Innovation Commitment and Resource Allocation

It is common in organizations for any type of project, but even more problematic in innovation: the resource allocation issue. How many times have you encountered the following problem:

• Top management is now really committed to innovation
• Very serious idea generation methodologies and innovation management processes and tools in place
• Many interesting ideas generated, people enthusiastic, management enthusiastic
• But, many interesting ideas stalled due to lack of resource allocation and commitment to their development and implementation

Resource allocation problems are created in several ways. When it comes to financial resources, the problem is often the yearly budget cycle. If not in the budget, then implementation will start next year, after the new budget has been approved. Some ideas might end up being delayed for 6-9 months this way and that might be just too long, especially in fast moving consumer goods industries. Another issue with financial resources is the question who pays for the development and implementation. Without clear sponsors, great ideas might be lost.

When it comes to allocation of people, the issue becomes even more serious. With even tighter headcounts, how can we guarantee allocation to projects that weren’t even clearly foreseen? This is even more difficult when the idea is radically new and the company might need to hire staff with different knowledge and capabilities.

Last week I had a conversation with Gijs van Wulfen, inventor of the FORTH methodology. Besides his inspiring model, we had a conversation about the issues that surround innovation. And although Gijs works more with the fuzzy frond end and I have been working with overall innovation management models we encounter the same problem: commitment to allocate resources. During our conversation we came to the following conclusion: if the company is not fully committed to prioritize staff and management time to work on innovation, it is better not to go forward. Without full commitment, one cannot expect results and this is not good for anyone.

To be successful innovators companies will need to break their traditional mental model of resource allocation. If innovation is really important, your best professionals should be working on it, management should be seriously involved (not just in “check point” meetings), internal and external venture funds should be created, specific innovation career paths created and hiring rules made to be more flexible.

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Caspar van Rijnbach is a specialist in innovation management and partner at TerraForum Consulting in Brazil – www.terraforum.com.br and www.terraforum.ca. Co-author of “Innovation: Breaking Paradigms” and “Management 2.0’’ (in Portuguese).