Best Practices for Corporate Entrepreneurship – #4 “A Core Innovation Process”
If you’ve been following the last few articles, the theme has been exploring the unique endeavor of “entrepreneurship within large organizations” (aka “corporate entrepreneurship”), its challenges & paradoxes, its opportunities, and what it takes to get it right. Based on our experience of helping others and doing it ourselves, we’ve identified some key “best-practices” that are foundational to success. So far we’ve covered:
(I encourage you to read these articles for context)
This time we’ll zoom-in on another critical success-factor – the importance of a “core innovation process” – a consistent, disciplined, yet fast & flexible approach that gives direction to an innovation-initiative as it matures from a fledgling idea to a legitimate business opportunity.
An analogy that comes to mind is “acting” – it can range from something as simple as an “in-the-moment-improv” (or children’s charades) to a Shakespeare production that is very structured, planned & practiced. The innovation funnel is much the same way, starting with an idea that can be born on a post-it-note, to a scaled-up business model with complex operations and a supporting “cast”/organization.
While it’s impossible to plan & predict every step of the “business-building adventure,” it’s nevertheless far from random and requires a consistent approach to be successful. Clearly there’s a wide variety of “innovation processes” to choose from, but here are some of the underlying factors we believe to be the backbone of those that are most effective:
A Portfolio Approach & Mindset ("several plays")– it’s proven that the more concurrent/competing solutions we have for a given problem (especially early on), the greater the learning/cross-pollination potential, and the greater chances of success. A large quantity of ideas is critical to fill the innovation funnel (especially given the “death-rate”). Also, it’s important for teams and management to develop the skill of evaluating an innovation “portfolio” (similar to a stock portfolio – risk, diversification, health…) instead of only looking at individual ideas. It’s not only the initiatives within a given stage, but all the initiatives across the innovation funnel that makeup the portfolio.
Phases, Milestones & Funding ("several acts within a play") – a consistent approach enables focus and cadence. When phases of the process are clearly defined with corresponding deliverables, it enables teams to stay focused on the right kinds of activities and goals. It also establishes outcomes & metrics that can be reviewed at key milestones to determine if an initiative should proceed or not. Keep in mind that two important things are happening as we move through the funnel – 1) de-risking the initiative to increase the odds of success (as basic assumptions are proven … or not), and 2) building our learnings to continually pivot the initiative into more successful territory. As these objectives/milestones are achieved/proven, commensurate funding (aka “progressive funding”) is released to fund activities for the next milestone. This enables organizations to increase the level of funding in a controlled way as success is proven.
Methodology & Tools ("the script") – as teams move through the process, different tools & frameworks can be applied. While there are many innovation approaches that are available, in general those focused on a deep understanding of user-needs & fast-prototyping are typically better suited for the early stages of the innovation funnel (like design-thinking), while those focused on business-building and scaling are typically better for later stages (like business model design and lean startup). In the end, when it comes to methodology, the most important thing is to pick an approach and stick to it rigorously. This provides a stable base to begin producing outcomes, develop tools & frameworks that prove effective, and develop capabilities & expertise in using them.
People & Casting ("the actors") – while this point is so important that we treat it as its own “success-factor” (which we’ll write about in a future post), it’s important to note that the phases of the process also trigger/imply that different skills & capabilities are needed to enable the evolving maturity of the initiative. Indeed the skills/people needed for ideation & creativity (at the start of the funnel) are vastly different than those needed to run operations of a scaling business later on. Like a theatrical play, the “cast” adapts as the story evolves. This also requires intentional management and oversight (managing the right casting of teams & capabilities), but the process is intended to help us anticipate and prepare for these “people-needs” as the initiative matures and needs emerge.
So as you think about how innovation works in your organization – are there clear phases & milestones defined? … is it managed as a portfolio of ideas/initiatives? … are there consistent tools & methodology to enable the work? … is “people-casting” intentionally managed?