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THE RESPONSIVE INNOVATION ENGINE
(CORPORATE INNOVATION) ARCHITECTURE ™
The Responsive Innovation Engine (Corporate Innovation) Architecture (Responsive IE) is Legacy Innovation Group's comprehensive and proprietary model for Corporate Innovation.
We created this architecture because Corporate Innovation has to deliver. It has to deliver real outcomes that produce real business impacts, and it has to do so on a number of different levels. In fact, among the legions of core competencies that businesses are challenged to master, Corporate Innovation is singularly unique in the leadership demands it makes, the cultures it requires, the organizational structures it uses, the roles and responsibilities it calls upon, and the processes it employs — all to ensure a constant flow of open, divergent ideas for new business opportunities.
Because of this, the primary aim of any Corporate Innovation program has to be to create within the business an "innovation engine" with the intelligent power needed to drive continual, effective growth. But yet most companies struggle when trying to implement this type of enterprise–wide innovation. Their struggles stem from not having a well–designed program with high–level coordination (which often hamstrings projects). Responsive IE solves this problem. By driving high–level coordination across a broad portfolio of activities, it is an architecture that, when used properly, will in fact create within a business a highly responsive innovation engine.
Responsive IE addresses all of the critical considerations that a Corporate Innovation program must make, such as… the program must demand ownership and full support from the most senior levels of the organization — including the CEO — and must be given a seat at the C Table. The program must teach and instill a culture that embraces uncertainty and change, that fosters exploration and learning – even learning through constrained failure, and that engages a generation of professionals hungry to live out a sense of purpose and meaning. The program must build an unconventional organizational structure that gives life to new types of teams, broadens existing teams, and creates a network of collaborators throughout the organization and beyond. The program must leverage a unique selection of roles and responsibilities to accomplish its aim — at times employing armies of "volunteer" intrapreneurs to get the work done. And the program must implement a very calculated process with well–defined steps, triggers, and hooks if it is to achieve its goal of delivering substantial new growth for the business. And it must do all of this in a way that is completely tailored to the business. Responsive IE makes this happen.
THE STRUCTURE OF RESPONSIVE IE — EIGHTEEN ELEMENTS
The Responsive Innovation Engine Architecture defines eighteen elements that every successful Corporate Innovation program must address. Each element is distinct and must be well–considered and well–designed if it is to align to the business, its strategies, its markets, and its opportunities. The eighteen elements are clustered into six groups.
The eighteen elements
Sponsorship & Leadership — The imperative that ownership of the Corporate Innovation program begins with the company's executive leadership team.
Philosophy / Beliefs — A fundamentally different set of philosophies about business and innovation that stand to drive truly impactful innovations day–in and day–out.
Values — The organization's embrace and reflection of ideals that value innovation for reasons of strategy and purpose.
Culture & Environment — The underlying organizational culture needed to nurture and sustain Corporate Innovation.
Structure & Relationships — The organizational structures needed to facilitate Corporate Innovation.
Governance Processes — The processes used to operate and govern Corporate Innovation across a broad array of domains.
Governance Metrics — The specific KPIs and metrics used at various stages to green light appropriate innovation projects for evaluation / implementation / commercialization, and to judge the effectiveness of the overall Corporate Innovation program.
Roles & Responsibilities — The roles and responsibilities needed to successfully carry out Corporate Innovation.
Funding — The budgeting processes used to finance the Corporate Innovation program.
Budget Management — The budget management processes used to manage the Corporate Innovation program's spending patterns.
External Investment — The funds set aside and managed for investing in external (inorganic) innovation pursuits.
Training & Resources — The provision of appropriate training and resources to teach participants how to think like innovators and have the insights, tools, mentors, and places they need to be successful as innovators.
Discovery & Insights — The mechanisms and resources for discovery and insight-mining work, including research to uncover unmet needs with current offerings, and trendcasting, trends analysis, and futuring to discover new, longer term Foundations of Value.
Technology & Infrastructure — The technology investment in creative design tools and capital equipment, and the infrastructure investment in labs and research spaces needed to simulate real world environments to test out new innovations.
Networks & Ecosystems — The support system of relationships among an array of internal and external partners, providers, investors, customers, and others that align around new ways of working so as to deliver new business models and new value propositions.
Engagement — The mechanisms used to drive organizational engagement in Corporate Innovation in order to feed the program's pipeline.
Recognition & Rewards — The use of recognition and rewards (for teams and individuals, both inside and outside the company) to reinforce the "value of innovation" message and sustain engagement in the program.
Public Relations — The communications used to build and sustain support for the Corporate Innovation program.
These eighteen elements are examined in greater detail below.
Additional details of the Innovation Management process (which resides within, and is a key piece of, the Corporate Innovation program) are covered in our Market Stream Innovation Management System. Formulating the actual portfolio of innovations to pursue is covered in our GR5 Growth Strategy Roadmap. These tools are designed to complement Responsive IE and one another.
THE EIGHTEEN ELEMENTS —
RESPONSIVE INNOVATION ENGINE (CORPORATE INNOVATION) ARCHITECTURE
SPONSORSHIP & LEADERSHIP
In order for a Corporate Innovation program to be successful, the company's Board of Directors, CEO, and Executive Leadership Team must act in concert to do two things.
First, they must issue a mandate for innovation and for innovation–driven growth. Inside of any Corporate Innovation program, this mandate has to exist, and it has to originate at the highest levels of the organization. With this, its priority and gravity must be clearly communicated throughout the company, horizontally across every function, and vertically along every level. In some cases, other mandates, structures, roles, and processes may need to be altered to accommodate this mandate. Ultimately, it has to be given a level of priority in the organization to ensure it will be taken seriously and live a long life. Until the Executive Leadership Team has issued such a mandate, innovation will go nowhere. No amount of training, process, procedure, and so forth will make the company any more innovative. It is not until this mandate has been issued that the patterns for pursuing innovation will get laid down, the philosophy of innovation embedded, and ultimately, that innovation will happen in the business.
Second, the executive leadership team must pledge and act on its ongoing support for the people and groups who are to carry out the program. This will at times mean providing "air cover" for the program and running interference for its projects in order to shield it against the forces of organizational momentum that — in the name of efficiency and immediate returns — otherwise seek to protect the status quo. This requires that the leadership team embraces a long term perspective and a healthy respect for the fact that the world around them is constantly changing and those changes will imminently demand the sort of exponential thinking that only comes from intentional innovation.
PHILOSOPHY / BELIEFS
If an organization is to make truly impactful innovation a day–in and day–out reality in their business, they are going to have to adopt a fundamentally different set of philosophies about business and innovation. In particular, they must fully embrace each of the following three core philosophies:
- The belief that innovation is everyone's job, and therefore the need to instill ways to make that a reality across the business.
