Governance

Every modern innovation management system needs active governance to keep it running. Business Design can’t succeed if leaders rely on 100% voluntary participation from employees. Of course, winning hearts for Business Design and innovation work matters – and visible results from project work are the best driver for that. But it also takes management mandates, a clear expectation to work innovatively and a structure that embeds Business Design into everyday Leadership. We distinguish between centralised governance at management level and decentralised governance at the level of individual business units. Below, we describe the typical processes that keep an innovation management system with Business Design running.

1. Centralised Governance

• Strategy workshop: At the start of the fiscal year, we run a strategy workshop to review the current Picture of the Future, including objectives and KPIs, and adjust them if conditions have changed. The workshop opens with a status report from the department head on events and results from the past 12 months, followed by individual input from each business unit based on their preparation (see below). Based on this, we adjust the picture of the future and long-term objectives, and redefine and prioritise playgrounds. Participants include senior management, representatives from selected staff functions and all business unit heads. The Innovation Manager facilitates and prepares this workshop.

• Setting the innovation budget: After the strategy workshop, senior management allocates the “innovation budget” based on the workshop’s results. This builds on budget proposals from each business unit, developed after their own strategy workshops. Business unit heads then review, discuss and decide on this proposal as part of the established budgeting process. The innovation budget splits into three categories:

  • Budget for exploration projects (Phase II)

  • Budget for sprints (Phase IV)

  • Budget for implementation projects (Phase V)

• Innovation Review: Twice a year, we briefly assess all innovation activities in an established exchange format and discuss where adjustments or support are needed. The focus isn’t on the content of individual projects, but on their status, ways of working and organisational roadblocks. When useful, we apply a maturity model that lets each business unit head assess their own unit. We discuss and decide on proposals to improve the innovation management system.

• Aligning innovation Portfolios: After each business unit’s quarterly review (see below), the central innovation manager consolidates the results across business units. The goal is to avoid duplicate work, share resources and connect business units on specific innovation initiatives – not to run central quality control. Where useful, the innovation manager gives business units feedback on their results and suggests where action might be needed.

2. Decentralised Governance

• Strategy workshop: Shortly after the central strategy workshop and the innovation budget are set, each business unit runs a compact strategy workshop of its own. Its purpose: translate the results of the central strategy workshop into the unit’s own business and innovation initiatives. To do this, a business unit can develop its own Picture of the Future and derive playgrounds that align with the company-wide future. A picture of the future doesn’t have to be an actual image – other formats work just as well, as long as they answer the picture of the future’s core questions. The workshop’s results are shared in other regular meetings between business units and senior management. The Innovation Manager facilitates and prepares this workshop.

• Planning the innovation budget: Based on its own strategy workshop, each business unit develops a proposed innovation budget for senior management. This covers all planned innovation projects with a budget plan spanning 12 to 24 months. For cost-focused business units, we recommend investing at least 1–5% of the total budget in innovation work, allocated according to the innovation framework’s mechanisms.

• Quarterly Review: Once a quarter, each business unit discusses its own innovation Portfolio, adds new ideas where needed, places them on the matrix and decides which phase of the innovation process each idea should move into. Options include a “deep dive” (too few details for a sound assessment), a sprint for validation (high uncertainty) or direct implementation (low uncertainty). Business unit leadership and all middle managers from the business unit take part. The business unit’s innovation manager facilitates, prepares and documents the workshop.

• Preparing the strategy workshop: About three months before the central strategy workshop, we recommend that each business unit explore and summarise all innovation results and their impact on the business. It also helps to examine new topics that might feed into an updated picture of the future through short exploration projects – for example, to assess the maturity of new technologies, potential new partners or competitors’ “best practices”. This lets us challenge existing elements of the picture of the future based on facts, and integrate promising new ones.

• Creating an innovation report: Every six months, each business unit creates a short innovation report covering:

  • Current innovation portfolio with planned initiatives

  • Overview of ongoing innovation projects

  • Results of completed innovation projects, by phase of the End-to-End Innovation Process

  • Self-reflection on progress in embedding the innovation framework, with suggestions for improvement

  The innovation report goes to senior management and to the leadership of neighbouring business units. The table below summarises all central and decentral processes in chronological order.

• Decision on project results: At the end of an innovation project — in Phase IV above all — the Project Sponsor decides what happens next: hand the new business over to a business unit, run another round of validation or stop it. The sponsor usually sits in the business unit that would take the business on. Where the investment exceeds the sponsor's own approval limit, the decision moves up to higher hierarchy levels. Write that limit into the System Playbook as a number, not as "larger investments" — an undefined threshold is decided by whoever escalates first.

3. Decision Rights

Governance only works when everyone knows who decides what – and who doesn’t. The most common breakdown isn’t a missing meeting. It’s a Project Team waiting three weeks for a decision nobody was authorised to take. Write the decision rights down once, keep them to one page and hand them out at every kick-off.

Note the last row. Governance decides on portfolio, budget and people – not on content. The moment a steering committee starts rewriting a team’s business model, you have replaced facts with hierarchy (see Facts Over Opinions).

4. Annual Cycle

The timeline below is an example of how these activities can play out over the course of a fiscal year:

5. Q & A

• We're a small unit. What's the minimum governance we need? Two formats. One budget decision a year that names an innovation budget, and one quarterly look at the Portfolio where someone decides which idea moves into which phase. Everything else in this chapter makes those two better; nothing replaces them. And don't invent new meetings if you already have them – hang the two questions onto an existing management round rather than adding a calendar entry nobody protects.

• Does the innovation manager have to be a full-time role? Not full-time, but named. Someone has to prepare the workshops, consolidate the portfolios across units and write down what was decided. Half a position is enough to start in most units. What does not work is "everyone a bit": a rhythm that belongs to nobody is gone within two quarters.

• Two business units are working on the same idea. Who decides? The business unit heads, not the centre. The Innovation Manager surfaces the overlap when portfolios are aligned and proposes who takes the lead – that is coordination, not central quality control. If the units can't agree, the decision moves up with the budget, because the budget is what the overlap is really about.