Innovation Cells: Fast Track to Innovation

Innovation is fast becoming the latest weapon against shrinking market shares, decreasing customer loyalty, fierce competition and other business challenges due to the unprecedented changes based on the effects of globalization. Faster cycle-times, 7x24, and “anywhere - anytime” are still business practices of high value, but the emerging economies of Asia, India, and the former USSR and its satellites have adopted them nearly as fast as the traditional economies of the West. Combined with the much lower labor costs in these emerging economies, this poses a real threat to the West’s leading global role in economics and industry.

Therefore every manager and leader in highly developed countries must ask themselves these questions:
What will better sustain the growth and competitiveness of my company: extended evolution of a product or product replacements?
What means exist to create enough new work opportunities in a relatively short time, to counterbalance the drain of existing work towards low-wage/high-skills countries?

Here innovation plays a crucial role, in particular if it is disruptive, i.e. something which is recognized intuitively as new. Innovation’s potential as a creator of new markets and new job opportunities may be the best hope of sustaining or even increasing the high standard of living that countries such as the United States, Germany, the UK, or France have become accustomed to.

When we look at innovation as a practice to sustain economic success and global leadership we need to ask how we recognize real “innovation.” A simple, yet powerful way is when something surprises us and we say “Wow!” One of my favorite examples from industry is the headlight design of BMW’s cars. It is not obvious, but the addition of LEDs surrounding the main light source like eyelashes gives the cars a very distinctive appearance. Although these LEDs may seem insignificant compared to the complexity of the whole car, the technical and business challenges were formidable. Energy is a rare resource in a car and the LEDs were something novel with unknown effects on power consumption, production, and buyer appeal. But Hella, the German automotive supplier who created this innovation, was able to convince BMW and produce the component in record time. How was this possible? They used a development team concept called Innovation Cell which has the potential to create break-through innovations consistently.

An Innovation Cell (IC) is a specific form of project organization. It consists of a team of volunteers who are dedicated, have full control over the project, and who will disband once the project is over. ICs are particularly suited to innovations and projects with high risks. They have proven themselves in the complex environment of the automotive industry.

ICs are often used for the early stages of development, where the gap between idea and product is greatest. Such is the case when the technology is known but the product is not, or a customer is interested in a new product or feature but the feasibility is not yet proven.

With ICs you can turn previously unattainable market opportunities to your advantage, such as when you feel there is a new market opportunity but you don’t quite know which product would allow you to grasp it, or when your competitor is about to come out with a new product and you need to follow quickly.

ICs provide these possibilities because of five characteristics, which if applied with rigor guarantee success: autonomy, dedication, co-location, goal orientation, and transience. Dedication and goal-orientation are nothing new and can be found in any good project team. The other three deserve some explanation.

Autonomy provides the IC with independence from its originating organization. The details of a particular innovation cell’s autonomy are negotiated in its foundation phase. The result of these negotiations is respected by everyone involved for the duration of the cell. This is a tough request, because of the tendency to withdraw key people from such teams in crisis situations or to interfere when things are perceived as too slow, un-orderly or non-predictable. But creative work is exactly that at certain times. Autonomy shields the team from impatient managers outside the team. But this freedom has a price: a high degree of self-organization and reliability of all team members.

Co-location requires that the IC has a physical home for all team members. This seems to fly in the face of modern day distributed workflows, but it is a key success factor. More closely observed, the reasons become clear. Innovation is creative work in often uncharted territories. To be successful in such environment requires dynamic and spontaneous communication involving all human senses. Also, team members often originate from different units. They will typically bring different knowledge, experience, responsibilities, and social skills. Co-location fosters spontaneity, common understanding of, and identification with the ICs objective.

Transience reflects the purpose of the IC, existing only in the space between problem/opportunity identification and goal attainment. The lifespan of the IC is tied to this cycle. In a fast cycle, the cell may exist only weeks; if the cycle is longer, it may exist several months. And because of the IC’s autonomy, it includes the possibility of self-annihilation in cases where the team concludes that the task it has been asked to do can not be done.

ICs provide all members of the organization with the opportunity to deal with underlying structures of its behaviors and beliefs. Despite the fact that ICs are very successful, they are often abandoned. Before engaging in the art of ICs, the key stakeholders in the organization need to ask themselves whether they can see the following situations as normal part of ICs.

The behavior of the IC may become unpredictable at times. This is not desired in the efficient organization. After all, order and predictability are the cornerstones of any reputable organization. But unpredictability is a prerequisite for truly disruptive innovation to emerge. Remember that penicillin was discovered not by an orderly process, but because of “messy” Petri dishes left unattended for a night. This same principle holds true for the organization of innovative work, some “messy-ness” is required for success.

When the project team seems to get “out of control,” management needs to overcome the desire to control and allow the IC to do its work without intervening. This is a big pill to swallow in environments characterized by speed, high fluctuation, scarce resources, or focus on short term financial gains. But it is required for self-organization, which is a natural organizational form for innovative work.

ICs can not solve every business problem, but when they are applied appropriately they can lead to real break-throughs. They are one way of dealing with disruptive environments. Although the specifics of ICs are important, the generic concepts and methods behind them are even more essential:

Awareness of the partly incompatible structures underlying creating and managing
Understanding that innovation needs approaches beyond the efficiency paradigm
Trust that people will find the best solution for a compelling goal if left alone
Insight in the interdependent nature of innovation and production

Beyond ICs lies a vast continent of innovative possibilities. Although we understand ICs, there must be many more innovative possibilities we have not yet discovered. To explore this treasure requires the open mind of the explorer himself. This mindset may be one of the most precious results of the work in an IC. Viewed in this way, a new generation of professionals and leaders may emerge to deal with the challenging uncertainties of our future.

Uwe Weissflog is an associate of Cambashi and founder of Pathway Guidance – Europe.

Uwe Weisflog

First appeared in the EAReport, October 2005.

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