Managing Innovation Program in Large Organisations
Asoke Das Sarma,
Vice President – Transformation
TCS Business Process Services
Abstract: A study conducted by reputed French Business School Insead revealed that only 14% of
the product launches are innovative in nature but they account for 56% of revenues and 86% of
profits. Clearly, Innovation is the lifeblood for any organisation looking for profitable growth.
Still, most companies focus solely on running their “performance engine“(i.e. optimising the current
products and services) and demonstrate little commitment to innovation. Some companies, who
invest in Innovation program also falter in many occasions and produce suboptimal results. The
reasons are either they are under the impression that driving large scale innovation needs big
investment or they fail to manage innovation as a program following the principles of project
While fostering innovation is an ongoing activity in an organisation and is not technically a project with
clear start and end dates– but the fundamentals of project management are relevant to manage the
complex project of driving and sustaining innovation culture in an organisation. In this paper, the
author outlines that how the phases of project management i.e. Initiation, planning, execution, monitor
and control and closing can be used to successfully manage Innovation program in a company. With
practical examples drawn from successful organisations, the paper discusses how the innovation
culture can be fostered among the rank and file employees in the organisation, what metrics to
measure and control and most importantly how to bring the program back in track when the initial
enthusiasm subsides and the project loses steam.
Keywords: Innovation, Project Management, Service Innovation,
1.0 Introduction: What is Innovation?
Innovation, simply put, is the successful commercialization of a new idea. The idea could result is a
new product / service or it could be about how to produce / market / distribute the product / service
faster, cheaper or better. Thus broadly the Innovation can be of two types:
(a) Product / service Innovation – this brings new product / service in the marketplace for
consumption. Examples of this type of Innovation are Apple’s iPod /Sony’s Walkman (both
are brilliant product Innovations) or ‘No frill low cost Airline services’ by Southwest Airlines (a
service Innovation). Automated Teller Machines (ATM) is a good example of Innovative
solution which embodies perfect amalgamation of product and service innovation.
(b) Value Chain Innovation – this improves the value chain efficiency by modifying and
improving the components of value chain architecture. A value chain is a chain of activities
that a firm, operating in a specific industry, performs in order to deliver a product or service to
the market. The concept was popularized by Michael Porter in his 1985 best-seller,
Competitive Advantage: Creating and Sustaining Superior Performance.
A Value chain consist of a set of primary activities (Inbound logistics, Operation , Outbound Logistics,
Marketing & Sales, Service) and four
support activities viz. Infrastructure ,
Human Resource Management ,
Technology and Procurement. All these
activities together enable a firm to produce
and market goods and services and thus
innovations in any of these activities will
improve the productivity of producing and
marketing the goods and services.
Examples of value chain Innovation are
using robots to improve productivity of
automobile car assesmbly or using
offshore low cost location delivery model
for delivery of Application Development &
Fig 1.0 : Porter’s Value Chain
(ADM) in software services industry.
Many practitioners come up with various other classifications of innovations such as marketing
innovation, business model innovation, supply side innovation, etc. but since all of these improve
some part of the value chain – in essence, they are value chain innovation.
Another school of thought is to classify the types of innvoation in terms of the nature of change and
impact. The advocates of this approach talk about two tyes of innovation – (a) incremental (b) radical
or strategic. As per them, adding a feature or two in an existing product (e.g., touch screen facility in
blackberry smart phone) or making minor improvements in a production process (say introducing
cellular cell concept instead of arranging the machines in a straight line) are examples of incremental
innovation. On the other hand, radical innovations means disruptive change leading to very high
impact such as introduction of iPhone by Apple (an example of product innovation) or invention of
Assembly line production process by Ford Motor Company (an example of process innovation).
While it is good to track the impact of innovation, unless the impact is significant, it should be
categorised as “incremental / continuous improvement” and not “innovation”.
