Conquer innovation inertia and build corporate innovation engines capable of systematically, repeatably and predictably realising new value.
In our first instalment of Future Foundry LIVE for 2023, we’re zooming out to look at how to get the foundational elements in place to build your own corporate innovation engine.
You can check out the full episode here or settle in and enjoy our in-depth write-up of the key takeaways right in this blog.
So, let's deep dive into the prep work needed to avoid hurtling into the usual blockers around bandwidth, skills and processes.
First up, let’s talk about those blockers. One of the biggest issues companies face is ‘Innovation Inertia.’
This is the term we use to describe the challenges corporate change-makers are up against in their organisations, including time constraints, a lack of investment in design thinking, and outdated systems that slow innovation progress down to a glacial pace.
When you struggle with innovation inertia, setting up a corporate innovation engine can feel like trying to turn an oil tank.
It’s slow, freight with risk, and very, very complex.
What you want is a slick speedboat that helps you move faster, eliminate risk and simplify innovation. So, how do you ditch the oil tanker and get on board our speedboat?
Let’s assume you’ve overcome the three main issues companies struggle with in innovation:
Methodology (or lack of one): No scalable way to identify opportunities, validate ideas and scale new initiatives.
An inability to leverage the core: No proven way to seize the advantages of the corporation and manage it at the same time.
No portfolio mindset. No discipline and perspective around placing a large number of small bets.
Without fixing these issues, you’re not ready for corporate innovation. Inertia = doing things ‘the same old way' = stagnation. Innovation culture = taking more, smaller risks = greater returns for the business. Ok, you get it. So, how do you go about building one of those super slick speedboats?
There are ten key components that form the foundation of your innovation engine:
You need to put all ten in place before you even begin thinking about running identification sprints, validation missions or scale accelerators. If you don’t, you’ll find yourself in a stop-start world of resistance, internal politics and stakeholder management. Bleugh.
It might sound harsh, but if you miss even one component, all your hard work will be a total waste of time. With our handy breakdown, this shouldn’t be a problem for you!
This is the reaction we usually get when we ask C-suite executives what their vision for innovation at their company is. They know they should be doing something but can’t articulate why. Or what they want to achieve.
This core ‘why’ will act as your north star. Here are three common objectives you may relate to:
There’s no right answer, but you do need an answer. Here’s how to define your north star:
Next, take the outcome of the above three points and turn it into a challenge statement. This should frame everything you and the company want from innovation.
A great challenge statement should:
And now you have your north star. Gold star (pun intended) for you! Only nine more fundamentals to go before you’re ready to fire up your engine.
The best corporate innovation teams in the world can confidently answer 7 questions when they’re in the hot seat. These are:
Having clarity on these 7 questions is super important, and you can start to see why mapping your internal stakeholders early on and engaging them is so critical.
If you’re lost in the middle of a forest with no idea how to get home, the most useful thing you could find is a map. And that’s exactly what your proven processes will act as — a map.
Almost all failing innovation functions have no standard way of identifying new opportunities, validating new ideas or scaling new initiatives in-market. Without a predictable innovation framework for identifying interesting opportunities, validating strong ideas and scaling proven ideas, you can’t build cadence, rhythm or momentum.
A method based on Design Thinking, Lean Startup and Agile will guide your actions every step of the way, from when you discover a new territory to explore to when you’ve validated an idea. This will help you run a repeatable, scalable model.
Most corporate innovation teams have poor governance, which isn’t going to fly here.
To overcome this and create a line of sight, there are three support networks you need in place:
Without these three components in place, you will fail to manage not just your innovation engine but the core itself. Cue your innovation initiatives going off the rails.
Corporate innovation teams are responsible for the future growth of the business, so any investment in this team will pay dividends (quite literally) in the future.
Surprisingly, most corporate innovation teams represent less than half a percent of the company's workforce. Your team should be lean and fast-moving, but you won’t get anything done if you don’t have the people you need onboard!
The exact size of your team will depend on the number of ventures, products and services you want to ship in a year, but there are several key roles that will form your A-Team.
In your fixed team, you should have:
You also need a flexible team which scales up and down. In your flexible team, you should have:
You then need to recruit for three roles from core:
You also need to consider how to compensate your team, such as through phantom stock, bonuses and equity.
And now you have your team!
Once you've created your team, you need to think about your operational approach. We’ve all heard the old adage, fail to plan, plan to fail — and it’s true.
You need a plan you can stick to, as this will guide your budgeting, recruitment, expectation management, and stakeholder management. In other words, everything.
That means creating an annual plan that defines how many territories, opportunities, ideas and initiatives you will scale. Without this understanding, you can’t define the scope, size and budget for your innovation engine.
It’s simple maths: If you want to launch four things this year, that means you need around 40 ideas. If you want to test 40 ideas, you need to identify 160 opportunities. Scale this up and down as appropriate, and voila!
Welcome to Innovation Island. Innovation teams butt up against the core again and again, so many end up operating like an island. But alienating yourself only severs your access to those much-needed resources.
The best way to ensure the core has a fantastic experience with your team is to add value the other way. Try creating a company-wide community of employees who are up to speed on the latest trends and technology, so they can leverage innovation, solve customer pain, and drive growth.
You can do this by setting up three events that inspire, enable, and excite the broader employee base, drive employee engagement, and help develop future leaders:
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When you work in corporate innovation, you do some cool sh*t. And what do most of us do with all the cool sh*t we’ve seen and learnt about? We lock it away, never to be spoken of again.
To this, we say, no more! You need a communication plan that helps tell your stories internally — to consolidate corporate support — and externally — to communicate the value you’re building.
Internally, act as the eyes and ears of your corporation, sharing external market trends, information on exciting new startups, and best practices from other industries.
Internally and externally, focus on recruitment and retention, sharing stories from team members, details on developmental programming, and the interesting problems you’re solving to attract and onboard talented innovators and entrepreneurs.
Externally, deliver value for investors and your PR team by making it clear you’re focused on disruptive innovation with successful new venues, products and services that grow your value.
If you’re constantly fighting for the budget just to do your job, that’s not cool. Most companies know there are costs in establishing innovation capabilities but rarely provide the budgets innovation teams need to get anything off the ground. Part of the problem is that they don’t know exactly how much funding they need.
There are three pots of money you need to account for building, running and launching your innovation engine.
You need to crunch the numbers to know what your seed and series funding looks like, and be clear on the metrics required to unlock series funding.
Align your metrics with a "small bets, fail fast" VC mindset. This means you should focus on traction-based metrics, like customer acquisition and revenue, not profit-based metrics.
Stick with us — only one more to go!
Finally, you need a great tech stack to help you launch, run and manage your innovation engine. This is key to making sure you move with the same speed as the start-ups you’re competing with.
Here’s one way your tech stack can look. Remember to always learn and be innovative; these innovation tools can always change.
We’ve gone through a lot of detail, so let’s summarise these 10 steps:
Remember to check in on these components monthly or at least quarterly, using our diagnostics tool to see how strong they are, quickly identify malfunctions and fix them — before you come grinding to a halt.
You now have the ten key components to become systematic, repeatable and predictable. That means you’re ready to identify new opportunities and test interesting and scale-proven ventures, products and services perpetually!
This is a lot of information (though we could have written ten times the amount on the topic). So, if you’re feeling overwhelmed, we’re here to help you get going. Book a demo if you need a helping hand getting started, or run ahead with our 15-Minute Innovation Assessment.
Until next time!