By: Pearl Zhu
The leverage point is to let innovation shine via effective governance discipline, but not adding too much complexity. In this article, we’ll look at what innovation governance is, and practices to help you manage a successful innovation program.
Governance is by definition a framework of principles, practices and indeed ethics; separate, different and outside the setting and subsequent control of business strategies, budgets, outcomes, and metrics (in short, management discipline). Statistically, innovation management has a considerably low percentage of success rates and there are numerous learning curves and barriers on the way. Innovation has to deliver business objectives, but it needs the right kind of governance to thrive.
Divergent View of Governance
When you say innovation, you could mean maximizing value to the business; when you say governance, you could mean minimizing risk. Innovation and governance seem to be the opposite practice. The problem with governance is that the people enforcing governance normally have a frame of reference based on their own experiences and a view of the organization’s existing capabilities. There are varying degrees of understanding of the scope of innovation governance such as governance structures, governance processes, governance mechanisms, governance practices, and governance metrics, etc.
Also, sometimes governance standards can be taken too far and become their own bureaucracy. In that case, innovation would be stifled. Therefore, the right level of guide and process is important, but overly rigid processes or too-pushy goals will stifle innovation. If governance is deemed to stifle innovation, then it is wrongly implemented, or indeed wrongly understood. The governance aspect and innovation don’t immediately come together depending on the context in which innovation is used.
Innovativeness is a Mindset, and That’s where Governance Comes in
Innovation is doing something better than it currently is. Hence, it requires a sound and competent understanding of what is currently being done. Not what others are good at. It’s a mindset. And that’s where governance comes in. Governance needs to include engagement and motivation because a focus on control and enforcement tends to damage an enterprise’s capacity to motivate and engage staff. Organizations should identify patterns for good governance that sponsors and promotes engagement, motivation, and innovation as these are vital aspects of top-performing enterprises in our modern economy.
Governance is a state of mind that must be achieved. Products and processes are possibly counterproductive when they do not flow from a pervasive GRC (Governance, Risk & Compliance) mindset. As it’s worth keeping in mind that “engaging, motivating, innovating” are cultural issues, which need to be embedded in the policies, processes, procedures, and practices of the organization. Governance is to frame innovation management, it should orchestrate the change, not police the creativity, do it with trust and flexibility. GRC is about collaboration and harmony, not a new organizational structure. It is about sharing information, knowledge, and common processes.
The Governance Mechanisms Dictate how That Idea is Fostered from Inception to Retirement
If innovation management is like the pedal to accelerate the speed of the car, then innovation governance is the steering wheel to keep a straight line or take a turn at that velocity of strategic planning processes and business execution scenario; the headlights to do forecasting of what lays ahead (risk or opportunity); fuel gauge (cost), speedometer (metrics), or the brakes to slow or continue the journey (resource management), etc. The governance process/mechanism can be embedded into the business process seamlessly, and governance practice should be shared cross-enterprise collaboratively.
Innovation management is not just about generating fresh ideas, but rather the processes to take ideas to value creation. When there is an innovative idea; the governance mechanisms dictate how that idea is fostered from inception to retirement. The bigger the innovation management program and the longer the time between major delivery points, the greater the risk, going up exponentially. Innovation governance has a direct link to critical innovation processes. Not only from the financial results, but also from the involvement and signs being displayed in innovation management about what guidance, values, and principles governing the company’s innovation activities.
The Leverage Point of Governance is to Frame Innovation without Adding too much Complexity
In many organizations, much of GRC management is reactive in the sense that there is a lot of rushing around trying to fix problems instead of preventing risks. Governance needs to set a framework for innovation management. Metaphorically, if innovation management is like the pedal to accelerate the speed of the car, then governance is like a brake to ensure safety via properly controlling. Both are needed, in an integral way, the brake is not just for stopping the car, but for allowing the car to run safely.
Governance is steering. It isn’t just about putting restrictions on what you can do, it is also about monitoring and knowing when things are not going to plan so that you can take appropriate actions at the right time. The leverage point is to let innovation shine via the effective governance discipline, but without adding too much complexity. Often, innovation gets stifled in very large, mature organizations in which the management is more interested in protecting their positions and markets rather than innovating and generating new ones. One of the important aspects when designing a process for innovation governance is about doing risk analysis, to avoid or minimize risks.
Look at Innovation-Governance as a Continuum
Both over-governance and under-governance can and will stifle innovation. Innovation managers should contemplate: Do individuals believe governance is essential to effective business innovation and that the two are interdependent? Or do individuals believe governance is incompatible with innovation and leads ultimately to company failure? What context “innovation” is used in? Is the purpose of the governance to support budget, security, regulatory issues, and safety? Etc.
If you don’t just look at innovation and governance as a continuum (increasing value, increasing risk), it could be argued that maximizing business value from prioritizing business objectives lessens many risks so the two are lock-stepped together. The governance aspect and innovation don’t immediately come together depending on the context in which innovation is used. It is critical in adopting a social-technical-ecological perspective of governance models, to improve innovation effectiveness and efficiency.
Remember governance isn’t just about putting restrictions on what you can do, it is also about monitoring and knowing when things are not going to plan so that you can take appropriate actions at the right time. Innovation cannot be separated from a specific business purpose and in a broad context, governance is critical for meaningful innovation.
About the Author
Pearl Zhu is an innovative “Corporate Global Executive” with more than twenty-one years of technical and business working experience in strategic planning, Information Technology, software development, e-commerce and international trading, etc. She holds a master’s degree in Computer Science from the University of Southern California, and she lives in the San Francisco Bay Area for 15+ years. She is the author of “Digital Master” book series and the Future of CIO blog.