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While running a city is no small eat, creating a culture o innovation within a

government bureaucracy is certainly as dicult. Yet thats what a small group o

olks within the Department o Inormation and echnology are trying to do or

the City o Chicago. With the creation o the Department o Innovation, the city is

starting to integrate design into their processes to provide better services or Chicago

residents. Beyond the initial hiccups that come with deploying a new internal

process, the City o Chicago also discovered that no ramework exists to help them

develop their own version o an innovation center.

Tis article, based on interviews completed with representatives rom (8) innovation

centers, is intended to help interested groups understand the general process o

creating an innovation center and anticipate the critical choices and hurdles that

they will ace along the way. Tis high-level perspective ocuses less on individual

examples than larger trends, and is skewed towards the authors experience and

education in design thinking and strategy.

Hanna Korel & Caroline Little, MDes 2009

IIT Institute o Design, Chicago

Types of Innovation Centers

Because o their relative youth, innovation centers do not yet have a model o success

to ollow. R+D labs, while ocusing on technological invention rather than creating

new products and services, are the clearest predecessor in orm i not unction to

todays innovation centers. Using R+D labs as a counterpoint, three dierent types

o centers were identied, based on how they operate within the company structure

and the types o results they produce (see Figure 1). One key limitation o this

1

Creating an Innovation Center: A Guide

Figure 1: Types o Innovation Centers

Tactical

Projects

Strategic

Planning

Independent from business

Integrated into business

R+D Labs

Consultants

City o Chicago

Department o Innovation

Microsot FrontEdge

Innovation Advocates

McDonalds Innovation Center

Kaiser Permenante Garfeld Center

Liberty Mutual Open Seas

Executors

T-Mobile Creation Center

Mayo Clinic Center or Innovation

SAP Design Services Team

Korel & Little :: 9/2009


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Routes of Innovation Center Development

While all innovation centers require a degree o high-level support, some are

much larger initial investments. op-down centers, careully constructed by

senior management, are given a dedicated team and resources or their overall

strategic development. Tese centers are oen designed to sit apart rom the main

organization to allow or distance between day-to-day operations and the work o the

innovation center. Te momentum placed behind top-down centers allows them

to get o the ground sooner and work on bigger ideas aster, but they may struggle in

building a relationship with their supporting organization.

Bottom-up innovation centers emerge more organically rom inside the

organization. Oen beginning as a small team tasked with working on a specic

problem, these centers are given more project work and responsibility based on the

value they provide to the main organization. Because o their position within the

business, bottom-up innovation centers oen start working on more immediate

problems rather than the long-term, strategic thinking practiced by top-down

centers. Bottom-up centers may have an advantage in their slow growth, as they

matrix is that it does not suggest or explain the overlap in the roles innovation

centers play. In reality, such tight boundaries do not exist; the types o innovation

centers are thus less representations o static entities, than suggestions o how

innovation groups can be initially or primarily positioned. Regardless o their place

within the matrix, a core dierentiator o innovation centers is their application

o a creative, fexible process that begins with an understanding o customer or

user needs.

Like R+D labs, Executors ocus on tangible results, but only those that addresscurrent business problems. Executors are oen able to make a sizable impact

because o clear directives given by the mother organization and their emphasis on

prototyping and testing. As an Executor, McDonalds Innovation Center hosts a

sophisticated kitchen environment as well as other protoype store environments that

allow numerous arms o the organization to work together on process innovations

that directly aect McDonalds service business.

Innovation Advocates tend to be a small arm within a business unit, perhaps not yet

sanctioned as true innovation centers. Because they typically lack systemic support,

innovation advocates work to make incremental improvements to the organizations

overall strategy. Innovation advocates do have the potential or increased successi they can show results and nd the right kind o leadership support. FrontEdge, a

small team within Microsos Entertainment Experience Group, is currently acting

as an Innovation Advocate or the umbrella organization by ocusing on the user

experience in the planning and strategy phases.

Consultants unction as an in-house design consultancy or their organization. As

strategic advisors, they work on planning the uture o products and services or

their organization. One example is SAPs Design Services eam, which looks to

provide high-level strategy recommendations based on a deep understanding o

consumer needs. Unlike Executors who oen act as test beds, Consultants rarely

play a role in moving ideas through the organization.



