Innovation Strategies: Part 3 — Organizing DX Innovation: Incubator or Center of Excellence?
This IDC study provides specific guidance to CIOs as they meet the challenges of supporting enterprise investments in innovation: finding good ideas and vetting these ideas for their market potential and, finally, making investments. IDC customers have taken two distinct approaches to organizing for innovation. Some have created innovation incubators, similar to their business counterparts, to drive specific innovations by concentrating skills/talent for an initiative in one team that has a business mandate to create (and sometimes fail) quickly in pursuit of a specific business outcome — often for one area of the enterprise. Innovation centers of excellence (COEs), by contrast, are designed to channel innovation resources in support of many kinds of initiatives — including the use of external sourcing — as a more general-function center for expertise and talent. This study explores the following issues: What are the important differences between an innovation incubator and a COE in terms of how they're structured and used?How can the CIO best coordinate innovation resources to ensure that he/she meets the DX needs of the enterprise? What are the benefits and risks associated with an incubator or a COE approach? Can COEs and incubators coexist in the same IT organization? "IDC customers have generally chosen either the innovation incubator or the innovation center of excellence," says Fred Magee, adjunct analyst for IDC's IT Executive Program (IEP). "IDC believes that both can coexist within the same enterprise. They are complementary organizational tools within the spectrum of options available to the CIO in support of DX. The key to their successful implementation is to recognize the unique qualities that each possesses by designing them to drive innovation."