2.0 Why Should Organizations focus on Innovation and why they don’t?
MyFab is a French furniture manufacturer that has revolutionised the furniture industry by a simple
innovative concept. Instead of building large inventories of furniture as per contemporary design as is
the normal practice in this industry, MyFab uploads a catalogue of potential design in the internet,
asks customers to vote and then produce the most popular ones. It accepts orders on the internet and
ships furniture directly to customers. The social and engagement aspects of voting make the
customers feel important and attract them to the website – the low price that MyFab can offer, thanks
to its simplified supply chain and low inventory, make them buy. As a result, through this simple
innovation, MyFab which started only 5 years back, grew manifold and now sells products in four
countries including United States.
A study conducted by reputed French Business School Insead almost a decade back
revealed that in
a year, only 14% of the product launches include innovation but they account for 56% of revenue and
86% of the profit. Clearly, innovation is the only silver bullet for organizations looking for profitable
growth. Louise Gerstner, former CEO of IBM, puts it in this way “In almost every industry,
globalization is leading to overcapacity, which is leading to commoditization and/or price deflation.
Success, therefore, will go to the fittest – not necessarily to the biggest. Innovation in process – how
things get done in an enterprise – will be as important as innovation in the products – a company
Besides from macroeconomic point of view, the ‘for–profit’ organisations can add value to society in
two ways and both of these involve innovations
1. The companies can improve productivity of existing work processes and thus enable
production of more good and services using less and less resources ( both human effort and
other natural resources). The human society as a whole cannot consume more than it
produces. Thus higher the productivity (i.e. production per person per day), the more is the
consumption potential and likely increase in human living standards.
2. The companies invent and popularise new products and services that meet previously
unfulfilled needs. Thus product innovations such as railroads to aircrafts, from telephone to
cellular phones or coronary bypass surgery to non-invasive laparoscopic treatments helps to
revolutionize human lifestyles.
Thus organizations need to focus on innovation both from benevolent and selfish point of view. The
former is needed for improving the life style and living standards of the society while the latter is
needed just for their survival.
In spite of this, there are handful of organisations which are truly innovative. There are hundreds of
computer hardware and software companies for every Apple and there are hundreds of consumer
product companies for every P&G. But why?
Some time back, a leading consultant firm commissioned a survey to find answer to this question and
covered 500+ senior and middle managers in large US companies to identify the biggest barrier to
innovation. Most of the response were “short term focus of the management” and “lack of time and
resources for the company” .
. In this view, innovation is highly dependent on investment and senior
management’s presumed obsession with near term earnings limits a company’s innovation
productivity. But this assumption is flawed – it is possible to drive significant innovation without
massive investments and we will discuss how to do that in this article.
3.0 How to drive and manage innovation Program in large organization?
There is an inherent inertia in workgroups and organizations not to go for radical innovation – both for
product and process innovations alike. Pursuing innovation is inherently risky and it makes much
more sense for successful companies to spend time in enhancing the existing “cash cow’ products or
services or tweak and improve already proven works processes and business models than to venture
into the uncharted territory of innovation.
In addition, the larger the organization grows in size, it tends to become more bureaucratic in nature
with its associated rules and regulations that govern it employee behaviours and work practices.
