Innovation and organizational performance can be yoked.

First let us be clear about what innovation is. Probably, it would be easier to put down what it is not. Simple improvements and problem solving are NOT innovation. Innovation, the type that really provides a competitive edge, is step-change. It involves doing things that you’ve never done before, or doing them in a manner that you’ve never used before. It’s uncomfortable.


However, that does not mean that innovation comes out only from sophisticated innovation teams working from hi-tech offices and not from other employee which remain in constant touch with customers. It comes from both segments of the organization working together. Those directly feeling the pinch can effect improvements but not meaningful innovation. Similarly, the innovation teams, trained in the discipline and methodologies of innovation, cannot, by themselves get the right triggers for innovation i.e. what to innovate about. They desperately need the inputs that can only come from the client facing team. But put the two together – those who face clients and the trained innovation teams- and you have a definite winner.


The reasons why everyone in the organization, particularly those who are tasked to quickly resolve issues, are not ideally suited to innovation are manifold. Simply put, organizations are not built to execute innovation. They are performance engines.


innovation A performance engines drives efficiency by holding employees accountable. Like a finely crafted Swiss time piece, a great performance engine never misses a beat. Innovation demands short term pains for long term benefits but a great performance engine want to win now. It does not forgive. Innovation and ongoing operations are inevitably in conflict. A performance engine thrives by making every activity as repeatable and predictable as possible – which are the very antithesis of innovation.



Innovation engine An innovation engine is different. By nature, innovation is non-routine and uncertain. Making mistakes and accepting them, are the norms, not exceptions. Hence there are fundamental incompatibilities between the two types of engines.


So, it seems that the innovation engine, a specialized small part of the organization has to be kept separate from the larger part of employees who keep in touch with the customers on a daily basis and handle the daily production schedules. Bur what is to be the critical link between these two?


The critical link is in form of inputs on what issues should the innovation engine work on.


The basic inputs must come from the performance engine because they alone know what’s going on in the real world of the customer and production. So clearly, the performance engine is not to be fully distanced from actual task of innovation. There should be some linkage. Each organization must decide upon which model of linkages to follow.


Research shows that there are three distinct models for executing innovation initiatives – Custom (C), Small (S) and Repeatable (R). Fortunately, organizations do not have to choose between the three as all three can be used simultaneously. However, each initiative must be matched with the proper model for execution.

The C (Custom) Model


This is the one in which the performance and innovation engines are two distinct entities.


The C model recognizes that it is important to separate the innovation work from the performance engine, in a manner radically different from the method followed in models S and R. But this model treats both the engines quite differently. It understands that you simply don’t get breakthrough innovation without breakthrough organizational design. Realizing this, this model creates special teams and special plans for each initiative, each with an organizational structure and incentives ideally suitable for that initiative.
So, in model C, what is the link between the performance and innovation engines?
The special team of the innovation engine is not one group of people, but two groups. The first group is a dedicated innovation team which is separate for each initiative, while the second group is a Shared staff. This shared staff is from the performance engine and is responsible to provide the inputs of real world – customer needs, customer expectations, customer feedback etc- to the innovation group of the team.


The S ( Small) Model


The S Model recognizes that even the most efficient and tightly managed performance engines falls short of perfection. There is always some slack in the system, which can be taken up. Here the strategy is to squeeze innovation into the slack. This is possible for small initiatives. This is the system in which every employee feels they can be an innovator each day. This is the famous Toyota culture, engaging front line manufacturing employees in continuous improvement. Here all people allot most of their time in their role in the performance engine and only some, in their part-time role, in the innovation engine. To support this team of part-time innovators, there could be some full time support personnel. While this model works well for some workplace improvements, it is not hard to understand its limitations. The limitations are two – the employees are not trained in specialized techniques of innovation and they have limited time to take up this part-time role. They use their intimate knowledge of the ground realities (rather than the specialized techniques of innovation ) into the tiny slivers of slack time that exist even in the most efficiently managed organizations. Despite these limitations, this is a very useful model that fosters employee engagement with some workplace improvements by everyone going after small improvements in their immediate area of responsibility. The key here is motivation. The companies employing this model will do well by using all possible techniques to nourish the motivation of the employees to go the extra mile. The result is a lot of employee engagement and some incremental improvements.


The R (Repeatable) Model


The R model recognizes that it is better to make innovation as repeatable and predictable as possible. This can work when a company executes a series of similar innovation initiatives. Apple, for example, releases different versions of I Phones with alarming speed. All mobile companies do this. Hasbro delivers hundreds of new toys and games each year. While the driver of model S is ‘individual employee motivation’, the one to this model is ‘process’. It believes that you can build a factory that delivers innovation just as you build a factory that delivers products. You break down innovation into small, discrete and repeatable tasks. You get your people to specialize, performing the same task again and again, for different initiatives. Many companies build stages and gates into their model R processes. If an initiative fails to meet certain specified criteria at each gate, the project may be halted. However, these uncertainties, at each gate and post launch, relate to results outputs not inputs. The inputs – the work steps that need to move from one point to another- are made as repeatable and predictable as is possible. This model is capable of pushing limits far deeper than those of model S. Indeed, size is no limitation at all.


Models S and R, both attempt to work around the fundamental incompatibilities between the performance and innovation engines. Model S does so by squeezing it into the tiny slivers of time of employees and use the slack in the system. Model R does so by trying to make the performance engine itself into the innovation engine.



Note – This concept is from book ‘Beyond the Idea’ by Vinay Govindrajan and Chris Timble. A MacMillan publication.



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