- The belief that innovation can be pursued and achieved intelligently, and therefore the need to take an intelligent approach to innovation.
- The belief that breakthrough and disruptive innovations are necessary, and therefore the need for a clear mandate to pursue these.
PHILOSOPHY 1: INNOVATION IS EVERYONE'S JOB — MAKE THAT A REALITY!
This philosophy demands that innovation not be relegated to a core, elite team locked away in an ivory tower somewhere (though those teams have their place), but that it be democratized by giving everyone responsibility for it, and the right orientation and tools to deliver on it. It understands that achieving successful innovation across a business means that every area of the business must be fair game for innovation, whether it's in R&D, Product Development, Sales, Marketing, Operations, and, yes… even Executive Management. Only by embracing this philosophy will the organization be able to evolve and continue thriving and growing into the future. This being the case, there are three key practices that accompany this philosophy — things companies must do to make this a reality. They are:
PRACTICE 1: Start with a Market Orientation
This means that instead of taking a primarily "push" approach — pushing what the company wants into the marketplace — the company instead takes a primarily "pull" approach — it first seeks to understand what unmet needs or "jobs" exist in the marketplace (especially the unspoken and unarticulated ones that cannot even be known by the markets yet), and then it tries to use its talents, skills, resources, and know–how to deliver some new value against those unmet needs. Doing this is not at all easy. It requires living very close to one's markets and using some very key market insights skills.
PRACTICE 2: Inculcate Discovery Skills in the Organization and its People
There are certain behavioral and cognitive practices associated with successful innovation. These are observing (deep observation in search of those clues that indicate what's not right), questioning (asking lots of "why", "why not", and "what if" questions), networking (sharing observations, thoughts, and questions with a broad and diverse array of people to see what synergies arise), experimenting (testing out things on a small scale to see what works), and associating (connecting all of these insights to identify the real "a-ha" opportunities). Collectively these are called the Discovery Skills, and if an organization is to make itself and its people effective innovators, it must teach them to use these practices constantly until they become a core skill set of the organization.
PRACTICE 3: Finish with a Design Orientation
This requires a fundamental shift in how the business looks at the world, and how it thinks about the challenges and opportunities lying before it and its customers… understanding that everything in the created world is a product of Design — good, bad, or otherwise. This changes behaviors. The behavior becomes one that begins with a different set of questions around the value proposition and then takes a very intentional approach to arranging and orchestrating the pieces of that proposition such that they work in maximum harmony with one another — as an overall "system", and in particular, with people. It drives empathy for all the "users" involved. This applies not only to products and services, but also to experiences, brand engagement, and — very importantly — to the business itself.
Design orientation is rooted in the principles of Design Thinking, and brings with it a host of innovation tools known as Design Methods. These are used to study the world around us and discover imaginative new ways to break through challenges and unlock opportunities (see The Legacy Innovation Toolbox). It also brings with it the mindset of Human–Centric Design… designing the products of our work to resonate with the activities of humans, who — in whatever capacity — must engage with them.
PHILOSOPHY 2: INNOVATION CAN BE PURSUED INTELLIGENTLY — TAKE THE INTELLIGENT APPROACH!
This philosophy understands that innovation is not a random act of creativeness, nor is it reckless abandon. There are practical and methodical approaches to innovation, just as there are for any other practice. These approaches significantly lower the level of risk associated with pursuing innovation, because they are intelligent about how they go about it, and they employ the most effective vehicle for doing so. There are two principles associated with the intelligent pursuit of innovation. These are:
PRINCIPLE 1: Take Smart, Managed Risks in the Pursuit of Innovation
This means two things. First, that the organization is fundamentally willing and prepared to take risks (and there will be some failures, otherwise they're not trying hard enough). Second, that these risks will indeed be calculated risks, as they rest upon the layers of discovery work undertaken as a result of the preceding philosophy (Innovation is Everyone's Job). Having completed the right types of discovery work closely and deeply within the markets while using a Design orientation to conceive new solutions, the risk of what one subsequently pursues is inherently going to be lower because the idea will be well–informed about effective solutions to legitimately unmet needs. This means the chances of success are going to be substantially greater than a random method could ever produce. Furthermore, because one of the Discovery Skills is experimenting, certain small–scale experiments will be run against these ideas in order to develop them further and ensure they work optimally. This further reduces the risk of the ensuing large–scale commercial move. All of these steps bring the level of risk into the realm of being palpable and acceptable.
PRINCIPLE 2: Innovation Happens in Small, Autonomous, Well–Designed, Well–Staffed Teams
The most effective way to pursue new innovation is to use small, well–designed, well–staffed teams with the autonomy to do what is required (within reasonable bounds) to go out and discover new needs and conceive new solutions. What this means is that the teams pursuing new innovation need to be relatively small (e.g. six to eight individuals), well–designed (complimentary discovery skills and functional expertise), well–staffed (as many "T–shaped" contributors as possible, for empathy and associating reasons), and autonomous (free of bureaucratic burdens that otherwise clog up the process). When such teams are formed with a clear charter, and allowed to use the Discovery Skills to find and validate new needs and solutions, they will deliver new innovations more effectively than any other entity the company can otherwise put together. Actual implementation thereafter may require a larger team focused on execution, but the initial discovery and conception work needs to happen under these conditions.
PHILOSOPHY 3: HORIZON 2 AND HORIZON 3 INNOVATIONS ARE NECESSARY — MAKE THEM A MANDATE!
This philosophy recognizes that, although ordinary incremental innovations are needed to gradually extend the business' current foundations of value, such a strategy is ultimately short lived. Over time, the world changes, markets change, technologies change, and so must the business and its offerings. What this means is that the fundamental underlying assumptions of the business model and the value proposition must be regularly reexamined and challenged, to see if they still hold up against current external realities. Inevitably the day will come when the argument that they do becomes increasingly weaker. Indeed, while a business may go through any number of business cycles with successive generations of the same value proposition, eventually the assumptions underlying that value proposition will give way to new realities, and the only viable path forward from there will be to abandon it and embrace a completely new one… one that is the breakthrough or disruption for that market space — and one that has the ability to carry the business into the future. But since new business models and value propositions take time to develop, implement, and scale, one has to proactively pursue these early on, even before they are needed. When this is well understood within the business, it will become clear that breakthrough innovations are necessary for Horizon 2, and disruptive innovations for Horizon 3, and there will come to be an ongoing mandate for pursuing these.
This also calls for a lean and responsive (agile) approach to innovation.
