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Can you really institutionalise innovation?

Innovation has been the biggest buzzword of the year, with many major firms and agencies starting units to foster it. Innovation units have been started and innovation executives have been appointed. It’s early stages, and while some are genuinely cutting edge, others are just buzzwords.

“Any time you ask someone an example of innovation, they would say, oh Nike Plus. The one example of where it has been successfully done. Most of the other stuff I would not call innovation, I would call it gimmicks – Just little things here and there,” said Ogilvy & Mather president of K1ND (its innovation unit),and CEO, China, Chris Reitermann.

That happens with clients. As for agencies, most have had innovation labs or digital labs for quite awhile. “That was how it was like in Ogilvy before, there was one guy with a card that said “Innovation Director”. Innovation (in a title) sounds good, but mostly what that person does is digital strategy or gimmicks,” said Reitermann.

Reitermann talks about the thinking behind Ogilvy K1ND, O&M’s innovation unit, and how it wanted to be different.

The unit was launched a year ago, funded both by Ogilvy and Singapore’s Economic Development Board, for the Singapore unit. K1ND is also based in Beijing. The unit also began with Mondelez as its first partner.

“To really institutionalise innovation and make it work like a start up, you have to create a totally different set up.”

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Reitermann talks about the confines of a traditional agency structure in inhibiting a real startup culture. “There are many things you can’t do financially, structurally, in terms of how you work.. Nothing wrong with it but it’s hard to drive real innovation,” Reitermann.”

“Existing agencies and many large organisations will tell you the same thing. You see companies like Unilever and P&G, they have a very hard time with driving innovation in their existing structures as this is not how these companies are built. The same thing applies for agencies. You would think agencies are innovative thinkers (which we are), but the structures are very traditional – there are P&Ls to live by. Compare this to a startup which has funding, doesn’t have to care about money and with some crazy people who can do what they want – well this doesn’t work in a larger organisation,” said Reitermann.

K1ND’s structure

“When we set up K1nd, we wanted to do it properly, use it as an experiment and to not do everything that agencies do,” he said.

K1ND was taken out of the existing structure of Ogilvy, and sits in a different office. Innovation has to be taken out of the day to day business to work, opines Reitermann. “This is why Unilever had to set up Foundry, to take innovation out of the daily business.”

Just like a startup, it was not expected that the unit would be profitable in the first six months. That, or expansion of the business, would not be its focus.

“My hope is that it will eventually become successful but also accelerate changes and transformation,” he said.

It works by a partnership model “so those who work there have some skin in the game.” These also don’t report to any other division of O&M.

“We don’t get paid by fees. We want joint partnerships on the IP we create(for example, patents may be created). We invest in product developments, we work with startups etc. We work with clients on a partnership model – the client puts in money, we put in money and if that takes off, we both benefit.”

It  also works by picking out projects for some clients, developing this up to a prototype level and proposing it to them. “Clients would offer a small fee to cover the cost – or do a joint partnership like I mentioned,” he said.

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