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Why Innovation Governance Matters

Many people in our marketplace associate the word “governance” with bureaucracy, administrative overhead and sluggishness. However, this couldn’t be less true. This article argues that the contrary is the case: without a good governance system innovation is unpredictable, slow, not agile and non-flexible.

What is a Good Innovation Governance Framework?

A good innovation governance framework is a system of rules -- a regulation -- that is defined, agreed and maintained to help an organization to take coordinated decisions and implement them in practice. It is a system of mandates, accountabilities and obligations per organizational function and role and it prescribes processes to be followed and the functional assignments therein, over defined timelines.

Further, the goal of the governance framework is to have a lean, flexible and adaptive organization in which every individual knows his or her position in the company network and can act accordingly.

You can compare a good governance framework with a playbook in American football: it defines how players should behave in certain situations, it defines the player’s responsibilities for certain areas of the field, it mandates certain players to take decisions during the game. The team has been trained to execute the playbook in the game “without any bureaucracy,” players don’t need a signature of their coach to take a decision, they are mandated to do that. They do that within the framework of their playbook. Without it, the team would be chaotic and slow.

The same is true for many other sports and is also true for traffic. See what happens in traffic without governance, the example is famous:

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To have smooth fast traffic you need regulations, where one lane is free for the unexpected. Like on this picture:

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In other words: to be flexible, agile and have speed you need a governance framework that is transparent, clear, unambiguous and well implemented and trained. If that is the case, an organization can act like a well-trained “organism,” without an overload of meetings and signatures, even if it acts at a global level. Moreover, the need for a good innovation governance framework is more crucial if the organization is large and distributed over the globe.

Impact of Bad Innovation Governance

Our research with many companies shows that missing a good innovation governance system leads to bad business results such as missed deadlines, late product launches, product recalls because of product faults, unrealistic business cases. The worst of all is the unpredictability of the future business: how can you trust financial predictions for new products if the governance behind the data is unclear?

Another negative impact is that the organization will have unproductive frictions between the different functions, moreover between the engineering side and the business side of the business. Historically, the engineering side is powerful and assumes to know very well what the business needs to be successful. Agile frameworks clearly follow this tradition and gives decision-making mandates to developers, assuming that they know what is best for the market.

The business side however is more market-driven, it looks at market research and competitive analysis and creates its business roadmaps based on external data. We can observe this clash of cultures a lot, caused by a lack of a good innovation governance framework. See also Paul Heller’s blog about the Stage-Gate® versus Agile debate.

Without the steering mechanism of a good, companywide implemented Innovation Governance Framework the various functions will compete with each other to protect their own limited interests and visions.

Principles of the Sopheon Innovation Governance Framework

At Sopheon, we have worked over the last 20+ years with many large companies and implemented our Innovation Management software. Based on these experiences and many discussions with our customers, we developed a set of Innovation Governance principles that we have bundled in our SIGF, the Sopheon Innovation Governance Framework. The most important ones are the following:

    1. Subsidiarity this means that the decision making “mandates” are given to the “lowest possible” level of the organization. In practice this means that development decisions should be taken by developers, business decisions by business people, strategy decisions by higher management. Developers cannot make decisions with business impact. However, HOW the various functions or teams want to work and fulfil their assignments is up to them. They choose the methods that they believe will make them successful, and without imposing them on other groups.

    2. Accountable Coordination – within the given limitations of the company strategies and the allocated resource buckets the various functions – business, product engineering and manufacturing engineering – agree and commit to realize product roadmaps within defined timelines and (resource) budgets, according to well-known and elaborated functionalities, elaborated during research. These commitments should be written and signed off by mandated managers for full traceability and accountability, just like companies make agreements with third party suppliers.

    3. Full Transparency – Innovation governance cannot work without full transparency top down and cross functional. Data and information should always be up-to-date and complete. If not, an organization cannot change, because it cannot oversee the impact of changes; financially, for the launch roadmaps, or for the usage of resource capacity. Our Accolade platform has been designed to just do that: support the processes and full transparency.

We believe that these principles with help companies to operate like an “intelligent network,” like a “living organism” or a “mature ecosystem,” always prepared for change and following dynamically changing market and customer conditions with clear mandates and trained rules for the unexpected. Like in the American football playbook, everybody knows what to do.

If you want to know how our software Accolade supports the Sopheon Innovation Governance Framework, schedule a demo with us and speak to an innovation expert.

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