How to Build an Effective Innovation Team

Industry Advice Business

Innovation is becoming a bigger priority for companies; 79 percent of surveyed executives claim it’s among their top three business initiatives.

But employees, who are already trying to manage a growing list of tasks and obligations, might not realize the benefits—viewing innovation as a distraction from their everyday work. It’s why some companies create an innovation team, or rather, a cross-functional group dedicated to developing new products, services, or processes for the organization.

“One reason for an innovation team is that it’s hard to do anything of complexity on your own,” says Barbara Larson, executive professor of management at Northeastern’s D’Amore-McKim School of Business. “You want to bring different bases of knowledge into the room.”

Some executives might argue, “Innovation should be every employee’s job.” But unless there’s a company-wide system in place that supports and incentivizes ideas, innovation can quickly become an afterthought. By establishing a team focused on incubating and launching new products and services, companies can increase their odds of spurring innovation.

Building an Innovation Team

The success of an innovation team relies on whether the right people are involved. An effective group is comprised of individuals from different departments within the company. If the team’s goal is to develop a new product, for example, there should be representatives from design, manufacturing, sales, marketing, and finance at the table.

“You want to bring all the knowledge into the same room at the same time,” Larson says. “An offshoot of that is getting different perspectives in the same room at the same time, which can be a challenge for teams. You want to not only reconcile that, but get the most out of those divergent perspectives.”

Most teams will appoint a team leader, who’s responsible for establishing process, including how to communicate during brainstorms and meetings. That person can also help shepherd the ideas and initiatives inspired in those meetings to the top of the organization.

“If you need the team to make decisions, get people on the team who have the authority to make decisions, and then give those people the bandwidth to actually do the work of the team,” Larson says. “A common sin of organizations is having one manager assigned to eight different teams, plus his or her own work. That’s way too many teams to be on at one time.”

If senior leadership doesn’t dedicate the proper time and resources to the team, it’s likely the company’s innovation initiatives won’t stick.

How to Enable and Sustain Innovation

Several big-name brands have established innovation teams and labs. Lowe’s launched its Innovation Labs to explore the future of retail and “rapidly prototype new technology in real-world, living labs,” including a virtual reality tool that teaches customers how to complete basic home renovations. Walmart boasts a similar program, called @WalmartLabs, and has started acquiring businesses to improve the retailer’s e-commerce performance, which continues to lag behind Amazon. But something’s working: Walmart’s online sales spiked 60 percent this year.

Other companies haven’t seen the same success. Three years after Coca-Cola announced its Founders program, which sought to support startups that could benefit the beverage brand, the company shut it down. Target decided to shutter two of its big innovation projects before they even launched, while Nordstrom chose to pivot away from its Innovation Lab, stating innovation would become “everyone’s job.”

What’s hard for some companies to realize is that innovation takes time. It requires a longer-term approach and cultural shift within the organization. If established and managed properly, however, innovation teams can make a big impact.

Here are five steps companies can take to better ensure success:

1. Establish a Team Process Early

“There needs to be an establishment of a clear team process early on,” Larson says.

This includes defining the roles of each team member, establishing a leadership structure, setting individual and group goals if not already in place, and outlining norms for how the team should collaborate and communicate. By creating a process, every employee is held accountable to the same principles, understands his or her responsibilities in a measurable way, and knows how to respond when conflicting projects come up.

“Norms tend to be the first thing to get ignored,” Larson says. “Setting up process upfront can seem like it’s delaying the work, but if teams go right into task, they usually spend that time in the latter half of their innovation cycle. They find leaks in the canoe too late.”

The more clarity and transparency the team and overall organization has, the better.

2. Allocate the Proper Resources—Including Time

Organizations need to properly invest in the innovation team, whether that’s creating dedicated office space and a support staff or allotting time for employees to actually focus on the tasks at hand.

Because most employees aren’t working solely on a single innovation project, team members often “experience constant pressure from other work demands and even other innovation team projects,” Larson says. While process can help dictate priorities, appointing a leader who can communicate up about what the team is working on and protect employees’ time is also beneficial.

3. Encourage and Embrace Failure

If an organization wants big, bold ideas, it needs to create a climate of “psychological safety”—a term coined by Harvard Business School professor Amy Edmondson.

“It’s about establishing a climate in which people feel comfortable admitting to well-intentioned mistakes without being harangued or punished,” Larson explains. “Teams where people feel comfortable admitting mistakes often look like they’re making more of them, but they’re really raising them in the open air and learning from them.”

Failure means the team tried something new and learned an invaluable business lesson. This can only happen, though, if employees know it’s safe to take risks. Some organizations have started handing out “Heroic Failure” awards to honor those who’ve pursued new or unproven ideas and opportunities they thought could benefit the company.

4. Consider Creating an Incentive System

Before any projects kick off, the innovation leader should establish key performance indicators (KPIs), or measurable goals, so that employees know what they’re working toward and have a benchmark to measure their progress against.

One way to better ensure progress is by creating an incentive system that aligns each employee’s pay and performance evaluation to the innovation team’s overall work. To keep members motivated, there needs to be an individual component to the incentive system but, as Larson encourages, reviews should be more heavily weighted based on the performance of the team.

“At the end of the day, you don’t want people to become lone rangers,” Larson says. “You want the primary focus to be on achieving the team goal.”

Research supports that approach: Incentivized teams increase their performance by 45 percent, compared to incentivized individuals, who increase their performance by only 27 percent, according to the International Society for Performance Improvement and the Incentive Research Foundation.

5. Build Buy-In from the Beginning

Although the team should have its own KPIs, those goals should align with the organization’s overarching strategy. Innovation teams can sometimes become the “other,” so creating a mission that’s transparent to the entire company, as well as regularly soliciting input from others, can help the group get buy-in.

While teams don’t want to loop too many employees into the decision-making process, the more visibility individuals can bring to their work, the more willing others will be to help and adopt new tools, processes, or services.

“You want to start by having one-on-one informal conversations with people around you, in which you’re laying out your vision, asking a lot of questions, and really trying to do some reconnaissance,” Larson says. “Ideally, you do this not just in your immediate circle, but with other members of the organization who will be affected by your project.”

By meeting with other colleagues, innovation team members can gain a better understanding of the problems facing the organization and uncover any main points of objection they might face before trying to make the big sell.

“When it comes to making the big ask, a data-driven approach is usually the best first approach,” Larson adds. “You need to have gathered a lot of facts and done your homework.”

Once teams receive that initial approval, they can implement their work and, hopefully, start steering their company in the right direction.

The good news when it comes to innovation?

“Innovation is a series of concrete, definable actions,” Larson says. “It’s not that you’re born with the ability to be innovative or not. It’s really a set of behaviors that can be learned. Anyone is capable of doing it.”

Companies simply need to prioritize it.