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Ready to overcome innovation inertia? We thought so.
Welcome to our deep dive on how to hunt down game-changing opportunities for your business.
If you’re wondering what ‘innovation inertia’ is - it’s the term we use here at Future Foundry to describe what so many corporate change-makers are up against.
Whether they’re trying to identify new opportunities, validate new ideas or scale new initiatives at every turn there’s:
- Time Constraints
- Capability Chasms
- Process Pains
Familiar, isn’t it?
That’s why we were so delighted when you told us you wanted to better understand where to look for innovation opportunities.
We get it – it can be so overwhelming, even for the most seasoned innovators. Figuring out what to look for, the decision-making process, and figuring out how everything relates back to your business strategy is no mean feat.
But if you’re familiar with Future Foundry in any way, you’ll know that we’re quite partial to a mean feat.
Identifying your opportunities
If there are decades where nothing happens, and weeks where decades happen - we’re living in the latter, and frankly, it’s becoming exhausting.
Just think about all the change your company is facing right now…
Consumers are:
- Exhibiting new behaviours post-pandemic
- Adopting new digital platforms, products, and services
- Wandering about with completely unreasonable heightened expectations
- Discovering they have new personal priorities
Oh, and they’re often an entirely new generation that your organization’s never considered!
As if that wasn’t enough, you’re also up against disruptive competitors with silly amounts of VC cash, and tech like 5G, machine learning, extended reality, and the Metaverse – all of which will redefine businesses, fast.
And - in this context – you’d better get good at:
- Unlocking growth
- Driving efficiencies
- Making customers happier
Gulp.
That’s why we’ve ditched talking about ideas. Instead, we’re focused on your opportunities. Why? Because an idea is just that. It has no value unless you make a return out of it. Ideas are just concepts that *could* *might* *maybe* be used to make money.
Think of it like stocks and shares – they’re really only worth what someone pays you for them (don’t tell the Dogecoin bros…)
On the other hand, opportunities lead to a desirable, feasible and viable venture, product, or service. They may or may not originate from an idea. Opportunities are far rarer – and way more valuable – than ideas.
Finding them is the first piece of the corporate innovation funnel. Everything starts here. We have to recognise that innovation doesn't start with (and heaven forbid, end with) idea generation. So, where do you look for opportunities, rather than ideas?
First and foremost, you need a common language that enables you to measure these opportunities – and the things you want to measure are time and value.
Broaden your horizons
The horizon model has an axis of time, and an axis of value – and the three horizons simply represent each innovation type.
Horizon One: The Short Term
Projects that fall under this umbrella are those that improve and refine what your organisation already has.
Horizon Two: The Mid Term
These innovations take a bit longer, because they’re typically (but not always!) those that have been copied from adjacent markets and applied to a new context.
Horizon Three: The Long Term
The ventures in this category are your long-term innovation projects.
There’s one key takeaway to bear in mind, however. If you want to create a balanced portfolio of innovation initiatives, it is imperative that you also balance your inputs.
Inputs for Innovation
Now we have our framework, let’s add our inputs. We want to understand:
- Customers - what jobs are they trying to get done, what are their pains and what gains are they trying to create for themselves?
- Competitors - what are start-ups, scale-ups and tech companies doing to disrupt our current model?
- Technology - what emerging tech should we care about, and which should we not concern ourselves with (*cough* NFTs *cough*)?
- Investment - where are the people whose job it is to gamble on the future betting?
- Employees - what are we hearing not in terms of ideas, but problems from the front line?
Input One: Customers
TW: The Customer is Always Right
If it helps, think of the word ‘customers’ as shorthand for ‘people we care about’. It could be literally any stakeholder – you want to understand the emotional, functional, and societal jobs they need to get done. What pains do they experience? What gains do they want to achieve? What’s important to them?
Try the three C’s:
- Craft qualitative studies
This looks like designing customer development interviews, getting under the skin of what makes them tick, usually on a conversational basis.
- Create smart surveys
These should be designed to help you determine why people do or don’t use your product, which jobs they’re trying to get done, and how they’re trying to do that right now.
- Consume secondary data
To round out your findings and add context, you can look to third parties to help you better understand some of the macro-changes in customers
From our perspective, you should be doing all of these things in some fashion or another – but they might be less obvious than you think.
Social listening is a powerful tool, and another place that might be an untapped goldmine is your existing NPS data. This data can be such a good source of information on customer pains and what they really don’t love right now.
And yes, you could buy in some fancy third-party research (looking at you, Kantar!) ...or you could get down and dirty with Google Trends.
Set a reminder to check in every few weeks and look for early signals that topics are growing in popularity.
There’s a service called Exploding Topics that does this brilliantly, and we love the team behind The Hustle email who really have their finger on the pulse.
Input Two: Competition
Let’s talk competition.
We don’t really mean your direct competitors here - they’re likely incumbents who aren’t innovating particularly well, or bringing new ventures, products, and services to market at lightning speed.
We’d much rather talk about more emerging competitors. These might be:
- Seed or Series A stage start-ups who are creating the future with disruptive new value approaches that break widely held conventions in your category
- Later stage companies at the ‘Scale Up’ stage who are beginning to upend and hack the status quo that your sector has relied on
- Well-established technology companies (just think about how Amazon is disrupting everything from media to Pharma and insurance - not just retail!)