These are the three core business philosophies that a company must embrace if it is to deliver truly impactful innovations day–in and day–out. Similarly, if a Corporate Innovation program is to realize its fullest potential across the business, this set of philosophies must become deeply woven into the fabric of the program.
In a mature innovation organization, the organization will have reached a point where its values embrace the concepts of market relevance, long–term resilience, and overall market leadership. It may even have a formal statement of values indicating this in so many words.
Furthermore, if these truly are the organization's values, it will have put into practice the beliefs associated with the innovation philosophy, such as market orientation, design orientation, and methods for pursuing smart innovation and minimizing risk, including the use of discovery skills and business experimentation.
These are the essence of mature innovation values.
CULTURE & ENVIRONMENT
While leadership initiates Corporate Innovation, and philosophy steers it, culture is what nurtures and sustains it.
Organizations who understand this are intentional about cultivating and nurturing not only a culture of innovation, but more importantly, a culture of relevance. What this really means is a culture that embraces change and uncertainty, and that constantly strives toward new levels of market connectedness and a more enlightened sense of purpose (see the Experiential Workplace Framework for more on this).
Unfortunately, this has traditionally been the exception to the rule. For the past century, businesses have been trying to apply Modern Management Theory in a relentless pursuit of efficiency, productivity, and lean, all aimed ultimately at maximizing margins. This has produced cultures that inherently presume the world will go on working the way it currently does — that our futures can be extrapolated from our present, and that we should therefore expend our energies and efforts toward finding new ways to maximize the capitalization of those patterns. But that is not the reality of the world we live in. Instead, society, technology, markets, and the world at large are changing at a rapid pace. The world will not go on — indeed, is not going on — working the way it currently does, and our futures cannot be predicated on our present.
This requires the sort of nonlinear, exponential thinking that expects the world to change, and is willing to embrace that reality and act on it. But such a change in thinking does not come without a change in culture. Therefore, the successful pursuit of Corporate Innovation requires a shift in culture, if not for the entire organization, then at least for the parts charged with delivering innovation–driven growth (including the executive leadership team).* This culture must become one that fully embraces the uncertainty and changes imminently before it, that desires to find the offensive maneuvers it needs to respond accordingly, and that openly fosters the exploration, experimentation, and learning — even learning through constrained failure — needed to get there. It's a culture that creates an environment welcoming of the innovator's discovery skills — observing, questioning, networking, experimenting, and associating. Such a culture will engage a new generation of professionals on their own terms… hungry to live out a sense of purpose and meaning as they press forward into the future (a viewpoint shared by many Millennials). Change will invariably come about as a result of this program. Therefore, this culture is absolutely necessary if the company is to create an environment conducive to creative innovation and to breaking down the barriers and obstacles that will invariably be thrown in the way of these changes. One of the important ways it does this is by giving the organization a common language around innovation, and a common set of core values for innovation and growth. When these become woven into the corporate vernacular, they give innovation a "soul"… a presence… a persona… a face within the organization, and they become an integral part of the organization's way of life.
Finally, this need for cultural underpinnings cannot be overemphasized. Peter Drucker famously once said "Culture eats strategy for breakfast". Mick Simonelli similarly stated that "Culture eats innovation for lunch." So, while a good culture might survive a bad strategy a time or two (though not indefinitely), a good strategy never survives a bad culture! When a business hits hard times (and every business inevitably will), culture is what separates the survivors from the losers. Thus if a Corporate Innovation program is to thrive and produce the results it signed up for, it must have the cultural underpinnings it needs to support and nourish it over the long haul. A lack of this culture is a non–starter for success in Corporate Innovation.
* Note that even inside of great cultures, operational bifurcations can and do occur. This gives rise to the ambidextrous organization with structural ambidexterity — parts of the company are focused on operational efficiency for today and parts are focused on innovation–driven growth for tomorrow. This is not always a bad thing, and in some cases can be thought of as "flying the plane on both wings".
STRUCTURE & RELATIONSHIPS
Successful Corporate Innovation requires its own unique set of organizational structures. Just as trying to get water to flow from Point A to Point B requires a plumbing structure, or trying to get energy to flow from Point A to Point B requires a wiring structure, trying to get new ideas to flow from conceptualization to commercialization requires a particular set of organizational structures. Without these structures, the ensuing innovation processes will be unable to "flow", and individual efforts will hit dead-ends and roadblocks with no easy way around or over them. This means that projects will go unexecuted and the needed results unrealized. For this reason, having the right structures in place is imperative.
Perhaps the most fundamental structure question the organization will have to address is where to locate its "innovation function" — does it centralize innovation, decentralize innovation, or do both. The first utilizes a dedicated core innovation team to drive and execute all innovation projects. The second rolls out innovation as a core distributed competency, and tasks individual functional groups and business units with making a certain percentage of their projects true "innovation projects". The third uses a combination of both approaches. No one approach will be right or wrong for every situation. There are well–understood pros and cons to each approach, and each company must carefully consider its current organization, its culture, its capabilities, its industry and markets, and any number of other factors to determine which approach might be best suited for it.
The following matrix lays out some of the implications for centralized versus decentralized approaches. As can be seen, for each stage of the innovation process — front end (ideation), mid zone (strategizing), and back end (commercialization) — this decision has important implications for where certain commercial and technical activities will take place (e.g. Chief Innovation Officer's office versus front line business units, etc.).
In more "traditional" organizations, it is usually advantageous to centralize innovation as a stand–alone function, as such groups will be less encumbered with the current way of doings things and can more easily "break away from the pack". In more "progressive" organizations, it is often advantageous to either decentralize innovation or take a hybrid approach. The majority of businesses considered "most innovative" tend to employ a hybrid of both approaches, with each offering a slightly different aim and outcome. Generally in those cases, centralized projects tend to focus on more "close–in", short to medium term innovations, while decentralized projects tend to focus on more "out–there" long term innovations.
Once this key decision has been made, the next step will be to define and build out the necessary team structures to ensure individual projects get championed and executed. Generally speaking, the structure of these teams will entail three primary roles — leaders, facilitators, and implementers. These are explained in more detail under Roles and Responsibilities.
The final step in the area of structure is to define the working relationships between the groups involved (e.g. core innovation team and front line business units) and the particular events at which formal interactions will take place and decisions made. These relationships can involve any number of structured and unstructured interactions, used as needed for each project (with generally no limit to how much informal interaction takes place). The guiding philosophy for these relationships should be one of stakeholder alignment, as the critical need will be to manage stakeholder expectations and get the right people on board with specific decisions prior to taking the next action steps. In terms of formal events, this may look like something like a traditional phase–gate process in which decision–makers convene, review insights and results to date, and make decisions as to whether to continue supporting specific projects, modify them, or shelve them, according to a predefined set of metrics and KPIs.
