Most of our conversations on innovation in large companies centre around how to get more innovation happening within the organization. In our haste to create new products, services and business models, we have neglected another major challenge that large companies face. In his new book The Startup Way, Eric Ries calls this the problem of success. Beyond the struggle of coming up with great new ideas, most innovators are frustrated because their companies don’t know what do with the ideas that succeed!
In my many conversations with heads of innovation labs, this is one of their top challenges. They have worked on a great idea. They have found the right business model. They are getting some traction in the market. But they cannot find support from executives within the main organization to take their product to scale. As I have explored these conversations more, I have learned that there are some misalignments between innovation teams and their parent companies. Managing these misalignment can help deal with the problem of innovation orphans (i.e. new products and services that customers want, but your company doesn’t want to sell).
• Don’t Create An Innovation Silo: This point wades into the debate of whether innovation should be done within the company or in a separate innovation lab. In my opinion, this is a choice that is dependent on the context of the company itself, the politics within the organization and how radical the innovation projects are going to be. However, regardless of where innovation happens, the innovation teams must not become siloed away from the parent company. Even as we work in separate innovation labs, we must strive to stay connected to the parent company. We have to work on problems that are of value to the leadership with the company; and we have to work on gaining trust through letting the rest of the company experience and understand our innovation methods.
• Strategic Alignment: This ensures that the projects we are working on matter to someone else in the company beyond our innovation team. It is important that innovators work with their executive leadership to define and agree an innovation strategy for the company. This strategy can be designed as an innovation thesis, which is based on an analysis of the key trends that will potentially affect the company in the future (e.g. population, competitors, technological, social or economic). An innovation thesis is a clearly stated point of view of how the company is going to use innovation to respond to these key trends. It defines the types of innovation projects the company will invest in and also what the company will not invest in. Such clarity at the strategy level, not only provides innovators with the right canvas to paint on, it also make conversations around what to do with successful ideas easier because innovation teams have been working on strategically important projects from the beginning.
• Process Alignment: This ensures that we have an agreed method for tracking and measuring success. It is now clear to most leaders that they cannot manage innovation using the same tools and processes that they use to manage their core business. The challenge is that most companies don’t have a clearly articulated innovation framework with different success criteria. As such, the fall back position for evaluating innovation projects is revenues, return on investment, net present value and profits. However, such metrics are inappropriate for the startup phases of an innovation project. Innovation teams need to work with their executive leadership to help them understand how to ask the right questions at the right time. For example, during the early stages of a project, the right question to ask is whether there is a real customer need that can be solved by our solution. Asking for revenue projections before we understand what customer want is the wrong question at the wrong time. Process alignment can help innovators manage conversations with their leadership teams as they prepare for scale.
The “problem of success” highlights the fact that innovation cannot succeed in a repeatable way if it is done under the radar. Having successful ideas often requires teams to surface into the consciousness of the leadership within their company. How those leaders respond to our success will determine whether or not we end up with innovation orphans on our hands. As such, it important to already be engaged with our organization, working to define strategy and innovation processes before the problem of success arises.