Eliminate Ambiguity, Correct Asymmetry and Promote Accountability With An Innovation Mandate

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It creates a legitimacy for their actions and a responsibility to carry out that mission. This exact concept of legitimacy and responsibility is often exactly what is missing in corporate innovation today.

Stephen Parkins, an expert in innovation governance who helps organizations do "risky stuff under uncertainty," asserts that it is impossible to simply rely on luck or haphazard activity. Innovation must be systematic. And to build that system, you have to fix the foundational design of how the organization grants authority.

Therefore, what innovation teams are truly missing is a mandate. As Stephen highlights, "It is my conviction that you can't innovate without one."

When we look at why innovation fails in established companies, it's rarely because of "bad" people. Individuals are generally doing their best to perform within the system in which they work. The issue is almost always a problem of design and incentives.

In a standard corporate structure, people are rewarded for working on projects with good outcomes. This is inherently bad for innovation, since innovation requires experimenting and finding the courage to do things that won't work. Even though we have a duty to learn from what doesn't work, the system still encourages us to disassociate themselves from failure.

In each team there is a cast of characters, inspired by real people, who become prisoners of this broken system:

Barry knows all the theory but none of the practice. He's teaching kids how to ride a bike, but he's never ridden one himself.

Bianca has played it safe her whole career. She manages to get promoted despite never taking a single risk.

Colin is brilliant at optimizing efficiency in the core business, but the day he's put in charge of innovation, he's unable to deliver those results.

These characters exist and operate within environments full of Innovation Theatre, or things that look and sound like innovation but generally produce no meaningful value. They're also surrounded by Corporate Fairy Tales, where companies talk a big game about innovation, digital growth, and transformation, but fail to back those words with concrete actions. "Look at your company's annual report from, say, 2018 or 2021. See how many of the promises around innovation still hold true today."

Moreover, are you familiar with projects consuming resources for some unexplained reason and keep on living even though they're not making any real progress? Most likely, the answer is yes; it is because these environments also breed Zombie Projects. As bad as these are economically, they're even worse for your culture. If you've got these initiatives draining resources, then you start having to turn down projects that are actually promising. Needless to say, this is terribly demotivating for innovators.

And let's not forget the HiPPOs (Highest Paid Person's Opinion). When we're dealing with uncertain outcomes in innovation, we should rely on evidence from the market to make big decisions. Instead, we're almost always dependent on the opinion of someone senior.

These detrimental symptoms: the zombies, the theatre, the fairy tales; are the result of root causes that must be addressed.

En route to systematic innovation, we need to address two key challenges that lie at the heart of the dysfunction: Ambiguity and Asymmetry.

Ambiguity refers to things inside the company that are not clear, not explicit, or left to chance.

"Innovation is hard enough," Stephen says. "The outside world, the market, is full of uncertainty and unpredictability. I always feel we don't need extra layers of ambiguity inside our company."

This internal ambiguity shows up left, right and center, since:

"Things that are not clear, not consistent, not documented or left to chance; I lump all these things together as ambiguity," Stephen explains. "And if you just take one thing out of this, I think this is what I'm trying to push: just be explicit about these things."

On the side of Ambiguity, sits Asymmetry. Asymmetry is the disconnect between expectations and reality.

"We have this disconnect, this asymmetry, between ambition and resources.”Companies often harbor sky-high expectations, promising to disrupt the industry and change the world, whilst at the same time allocating very modest resources to the actual work.

Asymmetry can be understood in two dimensions:

To solve these challenges, lessons from derivatives trading prove instructive. In the financial world, volatility is the name of the game. Daily uncertainty is a given to be dealt with. This offers a golden example innovators should learn from: "A lot of the mechanisms that we see in financial markets serve to me, at least as an inspiration."

In finance, traders operate under a Trading Mandate. This is an authorization that explicitly states what a trader can buy or sell within a range of guidelines. For example, a currency trader might be mandated to trade US Dollars and Euros, but nothing else. It imposes clear guardrails and risk limits, perhaps a limit of "don't lose more than a million dollars a day."

These mandates are crystal clear and absolute. They govern every single activity. And crucially, having a clear mandate ensures that all trading activity is aligned with the strategic goals of the bank, promoting accountability for everyone involved.