Once structures have been defined, it is next possible to define the actual governance processes, or more accurately, series of processes, the innovation program will use. Given that the broader program may incorporate a variety of activities involving any number of growth vehicles and any number of internal and external constituents, the details around each process can vary considerably from one to the other.
In order to think about overall governance, it is easiest to break the innovation process into its three stages — front end (ideation), mid zone (research and strategizing), and back end (development and implementation / commercialization). At each stage, a gating process will need to be used to move the most promising ideas forward, while rationalizing the rest (perhaps placing them into a "parking lot" to be revisited at a later time). This process starts out with a funnel (widely capturing as many ideas as possible) and proceeds to a pipeline (those worth working on). Its management is similar to that of a traditional phase–gate process, except that in the case of new innovations the projects often end up having to be continually "pitched" to decision–makers as they get further refined throughout the process. This process of managing innovation is well documented in the Market Stream IM System. Having a solid Innovation Management system in place will prove critical to maintaining support for the program inside the organization, as it gives participants a clearly understood process for getting their ideas introduced and having them fairly and objectively considered by the business. This will boost their morale and engagement in the program.
On the front end (funnel), new ideas can be captured and evaluated through the Innovation Management system. These ideas may originate from any number of sources, including, for example, individuals, internal ideation campaigns, external crowdsourcing, strategic think–tanks, or anywhere else (see Engagement below). Responsibility for capturing all these ideas and ensuring they get properly catalogued will fall to managers in the Corporate Innovation program. It is important they ensure that all new ideas, regardless of their source (internal or external), get catalogued and tracked in the IM System so that the program's overall effectiveness can be monitored. Corporate Innovation Managers will find internally–generated ideas from mechanisms officially tied to the program the easiest to capture and catalog, while externally–generated ideas from outside sources such as Open Innovation partnerships and CV–backed startups will be more challenging to capture and catalog, particularly when those areas are managed by separate groups. Nevertheless, it is important they capture and track these ideas, as they are often the ones that are so novel and foreign to how an industry works that they end up being the really impactful, even disruptive, innovations that matter the most.
In the mid zone (early pipeline), where projects have been vetted and certain ones selected for investigative and planning work (e.g. market research, developing go-to-market strategies, etc.), the process can be managed on the basis of whether the work is to be undertaken internally or externally. Internally, business plans are developed and pitched to a Selection Panel (aka "Angel Committee"), as explained in the Market Stream IM System. Externally, the process will typically involve outside parties doing most of the work, and then interfacing with key point–persons inside the Innovation Group or front line business units. The results of that work will also be pitched to a Selection Panel for further investment prior to commercialization. In the case of Corporate Venturing, the investment decision process is typically managed separately based on the perceived merit of a particular venture, and is generally overseen by a separate Selection Panel.
In the back end (late pipeline), where projects have been fully green–lighted for development and implementation / commercialization, development will generally take one of three routes, while commercialization will most often take place inside of a sponsoring business unit, particularly if it involves a new offering. In Route 1, the development integrates into the organization's standard New Product Development (NPD) pipeline or some similar pipeline (e.g. Manufacturing Process Improvement Team if the innovation involves a new manufacturing capability, or Sales Capability Team if the innovation involves a new Sales and Distribution process). In Route 2, the Innovation Group uses its own development team to develop the new innovation, more common where there is a new technology or new product category involved. In Route 3, the development is sourced to an outside third party. The decision as to which of these three routes to take will depend on the nature, scale, and scope of the project, and how well it otherwise fits with what a particular business unit may be doing and how they wish to pursue it. From an implementation / commercialization standpoint, if the new innovation involves a product or service offering, commercialization will generally fall back to a sponsoring business unit (unless there is no business unit aligned to it, in which case either the Innovation Group will commercialize it, or a new business unit will be formed to do so). If the new innovation involves a process (internal or external), implementation will tend to fall to an appropriate functional group, and will be implemented across most or all business units.
As seen, Corporate Innovation governance, and Innovation Management in general, have distinct processes for the front end, mid zone, and back end of the funnel / pipeline. So long as these are well coordinated, the program will yield a steady stream of results. One important consideration across all these stages is that the governance process operate on agreed–upon ground rules, and those rules are made widely known. This drives transparency within the program and across the organization. That in turn helps to maintain the health of the program by ensuring participants feel there is a level of objectivity in how it is managed.
In the course of carrying out Corporate Innovation, select sets of metrics and KPIs will be needed for governance purposes. Since innovation programs generally have many facets, these metrics and KPIs will fall into a number of different categories, each serving a particular purpose. Below, six such categories are highlighted, but in any given program there can be more or less than this, depending on the design and intentions of the program.
The first category of metrics will be those used to evaluate individual ideas and projects prior to and during early development. Typically each phase of the Innovation Management process (funnel / pipeline) will have its own sets of metrics. While the exact metrics may vary from one business unit to the next, according to their particular needs, the metrics should nevertheless be applied uniformly across all the ideas and projects so as to drive objectivity and transparency in the process (important for keeping positive morale in the program). Examples of possible metrics might include: degree of alignment to BU strategy, ability to create new value platforms, expected revenue over the first 5 years, line extension options, implementation costs (to develop / produce / market / sell), financial returns (e.g. ROI, DCF / NPV), development lead times, commercial risks, technical risks, and so forth. These are not unlike the metrics used in normal product roadmap discussions, except that since the ideas are typically more "outside the norm", the confidence around their projections may be somewhat fuzzier (though this should not be seen as a roadblock).
A second category of metrics is those used to evaluate insights gained from market research. Their purpose is to judge whether or not the research indicates acceptable viability of a particular concept, such that further research and/or development is warranted. Since market research will be conducted for only a select few concepts, the need for uniformity here is less pressing; the most important consideration will be to ensure that the metrics or KPIs are well–suited to the situation and to what needs to be learned about the concept.
A third category of metrics is those used to evaluate the learnings from in–market testing conducted in select test markets. The purpose of these metrics is to gauge whether or not these tests indicate a level of market viability and scalability that will prove attractive to the company, and if it should therefore move forward with a full market roll–out. Since there will only be a limited number of market tests conducted, the need for uniformity here is less pressing; the most important consideration will be to ensure that the metrics or KPIs are well–suited to the situation and to what is attempting to be demonstrated about the concept.
A fourth category of metrics is those used for Corporate Venturing decision–making. These are used to gauge the expected success and growth of a particular new business venture such that decisions can be made around whether or not to invest, when to invest, how much to invest, and how much to otherwise get involved in each new venture. Typically, different metrics will be used depending on the growth stage of the venture and the degree of alignment it has with the organization's core business strategy.