Now, there’s no need to go to massive lengths to find this info! Here are two hacks we love.
Set up alerts for your particular category to find out which companies are trending, which are raising or have raised funds, and let Crunchbase do the legwork.
Sifted focuses more on scale-ups and corporate venture capital, but their reports are really useful for companies in Europe to get a handle on more well-established market entrants.
The other place we like to look is less of a place and more of an exercise. Map your existing business model and look at all the ways that well-established technology companies could disrupt you.
By disrupt, we mean removing widely accepted conventions that exist around cost structures, key channels, and revenue streams.
Input Three: Technology
Let’s look at technology. As we’ve said countless times, technology doesn’t equal innovation.
It does, however, enable it if you’re able to pair it with a commercial value proposition, business model, service, or experience.
Some key questions when thinking about technology’s impact on your company:
- What interesting new IP is being created in the academic world that could have huge implications for your customers or your business?
Whilst it’s tricky to partner up with universities (they don’t make it easy…), we recommend choosing a few that are doing interesting work in your space. These partnerships can be an excellent way to keep ahead of the emerging tech curve.
- What patents are being registered that you should know about?
We love Valuer for this one. Think of it as a press monitoring for inventions! Valuer lets you monitor patents specific to your category or industry and provides you with alerts when inventors, academics, or other companies submit applications.
- What is Gartner saying about emerging technology and when it might become more established and mainstream?
Ah, the Gartner Hype Cycle! What is it that’s emerging that could open up significant opportunities for growth, efficiencies, or customer happiness in our category?
This print out will help you gather answers to these questions, and acts as a forcefield the next time some exec asks you to investigate NFTs.
Input Four: Investors
Investors! Where are the gamblers placing their bets?
- What are the characteristics of the companies are VCs investing in and why?
- Why are certain types of companies getting follow on rounds from those VCs?
- What do the public markets tell us about the future?
CB Insights is a wonderful tool to help you make sense of venture capital trends, and they also have a really great analyst team and so you get to understand the ‘why’ too.
Pitchbook is another really useful tool that enables you to follow all venture capital, private equity, and M&A activity to understand where capital is flowing and how the private markets are shifting.
You can analyse both investment and exit activity in a specific space, as well as valuation trends, multiples, and more.
Finally, Investopedia is a really great place to track the public markets and look at how news and particularly innovation impacts the value of competitors.
Make a list of ones to watch, and make sure that’s exactly what you do.
Input Five: Employees
Now, we stand by the fact that we think employee suggestions are largely useless (because they are), but canvassing employees for the customer problems, pains and feedback is actually really helpful.
Why? There’s nobody closer to the frustrations customers have than them. Ask your team:
- What problems do they experience day to day?
- What pains do they notice customers experiencing?
- What do they hear from customers time and time again?
Don’t overcomplicate it, just email employees regularly, ask them what they’re hearing from customers and let them respond in a free flowing way.
Now What?!
It should take you around 10 days to collect all of this information, and a few more to whittle them down.
In flashcard format, as yourself key questions to test these opportunities:
- How might we enable pet parents to access expert support from licensed vets and nurses without the expense and inconvenience of scheduling a visit?
- How might we help owners of recurring revenue companies to access up-front capital for growth without dilution or restrictive debt?
- How might we deliver a will-writing service for banking customers to help them feel assured in a way that’s easier, friendlier and more affordable?
Take each one and spend some time evaluating it - what you’re trying to evaluate at this stage is two-fold.
Evaluating Value
If you were to do something in this space:
- How compelling would a solution in this space be for customers/users?
- What is the relative size of the market or problem?
- How viable would developing something in this space be?
Answer those questions with a score, ranking from low to high.
Evaluating Difficulty
Now, if you were to do something in this space, ask yourself:
- What level of obstacle would we encounter when trying to do something in this space?
- How long would it take us to realise a return on an investment in this space?
- What level of external threat might we face when playing in this space?
Again, answer those questions with a score from low to high.
The goal here is understand how well aligned an opportunity is to your core competencies and competitive advantages.
What you shouldn’t do is an inordinate amount of research! You’re just looking for informed guesses across your entire opportunity set.
Once you’ve done this per opportunity - you can map it on your Horizons Model. How do you do this?
Horizon 1 - low value and low difficulty
Horizon 2 - high value and low difficulty
Horizon 3 - high value but high difficulty
And, last but not least – Horizon 101! Things in this box are really hard to do and low value.
Kill ‘em dead now.
Next Steps
Once these models are mapped, select up to three opportunities to focus on, but don’t prioritise them based on their horizon.
Why? Well, if you only pick incremental stuff to do next, you’ll get a reputation for not moving the needle sufficiently.
Equally, don’t just pick disruptive opportunities to go after now - they take longer to pay off and you’ll get a reputation as being too dreamy an innovator.
Design a portfolio that is balanced by focusing on one of each Horizon model per quarter.
That way you’re demonstrating quick wins back to the business, but you’re also clearly showing progression with larger, higher-return projects, as well as inspiring them with longer term thinking.
And if you need an extra pair of hands with all of the above – you know where to find us, and you can book a call now.
