Structuring Teams for Innovation

As published in All India Management Association's (AIMA) monthly journal "Indian Management "  Volume 54, Issue 12, Pages 68-72" in the column "Innovation Dilemmas"

 “Team work behind success of Mangalyaan” stated an article in The Hindu, when India made history by launching an indigenously built space craft to Mars in her first try. What surprised the world was that the cost of the launch, at US $74 million; nearly one-tenth the cost of a comparable launch by NASA. The team behind Mangalyaan comprised of scientists and administrators from different functional areas who were experts in several disciplines such as rocket propulsion, payloads, range operations, range safety, schedules, and others. Although Mangalyaan is an extreme example of a radical innovation executed through successful teamwork, innovation teams are common in organizations. Innovation teams; those entrusted with developing new products, processes or services, routinely grapple with complex issues that take them into unchartered territories. Such teams are particularly commonplace in complex manufacturing industries such as aircrafts, automobiles, electronics, petroleum refineries, and power plants. Projects in such industries involve extensive task complexity, necessitating exemplary team coordination for successful execution.

In general, based on novelty, innovations can be classified as incremental innovations or radical innovations. Radical innovations are high risk in nature[i]. Ex-ante there is substantial uncertainty regarding the success of a radical innovation, both in terms of its performance as well as its market acceptance. Thus, new product teams differ from other organizational teams in that they face high levels of uncertainty. They tread new ground with very little guidance available from existing organizational processes. What are the challenges faced by innovation teams and what are some ways to structure them such that they can succeed?

Research by Edmonson & Nembhard (2009)[ii] suggests that new product teams face five key challenges.

• First is the complexity involved in new product development. Teams must draw from multiple disciplines and focus on leading edge knowledge in each of these disciplines. This results in complexity, especially with reference to product design and market realities. When one adds the time pressure to reach the innovation to market on time, as well as, factor in the criticality of the project’s success for the organization, the complexity increases significantly.
• The second challenge is that although new product development teams necessitate cross-functional efforts, research suggests that the effect of team functional diversity on team performance under times of crisis is negative.
• Thirdly, in most cases teams are formed with members who are able to contribute to a particular project. These individuals lack the benefits that come with team longevity such as better intra-team coordination and transfer of learning between team members.
• The fourth issue relates to team “boundedness.” Members of bounded teams share a common sense of identity. However innovation teams have to interact with external members. Although some innovation team members are central to the team, others come and go, on an as needed basis. Thus, they miss the real team ideal. Furthermore, advances in technology have increased the use of geographically dispersed virtual innovation teams which makes collaboration challenging.
• Finally organizational reward structures can inhibit effective team collaboration. While organizational rewards are typically based on individual efforts, the success of the innovation depends on team efforts. When organizational rewards are at odds with innovation team’s goals it is difficult for the team to accomplish its objectives successfully.

What are some ways in which organizational managers can help innovation teams overcome these challenges?

Govindarajan & Trimble (2010)[iii] suggest that the first place to start overcoming these challenges is the assembly of innovation teams. There should be a dedicated innovation team that leverages the expertise of insiders, as well as, those that are from outside the organization. They suggest that the question managers should ask when assembling teams is “If I were to build the world’s best team for the job at hand, would I hire only from my own company?” Organizing dedicated innovation teams to execute new product development efforts from start to finish will usually address issues related to team longevity and team boundedness, enhancing the effectiveness of cross functional teams.

To overcome issues of complexity and the sharp learning curve associated with innovation projects, innovation teams need strong leaders. Innovation teams need psychological safety, where failure is tolerated and risk taking is encouraged. This will enable teams to handle complexity effectively. Edmonson & Nembhard (2009) state that complexity of tasks might in fact benefit innovation teams indirectly, because dealing with large complex projects enables them to develop project management skills. Additionally team members gain a broad perspective on complex issues by working with members from different disciplinary backgrounds. Furthermore, dedicated teams must also understand how to identify sponsors for their projects who would champion their innovation to senior management. This enables these teams to build resilience.

The final suggestion Edmonson & Nembhard (2009) make is on performance metrics for innovation teams. They suggest tying performance metrics directly to the innovation team’s performance. In most companies, performance metrics that are relevant to the general organization might not be meaningful to innovation teams. For example, while engineers might overemphasize the technical side when developing products, marketing department might focus on relationship with their buyers to a fault. While these are consistent with the foci of their respective departments, such differences in world views of team members are likely to hinder innovation efforts. Designing metrics that encourage cooperation among innovation teams is essential.

Thus, structuring innovation teams is a critical task that can lead to success or failure of a firm’s innovation efforts. Identifying the challenges of innovation teams, designing organizational structures to assist them, can go a long way in assuring successful project completion in organizations. To summarize, the critical success factors for structuring innovation teams in organizations include:

1. Identifying talented individuals from different functional areas from within and outside the organization who can contribute effectively to an organization’s innovation efforts
2. Forming semi-permanent cross functional teams with such individuals and providing them with a holistic perspective on the objectives, needs, and constraints faced by the organization.
3. Providing innovation teams with resources and authority to perform.
4. Offering continuous guidance and top leadership support.
5. Designing customized performance metrics  for innovative teams
6. Monitoring performance of innovation teams by taking periodical reviews and mid-course corrections as needed.
7. Keeping teams motivated by instituting timely rewards and recognition, such as when they achieve critical milestones before project completion.
8. Disbanding teams, once the innovation has been launched. Upon completion of the innovation, we recommend disbanding innovation teams and constituting new ones for the organization’s next innovation endeavor. Every organization must have a process of identifying new innovation team members from inside and outside the organization so that the pipeline for future team members is active. This will enable the organization to continue with their innovation team building efforts.

To conclude, organizations must carefully structure dedicated innovation teams, monitor their performance effectiveness, reward them appropriately, and disband the teams after the successful launch of a product or project. They must reconstitute new teams for the next innovation. This must be a continuous process in an organization’s innovation journey. Needless to say, the successful mantra for today is “innovate or perish.” Successful innovation teams enable organizations to innovate and thrive.

Dr. Rangapriya (Priya) Kannan-Narasimhan teaches Strategic Management and New Product Development at the University of San Diego. She has a PhD in Management from UCLA’s Anderson School of Management.

Dr N G Kannan has over 40 years of experience in the industry. He is a retired Director (Marketing) of Indian Oil Corporation Ltd, MD of IBP Ltd, and also retired as Chairman of Lubrizol India ltd, Indian Oil Mauritius Ltd. & Indian Oil Petronas Ltd. 

(We shall cover more on innovation-related issues in our forthcoming issues. If you have a question on innovation, send it to us along with your title and company name to [email protected]. We will also credit you for the questions when we respond to it in our article.)

[i] Hill, C. W., & Rothaermel, F. T. (2003). The performance of incumbent firms in the face of radical technological innovation. Academy of Management Review,28(2), 257-274.

[ii] Edmondson, A. C., & Nembhard, I. M. (2009). Product development and learning in project teams: the challenges are the benefits*. Journal of Product Innovation Management, 26(2), 123-138.

[iii] Govindarajan, V., & Trimble, C. (2010). The other side of innovation: Solving the execution challenge. Harvard Business Press.