While this may be necessary to manage the organization and optimises it performance – it surely
hinders employee creativity and innovation. Without innovation, a successful organisation of today
cannot guarantee its success tomorrow. While optimisation can ensure today’s revenue and profit,
only cutting edge innovation can guarantee tomorrow’s revenue and profit. The very successful and
profitable buggy whip manufactures witnessed their revenue streams vanished in the course of a
decade as automobiles gained popularity in the United States in the first decade of last century
So what does a large company need to do to remain innovative while simultaneously maintaining
consistent focus in preserving the current cash flow by managing today’s business profitably? To
manage this fine balance of working for the future while protecting the present, an organisation needs
to adopt the project management approach to manage Innovation program. The five phase of project
management are initiation, planning, execution, monitoring and control and closing. A deployment
wave / cycle in an on-going innovation program in a company can be aligned to these five phases as
3.1 Initiation Phase:
In many organisation, the Innovation process starts with idea collection drive. The management thinks
that the first step of the process is to collect ideas from individual employees. So the organisation
unleashes creativity among its employees and put the “suggestion scheme” on steroids for few days/
weeks or months. The implicit assumption is that in an idea collection exercise, the more the merrier
and creativity of the employees is the recipe for innovation. Unfortunately, both the assumptions are
Creativity is coming up with new ideas and innovation is the art of delighting the customers using
these ideas and thus making money (for a for profit organisation) from them. So creativity, albeit the
starting point of Innovation, may not necessary lead to ground breaking or even useful innovation.
Besides, the more is always not merrier or useful when it comes to idea generation exercise. A
company looking for innovation, in product or in the processes, will be better off with a rather smaller
set of useful, relevant and implementable ideas than a larger number of unrelated ideas, however
brilliant they might be.
So how does an organisation generate useful and relevant ideas from its employees? The answer lies
in defining the strategic objectives of the organisation, link its innovation effort to its strategic
objectives and communicate this linkage clearly and widely to the employees of the organisation.
The leading organizations like 3M, Whirlpool, Google and IBM take special effort to align their
Innovation strategy with the business strategy and ensure that any idea generation exercise focus on
generating ideas aligned to their business strategy. IBM uses Innovation Jam
Method to capture the
ideas from his employees, partners and others. Since 2001, IBM has used jams to involve its more
than 300,000 employees around the world in far-reaching exploration and problem-solving During
IBM's 2006 Innovation Jam
- the largest IBM online brainstorming session ever held - IBM brought
together more than 150,000 people from 104 countries and 67 companies. But before launching the
Jam exercise, IBM senior management and innovation team identified few key themes around which
the ideas was sought. As a result, many of the ideas given by the participants are relevant to IBM’s
strategic directions and the company could launch 10 new IBM businesses were with seed investment
totalling $100 million
Planning phase is extremely critical in the Innovation Program of an organization. Typically an end to
end Innovation cycle includes the following phases:
i. Idea Generation
ii. Idea Assessment and Prioritization
iii. Feasibility test and Concept Development
iv. Launch and Commercialization
The above four stages are iterative in nature and multiple cycles / waves may run in parallel in
different divisions and geographies in a large organisation. But for a particular unit, the four phases
must be clearly defined in terms of time line although the last phase, (i.e. commercialization) may get
extended depending on the product / services in scope.
3.2.1 Idea Generation
In this phase, the organization must decide who all to include in the Idea Generation exercise. While
traditionally, only the employees of the company were typically employed in idea generation,
companies are increasingly realising the value of including a larger ecosystem in the idea generation
exercise. One example of this shift is P & G , whose CEO Alan Laffley insisted ( in 2002) that 50% of
P & G’s new product ideas must come from outsiders, This was a sharp departure from P & G’s prior
practices which had been deeply insular and mistrusting of the outside world.
Thanks to the powerful new capabilities that internet provides for online collaboration , a broad range
of companies including Lego, Electrolux , Shell, Dell , BMW , Kraft etc., have set up on line data
gathering systems that invite people to share their ideas ( which may include new product
suggestions and business concepts) over internet. A survey done by Bearing Point – the reputed
business consultancy firm revealed that business partners and customers are the most significant
source of innovation ideas after internal employees and they provide more and better ideas as
compared to internal sales or internal R & D functions of an organisation.
3.2.2 Idea Assessment and Prioritization
In this phase, the organisation must also decide the idea assessment methodology and filtration
criteria. It is important to acknowledge every idea but it is more important to decide which one to kill
and which want to sponsor. For this, the idea selection board needs a set of criteria – which should be
used along with their gut feel to shortlist the smaller set promising ideas from the larger laundry list.
