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The current state of “Skunkworks”

It’s a time-honored tradition in the corporate innovation literature – the idea of a hardy band of people who work in a way that is separate from the mother organization to bring into being a radically new kind of product or service that the mainstream company never could have.  A recent example is the effort by Ford to introduce an entirely new kind of engine in record time.

I was reminded of this by my good friend and colleague Michael Schrage, who has written a great post on the HBR blog.  He talks about how hard it is for organizations today to foster or tolerate one kind of skunkworks, the ‘unauthorized’ innovations that are someone’s pet project and which can often lead to breakthrough products.  Of course, the problem is that they often lead to nothing, are hard to value, and can be winnowed away in corporate efficiency drives.  The problem is that without some of these operations (which the academics call ‘slack resources’) it is incredibly difficult for large organizations to bring new things to market that they have generated from within.

So, if skunkworks get squeezed out, what will companies do?  I suspect we’ll see more M&A driven innovation, more outsourced stuff, and a continuation of the dynamic in which established firms don’t participate in the Next Big Thing because an entrepreneurial company that is built to experiment beats them to it. 

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