Governance and innovation: unlikely friends

"Governance and innovation don’t have to be enemies, and there are no winners when they don’t get along."

They may be an odd couple, but striking the right balance is key to unlocking innovation in firms, according to Josef COO Sam Flynn.

Lightbulbs are cheap!

One of the most exciting things about Josef is that, no matter where in the world I am or the legal team I’m working with, I can generally get people to build their very first bot in under an hour. (Sometimes, like at a recent event at UC Hastings in San Francisco, they’ll have finished that bot before the second hour is up! More likely, they’ll finish a prototype in a few weeks.)

While this is a game-changer for distributed innovation – it’s the reason large firms can onboard hundreds of Josef builders with relatively little effort – it can sound like a scary proposition for managers and innovation leaders. Will their builders have good ideas? Who’s going to sign-off on their bots? How will we maintain these new tools after they’re launched?

“Legal teams generally don’t suffer from a lack of ideas. ... The difficulties tend to arise later when follow-through is required.”
– Sam Flynn, Josef Chief Operating Officer

And, much like the idea of “hackathon fatigue”, people are discovering the fact that, with a little prompting, legal teams generally don’t suffer from a lack of ideas. Anyone can have that lightbulb moment. They understand their clients’ pain points. They know where the inefficiencies are. The difficulties tend to arise later when follow-through is required.

Beyond project management

Over the past year, I’ve had the privilege of working with in-house teams, law firms and law schools on what we can do to solve these kinds of problems. And, while there are many approaches, much of the discussion has come back to a surprising word: governance.

In the past, innovation and tech teams have generally turned to project management to “stand up” a new product or service. This makes sense when we’re talking about a handful of projects, because project management is designed to achieve defined goals and set success criteria.

But what happens when lots of people are involved in the innovation function? Or if you want to implement a major transformation? Or when you want innovation to be a part of your culture and way of working?

Too often, companies are either too strict, which can clog up the funnel – think about those long and unactioned lists of ideas that you sourced from the team last year – or go too far the other way, and end up losing visibility over what people are doing.

Enter, governance

For many, governance sits at the opposite end of the table to innovation: bloated bureaucracy is antithetical to agility and creativity. McKinsey makes this point in Eight Essentials of Innovation:

“Cautious governance processes make it easy for stifling bureaucracies … to find reasons to halt or slow approvals. Too often, companies simply get in the way of their own attempts to innovate. A surprising number of impressive innovations from companies were actually the fruit of their mavericks, who succeeded in bypassing their early-approval processes.”

At Josef, this is part of the reason we wanted to empower both the managers and the “mavericks” to do innovation.

Governance is speed bump rather than a stop sign, argues Josef COO Sam Flynn.

Governance is speed bump rather than a stop sign, argues Josef COO Sam Flynn.

But governance and innovation don’t have to be enemies, and there are no winners when they don’t get along. In the same report, McKinsey also notes:

“Once the opportunities are defined, companies need transparency into what people are working on and a governance process that constantly assesses not only the expected value, timing, and risk of the initiatives in the portfolio but also its overall composition.”

Governance isn’t necessarily a barrier to innovation – it can be a friend, not a foe. And it helps our customers to address important questions about things like data, brand, risk and customer experience.

Many legal teams I work with are acutely aware of how much value innovation – particularly distributed innovation – brings as an opportunity multiplier. And governance should be a partner to innovation’s success. So, how do you strike the right balance?

Top down and bottom up innovation

For the legal teams we’ve been working with, this balance comes from recognising that the role of innovation leaders is to help people to succeed, rather than simply telling people what to do.

Take this example: if we want to ensure that people are creating things that are valuable to the firm, we have a number of options. We could tell them what to create. Expand their way of thinking about challenges and opportunities. Triage all of their ideas, throwing out the bad ones and keeping the good ones. Or we could educate them about the organisation’s strategic priorities before they identify opportunities.

There is no right answer as such, but what we are finding is that if managers are too strict, we suppress innovation activity, and if they are too flexible, we risk wasting resources. I think we need a mix of education, autonomy and light-touch oversight. The answer is to empower people while giving them a push in the right direction.

In the next few months I’ll be exploring how leading legal teams are achieving this balance, including in the areas of identifying opportunities, quality assurance and maintenance. Keep an eye out!

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