Innovation culture: legitimacy and power

Lucy Luo
Tendayi Viki
May 29, 2020
#
 min read
topics
Innovation Culture
Business Strategy
Invincible Company
Explore vs Exploit
Corporate Innovation
Innovation Management

One of the key attributes of an invincible company is the ability to manage the Explore and Exploit portfolio with an equal amount of strategic focus and energy. But Explore and Exploit are very different. The same practices you use to exploit existing businesses cannot be used to explore new ideas. You can read more about the differences between Explore and Exploit here.

Finding the balance between Explore and Exploit

One of the reasons why companies fail to manage the balance between Explore and Exploit is that these different portfolios do not have an equal status in the company. In almost all companies, the Exploit portfolio dominates. If companies want the ability for constant reinvention they need to allocate sufficient resources, bandwidth, and budget to the Explore portfolio. In order to be able to make those allocations, you need innovation leaders with power and influence in the organization.

explore and exploit innovation practice

However, in many large organizations we work with, innovation still lacks legitimacy and power. We see a lot of innovation leaders who are two to three levels down in the organization chart. Often, they are the sub-department of a leader who is the sub-department of another leader - guess how much impact that can create! This is the legitimacy and power challenge many innovation teams face. 

When innovation lacks power and legitimacy

When innovation does not have a high enough status within the organization, innovation projects are always placed at the bottom of everyone’s priority list. This sends a very strong signal to the whole company and often leads to severe consequences with long term impact: 

  1. Promising projects remain vulnerable and often killed because innovation is not perceived as crucial. Of the ones that do remain, even fewer are able to scale. This is because running the Exploit portfolio always comes first. 
  2. People avoid exploring new ideas because they fear taking risks will damage their career. This can result in your best talent not choosing innovation as a career path and leaving to go to the competition or to startups. 

We saw this first hand when talking to one of the heads of innovation at a large pharmaceutical company. He remarked that people within the larger organization often approach his team members and ask why they are risking their careers by working for him. Taking innovation roles in this company is perceived as making a risky move that might damage a person’s reputation and kill their career. 

The Chief Entrepreneur

To have an impact, innovation needs to feature at the very top of the organizational chart. Either the CEO, a co-CEO, or an executive reporting directly to the board needs to be responsible for growth and innovation. They also need to dedicate serious bandwidth, time, and resources on innovation. We refer to this person as the Chief Entrepreneur, who along with a dedicated team, is responsible for creating and managing the exploration of future opportunities, while traditional executives take care of the existing business.

Innovation hierarchy

The Chief Entrepreneur is responsible for managing a portfolio of entrepreneurs who experiment with new business models and value propositions. This should be someone with a track record and passion for taking calculated risks to create new growth. To make this really work, we believe that the Chief Entrepreneur should be as powerful as the CEO. In fact, in some organizations like Amazon, the CEO is the Chief Entrepreneur. In others, there is a co-CEO who focuses just on growth and transformation, like Jessica Tan at Ping An Group. You can learn more about a Chief Entrepreneur’s role and responsibilities here.

Who does innovation report to in your organization? And how far removed is innovation from the board?

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About the speakers

Lucy Luo
Coach, Advisor

Lucy is an innovation advisor to organizations large and small. She has been helping them seek breakthrough growth opportunities by launching new startup ideas to future proof their business. She has worked with multinationals to build out and implement their innovation engine as well as advising startups across Europe and Asia.

Tendayi Viki
Author, Speaker, Advisor

Tendayi Viki is an author and innovation consultant. He holds a PhD in Psychology and an MBA. As Associate Partner at Strategyzer, he helps large organizations innovate for the future while managing their core business.

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Lucy Luo
Tendayi Viki
May 29, 2020
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Innovation culture: legitimacy and power
Insights

Innovation culture: legitimacy and power

May 29, 2020
#
 min read
topics
Innovation Culture
Business Strategy
Invincible Company
Explore vs Exploit
Corporate Innovation
Innovation Management

One of the key attributes of an invincible company is the ability to manage the Explore and Exploit portfolio with an equal amount of strategic focus and energy. But Explore and Exploit are very different. The same practices you use to exploit existing businesses cannot be used to explore new ideas. You can read more about the differences between Explore and Exploit here.

Finding the balance between Explore and Exploit

One of the reasons why companies fail to manage the balance between Explore and Exploit is that these different portfolios do not have an equal status in the company. In almost all companies, the Exploit portfolio dominates. If companies want the ability for constant reinvention they need to allocate sufficient resources, bandwidth, and budget to the Explore portfolio. In order to be able to make those allocations, you need innovation leaders with power and influence in the organization.

explore and exploit innovation practice

However, in many large organizations we work with, innovation still lacks legitimacy and power. We see a lot of innovation leaders who are two to three levels down in the organization chart. Often, they are the sub-department of a leader who is the sub-department of another leader - guess how much impact that can create! This is the legitimacy and power challenge many innovation teams face. 

When innovation lacks power and legitimacy

When innovation does not have a high enough status within the organization, innovation projects are always placed at the bottom of everyone’s priority list. This sends a very strong signal to the whole company and often leads to severe consequences with long term impact: 

  1. Promising projects remain vulnerable and often killed because innovation is not perceived as crucial. Of the ones that do remain, even fewer are able to scale. This is because running the Exploit portfolio always comes first. 
  2. People avoid exploring new ideas because they fear taking risks will damage their career. This can result in your best talent not choosing innovation as a career path and leaving to go to the competition or to startups. 

We saw this first hand when talking to one of the heads of innovation at a large pharmaceutical company. He remarked that people within the larger organization often approach his team members and ask why they are risking their careers by working for him. Taking innovation roles in this company is perceived as making a risky move that might damage a person’s reputation and kill their career. 

The Chief Entrepreneur

To have an impact, innovation needs to feature at the very top of the organizational chart. Either the CEO, a co-CEO, or an executive reporting directly to the board needs to be responsible for growth and innovation. They also need to dedicate serious bandwidth, time, and resources on innovation. We refer to this person as the Chief Entrepreneur, who along with a dedicated team, is responsible for creating and managing the exploration of future opportunities, while traditional executives take care of the existing business.

Innovation hierarchy

The Chief Entrepreneur is responsible for managing a portfolio of entrepreneurs who experiment with new business models and value propositions. This should be someone with a track record and passion for taking calculated risks to create new growth. To make this really work, we believe that the Chief Entrepreneur should be as powerful as the CEO. In fact, in some organizations like Amazon, the CEO is the Chief Entrepreneur. In others, there is a co-CEO who focuses just on growth and transformation, like Jessica Tan at Ping An Group. You can learn more about a Chief Entrepreneur’s role and responsibilities here.

Who does innovation report to in your organization? And how far removed is innovation from the board?

related reads
No items found.
Innovation culture: legitimacy and power

One of the key attributes of an invincible company is the ability to manage the Explore and Exploit portfolio with an equal amount of strategic focus and energy. But Explore and Exploit are very different. The same practices you use to exploit existing businesses cannot be used to explore new ideas. You can read more about the differences between Explore and Exploit here.

Thanks for your interest in 
Innovation culture: legitimacy and power
Innovation culture: legitimacy and power
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