Simply defined, an Innovation Mandate serves as a contract between the senior management (the organizational level) and the professionals conducting the work (the portfolio and project levels).

"Think of it as a contract between the senior management and the innovation professionals," Stephen says. It acts as a delegation of authority to the Head of Innovation or a business unit leader to pursue innovation creatively within defined parameters.

Most importantly, it removes the need to constantly return to the board to ask for permission for individual projects. "It gives them safety as well," Stephen notes. "It protects them from having to worry about internal politics… so the legitimacy of their activity is protected."

"The beauty of a mandate, if it's clear and has been fully signed off, is that you can, as an innovator, just focus on the job that you've been hired to do."

The question "What will give us a strategic edge in the future?" should be the core message driving your entire mandate.

There's often confusion about where a mandate fits regarding strategy. You don't need a separate "Innovation Strategy" that differs from the company strategy; having these separate is redundant. Innovation strategy happens on three levels:

"To me, the innovation mandate is the connecting piece between the company strategy and your innovation portfolio," Stephen explains. Visually explained, It fits between the org level and the portfolio level: the delegation of power and authority flowing down, and performance feedback flowing back up to inform company strategy.

The innovation thesis sits between the portfolio and project levels. This defines the specific themes you will invest in and, vitally, what you won't invest in.

For example, you might decide to invest in projects focused on individual personalization, but anything that touches on blockchain, web3, or crypto is out of scope; that's your "anti-thesis." This provides clear direction for which projects get greenlit and which don't.

The mandate isn't just a concept; it's a physical document.

A critical component of this document is the signature block. The CEO and the Head of Innovation both sign it. "To me, it's a true expression of skin in the game," Stephen says. "You put your name on something, you sign it off, you've got some real skin in the game and on both sides."

The delegation of authority imposes responsibility also on the person receiving that authority.

The document shouldn't be a 300-page playbook on how to innovate. It should be three pages plus a recap page. "We just want to get unambiguous alignment on the really important things," Stephen explains.

So you've decided on an Innovation Mandate. Now, focus on these three key elements:

Many innovation leaders believe they have a mandate when they actually don't. There are three common fallacies:

"I was hired to do this job." Just because you have the title of Innovation Manager doesn't mean you have the organizational authority to take risks.

"We have a strategy deck." If your legitimacy hinges on some old PowerPoint deck from three years ago or some Excel with broken links that's still lingering somewhere, then you're in real trouble.

"We have a budget." A budget allocation without the governance framework is just spending money, not a mandate.

Remember one last thing: check the explicit nature of your authority. "Check how explicit these things are, and push back if they're not."

Like an electoral mandate, the innovation mandate should provide stability while allowing for learning and iteration. Ideally, it should last around three years, maybe with minor revisions once a year.

"You need to be open to making quick changes if the world dramatically does change," Stephen notes. "But ideally you don't want to be tweaking it every couple of minutes."

The key is finding the right balance between iterating and learning from feedback, while maintaining the stability that teams need to trust that their budget and authority are secure.

Implementing a mandate addresses the three most common ailments in corporate innovation: misalignment, funding instability, and cultural resistance. More specifically, a mandate can help you with:

"Something is not connecting from the top to the bottom.” Unless we can come up with a creative solution to make that connection explicit, we're always going to suffer from this misalignment. The mandate forces that connection, preventing resources from being wasted on projects that can't scale.

Commitments in large companies waver. Budgets change based on short-term priorities, executive departures and, most significantly, fear. "You're in constant fear of these withdrawals of your funding, and of course, this has terrible consequences for your innovation potentia.” Sadly, people stop taking things seriously if they don't think the budget is serious. That's why the mandate creates a contractual agreement on resources, protecting the innovation function from organizational "mood swings."

Without legitimacy, ideas get stifled by people who want to play it safe. "Innovators, would you believe it, are often seen as a threat to people's positions," Stephen says. The mandate gives innovation the legitimacy it needs to bypass cultural antibodies.

The ultimate goal of the mandate is to professionalize innovation. It's about moving away from Innovation Theatre and toward a system where grown-ups do business together.

The mandate promotes transparency. It imposes a requirement on teams to be responsible and to invest in a diversified portfolio and report findings.

"If you're not innovating in a responsible way, well, the mandate will not give you anywhere to hide.”

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