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encourage more collaboration and relationship development and are thus better

equipped to address specic needs within the organization as they mature.

Both top-down and bottom-up centers have their initial pros and cons (high-cost

but large impact, low-risk but incremental improvement). However, the route o

development appears to aect the progress o centers in the longer term. Te scarcity

o examples makes this trend dicult to prove, but it is hypothesized that the initial

blue-sky emphasis o top-down centers actually makes this kind o innovation

center less successul over time (as Figure 2 illustrates). op-down centerssometimes ace challenges in tangibly demonstrating how their concepts will go on

to positively impact the business, or, even when the ideas are relevant, ace political

challenges in convincing or gaining the resources rom the mother organization

to move the ideas orward. o be successul, both kinds o centers must develop a

set o tools and processes to communicate and in some ways even legitimize their

ideas. Bottom-up centers seem to have an advantage as they already share a

common language and some degree o credibility thanks to their origins within the

organization.

More Impact on

Organization

Top-Down

Centers

Bottom-Up

Centers

Making

Less Impact

on Organization

Thinking

Figure 2: Possible trajectories o top-down

and bottom-up innovation centers



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Key Planning Questions

Regardless o their route to development, all innovation centers will ace similar

challenges as they begin to take on project work. Four questions emerged as critical

to those interested in planning their own center.

1. How should the center be stafed?

While challenging, deciding on sta structure and roles beore hiring individual

talent is optimal. Understanding the relationships both internal to the center itsel,

and how that center reports to the mother organization should make uture project

workfow and hand-o easier.

In terms o individual hiring, it is critical to include those amiliar with both the

industry and current business work processes o the supporting organization as

well as talent rom the design eld. Tis multi-disciplinary sta, balanced with

both those amiliar with and oreign to the industry, will ensure a diversication

o approaches to problem solving and the necessarily experience to develop and

pitch ideas to the business. While outsiders (such as design thinkers) bring a resh

approach, industry experts ground the center and reinorces credibility and relevance

with the mother organization.

2. How should the innovation center communicate recommendations?

Innovation centers should determine early on the mother organizations expectation

or the presentation and delity o project work. Establishing a procedure around

what project deliverables look like and when and to whom they will be presented

will help ease the transition and prevent conusion and rustration. Te type o

deliverable oen depends on how the innovation center operates. For example,

Consultants may provide actionable guidelines at the end o a project but not provide

the same kind o support Executors do in gaining traction or the ideas through

renements and testing.

Overall, the transer rate o knowledge (and similarly, the degree to which

recommendations are realized) is directly correlated to the strength o relationships

between the mother organization and the innovation center. Ideally the project

teams should include members rom both the center and the organization, enabling

a continuous fow o communication.

3. What are early hurdles in innovation center growth?

Te design process, especially as it relates to concept development rather than

execution, can be unamiliar or employees outside o the innovation center. Some

o the key tenets o design thinking putting design beore engineering,

using research as a generative rather than evaluative tool are counterintuitiveto the way many businesses currently operate. Innovation center sta must be

prepared to work with employees o the main organization who may eel threatened

by this new way o working. While the entire enterprise should make the eort

to embrace a new way o thinking, innovation center employees must take on the

bulk o responsibility or challenging and overturning current assumptions. Low-

delity prototyping can be a good way to introduce new concepts on the mother

organizations own terms. Tis make to think approach also helps mitigate any

anxiety over the ambiguity o the design process by discussing tangible objects rather

than abstract ideas.

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4. How should the relationship between the innovation center and mother

organization be managed?

A crucial dierence between how an outside design consultancy and an innovation

center operates is the kind o relationships these in-house units must develop and

oster. A design consultancy is working with individuals in the organization who

have sought them out, while innovation centers oen have to earn the same kind

o trust and appreciation. Having a positive relationship and open communication

channel with the mother organization assures the unettered access the innovation

center will need to gain inormation, make connections, and push ideas orward.

op-down innovation centers tend to struggle with relationships more, at

least initially, because o the presumption o power bestowed on them by upper

management. When innovation centers are too separate rom their supporting

organizations (either in real or perceived distance), issues with potential tur wars are

only magnied. o build up the mutual trust and respect, innovation centers should

always position (and see themselves) as supporting the main organization rather

than as autonomous players.

