In Part 1, I described two potential approaches to building a corporate innovation team. One emphasizes specific individual skills of team members, the other focuses on the optimal mix of functional roles within the team.
There is the third approach to the formation of innovation teams. This approach doesn’t pay attention to the team composition or individual skills of its members; it emphasizes the way the team operates.
The logic behind this approach was eloquently articulated in a 2015 article by Google’s Julia Rozovsky. The article argues that the composition of a team matters much less for its success than how the team members interact, structure their work, and view their contribution. The article listed five key factors that set apart successful Google teams:
- Psychological safety: team members taking risks without feeling insecure or embarrassed.
- Dependability: team members counting on each other to do high-quality work.
- Structure & clarity: teams having clear goals, roles, and execution plans for each member.
- Meaning of work: team members working on something that is personally important for them.
- Impact of work: team members believing that their work matters.
Interestingly, it’s the first factor, psychological safety, that was by far the most important of the five. The safer team members felt with one another, the more likely they were to admit mistakes, work together, and take on new roles. The results followed.
The notion that innovation requires taking risks without fear of negative career repercussions is hardly new. We often hear calls to “fail fast and often” — or even to celebrate failures — as a surrogate invitation to innovate.
Unfortunately, while voiceful in promoting risk-taking, experimentation, and learning from mistakes, firms fail to introduce specific corporate policies encouraging and rewarding such behavior of their employees.
What can be done (or at least tried)?
Based on my research of factors favoring innovation, I’d like to propose a few recommendations on building corporate innovation teams
1. Create a brand-new team for each strategic innovation project and adopt a modular approach to the formation of innovation teams.
To avoid groupthink within innovation teams, I recommend creating a brand-new team for each strategic innovation project. This may result in a slow start of the project, due to the frictions between members of the team; however, the benefits of the cognitive diversity brought by new members should eventually overweight the cost of the initial delay.
I further recommend that each innovation team include a few members of the core innovation team (thoroughly trained in innovation management tools) and several outsiders from different units, functions, and locations. Naturally, this modular approach requires the creation of a firm-wide repository of employees with a track record of their prior involvement in innovation activities. Ideally, at some point, this repository will start collecting data allowing to judge the innovation skillsets of prospective members of the team and their optimal functional roles within the team.
2. When creating innovation teams, use a mix of subject-matter experts in the project’s domain and non-experts in this specific innovation field.
This recommendation takes a cue from a 2016 study that showed that the high ratio of domain experts on corporate boards resulted in poor performance of respective firms. The major problem with having too many domain experts on the board was “cognitive entrenchment,” the inability of expert-dominated boards to effectively respond to new information, especially when faced with an increased level of uncertainty. (And an increased level of uncertainty is what innovation is all about!) Sure, the optimal ratio of SMEs vs. non-experts needs to be determined empirically, but for longer-term projects, it can be adjusted midway.
3. When creating an innovation team for consumer-oriented projects, include team members with demographic characteristics mirroring the ones of the prospective end users.
This recommendation is inspired by a 2013 report by the Center of Talent Innovation that found that when innovation teams had one or more members of the same gender, ethnicity, culture, age, or sexual orientation as the project’s target end user, the entire team was far more likely to understand this user’s needs, increasing the likelihood of innovating more effectively.
4. Place members of the innovation team — especially those involved in strategic innovation projects — on fixed-term (tenure-like) employment contracts, as opposed to employment-at-will.
This proposal is based on multiple studies (reviewed here) showing that the labor laws that make it more difficult to fire employees increase their participation in corporate innovation activities. The idea here is to provide members of the innovation team with immunity for failure for the whole duration of the innovation project, a bureaucratic equivalent of giving them psychological safety.
5. Make stock option grants, as opposed to cash bonuses and other monetary or non-monetary rewards, the principal incentive for engaging employees in innovation projects.
This proposal is based on a 2015 finding that firms that offer stock options to non-executive employees are more innovative. This proposal, as the previous one, is based on a theoretical framework created by Gustavo Manso, who postulated that the optimal incentives motivating employees to innovate must include a combination of tolerance for failures in the short term and reward for success in the long term.
Of course, there is no guarantee that any of the proposed recommendations, especially taken alone, would result in immediate positive outcomes. But if you believe, as I do, in the importance of experimenting, then experimenting with the way you build your innovation team is a good place to start.
Image credit:Ashkan Forouzani on Unsplash