Innovation has always been with us, as companies have had to keep innovating to survive and grow. As a consequence, innovation management has been a much discussed topic over the past 30 years, both in management literature and in practice. Scholars, consultants, and company practitioners have studied it and argued at length about what companies need to do to become effective innovators. But we believe the challenge is now leaving the narrow realm of specialists to become a broader and vital general management topic. Indeed, relentless technological progress and global competition over the past decade have put innovation at the forefront of most top management agendas. In short, innovation is no longer a “nice-to-have” capability that needs to be developed, notably in R&D. It is increasingly becoming a core competence of corporations because of its many strategic effects, its disruptive character, and its complex cross-functional and multidisciplinary processes. As such it deserves top management attention.

Today's innovation focus tends to be on building a comprehensive market-oriented capability by systematically addressing all the pieces of the puzzle, with a strong focus on process elements and cultural aspects. In most companies all these elements have been somehow identified and assembled. Process management has been introduced. So has strategic portfolio management. Everyone agrees that an innovation-friendly culture and climate are essential. Customer management is also recognized, and managers are now spending a lot of effort in clarifying the “fuzzy front end” of innovation. Companies with a strong orientation toward either bottom-up or top-down innovation are trying to balance their focus. In short, management teams generally know what to do, at least in theory, to make their company effective, and yet many are not managing to turn their company into sustained innovators. Something is obviously missing! In some companies, it may be a lack of will or consistency in addressing innovation imperatives. In others, resources may be scarce. In yet others, management systems may be inadequate. In most cases, however, the missing element seems to be a holistic approach to innovation, considering it as an integrated system and implementing all aspects simultaneously while remaining open to unexpected environmental and market changes.

In our experience, the main cause of these obstacles is a dearth of innovation leadership at the top. Often, the problem is caused by a lack of continuity in leadership, especially given the acceleration of changes in top management. CEO tenures are getting shorter and many companies are experiencing the impact of mergers, acquisitions, and reorganizations due to globalization, not to mention a succession of economic crises requiring constant restructuring. The book Innovation Leaders addressed this aspect by characterizing the key traits of innovation leaders and highlighting the importance of aligning leadership styles with specific innovation strategies. But individual leadership or leadership among a small group of managers does not suffice. Organizational leadership is needed. Companies need to embed innovation into a comprehensive corporate governance system. This means that business leaders need to identify and address all the fundamental questions regarding the deployment of innovation. They must propose a set of values and policies on innovation, review their formal allocation of responsibilities for innovation, and put in place adequate supporting mechanisms. Equally importantly, they need a diagnostic system to help them decide whether their chosen approach will lead to their desired objective.

In many ways, innovation has joined the list of the big corporate issues that landed on the top management agenda and required a coordinated corporate response. Total quality management reached that level in the 1970s and 1980s; lean manufacturing practices followed in the 1980s and 1990s; and sustainability and environmental management have become hot issues in the last decade. In all cases, management has had to recognize that these challenges transcended functional boundaries and needed to be addressed in a coordinated way at a high level. This meant establishing a set of overarching values, a range of concrete policies and initiatives to support these values, a pyramid of measurements, and an auditing process to follow progress at the top level and communicate results. Last but not least, it meant assigning oversight responsibilities, also at a high level. In short, these big scale issues triggered the need for a real governance mechanism, at board and top management levels. In this book, we suggest that the same is now true for innovation. Innovation governance is turning into a new corporate imperative.

Innovation governance provides a frame for all activities related to innovation. It is akin to a company's innovation constitution. As a constitution, it has four broad roles.

First, it sets out all legitimacy aspects by defining and limiting the roles of the various players in innovation, and notably (1) who is really in charge and owns the whole innovation process; (2) who is responsible for what part of this process; and (3) what legitimizes the allocation of responsibilities.

Second, it establishes overarching goals for effectiveness and efficiency in utilizing resources and achieving results in terms of growth and competitiveness, and it specifies who decides on resource allocation.

