Corporate Innovation Structures: A Center of Excellence for Decentralized Innovation at Scale

By Simon Hill

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The below is an piece I posted as a LinkedIn article previously. Connect/Follow me there for more updates and thoughts on all things innovation!

Innovation is often the key to achieving a competitive edge and long-term success. To foster innovation at scale across an organization, it is crucial to establish a well-defined organizational structure that enables both creativity and efficiency.

Research and industry best practices suggest that a small, centralized Center of Excellence (CoE) for innovation can play a pivotal role in achieving this balance. This centralized team acts as the catalyst for a decentralized, horizontally-scaled innovation capability within the organization. In this article, we explore the benefits of this approach and how it is supported by existing research.

The Role of a Centralized Center of Excellence for Innovation

A centralized Center of Excellence (CoE) for innovation acts as the epicenter for cultivating innovative practices, methodologies, and culture across an organization. Its primary role is not to be the sole driver of innovation but rather to enable and facilitate innovation across the entire organization. The key functions of this CoE include:

1. Structural Development: The CoE sets the foundation for innovation within the organization. It establishes guidelines, frameworks, and methodologies to ensure that innovation initiatives align with the company’s goals and strategic direction.

2. Playbook Creation: The CoE develops a playbook that serves as a reference guide for innovation activities. This playbook outlines best practices, processes, and tools, offering a structured approach to innovation.

3. Collaboration with Enterprise Architects: Collaboration between the CoE and enterprise architects is essential to building a matrixed innovation capability. By working together, these two entities can ensure that the innovation strategy aligns with the overall technology and architecture of the organization.

4. Learning Pathways: The CoE designs learning pathways and programs to empower employees with the skills and knowledge required for innovation. These pathways are tailored to the specific needs of different teams and individuals within the organization.

5. Metric Development: Measuring the impact of innovation is critical. The CoE establishes key performance indicators (KPIs) and metrics to evaluate the success and effectiveness of innovation initiatives.

Developing a Decentralized and Scaled Horizontal Capability

A significant advantage of the CoE model is its ability to foster a decentralized and horizontally-scaled innovation capability across the organization. This decentralized approach empowers different business units, departments, and teams to innovate independently while staying aligned with the overarching innovation strategy. Here’s why this approach is considered a best practice:

1. Fosters Agility: Decentralization allows various teams to respond quickly to market changes and customer demands. It promotes agility and responsiveness, enabling the organization to adapt rapidly and reinforces the potential of the Corporate Explorer.

2. Diversity of Ideas: Different teams bring unique perspectives and ideas to the innovation process. This diversity enhances creativity and can lead to breakthrough innovations.

3. Cultural Integration: A decentralized approach promotes innovation as an integral part of the organizational culture. It ensures that innovation is not confined to a single unit but permeates the entire organization.

Research Supporting the CoE Model

Research and industry case studies have consistently shown the effectiveness of the CoE model in driving innovation at scale. For example:

1. Research out of Harvard Business School by Karim Lakhani, Jin Paik, Elizabeth Richard and Jeffrey R. Davis presents NASA’s experience using a Center of Excellence to scale and sustain an innovation program, where establishing a CoE provides an effective infrastructure to address both technical and cultural issues.

2. Centers of Excellence: How Companies Like LEGO, GlaxoSmithKline, and Bang & Olufsen Innovate: this master class by Jay Peters for InnoLead highlights that many large organizations leverage CoEs to coordinate innovation efforts and ensure alignment with strategic objectives. It points out that the CoE model allows for scaling innovation initiatives effectively.

Creating the right capabilities and capacity for innovation at scale is a complex Challenge for organizations. The best practice organizational design, as supported by research and industry case studies, involves establishing a small, centralized Center of Excellence for innovation. This CoE is not a siloed innovation unit but rather a hub that empowers a decentralized, horizontally-scaled innovation capability across the organization.

By developing structures, playbooks, collaboration frameworks, learning pathways, metrics, and more, the CoE becomes the driving force behind a culture of innovation that permeates the entire organization. In an era where innovation is paramount, adopting this organizational structure can be a game-changer for businesses seeking to thrive in a competitive landscape.

By Simon Hill

As CEO and Founder of Wazoku, Simon has been the driving force behind the business since the very beginning. When the gaps in his busy schedule appear, Simon loves to cycle, even completing London to Devon and London and Bristol bike rides in the last few years!