Relationships take time to build and require a humbleness on the part o innovation

center employees. As much as designers have expertise in the innovation process,

the sta o the main organization have industry and business inormation that is

invaluable. Creating common goals that link innovation center and organizational

success will help create a culture o cooperation and shared consensus.

Innovation Center Best Practices

As most innovation centers have not been operational long enough to necessarily

prove any return on investment,the clearest indicator o success is the number

o generated ideas accepted and implemented by the main organization. In the

beginning, management oen assigns innovation centers projects or businessunit partners. For a center to become sel-sustaining, managers rom the mother

organization must actively seek out the center as a working partner, creating a

positive fow o project work that validates the center rom a business perspective

and increases its credibility.

Other best practices include:

1. Learning through doing

Innovation centers are by their nature experimental; some were created or the

precise purpose o testing the waters o the innovation process immediately, ratherthan waiting or the prescriptive guidance o outside consultants. While every

project may not yield a positive outcome, it is important to embrace a ail ast, ail

oen culture and glean understandings about how and why the project was not a

success. Certain projects should be permitted, or even designated, to ail, to make

sure the center is pushing boundaries and keeping a rapid cycle o concepts in play.

O course it is equally important to set limits on projects so they do not drain time

and resources.



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2. Championing design thinking

For many innovation centers, success comes not just rom seeing their ideas put in

practice, but having the mother organization embrace the design process. Tis shi

in cultural mind set can only come i the center sta sees themselves less as experts

than as guided acilitators helping the organization explore new methodologies. As

one innovation center sta member said, I know I am doing a good job when I help

other people do their job well. Tat kind o attitude can encourage relationship

development and help make centers true ambassadors o design thinking. Some

innovation centers have ound hosting workshops in design thinking especially

valuable or helping organization employees understand and embrace their process.

3. Being fexible

Innovation centers, like the companies that sustain them, must adapt to changing

economic and industry conditions. Unlike an R+D lab, which is somewhat insulated

rom change, innovation centers must be willing and nimble enough to evolve in

respond to new challenges. Te role that most innovation centers take on initially

is oen not permanent, as the organization adapts the center or its best use. Many

centers that begin in a very strategic capacity nd they also need to take on more

tactical problems to support the mother organization.

On the whole, the sustainability o any innovation center ultimately depends on

nding the right type o projects that support the business in the most eective

way. By supporting a range o business needs rom short-term projects to more

strategic thinking a relationship with the mother organization is nurtured and

strengthened. Tis fexibility ensures a pull rom the mother organization or

project work and continued learning, establishing a dened and eective project

pipeline.



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Conclusion

Te innovation centers researched or this article range in scope and mission, but all

look to use design thinking as a key process in developing new products, services,

and experiences. Te fexibility o the design process allows innovation centers to

act as protoyping spaces, research arms, strategic advisors, or a combination o all

three. While it is ultimately up to the organization to decide how to best structure

an innovation center that ts their needs, one universal challenge is managing the

overall relationship between the two entities. Innovation centers must be close

enough to the main organization to produce credible and unctional ideas, but

separate enough to maintain the autonomy needed to be experimental. Concepts

created by the innovation center should not be so expected or ordinary that the

innovation center doesnt need to sell them to the mother company. It may be

that very process o negotiation and persuasion that in the end produces the most

ruitul ideas.

Special thanks to:

Jeremy Alexis, IIT Institute o Design

Maggie Breslin, Mayo Clinic

Maura Collins, T-Mobile

Enric Gili Fort, SAP

Matt Guilord, City o Chicago

Sue Jin Kim, Microsof

Jeanne Liedkta, UVA Darden School o Business

Chris McCarthy, Kaiser PermanenteRob Moore, Liberty Mutual

Elisabeth Power, Liberty Mutual

John Reinertsen, McDonalds


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