5 Tips for Building Successful Innovation Teams (Tip #1: Don’t call them innovation teams)

I’ve had the opportunity to work with several companies who have setup internal teams for investigating new product opportunities or otherwise looking at new ways to operate or to shake up their businesses. Many are called “innovation teams” and have a mixture of formal and informal mandates. 

Based on my experience offering the Product Opportunity Mapping framework and working with companies in North America, Europe and Asia, I’ve gathered some tips based on best practices for those who want to build teams like this for their own company.

These tips centre around the team’s mandate, who’s involved, how they are structured and accountability and while they are biased towards my experiences with product development teams, they are applicable to any innovation-focused group.

Tip #1: Don’t Call Them Innovation Teams

Commonly, companies start with the notion of setting up an “innovation team” or some other initiative with “innovation” in the title.  Innovation is of course important but experience shows it may not be the best term to use.  The reason why is that the term “innovation” means different things to different people and there’s the danger of falling into the “innovation theatre” trap.

I once made a presentation to a group of C-level executives representing eight large ($100M+ in revenue) firms.  All agreed that they wanted their people to be “more innovative” and they needed “more innovation” in their operations.  However, there was little common ground with how innovation was defined and very few could translate the term into something concrete that would create value for their company. They talked about the different initiatives and activities they had in place but it wasn’t much more than “innovation theatre” - a lot of creative activity but not much actual value creation. 

So, a best practice is to drop one level down and give more concrete direction on what you want a team to do.

I find a good way of setting up a mandate is by emphasizing that innovation is the outcome and innovation only happens when two other things take place first.  One is novelty (doing something new or better, faster, cheaper) and the other is value creation (will someone use or buy the new thing that is created?).  Each one by itself is not enough and both must be present for true innovation to occur. 

If you want your team to drive long-term revenue growth and create new products, don’t ask them to be more innovative but instead create innovative products. If the aim is to up your talent level internally or reduce turnover, focus on HR innovations.  For a senior leader, their onus is to ensure there is a focus on both novelty and value creation.  In turn, I have found team members on the receiving end of this find it easier to generate productive results

Tip #2: People: Consider What They Know and Who They Know (and bring in some outsiders)

The biggest challenge when creating an internal team with an innovation mandate is the issue of bias. To create something novel and valuable, team members cannot be overly biased towards how things are currently done, the existing company culture or from the lack of varied opinions.

Diverse skillsets and personalities need to be in place as do different types of technical skills, industry domain expertise, functional experts. However, these need to be complemented with different world views; storytelling skills (those who can articulate the value of something that does not already exist are worth their weight in gold); and different genders and ethnicities.

As a side note, it is also important to recognize that the creative person who comes up with the novel and value-creating idea may not be same person who can champion and translate it into a viable product/concept that someone wants to buy or use. There is a big difference between visionaries and implementers.

It is also recommended to have an external voice at the table or an “external provocateur” as some describe the role.  This resource can reduce the impact of internal bias, offer new approaches and mental models while also breaking stalemates and reining in discussions that go down rabbit holes.

Team members should also have strong links to external areas of expertise and industry contacts. While I have no scientific proof to back this up, I’m convinced that most of us are only two degrees of separation away from 90% of what we need to know to make a decision considering a new opportunity.  I would bet that if you needed to find an expert in a particular field, one of your first level connections on Linkedin or another social network would be able to make an introduction.

Another recommendation is to set up a formalized “Product Informant Network” which is a method for identifying and tracking external “informants” who can help your cause by offering knowledge and timely feedback and advice.  They are out there and I’m always pleasantly surprised how helpful people are when asked (just remember if they help you, return the favour in the future).

Finally, make sure that those on the team are comfortable with getting out of the office and talking to outside parties – insights, new ideas and answers to questions that arise are rarely found inside the office.

Tip #3: Mission & Mandate: Powerful Central Mission but with a Loose Structure

At worst, expectations are set that an innovation team will “boil the ocean” and offer transformative company changing ideas within the year.

The reality is that innovation is messy, full of risks and with inevitable false starts and pivots along the way.   It is important to accept the fact that successful innovation is not a step-by-step recipe but an iterative process that has many stops, starts and repeats.

In fact, if you ran a traditional main-line business like you should an innovation team, you would probably get fired.

