Week 29, 2025 — Issue #422
Six Questions on Innovation Governance
File this under #innovation
Remember the primer I shared a few years back on ISO56002, the standard for innovation management systems (see #149)? It’s since become a major focus of mine, and I am now building and consulting on the topic.
Governance is a key part of this work. Not (just) in terms of how to manage innovation work, but in terms of how to manage the system in which that work gets done. It’s a bit meta, but also very important.
Now, ISO standards are supposedly applicable to organisations of any size. But the reality is that users tend to skew large: think enterprise organisations with thousands of people spread across multiple SBUs.
Six Questions
Simplicity is a virtue at any scale, but doubly so here. Large organisations emphasise the “complex” in complex adaptive systems, which means that anything we can do to simplify things tends to be welcome.
I have, to this end, formulated six simple-but-not-simplistic questions for orgs to answer when tackling the governance questions:
- Who sets the strategy and focus areas? Which problems are even in scope?
- Who identifies opportunities? Where in the organisation do new concepts originate?
- Who allocates funds? Money is the most concrete expression of governance power.
- Who manages execution? Day-to-day project ownership, including who runs the stage gates.
- Who measures outcomes? Who defines success, and how are results tracked?
- Who manages the system? The innovation system needs an owner, or it drifts.
Note that short doesn’t mean easy. On the contrary, each question is likely to spark plenty of debate.
I have, however, found one thing that tends to make answering the above a whole lot easier: philosophical agreement on the right level of centralisation.
One Choice
Philosophy? In an article about innovation management? Damn, right. Because at the heart of the six questions lies a choice: What type of organisation do we want to be? One that values efficiency and control, or one that values creativity and speed?
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Neither is necessarily better than the other. It all comes down to something I call Organisation-Market Fit (see #148), defined as the best possible organisational structure for whatever the prevailing market conditions might be.
My point is this: organisations that know (and agree) on who they are will have a much, much easier time answering the six questions. They’ll spend less time arguing and more time ironing out the details of their to-be governance structure.
Three Options
Speaking of governance structure: theory suggests there are three options to choose from: Centralised, Decentralised, and Hybrid/Federated:
- Centralised: Corporate sets the agenda, holds the budget, and oversees execution. Units implement but do not originate or decide.
- Decentralised: Business units own the full cycle, including their own innovation systems. The centre’s role is financial oversight, not innovation direction.
- Hybrid/Federated: Ownership is shared. The centre sets the framework and holds the portfolio view; business units originate ideas and run execution within guardrails.
This might be true. But I’ve yet to see an organisation that fits squarely in the Centralised or Decentralised camp. Virtually everyone picks a hybrid approach.
Why?
Because while the Centralized and Decentralized are useful for framing purposes, neither is actually feasible in real life.
Centralised governance would produce coherence and speed on big bets (good), while creating bottlenecks on operational decisions (bad).
Decentralised governance would produce speed and marketing relevance (good), but risk portfolio fragmentation and the quiet death of anything requiring a long time horizon (bad).
So the only real option is the Hybrid/Federated structure. And that’s where the Six Questions come into play. They’ll help you find the balance between strategic alignment and operational ownership that is right for you.
/Andreas
PS. For more on Organisation-Market Fit, see also my series on management spans starting with #302, #303, #304, and #305.
Elsewhere
👨🔬 INSEAD AI Venture Lab
I’ve joined the 10-week accelerator program hosted by INSEAD and Audos.com. I’ll be experimenting with a couple of different ideas, most notably something built atop the above-mentioned ISO framework.
😒 The Paradox of Creating
“When you are creating something, you will usually find that once things appear 90 percent done, you are actually about halfway there. But you have to create the first 90 percent to see the half that needs to be revised.” — James Clear
How can we build better organisations? That’s the question I’ve been trying to answer for the past 10 years. Each week, I share some of what I’ve learned in an email newsletter called WorkMatters. Back issues are marinated for three months before being published to Medium. This article was originally published on Jul 17, 2026. If you are reading this, you are missing out. Subscribe to email updates at www.workmatters.studio.