The two criteria that are normally used for this filtering are (a) potential – which is expressed as NPV
of estimated future revenue net of cost or NPV of future cost savings and (b) ease of realisation –
which are measured using multiple criteria such as investment required , lead time , requirement of
change management etc. However, it is important to address another criteria as a toll gate during the
screening, i.e. alignment to organisation’s strategy. Any idea which is not fitting to the overall broad
organisation’s strategy should not be pursued, however attractive it might appear on the surface.
3.2.3 Concept Development and Feasibility test
Once the ideas have been shortlisted, the actual task of concept development begins. The
organisation must have a meticulous plan for concept development and feasibility test as this phase is
the heart of any innovation life cycle. The plan must provision for resources, identify teams, list out the
support required and expected time lines. The plan must also detail the pilot implementation plan and
the criteria to determine if the pilot is successful or not.
3.2.4 Launch and Commercialization
Only a handful of projects will go the final phase of launch and commercialization. The launch
phases for an innovative product / service is very important as many an otherwise brilliant product
may fail due to insufficient planning and inept handling of launch process. Typically, the following
steps must be planned in detail for the launch process
1. Launch Plan Development
2. PR/Communications Planning
3. Campaign/Promotions Planning
4. Distribution Planning/Channel Management:
5. PR/Communications/Promotions Execution:
6. Evaluation and Tracking of new product / service performance
Needless to say that execution is the most important phase in the innovation life cycle. This phase
makes the difference between leaders and laggards in the organization.
Sometime back, a survey was conducted in the United States where senior managers of medium to
large organisations were asked to rate themselves in their innovation effort and success. Each
manager was asked to rate their organisation’s performance in a ten point scale (1 being lowest and
10 being highest) on two parameters (a) ability to generate breakthrough ideas and (b) breakthrough
execution. The result was revealing albeit not altogether unexpected. The average score on the first
parameter i.e. performance on breakthrough ideas was 6 while the average score on breakthrough
innovation was as low as 1
.This shows the importance of execution in the Innovation Life Cycle.
In order to ensure superior execution, the organizations must create three distinct roles in the
innovation ecosystem. They are: (a) innovation genius (b) innovation facilitators and (c) innovation
sponsors. These three roles have distinct responsibilities in the innovation process and only when
they work in unison, breakthrough innovation happens.
The innovation genius are the employees who generate breakthrough ideas and take up projects to
convert these ideas into useful product and services. The facilitators are managers who are
passionate about innovation, and searches for useful ideas and innovative employees across the
organization and then guides / mentors those employees to make successful products and services.
The innovation sponsors are senior leaders who will release resources and commit investments on
the projects which converts the raw ideas to winning products and services.
In addition, every organization must adhere to three fundamental rules for successful execution as
3.3.1 Have separate team(s) for managing innovation project
Many a time, companies make the common mistake to let the existing BAU (Business As usual)
management team to own the innovation project. They expect that the existing operations manager
spend as much time perfecting the production process of the new product as they spend in producing
the current cash cow or Sales people will spend as much energy to sell the new product as they
spend in promoting existing product. This approach is a sure shot recipe for failure.
The existing operation manager is expected to focus more on the current product which is the main
source of existing revenue and will only spend time on the new product only after the needs of
existing product is adequately addressed. Similarly, the sales people will naturally spend more time in
promoting existing products as they are easier to sell. So the only option is to form a separate team
to look into the project of converting the new idea to a successful commercial product or service.
However, this team needs to have a good working relationship with the existing BAU team so that it
can leverage the assets, customer relationships and core competencies from the BAU team.
3.3.2 Leverage Ignorance Management more than knowledge management
Knowledge management (KM), as per Wikipedia, comprises a range of strategies and practices
used in an organization to identify, create, represent, distribute, and enable adoption of insights and
experiences. Technology, especially internet technologies are used to efficiently capture and
distribute Knowledge among the employees of the organization.
