Mind the Gap: Bridging the Business Unit AI Innovation Gap

July 17, 2023

By Noam Harel

In the fast-paced and ever-evolving business landscape, innovation has become the lifeblood of success. Yet, many organizations fail to harness the full potential of innovation due to a significant gap between their business units. This gap, like a hidden chasm, prevents the sharing of best practices, stifling growth and hindering progress. It’s time to challenge the status quo and unlock the immense power that lies within cohesive collaboration, especially in the era of generative AI. 

In a perplexing twist of logic, it seems that while businesses would swiftly castigate a negligent chief operating officer who failed to foster the exchange of best practice processes between similar business divisions, the same scrutiny doesn’t extend to sharing best practices in innovation. This discrepancy begs the question: why does this disparity exist, and how can we triumph over this perplexing predicament?

Imagine for a moment the consequences of neglecting to share crucial insights between two production or manufacturing sites for different business units or geographies. 

The very fabric of the company would be undermined, leaving the chief operating officer exposed to the unforgiving judgment of their superiors. Heads would roll, and accountability would prevail.

However, when it comes to innovation across business units, a peculiar blind spot emerges. The sharing of best practices is often overlooked, as if it were an inconsequential matter. Yet, we must ask ourselves: why should it be any different? Innovation, too, is a vital pillar of success for any organization. It shapes the future, propels growth, and secures long-term prosperity, especially when adopting Generative AI across the organization. 

Perhaps the allure of novelty blinds us to the value of knowledge exchange in the realm of innovation. We become enamored by the idea of groundbreaking ideas springing forth from a single source, as if inspiration were an isolated act of genius. But in truth, innovation thrives when it is nurtured through the cross-pollination of diverse perspectives, use cases, user experiences, and knowledge worker expertise and feedback. 

Why Business Units Matter

Large organizations often adopt a decentralized approach, allowing their individual business units to focus on their unique needs and objectives. This strategy mirrors the specialization found in factories, where specific products are manufactured with precision. However, while central control ensures operational efficiency and adherence to best practices in manufacturing, the same cannot be said for innovation.

A Missed Opportunity: Unleashing the Potential of Innovation

In-depth research reveals a glaring disparity in the adoption of innovation management practices across company’s business units. Astonishingly, within the same organization, there can be such a wide range of innovation performance scores that it’s difficult to believe they belong to the same entity. This gap creates several adverse effects, including:

Dampened Innovation Performance: The overall innovation performance across the organization suffers as a result of the gaps between business units.

Lack of Transparency: The absence of a unified view of innovation processes and projects hinders progress, obstructing the organization’s ability to identify and address inefficiencies.

Redundancy and Repetition: Failed processes are replicated in different business units, leading to wasted resources and lost opportunities.

The impact of this gap is undeniable with the majority of senior innovation executives and practitioners acknowledging that the absence of common approaches to innovation management across business units negatively affects overall innovation performance of their organization as a whole.  However, there is hope. Generative AI will no doubt transform organizations, and will create a new paradigm of productivity, efficiency and revenue generation by early adopting business units with the ripe use cases. Just imagine if the worst business unit were improved to just the company average rate of other business units adopting Generative AI, the result would be a substantial average growth in annual revenues, cost reduction and company-wide improved margins.

Key Underlying Causes

To truly bridge the gap in business unit AI innovation, we must delve into the core of its underlying causes. It’s important to confront these issues head-on, as they hold the key to fostering an organizational culture brimming with cross BUs collaboration and hold the key to a successful, and even revolutionary AI transformation. Let’s shed some light on the three pivotal factors that contribute to this disparity: 

Cultural Chasms: Internal conflicts and power dynamics, lurking within the very fabric of business units, instigate feelings of isolation and obstruct collaboration as some business units might compete with other BU’s or parts of the business. This pervasive and siloed “what’s mine is mine” mentality quashes the exchange of ideas, robbing the organization of a shared language of innovation and can debilitate the ability to unleash AI transformational cross organizationally. We must construct a bridge that connects our collective intellect when adopting AI and driving uncharted business innovation. Let us cultivate a culture that reveres collaboration, celebrates shared language, dismantles the walls of division, and nurtures the free flow of knowledge.

