While much of Pandemon.io focuses on the three big technology functions—organizing, deciding, and acting—that will change business in the coming decade, we’re also inviting experts in innovation and organizational change to show us how to harness these disruptions.

One such innovator is Angelique Mohring, whose company helps Global 1000 organizations move from “pockets” of innovation to a position where innovation is a core competence. Her diverse background—in technology, entrepreneurship, and cultural anthropology—has given her a unique perspective on making change happen.

Pandemonio: How can a company measure its return on investment in innovation?

Angelique: Start with what innovation means to your organization. This doesn’t mean a vision or mission statement — what does it actually mean to your bottom line, to your market, to your customers? Why innovate? Identify all the areas where you will be, or are, spending to drive greater innovation. Strategy? Market? Operations? Culture? What does success look like from a market view-in? Stay away from vanity metrics like the number of ideas you’ve gathered or twitter followers or how many POCs you’ve engaged — these activities are a part of your investments, not your returns.

It’s important to understand the negative impacts that hidden costs are having upon global organizations today in their efforts to become more innovative. The majority of global corporations trying to do disruptive innovation have only a 1–3% chance of success in the market and even if they are successful, they’ve likely incurred an additional 100–150% of planned spend in hidden costs. You know your COGS, yes? The cost to acquire customers, yes? Your infrastructure investments? Talent investments? If you want to be competitive and compete for the “workforce of the future”, you’ll need the same discipline in your ISM (innovation strategy Management) and ROII (Return on Innovation Investment.)

P What supporting elements need to be in place within a company for innovation to produce real results, rather than just “innovation theatre”?

Innovation theatre is fueled by vanity metrics and reminds me of sparkle sticks that kids light up at night. Positively distracting, captivating and mesmerizing for a very short period — risking temper tantrums, disenchantment and complete disengagement once they fizzled out.

The short answer to what supporting elements are needed for real innovation is: Discipline, Agility, and Data.

Discipline doesn’t kill creativity — it fuels it. Think of the elite athlete. Elite athletes do not make it to the top of their game through sheer will power or by loosely tossing ideas out there hoping something sticks nor do they succeed alone, ever. To compete today, you, like an elite athlete, require a systematic approach to evolve and grow. You require disciplined processes and the agility to be responsive to the insights you gain through data analytics. You’ll require a strong, transparent ecosystem and a diverse team of experts and contributors around you.

Discipline and agility across your ecosystem includes having an integrated, responsive innovation process and the financial maturity to support it. For example, do you take profits from commercial successes and re-invest into exploratory research? Do you provide your employees with the autonomy, trust and budgets needed to explore, to ideate, to cross pollinate and try new things themselves? Do you understand how ideas and concepts naturally flow across your organization? (If you liken this to a hierarchal org chart, you’d be mistaken).

Every detail of the ecosystem is analyzed for the athlete — and s/he and her entire team are responsive, agile, and disciplined in their approach to continuously show up, improve, transform, and to innovate.

P Pure science, it’s often said, can’t be measured or held to a timeline. If innovation relies on serendipity, can we still track and analyze it without stifling it?

A Innovation can indeed be serendipitous; however, we have many examples in our short history on earth of spotting, tracking, analyzing and leveraging opportune moments. If we look at the arc of innovation in technology, for example, it has been punctuated with tremendous leaps forward and continuous exploration.

In just a few short decades we have moved from analog to digital and into a quantum future. Each discovery building upon the one before it. Each failure informing the next discovery.

In today’s rapidly changing markets, to seize opportune moments for a competitive edge, we cannot leave discovery — or delivery — to chance. Leaders need to balance creativity and discipline to sustain a connected, transparent ecosystem that fuels collaboration and cross-pollination. Become responsive and agile enough to leap upon opportunities when they arise and excel in your ability to execute and to deliver something exceptional.

Again, it comes back to discipline, agility and data. Do not believe in “fail fast” or that “culture eats strategy for lunch.” These sentiments are grounded in the analog world trying to catch up to the digital world. We are no longer in either. The pace of change will only continue to accelerate — if you do not have the ecosystem to be responsive, fluid, and exceptional in our changing market — you will become extinct.

P When should a company build something themselves, when should they partner, and when should they acquire a startup?

A Yes.

Ok, it’s the question every competitive company asks — buy, build or partner? Ask a hundred CEOs and get a hundred different answers.

Build when it’s your core competency — this is where you should be the expert.

If you are going to build new things beyond your core competencies, be mature and take real measure of the opportunity cost in doing so. Too many times I’ve seen companies suggest “it can’t be that hard to build ourselves.” Perhaps it isn’t, but it will take you longer, costing you more hard cash and resources. What’s more, you risk losing any competitive edge you thought you might gain because your expertise is now diluted doing things that could have been bought or gained through partnership.

Buy — if you can leverage the value immediately, if it impacts your core competency positively, or if your removing the opportunity out of the market, away from your competitors. I’ve seen the Big Enterprise both buy and partner with start-ups because of the tremendous value they can bring to their consumer base. That value, however, should have landed in the market within 3–6 months to reap any measurable competitive advantages but one particular enterprise had a 36 month go to market cycle. #fail

Partnerships are interesting when it comes to innovation. I’ve seen many partnerships result in nothing more than an exercise in branding. Sounds good, looks good on the surface — but innovative impact? Zero. Then, there are those few unique partnerships that are purposefully designed for measured delivery and impact.

Customer impact, market impact, employee impact. #win

P What’s “pocket” innovation?

A Pocket Innovation is a term we use to describe global organizations that are at a specific level of innovation maturity and capacity within their business.

These companies have made progress in building some innovative teams (but not an ecosystem), in creating an innovation strategy, and might be investing into research and leadership; however, innovation is stuck in pockets across the enterprise and the organization is struggling with full adoption:

  • Innovation theatre is still alive and vanity metrics are, sadly, still driving key decisions.
  • Innovation processes — from financial, HR, ideation, innovation, commercialization — are still being defined and maturing.
  • Innovative and transformative leaders are hard to attain and have a very high turnover rate.
  • Employee engagement is creating a significant of what, in our tools, we call “Innovation Drag”, or waste, costing big companies millions of dollars.
  • Internal politics often sway innovation strategy more than market or consumer demands.
  • Strategic focus is primarily very short term or very long term with a dearth of initiatives or focus in the midterm which, therefore, creates inherent risk.

Importantly, organizations that are Pocket Innovators and that are trying to be disruptive have a very low chance of success — maybe 1–3%. That’s a greater than 97% failure rate. And, even if they are successful, the hidden costs across their organizations are costing an additional 100–150% of their planned spend. In other words, a $20M innovation or transformation initiative costs upwards of $40M or more — driving any potential ROI into the ground.

Sound like your business? Take heart if you believe you are here. You’ve made progress. But more importantly, take measure and steer clear of innovation theatre and vanity metrics.