An Innovation Charter is a management tool that gives an organization structure and direction to drive innovation. Continual improvement is vital for organizations to remain competititve, and Innovation Charters help them to identify relevant opportunities, evaluate them, and unite all stakeholders to carry out innovation successfully.
They outline a company's vision through a set of core principles and objectives, followed by the processes and activities it will adopt to achieve its goals.
How to write an Innovation Charter
An Innovation Charter aims to provide a framework for how organizations can manage their resources and make the most of potential opportunities.
To achieve this, they contain four sections: The background, the focus, goals and evaluation mechanisms, and guidelines for how to pursue opportunities.
In more detail, these involve:
1. Defining the organization's current situation, including any relevant background information that will help frame the opportunity. This is your "situation analysis."
2. Examining the technologies and markets related to opportunities. What new technologies or approaches could be used? What needs would they address that existing products or services can't meet? How big is the potential market for this product or service? This is your "opportunity focus."
3. Making goals for pursuing the opportunity and establishing ways to evaluate progress along the way. What would success look like? How will you know if you're making progress? What metrics will you use to track it? This section should also discuss any risks and uncertainties associated with the opportunity.
4. Setting guidelines for how to pursue an opportunity. Management should set create this framework, which may include aspects like target markets and minimum profitability requirements. This is your "management guidelines."
The components of Innovation Charters were proven to be crucial by the work of Professor Merle Crawford, who found that teams are more likely to achieve successful results when pursuing innovation if they have aim to have a clear purpose, goals, and guidelines that align an organization with its vision.
However, the information above isn't an exhaustive list of everything an Innovation Charter should contain. A Charter may also include provisions to set aside funds for research and development, give personnel or departments responsibility for specific tasks, or provide rewards and incentives for successful initiatives.
It can also address areas like risk mitigation strategies, project evaluation techniques, resource allocation methods, ways to measure success, timelines, budgets, communication channels among stakeholders involved in the process, reporting requirements, decision-making processes related to changes, and adjustments to make during the implementation phase.
Ultimately, a Charter may look a little different depending on the company in question.
Examples of Innovation Charters
Let's take the example of a company that decides it needs an Innovation Charter because its current development process for ideation or product testing is unfocused or inefficient. Therefore, it wants to maximize innovation opportunities before committing resources to its implementation phase.
To boost chances of success when launching new products or services, it may decide that every project should meet certain criteria before moving from the prototyping stage to the production stage. These guidelines may be based on customer feedback loops - such as customer experience improvement scores (CXI) or sales volume increases over existing products or services.
This way, the company can be more confident about committing time and money to projects that have met the specified criteria, because it will know there’s a higher probability of success proven by customer validation - this is far preferable to relying on internal judgement calls without considering market feedback loops.
Further examples are the Product Innovation Charter, which is often used in new product development, and the use of Innovation Charters in portfolio management.
Benefits of Innovation Charters
Innovation Charters provide guidance on which projects to fund using criteria such as customer demand, market opportunity, financial feasibility, and scalability potential. This helps to boost a company's resource-efficiency, increase its competitiveness in the market, and minimize risk exposure.
They also give all stakeholders a unified understanding of how they will work toward achieving their desired outcomes, even if they're part of different departments in a company. Since budget goals are established upfront, all stakeholders understand the time and cost commitments from the beginning. Plus, they help to create clarity around who is responsible for which aspects of the innovation process by giving everyone clear roles.
Innovation Charters also provide guardrails against “scope creep” by creating predefined boundaries around what types of changes can be implemented during development cycle - while ensuring the overall project objectives remain intact throughout the life cycle.
Related Keywords: Management Tool, Risk Mitigation Strategies, Project Evaluation Techniques, Resource Allocation Methods