Innovation: How structure drives success
Luke McKinney, Director of Consulting, Nile
Hugo Cassidy, Partner, Pinsent Masons
Technology has never been better-positioned to replicate human problem-solving, with solutions becoming faster and cheaper to implement than ever. Yet in businesses operating in highly-regulated environments – such as the provision of legal services – adoption remains inconsistent, with significant opportunities still untapped.
In a series of ‘fireside chat’ videos, we met to unpick why this is, and how businesses can set themselves up to innovate with impact. We’re accompanying these videos with a series of blog posts, of which this is the first.
What’s preventing us from innovating?
Several structural challenges combine to create resistance to change: risk-averse cultures are naturally at odds with innovation; knowledge can be concentrated at the level of individuals rather than institutions, and the demands of client delivery mean there’s little space for innovation. Insufficient resource investment by firms only compounds these issues.
Perhaps most telling is “innovation fatigue”. After decades of promised transformation, many professionals see minimal change in their daily work, fostering scepticism about new initiatives.
In the last couple of years, generative AI has dramatically expanded what’s possible. Tasks that once required human intelligence are now candidates for automation or augmentation, creating unprecedented opportunities across professional services. To quickly unlock those opportunities and maintain their competitive advantage, as well as meet changing client expectations, firms need to implement models which enable innovation and overcome these hurdles.
Structure: the hidden success factor
While technology and leadership buy-in receive most attention, our experience shows that how innovation functions are positioned within organisations can determine success or failure more reliably than the technology itself.
We propose that three distinct models have emerged, each with characteristic strengths and weaknesses:
1. The Speedboat
In this model, a fully-autonomous innovation unit is created, set apart from the main business. With specialised talent working in an environment optimised for creativity, ‘speedboats’ excel at rapid development and bold experimentation.
However, the separation often creates integration challenges. Solutions developed in isolation may miss practical constraints, and “not invented here” syndrome can hamper adoption across the wider organisation.
Speedboats work best when exploring genuinely novel territory: markets, technologies, or business models that differ substantially from the core business.
2. The Siloed Faithful
The most common approach, the ‘Siloed Faithful’ model simply adds innovation as another silo alongside existing departments. This centralises capabilities in a separate function that interacts with other departments on specific projects.
This structure fits into existing governance systems and creates clear innovation accountability. Yet it often makes innovation “someone else’s job”, disconnected from daily operations. Cross-functional collaboration becomes more convoluted, and solutions may fail to address real business needs.
Where siloed models can succeed is when innovation requires highly-specialised capabilities that would be impractical to distribute across the whole organisation.
3. The Embedded Expert
The most ambitious approach, the ‘Embedded Expert’ model embeds innovation capabilities within every business area. Rather than centralising expertise, this model distributes it throughout the organisation, guided by a coherent strategy and strong governance.
This approach integrates innovation into daily operations rather than treating it as a special, separate initiative. Proofs-of-concept are developed in alignment with actual business needs, and – since end users participate in development – barriers to adoption are reduced considerably.
While more expensive and complex to govern, this model can deliver considerably stronger results for firms operating in regulated spaces. The close integration between subject matter experts and innovators creates practical outcomes that more deftly navigate complex regulatory environments.
The AI inflection point
With AI now full steam ahead, organisations need to understand the different approaches to innovation, and start putting the right structures in place to capitalise on this new technology. ‘Speedboats’ offer rapid experimentation, but may develop impractical solutions. ‘Siloed Faithfuls’ build specialised capabilities, but could struggle to integrate them. ‘Embedded Experts’ move more cautiously, but will typically develop solutions that are more sustainable and deliver longer-term success.
Of course, you don’t have to pick just one. Most organisations operate with hybrid approaches, adapting the innovation structure to match their own strategic needs. What matters most is creating an organisational model that enables innovation to flourish and scale effectively.
Luke McKinney is Director of Consulting at transformation consultancy Nile. Hugo Cassidy is a Partner at Pinsent Masons.
Generative AI was used to create some of the decorative images in this article, in line with Nile's AI policies.
