Do companies need a Chief Innovation Officer?

A truly innovative company needs neither a Chief Innovation Officer (CINO) nor Chief Digital Officer. Innovation is sown into the very fabric of the firm. This shows up in the design of the firm’s innovation operating model: a small, cross-functional board of decision-makers shapes the portfolio and steers large innovation projects. In this desired end-state, innovation is not distinct from the core business. Amazon and Microsoft are such firms of course and neither has a CINO or CDO - which illustrates that these roles are only needed temporarily.

Yet few firms are in a similar state to Amazon or Microsoft - in terms of having innovation sewn into their fabric. To jump-start their journey to being a high innovation performer, a CINO is a powerful lever.
Appointing a CINO, signals to the entire organization the importance of innovation. It also yields tangible success: our research has found that companies that make innovation a top-three C-level priority are twice as likely to win in innovation. More qualified talent will seek to work in organizations prioritizing innovation, launching an up-ward spiral.
Simply appointing executives is a vane act, though. For innovation to be effective, the innovation function must have the power to drive significant change that the organization itself is likely to resist at first. Take, for example, this alteration to the operating model: shifting from measuring sales growth and return on investment today to measuring quality is an extremely difficult change - it requires a shift in perspective. 3M pioneered this measurement shift many years ago by introducing the New Product Viability Index. The index measures the percentage of sales generated by products that did not exist five years earlier. While it may be hard to define “new” products—are they completely new products or incremental innovation? — the metric exemplifies 3M’s leadership in innovation. Introducing an innovation-focused metric, such as the percentage of sales from innovation, is not as intuitive as the more traditional metric of sales growth. Once the business unit team gets used to it though, the metric will help provide insights into whether sales growth is long-term, as opposed to one-off [...]