Over the past 15 years, I've had a front-row seat to the inner workings of over 500 corporate strategy and innovation teams. And here’s the surprising truth I’ve unearthed:
- 10% have an outsized impact on the growth of their company, achieving a 10x ROI or more
- 20% hold their own and achieve satisfactory outcomes (a positive, but not company-changing ROI)
- 70% end up being a financial burden, not just in direct costs but also in missed opportunities.
So what does it take to be in the top 10% and genuinely do company-shaping work? I've analysed the characteristics of the best 50 teams I've ever worked with and found that there are five that they all have in common:
- They have the enthusiastic support of their CEO. The permission, air cover and mentorship provided by a CEO enable teams to move beyond innovation theatre (hackathons, demo days and idea competitions) and build breakthrough new businesses, products and services that get adopted by their company.
- They have a growth thesis. In the same way that VCs have investment theses that specify the types of startups and markets they invest in, the most successful strategy and innovation teams I've worked with have a thesis that dictates where they will, and more importantly, won't, play when it comes to growth. It stops them from getting distracted by shiny new things and the tech du jour thrown over the fence at them to explore by senior executives.
- They compete in broad arenas, not myopic industries. They recognise that the most significant competitive threat might not come from an established player operating in their category today but from anyone with access to the assets that could help customers get their jobs done better or more efficiently. They also enter other arenas and industries with their own propositions.
- They use problems to drive growth, not ideas. They know that working on solutions to problems that people may or may not have is a waste of resources, so they obsess over validating and quantifying customer problems and only then do they spend time finding better and more efficient ways to solve them.
- They place a large number of small bets. Recognising that the best hedge against volatility is volume, they work on 100 or more propositions at any given time to find the one winner that will pay 10x over the 99 that didn't make it, and they have the financial governance and systems in place that enable them to do this over and over again.
If you see a reflection of your team in this depiction, you're on the right track. But if this feels aspirational, use the close of 2023 to introspect. What steps can you take to inch closer to the 10% in the coming year?
For more advice, recommendations and support to bring your team closer to these 5 key characteristics, join The Fold, our free membership community for corporate change-makers.