Often when we think of innovation, we call to mind those projects that fly below the radar within the enterprise, only to surface at some point to loud applause, fully formed and functioning. These are the make or break innovations that change companies or industries. In the 20th Century, these innovations were kept well away from the core business as they could not be easily accommodated within the functions, structures and business models of the enterprise – and would only be brought into full view of the world when the conditions were right.

The pioneer of this model was aircraft manufacturer, Lockheed. Under the leadership of chief engineer, Kelly Johnson, the Lockheed Skunk Works produced many of the industry’s advanced projects including the first US fighter plane – the XP-80. But the Skunk Works had very humble beginnings – in a rented circus tent alongside one of Lockheed’s manufacturing plants. Its first project commenced four months before an official contract was in place and there was no official submittal process. Even the name of this mysterious innovation division was secret until:

One day, [team engineer] Culver’s phone rang and he answered it by saying “Skonk Works, inside man Culver speaking.” Fellow employees quickly adopted the name for their mysterious division of Lockheed. “Skonk Works” became “Skunk Works.”

The once informal nickname is now the registered trademark of the company: Skunk Works®.

The Skunk Works model has been so successful that it is routinely followed by the most innovative of 21st Century companies. Google has Google X where self-driving cars, wearable computers and indoor mapping technologies have been hatched. Amazon owns Lab126 in Cupertino, Ford runs a research and innovation center in Palo Alto and Nike has its Innovation Kitchen in Oregon. 60 Minutes recently showcased Apple’s design lab led by Jony Ive – which continues to pride itself on its small team, secretive approach and purposeful mantra. Where Lockheed’s Kelly Johnson set out 14 rules and practices for innovation, Apple’s head of hardware engineering, Dan Riccio goes further, explaining “every tenth of a millimeter in our products is sacred”.

What we have seen from the Skunk Works approach of the 1940s to the Jony Ive model for 2015 is the shifting from process innovation to design innovation.

The Skunk Works mechanism allows for the co-existing of innovation and business execution only where the two are separated. This worked fantastically for Lockheed and it continues to work successfully for Apple, Google and others. But when we look objectively at these structures – at the independence and arm’s length nature of these innovation labs, we can now see other models, structures and opportunities. For as entrepreneur, Steve Blank points out:

… we can now see that a successful skunk works – separated from its corporate parent, with its own culture, in control of its own R&D and distribution channel – looked much like a startup.

But the challenge that we all face in the 21st Century is that we must now continually execute on our core product and promise while also inventing new products and business models. We no longer have the luxury of separating innovation and execution. As Blank explains, “We need to realize that skunk works epitomize innovation by exception. But to survive companies need innovation by design.

I would argue, however, that we need to move even further as leaders. It’s not just a matter of innovation by design. We must consciously and deliberately set an innovation agenda. We must bring the best of the Skunk Works decision making into our design process. We must bolster this with technical skill, architecture and security. And we must engender trust and support from our teams, stakeholders and customers. We must engineer and structure our teams and processes to amplify the impact of innovation. And we must incentivize it.

And all this must be done consciously. Strategically. This year. It’s the year of conscious innovation and there’s work to be done.

Nina Nets It Out: A new calendar year is a great time for leaders to pause, re-assess and then act. In 2016, leaders will mark their success through deliberate, strategic and conscious programs that drive continuous innovation while also delivering value through core business activities.

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