Divisional time limits for Product Innovation Charters (PIC’s)

Divisions or SBU’s should have Product Innovation Charter (PIC) that comes with a time limit or expiration date. In a highly cited research paper Galunic and Eisenhardt (2001) mention that a manager interviewed at the SBU level who  suggested that the time dependent nature of the PIC is a critical characteristic of a good PIC. The PIC is a statement of innovation goals that specifies the market segment and customer need and the task the New Product  Development (NPD) team is charged with.

In multi-division companies and conglomerates the PIC should tie in with the holding company’s PIC and should match the mission statement of the overall organization and appear to contribute to the overall vision of the company. But this might change and readers of this blog must have experienced multiple revisions of mission and vision statements in their organizations. Most of these changes seem to happen with new CEO’s or the CxO and it might be necessary given highly volatile markets and competition. Nevertheless, the mission statement should mimic timeless documents like a country’s constitution that sets out the ideals, hopes and aspirations of the organization and is amended as rarely as possible.

The PIC however is not sacrosanct in terms of its shelf life and thus needs to have a time limit or valid upto date on it. When a PIC is formulated, the top management is telling the operating NPD team that here is the task, here is the market and customer profile and importantly here is a soft budget indicator, now get it done within the time specified.

By just imposing a time limit, and setting the NPD team free, can unlock entrepreneurial energy in the team. For the NPD team it is empowering to see a PIC signed off by the CxO’s. It assures co-operation across functions and units and unlocks the energy of everyone else who might play a part in the NPD project in the organization.

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