May 032016
 

By asking the CEOs of some of the most successful and influential companies in the world, such as GE and Google, a clear definition of innovation manage­ment emerges. The definition addresses the need to quickly and effectively implement organizational goals and objectives to remain competitive and the desire to strengthen advantages through the adoption of innovative ideas, products, processes, and business models.[1]

Enterprises facing increasing competition and the pressure of techno­logical innovation are beginning to realize that to drive organic business growth and maintain a competitive advantage, they need to discover and imple­ment innovation quickly and with great care to ensure maximum value. One-off innovations are moderately easy to take advantage of, but to create a pipeline of innovative ideas that materially impacts the growth of an organization, it is critical to nurture an innovation management proc­ess that can be sustained and that can remain flexible and adjustable to accommodate changes in the competitive environment. Today’s enterprises need to manage and govern the process of innovation; it is a crucial facet of a company’s overall function.

Developing and nurturing an innovation management process takes con­siderable effort, resources, and ingenuity to perfect. As the digitization of organizations continues to emerge as a result of the growing importance of technology in the business models of companies, CIOs play an increasingly more relevant role. CIOs, as thought leaders on technology and its use within the organization, are sought after as leaders who understand how technology can enable an organization to succeed — with the right level of technology use in their operational and business models. According to recent analysis from MIT and Simplicable, innovation in large companies comes down to 10 major challenges that inhibit the realization of value from the innovation management process of large enterprises (see Table 1).

Table 1 — 10 challenges faced by organizations during the innovation management process.
(Adapted from MIT and Simplicable.)

CHALLENGE DESCRIPTION
Fear of Cannibalization As documented by Clayton Christensen in his book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail,companies with existing revenue streams are reluctant to risk cannibalizing them by creating new products whose market performance is uncertain. As a result, new ideas are not pursued with the same passion applied by entrepreneurs when starting a new venture.
Structural Obstacles to Invention As highlighted in Howard Anderson’s work in articles such as “Why Big Companies Can’t Invent,” the traditional model of research in large companies is failing for structural reasons; in large corporations, structural inhibitors to innovation are commonplace.
Desire for Predictable and Consistent Results Mature companies have investors with large amounts of deployed capital who value and expect predictable, consistent financial results. As can be deduced by logic and evidenced by the experience at 3M Corporation, this expectation conflicts with the inherently unpredictable and disruptive nature of innovation.
Lack of Training Traditionally, the employees of large, mature companies are trained and expected to manage existing businesses rather than create new businesses. They achieve proficiency in the practices of gaining market share, adding incremental new product features, and leveraging and optimizing existing competitive advantages. Entrepreneurs, on the other hand, learn to create new markets, create entirely new products, and build competitive advantage from a clean canvas.
Personal Risk/Reward Profile In large companies, failure is often not well received. Career advancement most often results from careful management of successes and avoiding association with conspicuous failures, for which penalties can be severe. As in scientific laboratories, entrepreneurial ventures use experimentation and failure as an important part of the innovation process. These consist of large potential financial and personal rewards, and correspondingly high risks, associated with entrepreneurial ventures. In large companies, the upside of increased financial benefits is not commensurate with the downside of increased career risk that can accompany failure. This situation inhibits the pursuit of innovation.
Organizational Baggage Large established companies often have a lot of baggage — legacy systems, processes, and products. Systems, processes, and products tend to become more complex over time until eventually nobody understands them.
Lack of Focus on Core Competencies Many small companies have the luxury of focusing on one or two core competencies. A large firm may have hundreds of products — a situation that is more difficult to manage. It is easier to excel at one thing than to excel at hundreds of things. Put another way, large firms often lose focus by chasing growth.
Speed to Decisions Decision makers in large organizations are isolated from the results of their decisions. In small companies, feedback from decisions flows quickly.
Duplicating Existing Capabilities Large businesses often duplicate efforts at the worker, team, and departmental level. For example, large companies may have thousands of IT systems with hundreds of functional duplications. Big companies may even duplicate expensive enterprise software; it is not uncommon for a big company to have three or four CRM systems and two ERPs.
Communication Complexities — Lack of a Common Language The complexity of business communication grows rapidly with the number of workers. This increases the cost of communication (more meetings) and reduces the quality of communication (misinformation).

Organizations facing the challenges described in Table 1 likely have the best intentions regarding achieving their innovation outcomes but fall short of achieving the desired result due to a lack of coordination and Agile decision making. Leaders in organizations are continuously looking to the principles and practices of enterprise architecture (EA) as a discipline for its ability to align corporate resources and plans against a target state. The use of EA by itself is not the complete answer given that architecture blueprints and roadmaps need to be executed in an Agile manner due to the unknown nature of most innovative ideas and concepts.

In a 2015 Cutter Executive Report, we highlighted the fact that enterprises that intend to translate strategies into outcomes face issues when converting strategies into projects, programs, or initiatives. The challenge for many senior leaders who decide on the strategic initiatives and vision for the enterprise is the inability to determine an effective way to translate that strategy into a useful roadmap for execution teams to follow. The likely culprit in this equation is the lack of visibility regarding the possibility of an innovative idea or concept being executed delivering value.

It would be unwise to undertake an initiative to deliver an innovation in an enterprise without forethought. EA plays a vital role in ensuring that innovative ideas are carefully planned and executed against a blueprint with a lightweight target state. The process of conducting the architectural plans must, however, not impede the agility of the enter­prise nor slow down the path to progress. Therefore, it is vital that EA supports the innovation management process to enable decisions and conclusions at the appropriate time.

[1] Summary statement based on research for the recent Executive Report; two influential articles are from the Harvard Business Review: Hamel, Gary. “The Why, What, and How of Management Innovation” (February, 2006); and Iyer, Bala, and Thomas H. Davenport. “Reverse Engineering Google’s Innovation Machine” (April, 2008).

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Gustav Toppenberg

Mr. Toppenberg is a contributor to Cutter's Business & Enterprise Architecture practice. He has more than 16 years' experience in startup, high-growth, and Fortune 100 companies. His diverse background includes building and leading transformational efforts for both small and global operations and spans across business and IT strategy; business operations; IT risk management; project, program, and portfolio management; organizational change management; management consulting; and IT service management.

Discussion

  One Response to “EA’s Role in the Innovation Management Process”

  1. In my personal opinion, I think that enterprise architecture can benefit any business in the long run. So, its never harmful to hire an enterprise architect for a small business venture.

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