Organizing for innovation
I think the answer is that value creation and strategy are top of mind for many executives, and have a long history of continuity. Strategy defines WHAT we want to do and value creation defines how to create value. In the recent past, when the pace of change was far more sedate and competitive threats and market shifts more incremental, innovation was required only occasionally. As the pace of change increases, competitive threats and substitutions increase, innovation must become as constant as the change you face.
But innovation has no long history of continuity, no over-arching framework. Most organizations lack deep innovation experience and recoil from the assumed uncertainties and risks associated with innovation efforts. Many executives long for more innovation from their teams, but don't understand how to lead their companies to sustained innovation. There are few examples of long term innovation successes, and those often seem to suggest that their success is not repeatable. What can we learn from Apple's success, or Google's, or 3M's?
One concept that we can advocate with certainty is that anything that must be done well, and done repeatedly, in any organization, must be based on a defined process or framework. In a corporation, nothing important is left to chance, or performed in an ad-hoc fashion. If innovation is important and must become a more consistent capability, and if executives want to lead their teams to more innovation, then executives must provide and support a consistent method for innovation, in the same way that every other important activity has a defined approach or framework. Note that I'm not suggesting that executives must do the innovation work, but that they must define how the innovation work gets done, and create clarity about the approach and remove roadblocks or inconsistencies, so that innovators can work more effectively.
To this end, Paul Hobcraft and I have developed, and are currently publishing, a strategic innovation framework we call the Innovation Workmat. The workmat consists of seven "domains" which we believe must be defined and developed by executives, to create a consistent and sustained environment for innovation to flourish. In many organizations, these domains, including concepts like strategic alignment, corporate culture, governance and motivations, are hazy or simply block innovation attempts. Executives often request innovation from their subordinates but don't provide frameworks or roadmaps for success, and fail to develop a sustaining infrastructure. By developing a consistent, sustained innovation framework, executives demonstrate their commitment to innovation and build structures that enable far more innovation, with far more continuity and success.
Prahalad's suggestion was that executives had to organize for successful innovation - in fact it may be that he was merely reminding people of Drucker's statement that enterprises have only two functions - marketing and innovation. All the rest are costs. Strategy, value creation and innovation are now, and will continue to be, tightly intertwined. Innovation is not an occasional activity but must become a consistent capability. Executives can ensure that occurs by defining and supporting a strategic innovation framework. The Executive Innovation Workmat we present is meant to define that framework and start a discussion in every organization.