A fifth category of metrics is those used to evaluate the final success of individual innovation projects. These can be any standard business metric, such as real revenue growth, margin realization, brand uplift, regional sales volumes, actual versus planned costs, impact elsewhere in the business, and so forth. Each project will be judged against its originally forecasted / expected success parameters (those established in the first category above).
A final — and very important — category of metrics is those used to assess the health and success of the Corporate Innovation program itself. Particularly as the program begins to enter into its third, fourth, and fifth years, there begins to develop some clarity around its overall level of effectiveness in driving new innovations that have meaningful impact to the business and its markets.
Often this set of metrics is broken down into approximately eight areas, as follows:
Leadership — Organizational perceptions of executive support for the program (perhaps as assessed through 360° surveys) / Percentage of executive time spent on nurturing innovation projects.
Environment — Strides in alignment and support from other organizational domains (being a help rather than a hindrance) / Progress made in continuing to remove obstacles to innovation and change.
Competence — Percentage of participants trained and certified in business innovation / Improvements in the caliber of ideas generated by the program / Participant engagement in, and satisfaction with, the overall program (perhaps as assessed through 360° surveys).
Inputs — Number of ideas generated internally and externally in each period / Participant time invested in the program each period / Capital invested into the program each period.
Throughputs — Quantity and caliber of ideas passing screening from funnel to pipeline in each period / Financial value of the pipeline by stage / Time required for projects to move through the pipeline from concept to reality.
For more details on the pipeline process, see Market Stream IM.
Outputs — Number of concepts commercialized in each period / Revenue derived from new offerings across a given period / Margin gains attributable to new offerings across a given period / Value of new markets entered or created / Uplifts in brand equity for a given brand / Impacts on the broader corporate strategy.
Efficiency — Improvements in the ratio of general program outputs to inputs / Improvements in the ratio of "market successes" to "market failures" / Improvements in capital efficiency (revenue & margin lift versus capital invested).
Balance — Mix of innovation types from around the business model (e.g. offerings, markets, channels, etc.) / Mix of risk levels (e.g. core, adjacent, or new markets) / Mix of time horizons (e.g. short, medium, and long term).
For more details on all of these, see GR5 Roadmap and Breakthrough BI.
Needless to say, there are a large number of metrics that can be used for program health assessment. The important consideration is to use those that are most meaningful to the business and that will drive momentum toward the desired behaviors and outcomes.
ROLES & RESPONSIBILITIES
Just as with structures and processes, Corporate Innovation will need to establish a clear set of roles and responsibilities. The most important consideration here will be the selection of those leaders used to drive the program, at all levels — strategic, tactical, and everywhere between.
At the strategic level, Corporate Innovation requires its own seat at the C table — known generally as the Chief Innovation Officer, or CInO. This is to ensure it has equal footing and visibility with the organization's other functions and that it has a voice when needed, including at times being the prominent voice.
The person who fills this role will become the business' Innovation Architect. As such, the position demands a particular type of executive — one who sees the big picture, one who gets the "round peg in a square hole" nature of innovation, and one who can convincingly articulate a vision and plan for moving the program forward, as well as advocate for its individual projects. There is a relatively small cohort of executive–level leaders who match this unique profile.
The actual role of the CInO can vary quite widely depending on the level of innovation maturity the company has reached and on how the CEO and Board of Directors wish to leverage the Corporate Innovation program. There are four generally–accepted functions that the CInO role can assume (each associated with a particular level of innovation maturity):
Advisor — This CInO serves as an internal consultant to the CEO to help focus the company on defining a series of innovation strategies, both overall and within individual business units. They scan the external environment and the company for new opportunities, and then based on the trends and changes they see, make appropriate recommendations. Actual execution of the innovation strategies generally passes to the front line business units. In effect, this CInO is the company's innovation function, consolidated into one person. They may work either in isolation, or as part of a Corporate Strategy group. Over time, this CInO may influence a broader journey toward a more comprehensive Corporate Innovation capability.
Catalyst — This CInO takes on the heavy–lifting task of initiating a new Corporate Innovation program, with the goal of institutionalizing systematic innovation capable of achieving short, medium, and long term growth objectives. This CInO must be an agent of change and a convincing evangelist at the highest levels of the organization. As such, the role requires a well–respected individual capable of building alliances and alignment among key business leaders, and of exerting significant influence when needed.
Expander — This CInO serves as a curator of emerging innovation capabilities within the business. Their task is to continue maturing the organization's innovation prowess and further systematizing the overall innovation process such that it becomes increasingly embedded inside the business. This CInO does very little in terms of setting actual innovation strategies, as that capability has by this point matured inside of individual business units and functional groups, including the core innovation group(s). Instead, they spend their energies developing increasingly advanced innovation programs and capabilities.
Renewer — This CInO — because the organization has reached the highest levels of innovation maturity — now spends their energies engaged with the CEO and Board of Directors developing higher level business strategies aimed at helping the company navigate "bends in the road" it may encounter, thus constantly "renewing" itself. This may involve some highly strategic opportunity changes for the company, together with significant changes in the company's architecture.
At times, and under certain circumstances, the role of the CInO may encompass aspects of more than one of these.
At a level in between strategic and tactical, one must consider the group of individuals who will lead and manage the Innovation Management system, which the program will by necessity need. This group — known generically as the Evaluation Group — serves as gatekeeper of the innovation pipeline. They are charged with evaluating the steady stream of ideas submitted into the innovation funnel and selecting those ideas they feel hold promise. The members of this group must be experienced business leaders who have been explicitly trained and empowered to execute this role. These individuals can hail from any variety of corporate functions, including Corporate Strategy, Marketing, Engineering, business unit leadership, or an equivalent function. Regardless of how this group is constituted, it must function cohesively, and will need to maintain solid connections to, and relationships with, designated point–persons inside of each business unit. These individuals should otherwise not have roles inside of the business units or other functional groups. This is to ensure they remain unbiased toward maintaining a status quo of how things are currently done in the company.
Another important set of roles that operate at both the strategic and tactical levels is that of Marketing Communications specialists. These individuals run engagement marketing and public relations campaigns on behalf of the program, both internally and externally. Such campaigns help to drive engagement in the program by sending the right messaging, making this is a very crucial set of roles for the program. For more on this aspect of the program, see Public Relations below.
