7 Proven Steps to Maximize Corporate Innovation Profit
Innovators empathize. They understand the concerns of lingering leaders asking, “So, how’s that coming along?” Leaders aren’t just pressuring you into implementing some grand plan that will define their legacy (Think: Frank Underwood’s America Works program). They’re in pursuit of the lifeblood that supports us all — profit!
Have you given your Horizon 1, 2, or 3 innovations the best chance to profit? Are you sure?
Many teams aren’t. They tend to be the vocal ones.
We spoke with the CEO of a mid-size insurance company here in the Midwest last week. “Innovations don’t move fast enough. I don’t know if we’re just burning cash or onto something spectacular. I don’t even bother projecting profit.” She’s committed to the risk and loves her team, but she’s concerned.
Why? No profit in sight.
We see this concern time and again at Econic. All corporate innovators want great, big, beautiful storybook endings, where the organization is the envy of the innovator’s eye and the CEO falls asleep counting breakthroughs, not sheep. It takes time, and it starts when leaders make the decision to innovate, not after the team chooses the ideas to pursue.
Leaders will wait but, come on — waiting is hard! Here are seven proven steps to structure innovation projects as profitable enterprises.
Consider the implications of one more idea. None of them are validated, and regardless of your existing knowledge of the marketplace, these are new propositions. Don’t let the first few promising thoughts limit the ideation process from revealing an unsuspecting breakthrough. Think far and wide; you’re an idea machine and at this stage of the process, anything goes.
Spigit is a great help for this. “Spigit helps you empower your crowd to submit, discover, and analyze ideas with the most value and potential, ensuring that you never miss out on the best opportunities for growth.” Equipping key staff with the right tools is critical, and we expand on it below. Why leave ideation to a roundtable when you can mine fantastic insights from thousands of knowledgeable employees, customers, and partners?
See Spigit’s Enterprise Innovation page here.
2) COMPLEMENT YOUR TEAM WITH OUTSIDE TALENT
Employee development is a top priority throughout this process. That said, we find that most employees are unable to crawl the innovation landscape thoroughly themselves. As part of the Global Accelerator Network and leading NMotion I’ve been a witness to thousands of innovations — watching them take shape, take aim, and deploy with new rounds of funding in just 90 days.
Leaders can’t expect employees to see lean threats as they’re born and launched in a 3-month window.
Internal startup radars will provide precious intel for defensive organizations, but growing companies must take stock of every idea with the potential to pivot quickly into a hailstorm of fury on their existing business model. That sounds a bit sinister, but are you positioned well enough to leave this tracking to an in-house team?
Often the outcome of an accelerator program like NMotion is a far different product or service than what the founders envisioned 90 days earlier. Innovation is hard to see. At Econic, we’re helping clients see threats as external innovations — possible partners instead of menacing threats.
3) RECRUIT THE RIGHT PEOPLE
Assemble an innovation team that will operate with a sense of urgency. Don’t just look for innovative skills — entrepreneurial, idea-focused, finishers. Employees in more traditional roles will provide structure and accountability at every step.
Daniele Dondi of ING’s Innovation Studio shared some interesting thoughts on selecting the right team for ING’s accelerator, “I would say it’s important to select people that are not too worried about following the classical career step. Because when you join the accelerator for six months you step in a period of high uncertainty, you don’t know what’s going to happen after all. So you need to make sure that you don’t select people that will spend the last 2–3 months protecting their job, rather people that want to learn new things and are not worried about what their next position will be. And it’s not easy to find these people before you start the cycle.”
Ken Durand of Ericsson’s Atlanta Idea Factory echoed Daniele in another episode of the podcast, “We are very risk averse, and we don’t care for failing. One of the things we began to understand was that it’s not so much about the ideas themselves, it’s about the teams that you put around them. The vast majority of the people that work in a corporation are the wrong people to work on entrepreneurial efforts.”
So who is the right person? According to Durand, at least three things are important:
- Are they action oriented? Look for a bias for action.
- Do effectual or causal thinking dominate their thinking style? Look for effectual thinkers.
- Do they have it all — skill set, mature effectual thinking, entrepreneurial pieces? Assessing their backgrounds to look for those who have it all and putting them in the right environment to succeed.
4) KILL INNOVATION IDEAS SOONER
Establish very clear entrance and exit criteria for each stage of vetting. Place exit points at several stages of the process. Each stage should have objectives to help you move from one step to the next. Too many languishing projects will suck up resources and keep your team from moving as fast as possible toward profit.
And of course, before you vet any ideas — iterate and test with customers.
Justin Wilcox offers a written guide to the Lean methodology called the FOCUS framework; you can see the TOC here. He argues that “any time spent not testing is wasted time. Testing is ultimately what builds the product. We are testing the entire way so by the time we’re done with our tests we’ll have built a successful business. Testing never stops.”
If, after testing, you have good reason to believe an idea won’t reach profit, kill it.
5) OPEN CORPORATE DOORS
The team may need client lists, for example — and the more red tape they have to dig through, the longer it will take to reach profitability. Help your team bypass or streamline bureaucracy in departments such as human resources, legal and compliance. How can you get more leeway to work faster? Maybe all it will take is a little more internal education and prep work. If the speed of innovation puts your brand in jeopardy, suggest creating a separate brand to contain your new idea.
For communicating, some organizations are using Slack to create a culture of transparency and innovation. Any employee can see the conversations between teams at any moment. The advantages to this route are obvious — more transparent, easier access to answer and, of course — less e-mail!
6) USE INNOVATIVE MANAGEMENT AND INCENTIVES
Innovation teams, like the rest of us, push hardest when the time to be held accountable is near. You’ll hear Daniele discuss his observation that, in the last three weeks of ING’s 6-month accelerator, he saw more progress than in the previous three months combined! Driving a project to profit requires leaders to stagger reviews or demo days to distribute urgency evenly across the project’s lifecycle.
If innovation personnel are not managed and incentivized correctly, you can bring your innovation machine to a grinding halt. Motivating the team properly means creating infrastructure and compensation that’s noticeably different from the rest of the company. Read more about this point — Compensation, Incentives & The Places Innovation Goes to Die.
“Bonuses tied only to profit cause people to optimize for profit. If you want your innovation teams to try out-of-the-box solutions that MIGHT NOT work in order to find exciting new ways for your company to thrive, you have to provide a compensation structure that doesn’t penalize innovators for missing immediate profit and taking time to dig for exceptional opportunities, or risking failure and pushing in many different directions.”
7) EQUIP YOUR INNOVATION TEAM WITH THE RIGHT TOOLS!
Demand efficiency but offer assistance — effective MVP creation, customer interviews, market validation, partner vetting and unique metrics development are new challenges for most corporate employees.
To start, look for existing software to enhance training, design sprints, and fast development. Some helpful starting points are Balsamiq, Hotgloo and Invision (rapid prototyping tools). There are more. We spoke with Senior Experience Design Lead Scott Childs about the tools they’re using at Capital One. Listen in the link below.
Econic helps forward-thinking enterprises innovate by providing training, research and matchmaking services that tap into emerging startup opportunities. Econic leverages relationships with an unparalleled network of startup communities, accelerators and proprietary data sources to help you partner, invest, acquire or learn from startups aligned with your strategy and growth goals.
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Brian Ardinger & Josh Berry