Whether in the form of disruptive, frugal, trickle-up, clean-tech, exponential, blue ocean, inclusive, reverse, or base of the pyramid (BoP), it is becoming clear that we are in the midst of one of those transformational times when innovation alters the fundamental fabric of civilization-and competitive success. Schumpeterian creative destruction increasingly reigns supreme: Entrepreneurs thrive, new entrants emerge, and incumbents fall...or so we are told.
Yet such times need not spell doom for large, incumbent corporations. Indeed, it is possible for these titans of the 20th century to lead the process of transformation toward a sustainable future--but only if they focus conscious attention on building the necessary organizational infrastructure--the "white space"-- as a complement to the existing corporate structure.
Let's face it: current corporate organizational structures are designed for self-replication--producing more of the same, or at best, continuously improving/adapting current products and processes. Yet growing social inequality and environmental degradation steadily render self-replication and continuous improvement obsolete. Not surprisingly, leapfrog innovation calls for a fundamentally different structure since the existing corporate "immune system" is very strong--any project that deviates too far from the norm is quickly surrounded by "antibodies" and rendered harmless!
So what does it take to build an effective corporate innovation "white space?" My colleagues and I have written extensively about the importance of creating a separate unit focused on co-creating solutions appropriate to the new social or environmental realities. Vijay Govindarajan and his colleagues have spelled out a similar logic for what they call "Local Growth Teams"--innovation teams with a timeline, set of metrics, and deliverables that are appropriate to the task of driving leapfrog innovation. Such a unit must also have the power to develop its own strategy, organization, products, and ultimately, its own P&L responsibility.
Let's be clear: We are not talking about a completely separate "skunkworks" which seeks to separate itself from the mother company. Instead, leapfrog innovation needs to link to corporate-level resources and capabilities while at the same time maintaining sufficient independence from the routines that govern the existing core business. It is therefore crucial to have the support and protection of the CEO to create the protected space for such units to exist and to provide them with the necessary level of autonomy, resources, and connections.
But even CEO-level support is not enough. I have learned this the hard way in my own work focused on BoP innovation in corporations. Indeed, depending solely on the goodwill and support of the CEO, or any other single senior executive can be risky. The "white space" can come crashing down if this person changes positions, leaves the company, or is replaced. It is for this reason that I strongly recommend the creation of a White Space Innovation Leadership Team consisting of 8-10 key executives that span the company--business heads, functional heads, and heads of staff organizations such as R&D, HR, Strategy, and Sustainability. The Leadership Team provides legitimacy, oversight, and much-needed protection for the White Space. By recruiting a diverse team of executives from across the company, the probability that the whole thing collapses with the departure of a single key individual is greatly reduced. Such a Leadership Team can even withstand CEO succession if it has been thoughtfully constructed and nurtured.
Often the biggest challenge to leapfrog innovation is internal: We have met the enemy and it is us. But by combining a "top-down" corporate strategic support system with a "bottom up" business co-creation capability, the prospect for success in this new and exciting innovation space is greatly enhanced. Leapfrog innovators must thus seek to develop multifaceted relationships with all the corporate stakeholders and partners to better realize their core purpose--accelerating the number and success of new "leapfrog" ventures and initiatives that have a chance of moving us toward a more socially inclusive and environmentally sustainable world.