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Busting the myth: You can’t govern innovation

Tracy Deveugle-Frink

By Tracy Deveugle-Frink
Head of Change & Innovation

Governance and innovation. Can the two co-exist?

The meaning alone suggests these concepts are poles apart. On the one hand you have governance, which sets the rules and processes around what we adhere to. In contrast, innovation seems to blatantly disregard these rules and instead focuses on trialling new ideas quickly and adapting as you go.

When it comes to fitting innovation into a linear governance and project delivery framework, many see it as a bit of pot luck. You could invest all of this time and money, and at the very last moment you find out that it’s either a raging success or a complete failure.

What do I think?

I believe anything can be governed, even innovation. The trick is to apply the right governance model to what you're trying to govern.

Standard verses agile models

A typical project may have quite a straight forward approach to achieving a set goal. It’s built around an investment governance framework, where you know the outcome is a constraint. In other words, you’re going to spend a certain amount of time and money, and you understand right from the start what the outcome will be.

In the world of innovation, the end point isn’t a constraint. It's a variable. We don’t know the end goal or where we will end up, so we know a standard governance model probably won’t work.

This is where a more flexible measure, what I like to call a ‘reactive governance model’ makes sense. It’s not about ‘I'm going to give you a billion dollars and however long you want, and fingers crossed it works out.’

This model allows you to decide how much time and money you’re comfortable with investing incrementally. And at a certain point, you review whether it’s good value or not. The return isn’t likely to be financial but more insights driven. Did you learn enough? Was it worth it? If not, you can always pull the pin on it before you get in too deep.

The only constraints here is time and money, not the outcome. And that's absolutely governable. We can track and measure this and hold people accountable.

Linear vs Agile project graph

A linear approach to a standard project vs governing an innovation project

How an agile model works in trials

Western Power’s stand-alone power system trial is a perfect example of applying an agile approach to a project. It’s built on the idea that I don't need to know the end point to begin. We knew we had to deliver a more reliable and cost-effective energy solution for our regional customers – but it was unproven, so our approach had to be flexible.

At any given stage, the team would say, ‘Am I still confident enough to proceed?’.

Based on this model, you learn about constraints and adjust on the fly, until you get to the optimum solution.

This is the model that works for innovation. Start small and fine tune as you go. You see this a lot with agile software development. For example, an app is released and updated regularly as new functionality and features are made available.

Had we taken a linear approach instead, and forecast where we thought we should be, we would’ve missed the mark completely, and spent all that time and money for nothing.

For stand-alone power systems, this approach demonstrated value along every step of the project pathway and ultimately delivered a strong outcome.

Innovation investment funnel

At Western Power, we have an innovation fund that allows us to trial new technology and promote growth. Sort of like angel investment for internal start-ups.

When we govern a project, our confidence level about our ideas may start at 50% or below. As the team invests more time into ideas, our confidence increases or decreases. With increased confidence, projects proceed into the innovation investment funnel and get the financial backing they need to progress with a trial. Without a certain level of confidence projects don’t proceed, minimising risk to the business.

The innovation funnel manages risks across each project. You need to think about how much money are you willing to spend on these ideas? There may be hundreds of ideas, but you won’t invest in these until they reach a certain level of confidence. Remember, we are responsible for administering public funds.

When deciding which ideas make the cut, I look at what I'm going to learn and whether the outcome fits within the current investment framework.

The innovation fund fits into an overall portfolio of investments, where we manage risk across all projects to ensure its balanced, like any investment portfolio. We only invest in projects with a solid return for our customers and our business.

I think if our strategic projects as businesses in which I'm investing, and I'm investing in that business, because I need a specific outcome out of them.

Western Power's innovation funnel

Western Power's innovation funnel that is used to nurture new ideas and projects

The brains behind our ideas

We work with our front-line staff such as the crews in the field and our call centre team to uncover ideas. They’re largely driven by the need to find solutions to customer-related problems. There are also environmental shifts and technological changes we have to address, which further fuels our passion to innovate.

Like any shift from old to new ways of doing things, there are cultural, capability and governance challenges along the way, but we’re tackling them head on because the improved outcomes are worth it.

Myth busted? I think so.

Tracy Deveugle-Frink is the Head of Change & Innovation at Western Power. With years of consulting experience including innovation and entrepreneurship, business management and process improvement under her belt, she is leading the charge in trialling new ways that will change the way we connect customers and deliver electricity in the future.