Third, it proposes methods for handling conflict resolution, for example across functions and/or between business units and functions, and it specifies how complexity and ambiguity will be managed.

Fourth and finally, it pledges to guarantee the delivery of specific benefits to the various stakeholders – customers, employees, shareholders, and communities.

Innovation governance has to be consistent across the organization but adaptable to different parts of the process. It also needs to be future-proof, i.e. to adapt to new market, technological, and other external trends. In short, as a constitution, it needs to be amended from time to time to fit closely with the company's changing environment.

This book has been written by experienced innovation management practitioners to help you rethink your innovation governance system, i.e. to enable you to change the way you allocate overall responsibilities for innovation in your company. It aims to guide you in establishing mechanisms that will ensure continuity of leadership in spite of changes in your company's management and environment. It illustrates the main models of governance proposed with real examples from companies, highlighting some of the challenges and success factors behind each model. It is neither an academic book nor a prescriptive “recipe-type” book. It aims to trigger reflections in the top management team on a topic that has seldom been addressed explicitly, even in highly innovative companies. It ought to enable you to consider whether there are more effective models for allocating responsibilities for innovation than the ones you are using today, and it will guide you on how to implement them successfully.

In summary, this book aims to provide a holistic and systemic approach to (1) understanding what innovation governance is, what it means, and what it entails; (2) recognizing possible governance models and their advantages/disadvantages; (3) assessing and improving current innovation governance policies and activities; and (4) advising on behavioral aspects that will help management make its governance effective. It will look at the innovation governance challenge from the perspective of both the board of directors – i.e. how should the board exercise its governance duties in the field of innovation? – and top management – i.e. how can senior leaders contribute effectively to the governance of innovation in their company given their own models of leadership?

In Part I, we shall start our innovation governance journey by characterizing the challenge. This means first clarifying the concept of innovation governance. Chapter 1 will do so by defining innovation governance as a form of organizational leadership at the corporate level that provides an overall frame for innovation. We shall describe the scope of innovation governance by listing the questions that it addresses, both on the content side of innovation and on the process dimensions. We shall recommend that management ensures a high level of congruence between these various governance aspects and that they are regularly reviewed and updated as the company goes through various phases in its development.

Talking about governance raises the question of the role of the board of directors in “governing” innovation. Chapter 2 will address this question by recommending that the board be proactive and include an innovation aspect in each of its statutory governance missions. For example, the board should ask management to audit the company's innovation effectiveness regularly and to communicate its planned innovation strategy. It should require management to establish and monitor a set of key performance indicators regarding innovation and to regularly review the strategic risks linked with innovation. Finally, the board should ensure that new appointees – particularly in the CEO position – have the experience and talent to support the corporation's innovation focus.

Governing innovation is primarily a responsibility of the top management team. Chapter 3 will list six areas where management initiatives are expected: (1) setting the frame for innovation, in terms of vision, mission, and values; (2) specifying how the company will identify, create, and capture value from innovation; (3) establishing priorities and allocating resources for innovation as part of an explicit innovation strategy and plan; (4) assigning primary and secondary responsibilities for innovation and setting up supporting mechanisms; (5) identifying and addressing current obstacles in the company's organizational system, as well as sources of resistance within the structure; and (6) monitoring and evaluating results continuously.

Our journey will continue in Part II with an exploration of different organizational models for assigning both overall and support responsibilities for innovation.

Chapter 4 will explain what we mean by innovation governance model and why it is important to reflect on possible models before choosing one. Indeed, companies often need more than one model; they combine innovation governance models by choosing a primary model for allocating overall responsibility for innovation and selecting one or several secondary models to support the primary model. These models go beyond merely allocating innovation responsibilities – they convey a general management philosophy, since they define the level of involvement of the CEO and his/her top aides and the company's preference for centralized or decentralized innovation responsibilities.

