How to Think about the Role of Innovation in a Large Organization

R&D facilities like Bell Labs, Lockheed Martin’s Skunk Works, and Xerox’s PARC are celebrated for developing ground-breaking technologies and have inspired many companies to set up their own teams to pursue revolutionary ideas. But what happens when an idea must be translated from a lab—by its nature, a lean, semi-independent structure—to the larger organization? And how can a leadership team decrease resistance to change?

The "Edge and Core" Innovation Framework

When working with teams in preparing for this transition, we encourage them to envision the organization as a cell with a “core” and “edges”. The core consists of the vast majority of the organization in terms of people, resources, and day-to-day operations, while the edges are smaller teams or groups tasked with exploring and sensing changes in the marketplace. The edges will typically have more direct interaction with customers, which gives them constant feedback about unmet and emerging needs.

With this conceptual framework in place, executive teams can then implement structures, processes, and incentives to spread innovation throughout the organization.

Three Steps to Implementation

  1. Advocate and allow for experimentation on the edges. The edges of the organization must be allowed to experiment to uncover new strategic opportunities. This experimentation does not require centralized support or direction, though the core of the organization should know what’s being explored in order to know when to support it. The leadership team, therefore, must act as the relay (and buffer) between the edges and the core, helping experimentation find a market and wider outside attention. A common objection to experimentation is the fear of failure and the resulting loss of resources, momentum, and prestige. As a result, organizations tend to demand failsafe solutions and sure bets, which result in teams retreading ideas rather than seeking out true innovation. Instead of failsafe, therefore, leadership should set “safe-fail” parameters—rules that assume things will go wrong, but will contain the damage so they don’t affect the operations of the larger organization.
  2. Cultivate a network connecting the edge and the core. All too often, innovation is kept on the fringes, but discovery must be celebrated. Once the edges receive early signs of success for a given experiment, a network of support (including resources, time, disciplines) must be ready to rush in to further pursue that experimentation and commercialize the results.
  3. Commit structural resources when success is achieved. If success continues, then the organization has to make a fundamental decision to shift not just resources, but its very structure. That doesn’t mean “add more people to the edge” or “double the size of the Lab”, but rather, spread the mindset and processes of the edge to the every single team within the organization. This is the most fragile state for the organization as it requires staking out a new position and committing to the widespread change.

Takeaway: Changing an organization’s structure is challenging and takes time, but once teams understand the roles of, and relationship between, the edges and the core, developing and spreading innovation will become integrated into every aspect of the organization.

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