Experience Center

Innovation governance model

For conference purpose only

September 2018

Ever-increasing challenges to achieve growth goals

Stretch

Goals

M&A

Gap

Today Tomorrow

Innovation

EB

IT, R

ev

en

ue

Growth Goal

HardWork

Business Development

3

Focus on breakthorugh innovations

3

5

Once the direction is set, it is time to decide upon the optimal organizational structure for innovation.

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Cross

divisionalSiloed

Top Down

Bottom Up

There are typically seven designs:

1. Corporate Intent

2. Innovation labs

3. Skunk works

4. Business unit innovation

5. Practice driven innovation

6. Innovation for hire

7. C&D (Connect & Develop)

1. Corporate intent.Unified vision driven by the CEO

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What they do:Define the innovation and

corporate intent

Strengths:Unified vision

Weaknesses:Requires strong leadership

and the right visionPotential for infighting and

territory battles

Example:

Apple

1. Formulate here

2. Execute as objectives

CEO

•Innovation Intent

Steve Jobs(Visionary)

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nit

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nit

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Other Examples: GE “Ecoimagination”,US Department of Defence “Own the Night”

Innovation labs.Innovation through incubation and diffusion

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Example:Samsung Product Innovation Group

Strengths:Independent,

recognized (budget), and forward-

looking.

1. Develop concepts here

2. Sell concept here

Bu

sin

es

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nit

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nit

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Corporate

Weaknesses:Politics with business

units (not shared objectives, credit,

relevance)Independence makes it difficult to reintegrate

into business.

What they do:Think tank for identifying

and developing new opportunities. Research,

needs finding, concept development.

Other Examples: Lego Concept Lab, and most major corporations

Skunk works.Innovation through independent, informal initiatives

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Corporate

1. Bottom Up Invent, prototype and engineer here

2. Sell-in here

Bu

sin

es

s U

nit

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sin

es

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nit

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sin

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nit

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sin

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nit

Example: Google

Strengths:Commitment from

team owners

What they do:Independent invention

Weaknesses:Management sell-in (no

owner)Note: Google has made

sell-in an objective (formalized it)

Other Examples: Lockhead Martin

Business unit innovation.Innovation driven by business unit interests

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Corporate

1. Understand here

2. Feed in here

Bu

sin

es

s U

nit

Bu

sin

es

s U

nit

Bu

sin

es

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nit

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sin

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nit

Example: Bosch

Strengths:Relevant for the

bottom line.

What they do:Forecasting, market

analysis, trend analysis, roadmaps relevant for

their division

Weaknesses:Vision narrowed by

business unit objectives - tend to more incremental innovations.

Common model in most siloed corporations.

Practice driven innovation.Holistic practice-based, long-term innovation

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Corporate

1. Understand here

2. Diffuse to relevant units here intent

Bu

sin

es

s U

nit

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sin

es

s U

nit

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sin

es

s U

nit

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sin

es

s U

nit

Example:

Intel

Strengths:Decoupling short

term business unit objectives from long

term strategic thinking. Keeps

limitations of day to day business from

hampering long term vision.

What they do:Broad understanding of practice area (defined by

activities, people and environments rather than

products) - and using insights to objectives relevant business

units.

Weaknesses:More abstract - requires more

filtering and translation

Innovation for hire.Semi independent R/D unit

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Parent Company1. Hire here

ExternalClients

Bu

sin

es

s U

nit

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sin

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nit

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sin

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Example:

Xerox

Other Examples: Porsche Design, BMW Designworks

Strengths:Have own P/L and business

objectives, semi-independent.

What they do:Semi-independent, project-based initiatives working on a consultancy model.

.

Weaknesses:Detached from the culture of parent company - may

feel or want to be more independent, making them

function more like a consultancy.

C&D - Connect and Develop.Using networks to distribute innovation and increase hit rates

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Corporate

1. Find

here

2. Build here

Bu

sin

es

s U

nit

Bu

sin

es

s U

nit

Bu

sin

es

s U

nit

Bu

sin

es

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nit

Example:

P&G

Other Examples: LEGO, Kraft

Strengths:Distributed, leveraged and an effective use of

internal resources.

What they do:What they do

Seek innovation opportunities

through a network (both open

and closed) of talented and

independent innovators

(small to medium sized

businesses). Objectives set by

corporate group; use a

competition model.

Weaknesses:Coordination of resources,

need to find and build the

right network, trust based

and informal relationships

may be less reliable.

Contact

Ján Uriga

PwC Experience Center Leader

+420 731 132 666

jan.uriga@pwc.com