At the tactical level are the acting innovation teams — those teams tasked with championing and executing individual innovation projects. Specific roles have to be defined for these teams as well. They will generally involve three primary types of role — leaders, facilitators, and implementers. Leaders can come from any discipline. Their job is to both lead the project and champion it in all corners of the organization, up, down, and across, meaning they must be able to articulately advocate for the project's vision whenever and wherever that is called for. This requires a mix of entrepreneurial fervor, political savvy, and solid leadership skills. Facilitators are individuals who have been specially trained in the practices of innovation facilitation, such as Design Methods. Their job is to enable and facilitate the type of creative exploration work uniquely associated with innovation. Implementers make up the core cross–functional team that will carry out the hands-on work of each discipline, including such roles as Marketing, Engineering, Finance, Manufacturing, Sales, Customer Service, and so forth. Given their broad constituency, acting innovation teams require an equal mix of both hard and soft skills. In those cases where innovation is centralized into a distinct function, these three roles will generally be a part of that function. In contrast, wherever innovation is decentralized into the business units, the Leaders and Implementers will typically work for these business units, while the Facilitators may belong to a dedicated Innovation or Corporate Strategy Group.
The preceding sets of roles — CInO / Evaluation Group / MarCom / acting innovation teams — are representative of the types of roles that would be associated directly with the Corporate Innovation program. Aside from these, the next consideration must be for the roles and responsibilities that will reside inside of each business unit, where it is expected that certain business units will be the ones who take new innovations to market.
There are two critical roles that must be filled inside of each business unit. The first is the main point–person who will serve as the point–of–contact for communication on specific projects. This is largely a tactical role, and ensures that open communication and dialogue are constantly facilitated between Innovation Managers and the business unit. The second is the business unit champion — often the head executive of the business unit, or one of their next–in–command. This is a strategic role whose responsibility is to provide alignment with and support for specific projects — the so–called "downstream receiver". Their job is to provide a go / no-go vote on specific projects targeted for their business unit, indicating which endeavors they intend to support and which they do not. This is very important, as otherwise innovation groups can end up working on projects that go nowhere and never get commercialized. Thus, the Corporate Innovation leadership must get this person's vote of support for an idea up front if they are to justify the time, effort, and resources required to develop the idea. In most cases, some amount of preliminary work will have to be done on each idea to get it to this point, at which point the ideas are then "pitched" to the champion so that they can decide which ones they will support and which they will pass on. This is an integral part of the Innovation Management selection process, in which, at any given review, the champion will be reviewing a portfolio of projects at differing stages of development. These two roles — the point–person and the champion — are critical to the success of every Corporate Innovation program, and must therefore be defined inside of each front line business unit.
Finally, aside from the core innovation and business unit roles, in some cases special groups will be used to run special parts of the innovation program. This can include for example Open Innovation and Corporate Venturing partnerships. With Corporate Venturing in particular, if the organization intends to pursue this on a large scale as an ongoing vehicle of its growth strategy, it will typically set it up as a separate legal and financial entity with its own operating protocols. This allows the entity to make its own investment decisions without first having to obtain approval from the main business, enabling it to operate agilely. Its operation would therefore look more like that of a private Venture Capital fund than of a large business enterprise. Whenever special groups such as these are set up, their unique roles and responsibilities will have to be defined accordingly.
In order to ensure the Corporate Innovation program is appropriately funded, it will be necessary to establish a budget for the program, such that a selection of its projects can be taken to fruition. The budget should be sized according to the required outcomes of the program and with an understanding of the types of growth vehicles the program will use (see GR5 Roadmap). In particular, many of the long term vehicles such as Corporate Venturing may require relatively large budgets if they are to be successful.
The budget must also take into account the fact that much of the innovation work will involve upfront experimentation in order to learn and decipher emerging market needs. This should be viewed as a necessary ongoing investment in the program.
Regarding budget management, the Corporate Innovation program should be managed using a 3–year rolling budget with quarterly reviews, as opposed to a fixed annual budget. This is because many things will be learned each quarter and numerous things will change from quarter to quarter, such that the budget will need a certain level of running flexibility. This allows the program to remain agile and its funds to be shifted from place to place as promising new opportunities are discovered that need to be pursued aggressively. It also allows the program to adjust in accordance with changes in the company's broader business strategy so that it is always in sync the rest of the company.
To the extent that the Innovation Strategy calls for making external investments in the pursuit of new innovation capabilities — such as through Corporate Venturing or M&A — the organization will need to set aside and properly manage a separate budget for this.
Whenever Corporate Venturing is to be pursued extensively, the enterprise will typically set up an independent Corporate Venturing arm. This is a separate legal and financial entity with its own Board of Directors and its own balance sheets, separate from those of the primary organization. This allows for investment decisions to be made and managed autonomously.
TRAINING & RESOURCES
In any given Corporate Innovation program, if the organization's participants do not understand how to go about pursuing innovation, and if they are not given the tools and resources they need to be effective at innovation, then the program will not get particularly far.
For this reason, it is critically important to give participants the training they need to think and act "like innovators", and access to the tools and resources they need to be effective at innovation. This includes fresh new business insights that can point their compasses in a meaningful direction, tools to analyze and qualify new opportunities, mentors who can help point them in the right direction and impart forward momentum, places to work that inspire innovation, and time to pursue innovation… time that is explicitly set aside for this purpose. With these resources at their disposal and the right training on how to use them, the Corporate Innovation program can sustain high levels of engagement and yield some particularly high–return outcomes.
Within most Corporate Innovation programs, there are usually multiple levels of training, and with this, various levels of certification. These certifications often mirror those seen in Six–Sigma programs, e.g. Green Belt, Black Belt, and so forth. Using certifications at different levels helps in two ways. First, it helps to reinforce in participants' minds the value the organization places on innovation and on the innovation program. Second, it helps people know who are the highest level innovation experts, giving them go-to people to consult with when certain insights are needed. Both of these can play an important role in driving engagement and helping to support the program's ongoing health.
DISCOVERY & INSIGHTS
Good innovation work, whether or not in the context of a Corporate Innovation program, always begins with effective discovery and insights–mining work.
Corporate Innovation programs, in particular, are starved for these discoveries and insights broadly across the enterprise. Across all the parties who have to contribute new ideas, evaluate and select new ideas, and/or execute new ideas, solid market intelligence and user insights are a must. This is so that they can build high confidence in what is being pursued.
Therefore, if a Corporate Innovation program is to produce outcomes that meaningfully impact the business and its markets, it has to provide the necessary mechanisms and resources for facilitating discovery work, and for mining relevant insights (e.g. user research laboratories, market research groups, and trend–scouting teams).
For the current Foundations of Value (H1), this may revolve mostly around user research to more deeply uncover currently unmet needs and to validate proposed solutions around those needs. For emerging Foundations of Value (H2 and H3), this may revolve mostly around trendcasting, trend analysis, futuring, and scenario planning.
