Chemical Engineering June 2022 - 42

on approach to innovation
governance (Figure 3).
The reason is simple: the
FIGURE 3. A collaborative approach to innovation governance is crucial, and cross-functional teams can help
deliver the most promising outcomes
efforts have not (yet) progressed
very far. As exploratory efforts gain
structure and definition, the possible
risk-return curve begins to
materialize. In this way, the exclusion
of non-viable options can be
just as valuable to the company
as the creation of actual new-toworld
innovations.
Interestingly, one of the most
common issues with innovation
metrics used by companies is
about measuring the outputs. Unlike
the expected-value planning
measures discussed above, here
we are talking about actual, tangible
results. Companies may think
this is easy and straightforward for
innovation. However, there remains
one large problem - innovation efforts,
especially exploratory innovations,
typically pass through many
teams on their way to final launch
or implementation.
In a globally diversified company,
there may be dozens of different
R&D and engineering teams
that might decide to implement
an artificial-intelligence (AI)-driven
design capability, for example, either
in whole or in part. Perhaps
the AI piece is one component of
a broader effort to improve their
team's efficiency. If they make a
raft of changes and productivity
improves by 32% - how much of
that success is attributable to the
AI-derived capability in particular?
42
Such questions are answerable,
but since the team that benefits is
more interested in the end-result of
boosting efficiency, they may not be
overly interested in tracking back to
figure out the answers about how.
To overcome these hurdles, the
key is to drive the company's innovation
portfolio with strategic purpose
from the outset. If leadership knows
that AI-driven design is a strategic
option the company plans to create
or protect, then the organization
will be primed not only to adopt it if
and when the innovation bears fruit,
but also to help measure the value
it has driven throughout the organization,
thus making measurement
a priority, not an afterthought. The
good news is that while this may
seem like a far cry from the way
organizations currently handle their
innovation work, it is fundamentally
no different than how every department
participates in the annual
budget season, or other traditional
business-reporting functions.
Governance is key
One of the foremost reasons why
companies fall short in their innovation
aims is that the executive
suite is often detached from their
on-the-ground innovation workforces.
This simply is not a blueprint
for innovation success. Modern
innovation operations practices
bear fruit when there's a handsmore
promising the innovation,
the more cross-functional
the effort. Delivering gamechangers
requires the input
and assistance of various
teams across the organization.
If it is a new product technology,
for example, then the engineering
team must learn to
incorporate it into the product
design, and the manufacturing
unit must learn to make it
at scale, while the sales team
must learn to sell it to customers,
and the services group
must learn to support its use.
If any of these functions is too
distracted or isn't fully bought
in, the effort will fail. The
problem is that many innovations
- especially the most
valuable ones - tend to " break
the frame " of prevailing incentive
structures, pricing schemes, supply
chains and other established
processes a company may have
in place. Therefore, without executive
intervention from the top, the
organization will miss out on such
opportunities. Unfortunately, this
is all too commonplace at many
companies today.
That said, this does not mean
that everyone across the company
needs to have a " drop everything
and innovate " mentality in their
daily work. However, when gamechanging
innovations do traverse
the pipeline stages all the way from
exploratory work and into production,
organizations need to be ready
for them. Companies can help their
teams get ready to " catch " the biggest,
most promising innovations by
first learning to accept smaller opportunities,
of the kind that are more
common and that also tend to get
held up due to disorganization or
mismatched incentives.
If the company treats each innovation
project like a special
case, then portfolio governance
quickly becomes a massive challenge.
But not every initiative needs
constant scrutiny. Most of an innovation
team's work happens in
the background, as they incubate
early-stage opportunities and try
to turn them into value-creation
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Table of Contents for the Digital Edition of Chemical Engineering June 2022