Misaligned Incentives & shortsighted Leadership: The heart of the matter lies in the shortsightedness of senior managers within business units. Their unwavering focus on immediate gains and narrow revenue targets blinds them to the vast potential for innovation within the organization. Fear looms large, casting its shadow on their willingness to embrace novel practices from other corners of the company. To overcome this barrier, we implore leaders to adopt a visionary mindset, daring to push boundaries and link performance metrics to the integration of best practices. This will be critical when adopting Generative AI across the enterprise. 

Diverse Needs and Varying and Conflicting Ambitions: The distinct requirements and objectives of each business unit breed skepticism when it comes to adopting organizational best practices and unleashing the power of Generative AI in their BUs. The disparities in the pace of AI innovation and levels of use case maturity further compound this resistance. To conquer these arduous challenges, we must cultivate an environment where business unit stakeholders become active participants, where their voices resonate and their concerns find solace. Only through this collective engagement can we dissolve the barriers that impede progress and share the lessons learnt to unleash AI innovation effectively.

Unleashing the Power of Collaborative AI Ingenuity 

Now that we understand the obstacles, it’s time to embark on a transformative journey toward a culture of innovation excellence. To bridge the innovation gap, especially in the rapid innovation era of Generative AI, organizations must embrace a strategic approach centered around three crucial elements:

Strong Leadership Pioneering the Change: Senior management plays a pivotal role in closing the innovation gap. By recognizing the magnitude of this challenge and articulating the strategic importance of innovation management best practices, leaders can shift the organizational culture. Incentives and rewards should be aligned with organization-wide innovation goals, encouraging business units to adopt and share best practices with each other. Creating a balanced cross-business unit innovation portfolio with protected budgets ensures a long-term commitment to innovation excellence.

Building a Collaborative, Innovation-Led Culture: Cultivating a culture of collaboration requires a multi-dimensional approach. Leaders must communicate a clear vision, mission, and objectives for AI transformation while considering regional variations and business unit maturity levels. Establishing a common language of AI innovation fosters alignment and enables consistent measurement of success. Furthermore, involving business units from the outset, incorporating their insights and unique challenges and POVs while setting shared priorities will build trust and drive collective commitment to best practices.

Engaging Business Unit Stakeholders while Driving Ownership: Change can be met with resistance, especially when unleashing the latest and greatest Generative AI. To mitigate this, senior management must proactively involve business unit stakeholders, seeking their input and fostering a sense of ownership in governing and implementing new best practices. Break down silos by facilitating meetups, communities, and knowledge-sharing forums, enabling the cross-pollination of ideas and success stories across the various use cases. Consider inviting influential innovation project leaders from outside the organization to drive  fresh perspectives that can inspire and highlight the value of AI innovation best practices.

Seizing the Future: Unleashing AI Innovation’s True Potential

AI Innovation stands at the forefront of competitiveness in today’s business landscape. Organizations invest heavily in AI, research and development and engineering to drive progress and secure a sustainable future. However, by failing to share innovation management best practices, they inadvertently leave value untapped, limiting growth and stifling their AI transformation potential. To bridge the innovation management gap and unlock boundless possibilities, organizations with decentralized R&D must act decisively. By embracing strong leadership, engaging business unit stakeholders, and fostering a cross business unit collaborative culture, organizations can overcome the barriers and embark on an AI ingenuity journey of unparalleled innovation and growth.

Remember, the AI innovation gap is not insurmountable. It is an opportunity—an invitation to rise above the limitations of the past and embrace an exciting future where collaboration fuels transformation and excellence. Together, let us bridge the divide and unleash the true power of innovation.