While KM, is very relevant and useful to optimise performance of existing processes or incrementally
improve existing product and services, they are hardly effective and useful to bring in disruptive
changes in the system. The organisations, driving innovation, must realise this and should focus on
leveraging what some pundits call as “Ignorance Management”. Ignorance Management has been
described by John Israilidis, Russell Lock, and Louise Cooke of Loughborough University as: “ s a
process of discovering, exploring, and realising, recognising and managing ignorance outside and
inside the organisation through an appropriate management process to meet current and future
demands, design better policy and modify actions in order to achieve organisational objectives and
sustain competitive advantage."
In a nutshell, it is important for the organisations to realise that adoption of best practice cannot result
in Breakthrough Innovation – they need to look out for “Next Practices”. To do that, the innovation
teams must practice the art of selective forgetting. As per Vijay Govindarajan of Tuck Business
School, the teams dedicated for Innovation must forget to look at the existing customers, current
value proposition, and the end to end value chain architecture.
3.3.3 Have tolerance for failure in the execution cycle
“Innovation is generally an untidy process,” says Gary Pint, retired Sr. VP of 3M, worlds one of the
most innovative companies.” A majority of new ideas fail, but people shouldn’t fear for their jobs when
that happens. We estimate that 61percent of our formal, new product programs never make it, when
this happens, the important thing is not to punish the people involved.”
Little wonder that 3M is one of the most innovative companies in the world. The moot point is that just
like one must kiss a lot of frogs to get the prince, the companies must do lot of trial and error to strike
the blockbuster innovation. So, failure is part of the process and organizations must create ample
cushion to absorb such failures. In fact, truly innovative organisations encourage failures (they call it
fail faster) and not censure it so that the lessons from these failures can be quickly learnt and
leveraged in the subsequent innovation cycle. For example, in Tata Innovista, the annual contest for
innovation in the 80 billion US$ Tata Group, the chairman facilitates the failed promising projects and
awards them under the category “Dare to try”.
3.4 Monitoring & Control
Many a time, the organizations start Innovation initiative with lot of fanfare, as it is fashionable to
pursue innovation, but the organisational enthusiasm on Innovation comes down rapidly as the
program fails to achieve quick results. Also management starts to doubt efficacy of the program and
such management vacillations directly affect the employee morale.
To address this, it is important to develop a list of critical measure and track them month on month
basis during the lifetime of innovation program. (The duration of the program should not be finite but
deployment should be done in multiple waves with each wave having finite duration). The common
metrics to track in different phases are indicated below:
Idea Generation Number of ideas per 1000 employees
% of ideas aligned to strategic themes (as a % of total ideas)
Participant’s satisfaction index
% drop / increase of ideas as compared to last half year / cycle
Idea Assessment High potential ideas as a % of total ideas
And prioritization. Feasible ideas as a % of total ideas
% increase/ drop in high potential / feasible ideas
Ratio of product ideas to process improvement related ideas
Concept Development Investment required for concept development
& feasibility test Duration for concept development
ROI / potential revenue from the developed concepts
% success in feasibility test
Launch & Time take to reach X (say 100) m US$ of sales
Commercialization Time taken taken to garner x % of market share
Margin of the new product as compared to existing product
Customer Feedback on the new product (qualitative)
The above list of metrics are illustrative and not exhaustive. In his book, “the Innovation Master Plan”,
Langdon Morris, the co-founder and partner in InnovationLabs LLC, a leading innovation consultancy
firm, outlines 92 metrics that can be used to measure the Innovation program
. Of course, 92 is a very
large number – no organization can use so many metrics to measure the performance of any program
(the data collection effort will be too high and also interpretation will take too much time). Besides the
the metrics which are important for one organisation may not be relevant for another. So the program
manager must identify some 10-15 metrics through which the program health can be judged and
corrective action taken when the performance is slipping
3.5 Closing an wave of Innovation program
Like perfection, the goal to be a more innovative organization is a never ending journey with no finish
line. But while Innovation program is an on-going initiative, the actual deployment in an organisation is
best done by running multiple waves with clear start and end date with typical duration varying
between 9 to 18 months. So each wave must be closed following the best practices of project
management methodology and documenting the lessons learnt. This experience must be re-used to
design and execute the next wave. It is also important to celebrate success (and smart failures) so
that the rank and file employees are motivated to take up innovative projects in the next wave of
Many companies emphasize on recruiting bright and highly qualified fresher from prestigious business
and engineering schools with the hope that these employees can make the company truly innovative.
