Three Best Practices to Create an Effective Innovation Council

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While these activities are moving innovation from an opaque art to an increasingly mature discipline that can be managed professionally, it also has created a host of unique governance challenges related to prioritizing, coordinating and optimizing these investments. Some of the specific challenges leaders must address are:

Prioritizing and sequencing capability investments
Fostering commonality across an organization
Managing and balancing an increasingly broad innovation portfolio
Balancing tensions between core and new innovation efforts

What makes these management challenges particularly acute is the “horizontal” nature of innovation. Innovation doesn’t sit neatly in existing organizational silos. It requires coordination across business units, HR, IT, and R&D.

To solve this issue, many organizations are turning to “innovation councils,” which are comprised of a cross-functional set of senior leaders tasked with overseeing innovation across the organization. While councils can be effective structures for coordinating and removing roadblocks, without a clear mandate and practices to help with decision making, they can risk turning into little more than a “book club” – where members meet regularly, have plenty of interesting conversations, but ultimately have negligible impact on how the company innovates. Companies can avoid this fate by following three best practices for standing up and running an innovation council.

1. Align on a mandate and decision rights.

There is no one-size-fits-all innovation council. Different organizations have different challenges. Some councils may focus on managing the innovation portfolio, while others bias towards coordinating capability development efforts or shepherding disruptive ideas through the system.

Whatever role the council aligns on, it needs to be communicated clearly and consistently to the organization.

Whatever the priority, councils need to be clear and precise on their mandate. Aspirations like “help improve how we innovate” stop short of articulating the specific problems the group is intended to solve; and equally importantly the issues that are out of scope. Without more clarity, councils inevitably run into challenges like awkward overlaps with existing functions or difficulty making decisions.

For example, one chemical company council we worked with took on the role of setting priorities for non-core innovations. However, they didn’t explicitly address overlaps with business unit leaders and a corporate strategy function that also believed they had control over those efforts. This led to a lot of unproductive, conflicting directions for innovation teams until the roles were sufficiently sorted.

In addition to a clear mandate, councils benefit from clarity on how they will support those goals. In some cases, a council may have access to a pool of resources and be responsible for distributing the funds to projects. In other cases, the council may function more as an advisory board that helps to provide cross-functional input and guidance on a set of issues, while the ultimate responsibility to make a decision resides elsewhere. Whatever role the council aligns on, it needs to be communicated clearly and consistently to the organization. This ensures that both individuals engaging with the council as well as other governance functions have clear expectations and can manage their interactions with the council accordingly.

Based on our experience, councils that are set up to have decision making authority — for example, what projects get funded — generally have more tangible impact on the business. However, councils that are set up more as advisory boards, whose members draw on deep experience to counsel innovation teams, play meaningful roles in the innovation system.

2. Decide how you will decide.

With clarity on the mandate and decisions rights, councils need to ensure they have the right people, process, and data to operate effectively. Simply assembling a senior group of people with decision rights doesn’t lead to effective decision making. Councils need to think through what data and inputs are required to make a decision, how that data will be collected, processed, and presented, and who should be involved in the process. Often subject matter experts or ad hoc participants are required to weigh in on specific issues.

Once decisions are made councils need to ensure there is a mechanism to properly communicate decisions, and the context around them, to the organization. And finally, they need mechanisms to track the impact of their decisions and adjust their thinking and process over time. This often reveals the need to have a dedicated or partially dedicated resource to act as a “chief of staff,” preparing agendas, coordinating input, and framing discussions so that the council functions effectively.

3. Establish group norms.

Leadership teams setting up councils face a tension between inclusivity, which can be important for alignment and support, and involving people with the right insights, experiences and perspectives. The practical answer is often to include a wider range of decision makers indexed towards resolving the alignment issue. However, this approach creates its own challenge – how to ensure everyone has the right mindset to create the collaborative, constructive, unbiased, and open culture required to deal with the types of issues that councils address. For example, business unit leaders on the council may need to ensure they bring a broader organization perspective versus thinking narrowly about what is best for their specific unit. Doing this requires putting in place specific behavioral “nudges” to reinforce the desired norms.

For example, one such norm might be ensuring that members have a “growth mindset” –that is, they are able to focus on the possibilities rather than the constraints. To support this norm, councils might provide a cheat sheet that provides tips for helping members reframe questions and reactions to common scenarios; for example, “When an idea looks like one you’ve tried before, ask ‘What has changed since the last time we tried it?’ rather than “Why are you proposing something that we know won’t work?’” These types of interventions can be designed through a process of first identifying and aligning on the desired group norms and then borrowing, adapting, or creating new nudges.

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Innovation councils are an increasingly important mechanism to govern the complex innovation systems within large organizations. They solve important problems related to the prioritization, coordination, and optimization of a company’s innovation investments, both in terms of capability building and opportunity development. However, ensuring they are effective and have impact requires intentionally defining their specific roles and establishing a supportive operating model and culture.