When setting up a team, make it mandatory for the members to think expansively but at the same time, make sure they are tethered to earth.  During my work helping companies create new products, we regularly shift back to first principles by asking key questions like what customer problem needs to be solved?; who are the customers and where do they exist?; who are the direct and indirect competitors?; and how and why will you win?

As part of your team’s mandate, outline what first principles questions should be asked when they get stuck or when they need criteria to choose one competing opportunity over another.

A good way to think about it is to make sure a powerful central mission is in place but with a loose structure around it.

Tip #4: Focus on Atmosphere and Resources

I’m a firm believer that team members need to get out of their comfort zones and “play under the lights” as people generally perform better when others are watching.

Successful teams will incorporate elements of creative tension and a bit of conflict but psychological safety is also very important. Team members need permission to fail, go against internal cultural norms and try some high-risk experiments – in other words, they need to feel comfortable making calculated mistakes without the threat of punishment.

It’s important to remember that incentives and company culture drive behaviour – and these need to be aligned.  As an example, I’ve worked with several construction and engineering firms where they view “safety” as a corporate mandate and core guiding principle.  This makes sense as unsafe conditions or risky actions on a construction site could lead to injury or death.  It also means that safety infractions have severe repercussions and could be a firing offence. 

Taking this same culture into an innovation or new product development team doesn’t work and is a recipe for frustration and failure.  If the core culture of a company is not to take risks, it’s hard for any employee to shift gears and move in a different direction.

Senior leaders need to communicate that they have the backs of their team members if they don’t directly adhere to the company’s accepted norms and rules.

Finally, an innovation group needs to be given the appropriate level of resources to generate any sort of success.  Insufficient resources are clear indicator the initiative is not a high-ranking priority for the company.  The best employees will take a pass and progress will be limited.

One senior executive told me that when he was asked to be the Chief Innovation Officer of a multi-national company, he thought his career was going sideways as this was a new and non-traditional role with a limited budget.  It wasn’t until the CEO told him the company’s innovation budget would be doubled, more people would report to him and he would be reporting directly to the CEO that he realized this was important to the company and he would have the resources and latitude to generate significant results.

One last tip, give an innovation team the option (or preferably make it mandatory) to set up a separate physical location away from the mothership.  When inside the mainstream business, the urgent inevitably outweighs the strategic (like innovation) and close proximity to the company’s current corporate culture may be a gravitational force that is difficult or even impossible to ignore.

Tip #5: Build in Accountability

Innovation teams – because the term “innovation” is nebulous and squishy – often have difficulty measuring progress.  This is understandable given the uncertainty of trying new and different things.  Using traditional financial metrics is a good way of prematurely stifling creativity while no metrics at all will create a black hole of lost resources.

Depending on the company, the industry and the team’s mandate, a mix of activity metrics and value-focused metrics are needed.  Activity metrics are purposely loose and measure things like prototypes created or number of customer interviews completed.  These should be balanced with additional defensible metrics that validate progress such as an idea passing a stage-gate or conversely being killed.  For these, patience is required as timelines are not always predictable.

Regardless, metrics must directionally lead toward the hand-off of a new innovation to the mainstream part of a business. They need to foretell what metrics will be used to measure success in that setting. 

Accountability also relates to making decisions on what projects should be continued or killed.  A key element of strategy is the proper allocation of time and resources and equally important is knowing when to say no. 

For my customers with teams who are developing new products, we talk about making a firm decision every time an opportunity is being discussed.  That decision has four potential outcomes: Go (keep moving the project forward as planned); No Go (stop the project permanently); Park (document everything to date but put it aside until conditions change); or Pivot (the most common outcome which recognizes that good ideas may need to evolve over time).

This is an opportunity to create an element of discipline in an otherwise messy process.

Final Thoughts

Without the ability to undertake new and value generating initiatives (in other words where innovation is the outcome), companies will eventually marginalize themselves into mediocrity. 

That’s why innovation-focused teams are so important.  Putting the right group of people together who have a clear mandate and enough resources to work with (along with the permission to fail) can be a corporate game changer.  They can help build a moat to fend off competitors, grow and diversify revenue and feel the satisfaction they are playing a key role in building corporate resilience..