Others go for experienced professional with successful track record on innovation and think that on-
boarding these “heroes” will unleash innovative spirit in the company. Both are equally wrong.
While some individuals may be more innovative than others, their individual brilliance is grossly
inadequate to fight and win against the organisational inertia to maintain status quo. This is especially
true in a large organization. Besides, when the employee strength crosses the threshold of 1000, the
statistical law of large numbers starts to catch up and the majority of employees tends to be
‘mediocre’ or ‘ordinary’ and not truly innovative.
So to make a company truly innovative, the company management must work on building the
processes and propagating the values which foster innovation
. In this article, I have mainly
discussed the processes (which is the way of doing things) that helps in making an organization
innovative. I have also linked the processes to the five stages of project management and discussed
the key points in each phase which will help to make a large organization truly innovative. However,
the organizational values which encourages innovation are equally important to create an
environment that is conducive to innovation. Only when the values are aligned and processes are
seamless, a large organization can bring in disruptive innovation in products / processes that will
ultimately enrich the human society and ensure sustainable development.
1. Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, The
Free Press, New York, 1985
2. Thomas McGraw , Prophet of innovation: Joseph Schumpeter and Creative destruction,
President & Fellows of Harvard College, USA , 2007
3. Karan Girotra and Serguei Netessine. “ How to Build Risk into Your Business Model” , HBR, May
4. W. Chan Kim and Renée Mauborgne, Insead Innovation Program lectures , 2004
5. Louis V Gerstner. Who Says Elephants Can’t Dance. Harper Business , 2002
6. Vijay Govindarajan, Chris Trimble , 10 Rules for Strategic Innovators, Harvard Business School
Press, USA, 2005
8. Langdon Morris, The innovation Master Plan, Innovation Academy, 2011
9. Bearing point webinar on “ Innovating Innovation” by Charles De Monchy , Partner , Business
10. SCHNEIDER/BOSTON UNIVERSITY-NEW PRODUCT LAUNCH REPORT, 2001
11. Vijay Govindarajan, Chris Trimble , Reverse Innovation, Harvard Business School Press, USA,
13. A Century of Innovation, the 3M Story
14. Google search on “ Tata Innovista”
15. The Innovator’s Dilemma, Clayton M. Christensen.
About the Author:
Asoke Das Sarma
Asoke Das Sarma is the Vice President of Business of Process Transformation function in TCS BPS
Operations. In a career spanning more than 2 decades , he has worked in the multiple functions
such as operations , sales, marketing , corporate strategy , quality and consulting across multiple
industries such as construction , machine tools , metals , software development and BPO. Before
joining TCS, he has worked in Larsen & Toubro, Sandvik Asia, Tata Steel and IBM Global Services.
Asoke is an engineering graduated from Jadavpur University and holds a post graduate diploma in
Business Management from Indian Institute of Management, Calcutta. He is a certified Six Sigma
Black Belt (from ASQ, USA) and a certified Project Management Professional (PMP) from PMI, USA.
Asoke has published several articles in various management journals and is a frequent speaker in
Nasscom, IITs and various management and engineering schools. His first book titled “: Lean
Principles and Applications in BPO” is due to get published in July, 2013.