Friday, June 15, 2012

The only three innovation models you need

After years, nay, almost a decade, of innovation consulting I can say to you that innovation, while widely discussed and often parodied, has only three models or forms.  It's due to deep investigation, experience and a small dash of cynicism that I can offer this simplified insight to you.  But once I expose the three variation of innovation, I think you are sure to agree with my categorizations.  And if you don't, there's always the comments section to tell me where I've gone astray.

Three innovation models

Let's start by asserting that there are really only three innovation models in place in organizations today.  Those models are based on what the corporate culture allows, how deeply the executive team is engaged and how well innovation is understood.  The three models are:
  • Isolation:  Innovation in a secretive skunkworks, isolated from the rest of the business
  • Bolt-on:  Innovation as an activity bolted on to the "performance engine" or what I've called "business as usual"
  • Embedded:  Innovation complete distributed in the operating model or performance engine, so that innovation is a constant capability in line with strategy and operations
You may be tempted to argue that I've missed one, which is a discrete innovation activity that isn't meant to impact the organization over the long term.  Perhaps you are correct.  But increasingly many firms are going to deploy one, or more, of the models I've described above simply because doing discrete innovation projects isn't valuable or productive.  Let's look briefly at each of these models.


Innovation is often relegated to a skunkworks, to allow more creativity and expansiveness, and to keep the existing mental models, barriers and frameworks from limiting the thinking.  Perhaps the best known example of isolation is the development of the MacIntosh, when Jobs placed a team dedicated to a new platform in another building, isolated from the rest of Apple.  The signal that a continuous skunkwork sends is that the corporation wants its cake, and want to eat it too.  It wants innovation -really interesting, disruptive innovation - but doesn't want to change its culture or operating model to do so.  To accomplish this task, it isolates disruptive innovation in a skunkworks, importing the ideas back into the business as new products or services.

Skunkworks can work on occasion, but require very focused and capable small teams of fully dedicated people to spend a dramatic amount of time away from the business, and then attempt to re-enter the business with a product or service that the rest of the organization had not part in developing.  Unless the executive team provides exceptional cover for the skunkworks team and their ideas, re-entry is difficult, for the idea and for the team.


The "bolt-on" approach to innovation is the approach most attempted, and the one that causes the most grief and confusion.  Bolting on innovation to an existing "business as usual" operating model or what some call the "performance engine" is often distracting and devastating in two simultaneous dimensions.  First, it disrupts and diverts the existing work streams and processes, which don't understand how to interact with new concepts or ideas.  Second, it constantly draws into question the rationale, purpose and tools of innovation work, since they are unusual and unfamiliar.

The vast majority of firms attempting innovation today are using a "bolt on" model, which is perhaps the worst of the three models to use, since it isn't optimized to sustain existing workflows or optimized to improve innovation outcomes.  It actually affects both negatively, but the bolt on approach requires the least investment.


We assert, regularly, that innovation must become a core competence.  Given the speed of change, the increasing competition and customer demand for new products and new features, organizations must improve their ability to bring relevant products to market more quickly.  Its only when innovation works hand in hand with effective business processes and the "business as usual" operating model that innovation will be deployed effectively and repeatedly.  Good innovators know this and have already begun to shift how they work and think toward this model.  I wrote Relentless Innovation to highlight some of these firms.

Yet this approach is the one that is least likely to be attempted of the three, because of the organizational change and management commitment involved.  Everyone recognizes the need for increased innovation capability, but many recoil at the costs, in terms of skill development, commitment and especially change management.  Of the firms doing innovation well, and consistently, they have embedded innovation as a continuous capability and a core competency.

Where are you?

The big question is:  where is your business?  Are you isolating innovation to try to optimize disruptive innovation and protect your internal operation processes?  Or are you bolting innovation on to a highly efficient operating model sure to resist innovation?  Perhaps you are attempting both.  The point is that neither build skills and competencies which are necessary for long term success.  And I won't even bother to talk about occasional, discrete innovation projects, which are most often doomed to failure.

Many of you reading this will say, but wait, he left out "open" innovation.  But my assertion is that until you define and implement an internal innovation capability, you can't perform successful external or open innovation.  Even in an open innovation model your team must implement methods and frameworks to manage ideas internally, which brings us back to the three models.  Open innovation is exceptionally valuable, no argument, but can't be sustained without some form of an internal method or approach.

Your thoughts?

 I'd love to hear from you about your thoughts, whether you agree with my simplified model or not.  Please provide some comments or email me to take the discussion further.

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posted by Jeffrey Phillips at 4:42 AM


Blogger said...

This comment has been removed by the author.

6:42 PM  
Blogger said...

Great post and book.  No though we as an organization are currently in the middle of "Isolation"  heading towards "Bolt-on" with the aim to "Embedded". To us, it's a journey and little wins within each stage provides for a better case to our organization leadership and middle managers to move to Embedded. I think knowing where you are at the moment, where you want to be and what needs to be do to make innovation as business as usual is important.  With Open Innovation you could do the same and pilot small control areas with the business and communicate its all part of the innovation movement.

6:44 PM  
Anonymous Anonymous said...

The vast majority of companies flail at innovation because they have a fundamental misunderstanding of what the word means. Most equate it with a specific idea or a specific person or a specific process. And when each fails, innovation fails and in turn abandoned. They don't or won't understand that innovation is iterative and ridden with failures.

Most want "magic" to come out innovation and when they don't they shut it down. They incessantly fail to understand that "failure of ideas" is part of innovation. When ideas fail, innovation is put on hold for more pressing "book of business" issues.

I do agree that the embedded model is the way to go, but first you need to build an organization that's truly agile (thinks in hours and days, not weeks and months and iterations) and one that rewards failure of ideas and not confuse that with failure of execution or planning. They need to truly get that "if you're not failing, you're not innovating." A complete and permanent mind-shift needs to take place for any true innovation to take hold.

typo: in the Embedded bullet, the words "complete distributed" should read "completely distributed."

Thanks again for a great post!

9:32 AM  
Blogger Shyra Jeane said...

This comment has been removed by a blog administrator.

9:01 AM  
Blogger Paulo Dias said...

I´ve recently started helping a small IT company in their first steps in managing innovation.
It was not a surprise for me the declared interest in the adoption of a model of innovation management. Everyone declared to be very motivated to participate ...
But when they have to decide between the urgent and important tasks, the urgent ''always'' prevail!
They understand the importance of innovation but they don't fell the emergence.

3:21 PM  
Anonymous Anonymous said...

good article, may i copy your article to my site ?

11:58 PM  

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