Chapter 5 will describe a number of models in use today, as well as examining how widely they are used. In some models, overall responsibility is entrusted to a single leader, whether solely dedicated to the task or not. In others, it is allocated collectively to several managers. In yet other models, the overall mission to steer innovation is entrusted to a permanent organizational mechanism. Surprisingly, some companies have even opted not to assign innovation responsibilities to any specific individual or group. Besides these primary governance mechanisms, most companies have established additional mechanisms to support innovation. Many of them are simple replicas of the main models, focusing on a specific part of the company or its processes. We will recommend that the choice of model be based on a systematic review of alternatives and their pros and cons.

Chapter 6 will raise the question of the perceived effectiveness or ineffectiveness of the various models – and the probable reasons – based on the results of a survey that we conducted. Indeed, companies express a rather mixed general assessment of their overall level of satisfaction with the innovation governance models they have put in place, definitely reflecting the need for a rethink! In fact, their level of satisfaction varies significantly according to the models they have chosen. In short, some models seem more effective than others, although no model scores better than 70% on effectiveness. We shall try to understand why all these governance models are deemed unsatisfactory in some cases and, for many, even in a majority of cases.

In Part III, we shall attempt to learn from the field and see how specific companies have chosen to organize for and lead innovation. We will highlight (1) how these companies have evolved and come to their current governance system; (2) the mission and characteristics of their system and the mechanisms they use to leverage their efforts; (3) what challenges they have to address and how they see their governance model and priorities evolving over time; and (4) what lessons, if any, they have learned from their experience.

Chapters 7 and 8 will focus on companies that have chosen to lead from the top. In some cases, as exemplified by IBM, the CEO has assumed direct responsibility for innovation; in other cases, like Corning, it has been assigned to a subset of the top management team. We will highlight how the leaders of these companies are personally engaged and promote an innovation agenda, and what supporting models they use in their task.

Chapters 9 and 10 will focus on companies that have appointed an individual innovation champion. In some cases the champion combines overall responsibility for innovation with his/her functional job. This is frequently the case when the mission has been assigned to the chief technology or chief research officer – what we call the CTO or CRO model. The example of Nestlé illustrates this model at the highest level since the CTO is a member of the company's executive board. In some cases, the responsibility is seen as sufficiently important to be assigned to a fully dedicated leader. DSM, the Dutch life sciences and materials sciences company, has appointed a chief innovation officer reporting to the CEO.

Chapter 11 will describe the experience of a company with another form of governance system, in which responsibility is allocated to a group of managers who take on the mission collectively. What we call the board model – which generally involves a high-level, cross-functional innovation steering group – belongs in this category. The global packaging company Tetra Pak illustrates the board model and its evolution into a number of high-level councils.

Part IV will lead us to focus on concrete steps that leadership teams can take to design or upgrade their own governance system and make it work effectively.

Chapter 12 will describe how to start when building a new governance system. It will follow the example of Michelin, a large and innovative multinational, on its journey of rethinking the way it manages innovation and building a new innovation governance system from scratch. It will describe the steps the company is taking and the challenges it is facing.

Chapter 13 will propose a number of conditions that a governance system must meet to be effective. These imperatives deal with its scope, its management, its relationship with the organization, its transparency, and its capability to evolve over time as the company strategy and market conditions change.

Chapter 14 will stress the importance of aligning individual and collective leadership models to match these imperatives and challenges. This assumes that corporate leaders are able to identify their own model of leadership and understand the leadership and behavioral requirements of the different governance models. The ultimate objective is to build management teams combining different personalities and leadership styles in order to make governance effective.

To complement these recommendations, the appendix will list examples of concrete initiatives that a company can launch as part of its governance system. These specific actions deal with a number of areas, such as diagnostics and continuous improvement; innovation vision and strategy; innovation process and its management; organization and infrastructure; competences and attitudes; climate and culture; and, finally, allocation of innovation responsibilities.

Our ultimate objective is to stimulate members of the C-suite to go deeper than they otherwise might in identifying and allocating the levers of innovation under their direct guidance.