BA 850
Sustainability-Driven Innovation

 

Structure Innovation

PrintPrint

Introduction

Structural innovations can take many forms, but when you peel them all back, they tend to have one characteristic in common: commitment. While the book calls out some of the more tactical facets of structural innovation, the roots of structural innovation begin in an organization taking a stand to differentiate.

If you have a finance background, think of companies with the classic "wide moat" profile. At some point in their history, they aligned significant resources behind one vision, and, in the process of doing so, created a seemingly insurmountable separation between themselves and peers. Think of Caterpillar, for example, a classic wide moat business and structural innovator. As we will see, while you may not associate Whole Foods with a "wide moat" profile, some of their early decisions have indeed created structural innovations which would be difficult for competitors to replicate.

From The Ten Types of Innovation:

Structure innovations are focused on organizing company assets–hard, human, or intangible–in unique ways that create value. They can include everything from superior talent management systems to ingenious configurations of heavy capital equipment. An enterprise's fixed costs and corporate functions can also be improved through Structure innovations, including departments such as Human Resources, R& D, and IT. Ideally, such innovations also help attract talent to the organization by creating supremely productive working environments or fostering a level of performance that competitors can't match.

Structure Innovation in the Sustainability Space

Whole Foods Culture of Transparency

Here's about as structural an innovation an organization could have internally, so much so that one could imagine it would be virtually impossible to "retrofit" onto an existing organization: The salaries and bonuses of every employee at Whole Foods are available to be "looked up" by other employees. Co-founder John Mackey instituted the program very early in the life of the company, taking a stand to eliminate office politics and personal agendas in favor of making goals visible and attainable. I'd like us to focus on this very specific aspect of Whole Foods structural innovation, as opposed to taking the book's more broad view of their 'culture' as the structural innovation.

John Mackey's logic as stated to Business Insider is quite elegant:

Whole Foods co-CEO John Mackey introduced the policy in 1986, just six years after he co-founded the company. In the book, he explains that his initial goal was to help employees understand why some people were paid more than others. If workers understood what types of performance and achievement earned certain people more money, he figured, perhaps they would be more motivated and successful, too.

"I'm challenged on salaries all the time," Mackey explained. "'How come you are paying this regional president this much, and I'm only making this much?' I have to say, 'because that person is more valuable. If you accomplish what this person has accomplished, I'll pay you that, too.'"

Watch the Inc. Live interview of John Mackey, entitled The Benefits of Radical Transparency, where he discusses his approach to compensation and disclosure. He covers it more passionately and succinctly in this interview than in most all writings.

Pittsburgh's Department of Innovation and Performance

The City of Pittsburgh has taken a rather unique structural innovation approach through their creation of a Department of Innovation and Performance in February 2014. While the creation of the Department itself is certainly a structural differentiator, consider that Debra Lam, the Chief Innovation & Performance Officer, is one of only six executive-level positions in the city. Add in the factor that CIOs still aren't terribly common in the corporate world, let alone government, and we have the makings of a structural innovation for the City of Pittsburgh.

The description of the Department of Innovation and Performance platform:

We live in an age of infinite possibilities. The Department of Innovation & Performance (I&P), created in February 2014, reflects Mayor Peduto's vision for the Next Pittsburgh and our team's role in fostering a culture of accountability and innovation at levels and sectors of society. I&P aims to transform Pittsburgh into a world-class city through not only managing information systems and delivering technology, but by pursuing data-driven decision-making, creating sustainable solutions, and driving quality performance.

While technology is an important component to this, it is not the only end goal. There is no silver bullet, fancy platform, or expensive software that can magically transform the City. The City's greatest asset is us, its people, and our commitment to collaboration and better serving the City government and its residents.

Beyond servicing the City and its departments and agencies internally with strategy and hardware, I&P has a wider external component. We work to better service all residents of Pittsburgh by closing the digital divide, fostering entrepreneurship and innovation, improving access and application of information, and empowering neighborhoods, especially vulnerable communities. We want citizens to better utilize their resources and have the information to make better decisions and take action.

To underscore the importance of enabling innovation in the Next Pittsburgh, the Department takes responsibility for keeping the concept of a fresh, innovative Pittsburgh at the forefront of minds, as well. It has created an Innovation Community Map as just one tactic to help reinforce what will be a long-term strategy.