All of these will prove critical to facilitating the discovery and insights work needed for successful Corporate Innovation.
TECHNOLOGY & INFRASTRUCTURE
Any good Corporate Innovation program – if it is to be effective – will have to provide the organization with certain resources and facilities so that its members can pursue the work needed to produce useful innovations.
This will require they make certain investments in technology and infrastructure.
The technology side largely involves any of the tools associated with facilitating innovation. This will include, for example, creative design tools such as Software Development Environments, Computer–Aided Industrial Design, Electrical CAD, and Mechanical CAD. It will also include Idea Management software, Portfolio Management software, team collaboration and sharing platforms, and various project management tools. It can also include any special capital equipment that is germane to the enterprise's efforts, such as rapid prototyping (3D printing) machines, maker labs, various scientific and engineering test equipment, research libraries, and so forth.
The infrastructure side largely involves various collections of laboratories, research spaces, study spaces, team coworking spaces, and access otherwise to particular places and resources conducive to the innovation work. It also includes access to networks of businesses, partners, and individuals, and to certain online resources. It is important that the laboratories are able to simulate real world environments as closely as possible, so that members can conduct an unlimited array of "what if" tests, including with real subjects on site.
The right technology and infrastructure are always necessary ingredients for an effective and successful Corporate Innovation endeavor.
NETWORKS & ECOSYSTEMS
A well–functioning Corporate Innovation program requires healthy networks and ecosystems.
Networks involve the collection of personal and corporate relationships that exists among a wide variety of internal and external resources. They are about "who knows who", "what company knows what company", and "who knows where to go to get X". The broader and more diverse these networks among companies and individuals, the healthier they are, and the more they will benefit the innovation program. They benefit it by creating access to knowledge, insights, and resources that may otherwise be, for all intensive purposes, inaccessible. These are often resources that end up benefiting various innovation projects and initiatives in unexpected ways, particularly as the organization seeks to cross–pollinate business models and other practices.
Ecosystems refer to the broad support systems that a business has in place – largely external – for helping it get certain things accomplished in the marketplace. This can be business partners, suppliers, consultants, service providers, regulatory groups, investors, customers, and so on. Particularly whenever these resources are aligned around new ways of operating that accommodate new business models and new value propositions from the enterprise, they can play a powerful role in making new innovations happen, and should be leveraged liberally.
Without healthy networks and ecosystems, any given enterprise's innovation efforts are likely going to come up short and not be nearly effective as they otherwise would. Having these support systems – particularly on the outside – can often mean the difference between success and failure for a number of endeavors. Also, it is not uncommon for these extended ecosystems to end up becoming the "shelter for homeless ideas".
Engagement is foundational and absolutely critical to an innovation program's success. It is what democratizes the program and connects it with the people who will give it life. It is also what "feeds" the program's pipeline with innovative new ideas. Without engagement, the program is effectively dead.
To this end, a Corporate Innovation program must employ what is known as mechanisms of engagement. These enable the program to tap into the insights, knowledge, and perceptions of the organization's internal staff and external partners, primarily around what is happening externally to the business, in current and potential markets, and, very importantly, how they can potentially capitalize on those things. In some cases, they actually involve creating something to bring to market.
There are well over a dozen mechanisms of engagement in common use for Corporate Innovation programs. Each of these serves a different purpose and has an appropriate time and place, according to the needs of the program at any given time. Each also has a very different way of engaging people, and therefore a different feel. Some are simple, straightforward, and unstructured, while others are more structured and very work–intensive. For this reason, some mechanisms will resonate with certain people more so than with others. This is why programs will generally need to use a variety of mechanisms.
The following is a brief explanation of certain mechanisms of engagement:
Communities of Practice — These are ongoing communities of professional peers organized around specific subject matters. They are formed to enable individuals to share their expertise in certain areas and to help out one another opportunistically, which generally means as needs and interests arise. As such, they help to stoke occasional inputs into the Corporate Innovation program. Just as importantly though, by sharing openly and widely, they help further the organization's capabilities in these areas. Since these communities are "open–ended" in nature, there are no set timeframes for follow–on action. In order to be self–sustaining, each community will need a distinct subject matter with broad interest and a community manager.
Expert Forums — These are online forums designed to allow individuals and teams to submit their questions on particular topics and get back answers and solutions from subject matter experts. The subject matter experts need not be internal; they can just as well be outside experts sourced from any number of places, including venues such as online Open Innovation portals. These sometimes require an extended period of promotion to get people in the habit of using them and making them an ingrained part of how they routinely find answers. The insights and ideas they generate can produce useful fodder for the Corporate Innovation program.
Speed Dating — These are scheduled sessions between peers (typically two, sometimes three) designed to facilitate reciprocal sharing of insights, expertise, and experience. They are much more intimate and "on–topic" than are Communities of Practice. Speed dating can be productive at any level of the organization, but can prove particularly effective at higher levels, where individuals often have deep wells of business expertise around specific functional domains. Speed dates may happen only once, or they can become recurring if desired. With speed dating, it is important to properly scope the participants so that each side understands the give–and–take they should expect, and therefore have bought into the idea so they are prepared to engage in it completely. The outcomes of speed dates can often produce extremely valuable inputs into the broader innovation program, and may result in any manner of innovation initiatives for the business (some of which may have immediate impact).
Idea Conferences — Also known as "idea accelerators", these are outside conferences that participants are sent to so that they can be exposed to fresh thinking and diverse ideas from all over the world. It allows them to not only hear the ideas, but also network and interact with the presenters and other attendees to further explore and develop some of the ideas. Examples of such conferences include TED, the Aspen Ideas Festival, and Davos (the World Economic Forum's annual meeting); they are like speed–dating on steroids, all crammed into a short time span. Participants typically return to their offices inspired with all manner of new ways of seeing and thinking and with ideas that can be applied inside the business. Ultimately, some of these ideas will make their way into the innovation funnel.
i–Mentors — These are individuals who have been specially–trained as innovation mentors / facilitators and who float around the company, moving from place to place as needed or requested. They plug themselves into select project teams and deploy various innovation tools (e.g. problem reframing, brainstorming, business model canvas, customer journey mapping, etc.) to help the teams break out of current thinking patterns around a challenge and tap into new thinking patterns. This often yields new insights into the more fundamental problem, which in turn yields novel and innovative solutions, producing positive results for the innovation program.
