What Is Decentralization?

Research by the late Harvard Business School professor Clayton Christensen indicates that around 95% of new products fail due to poor product segmentation. Companies need to adopt a consumer-centric view, treating products as tools for achieving success.

Why Is Decentralization Essential for Innovation?

Decentralization involves distributing the planning and decision-making authority of an organization from a central hub to various stakeholders. By applying this concept to innovation, you can engage all relevant parties—employees at various levels, customers, and other stakeholders—in every aspect of your strategy.

Why Traditional Innovation Models Fall Short

Innovation fosters motivation, participation, and a sense of community, which can significantly enhance an organization’s performance across all units. While traditional innovation models can be beneficial, they often present barriers that can hinder progress.

Costs associated with innovation can vary widely, especially when considering the significant number of man-hours spent on manual processes. When you explore automated tools, expenses can range from $10,000 to over $500,000 annually, depending on your company’s size. While there are alternatives to manage costs, understanding their purpose and measuring success is crucial.

Companies often strive to recruit top talent to ensure future success. However, assembling dedicated innovation teams can be expensive. Most organizations either need a large budget to form these teams or must outsource, both of which can be financially burdensome.

How Can Decentralized Innovation Benefit Your Business?

It's important to evaluate your company’s strategy, mission, and objectives, as these factors significantly influence innovation efforts. Currently, many innovation initiatives focus primarily on corporate strategy and investor interests, sidelining the most crucial element: the customer.

By decentralizing your innovation process and involving all relevant stakeholders, you can achieve numerous benefits, such as:

• Encouraging creative thinking beyond internal politics and shareholder interests.
• Fostering diverse perspectives.
• Challenging the existing status quo and prompting necessary changes.
• Enhancing engagement among employees, clients, and partners.
• Strengthening customer loyalty by making them feel valued.
• Ensuring that your audience’s insights are genuinely appreciated.

Your Decentralized Approach

To initiate a decentralized innovation strategy, consider the following steps:

1. Connect with trusted customers or partners, ideally through in-person meetings or video calls.
2. Inform them about your intent to create a customer-centric decentralized innovation process and emphasize their role in it.
3. Develop a consistent engagement strategy that includes voices beyond just the leadership team.
4. Focus on listening and learning, then return with a range of ideas for internal validation.
5. Document insights and ideas using traditional methods or shared folders for collaborative efforts. A dedicated innovation platform isn't necessary; prioritize rapid validation of ideas.
6. Once you have narrowed down your ideas, present your final selections to your clients and, if possible, invite them to contribute to the process.

Embracing decentralized innovation allows you to align your team and customers with your business’s future vision. By instilling this approach and regularly seeking external feedback, you can cultivate a stronger relationship with your customer base.