Innovation Hubs: Do they Matter?

When we look at organizations that have been successful innovators, some such as Apple stand out because of their ability to come up with several breakthrough innovations. What makes organizations such as Apple innovate repeatedly? The simple answer is there are many reasons. It could be their culture, it could be their R&D and product development processes, it could be the leadership and so on. A more general answer is that Apple seems to have institutionalized some competencies that enable them to successfully innovate.

In an on-going study we have been examining how organizations could institutionalize innovation management capabilities. We surveyed over 85 large firms in the US to identify the organizational systems comprising of processes and structure they have created to institutionalize innovation management. Today we will discuss about the structures. I will talk about the various management practices in the subsequent posts.

One structural arrangement that seems to be gaining ground is an innovation hub. What is an innovation hub? It is typically an organizational unit or group created to facilitate innovative activities in the firm. More than 65% of the firms surveyed had implemented a hub in some form or other. They come with different names such as the New Business Initiatives group at Intel that Gina mentioned in her post, or emerging business opportunities group at IBM.

Do hubs matter? In our study we found that in a way they do. It is not that firms that had hubs magically became better innovators. But hubs facilitated organizations to implement effective innovation management practices which in turn lead to better outcomes such as successful commercialization of breakthrough innovations. Which leads us to the obvious question such as – what do these hub do? Where do they reside in the organization? What are their responsibilities etc. More on this in my next posting. Stay tuned.

United State of Deferred Maintenance…..Is that the real problem here?

Have you seen Tom Friedman’s March 2nd Column article? He talks about an old, dusty US economy…the United States of Deferred Maintenance, and compares us to the People’s Republic of Delayed Gratification. Wow, what descriptive labels, and I share his concern, as you likely know. However, the evidence that he provides for his concern is a talk that he heard Paul Otellini, Chief Executive of Intel give in Washington recently. Otellini described the difficulties he faces in hiring great science and engineering talent in the US, as well as in the comparatively minute financial incentives the US offers large multinationals to create more jobs. He described the ease with which he can access talent globally today, and certainly the more welcoming tax structure of China for attracting his latest manufacturing plant. Friedman cites Otellini’s reference to a study showing that the US is dead last in the rankings of 40 industrialized countries in an index they call the ‘rate of change in innovation capacity’ over the last decade…surely something any US reader would find frightening.

He may be right. The study may be right (though when you examine the source you find that the study, conducted by the Information Technology and Innovation foundation, is measuring IT infrastructure and other foundational elements rather than the innovation related capabilities that have actually driven US based innovation over history). But what Otellini failed to mention in his talk is how Intel is handling innovation. How are they managing it? How are they building, nurturing that expertise? That capability? Intel’s New Business Initiatives (NBI) group, part of Intel Capital for a number of years, no longer exists. Responsible for the beginnings of WiPro, among a number of other offerings that provided Intel with the options for developing whole new platforms for growth, NBI was largely viewed as an appendage to the mainstream organization. It was run by a strong willed, articulate person, Angela Biever, for a number of years in the early part of this decade. She wasn’t always the easiest to deal with, I’m certain. She fought uphill battles, for sure. She constantly had to justify her group’s existence. But the success rate of her portfolio was among the best in the ‘Corporate Entrepreneurship’ space. Once she left, and I’m certain for many apparently rational reasons, the NBI group’s mandate evolved to become ‘closer in’ to the mainstream business. Great.

Now I’m sure the NBI is not the only innovation related group in Intel, or Intel’s only approach to innovation. But this is just an example of which I’m aware. So the question is, if Intel wants innovation….how do they plan to make it happen? Is the lack of capable scientists and engineers really the root cause of Intel’s problem? Are tax incentives for building a plant the basis of Intel’s innovation issue? or is it, perhaps, the company’s ability to commercialize technologies that are new, unfamiliar, and perhaps risky???