Flash Builds — Modeled after the concept of "Flash Mobs", but intended to create something useful, these are pre-planned events where small creative teams (e.g. a researcher, a designer, and an engineer) converge on a place — typically a place where real, actual customers are going about their business — and create a new product on site over the course of approximately a week or so (working long days). Ideally suited to digital products like mobile apps, this setting allows the developers to conceive, build, and test out a new offering live, right on the spot while they're developing it. This makes for highly rapid, on-the-spot iterations as each successive version is tested with different customers as it becomes available, allowing the design to rapidly converge on a high-quality version in very short order. When finished, the team can — perhaps with some final clean up back in their lab — then roll out the offering to their entire market if so desired. These work particularly well for offerings used to augment broader customer experiences, such as in retail shopping for example.
Maverick Panels — Also known as "Thought Leader Panels", these are events where external "thought leaders" (some of whom should be mavericks and provacateurs) are brought in to meet face-to-face with the company's leading innovators. The external thought leaders / experts are generally considered visionary in their respective fields, such that they bring in fresh new perspectives and insights that should ideally challenge and stretch the organization's thinking. Here they discuss, explore, speculate, and otherwise engage in very active and sometimes vociferous debate amongst the panel. Beyond the discussion and debate, they can also engage in active exploration of future scenarios together, as well as co-creation of concepts for new businesses, offerings, and business models that stand to capitalize on the intersection of certain trends and their insights. Given their vociferous nature, these are very different than a "gentlemen's debate", as they are intended to move the needle on the organization's thinking in a significantly meaningful way.
Ideation Challenges — These are crowdsourced ideation campaigns focused on a specific business challenge. They are presented to a wide and diverse audience over a limited timeframe, and have clear follow–up milestones. They sometimes use gamification to drive participation, where peers can "vote up" or "vote down" one another's ideas to see who's ideas rise to the top, and whose sink to the bottom, there being prizes for those that float to the top. Idea Challenges may generate hundreds of new ideas, each of which must then be reviewed and evaluated for usefulness and actionability. Follow up is usually assigned to special teams either in Corporate Strategy, Corporate Innovation, or one of the front line business units.
Innovation Kits — This is an exercise in which any number of participants from all over the organization are provided with carefully–designed starter kits containing various paraphernalia. The paraphernalia are meant to serve as thought starters. Participants are challenged to take the paraphernalia and use it to spark innovative new thinking around a particular business challenge, and to consider how the various pieces and parts might be recombined in novel ways to generate novel new ideas about needs, opportunities, and solutions. The end result is the submission by participants of new ideas they were able to generate from the synthesis of the different starter pieces. There is no limit to how many innovation kits can be handed out, nor how long such a campaign can be run at a given time. And while it may prove useful to have all the kits be uniform in any given wave, it is often good over time to mix up the kit contents, as this will generate the greatest variety of new ideas over the long run.
Innovation Jams — These are open discussion and brainstorming forums framed around some issue that is pertinent and relevant to the business at the time. Using various mediums, they serve as a means for broad scale collaborative innovation. Innovation Jams allow participants from the broadest possible global audience — often numerous countries and companies, and potentially thousands of individuals — to share their insights, perspectives, and ideas on an issue, with the goal of discovering a new solution to the problem (often a long–standing problem). Because of their ability to integrate so many diverse perspectives, they have shown themselves to be powerful tools for seeing problems with "new eyes" and creating solutions that no individual or group ever could have in isolation. Given the potential scale of these forums, they are generally curated and moderated by a trained moderator. In the context of a Corporate Innovation program, Innovation Jams can be a powerful tool for generating well considered new business ideas, perhaps in response to a challenge or opportunity that was first identified elsewhere in the program.
Possibly the most well–known example of a broad scale innovation jam is IBM's 2006 Innovation Jam™, which brought together more than 150,000 people from 104 countries and 67 companies and resulted in launching 10 new businesses using $100 million of seed investment.
Hackathons — More common in the tech / software worlds, these are team sprints organized to build something entirely new in a highly–compressed timeframe (e.g. over a weekend). They can be a great source of fun for those inclined to participate, and often produce a highly useful outcome in record time. Since the outcome rarely emerges in "saleable" form, the challenge then becomes how to finish what the event began and turn that into a "finished product". That work must typically be transferred to a formal development team who will complete and implement the outcome. Keeping the momentum to ensure this happens generally requires some type of executive sponsorship with a commitment to finish what the hackathon began. With the right follow–on, these have been known to have business impact in as little as one month, particularly when the outcome can be integrated into something that already exists.
Innovation Workshops — These are hands–on working sessions purposefully–designed to engage participants in a variety of thought–provoking activities around discovery and creation. They come in a variety of forms, each designed to accomplish a specific purpose and to engage a specific type of participant from the organization (see our Workshops, Events, & Fieldwork site for examples). Regardless of which workshops are used, they will all yield actionable fodder for the innovation program — some ideas being strategic and some being tactical, but all being valuable.
Innovation Tournaments — These are prize–based contests designed to generate a large number of high–caliber new ideas in a set timeframe (the "best" new idea for "x"). They are often open to the general public and/or a large internal/external pool of participants. Since they are force–ranked competitions, they have competition–style rules and clearly defined participation guidelines, and there will inherently be "winners" and "losers". Their biggest challenge lies in generating the desired caliber of participation and from this the desired quality and caliber of ideas. In the context of a Corporate Innovation program, they can be a highly effective tool for generating high–quality ideas to front load the innovation funnel.
5 x 5 Team Competitions — These are internal competitions aimed at generating a large number of relevant hypotheses about a business' markets and with them a large number of high–quality, low–cost, quickly–executable business experiments designed to yield definitive learnings about the hypotheses. To accomplish this, the competition builds out approximately 5 teams, each comprised of approximately 5 members who have been explicitly hand–picked for this exercise, and then each team spends roughly 5 days together (full time) to develop what they feel is an important hypothesis (or several themed hypotheses) around their markets and with that 5 business experiments that can each be run within 5 weeks or less, and for $5,000 or less, which will yield useable and actionable insights about the hypothesis. At the end of the initial conception period, each team presents their hypothesis and their 5 proposed business experiments to a committee that ideally includes business unit leaders who can fund the experiments. Coming out of the competition, certain experiments will be funded and run, and select prizes awarded to winning hypotheses / experiments, according to the committee's final recommendations. These experiments do not generally yield final answers about solutions, but they do tend to confirm or repute particular elements of the hypotheses, and in so doing point the organization in the right direction for additional learning and possible solutions. More often than not, the experiments provide useful learnings that eventually do inform new innovations offered to the market. As a mechanism for exploring and testing various market hypotheses, 5 x 5 Team Competitions are highly compatible with Design Thinking methodology.
Business Plan Competitions (Dragon's Den / Shark Tanks) — These are internal competitions in which teams of peers work together to, in each case, identify a new opportunity for the business, develop a relatively complete and well thought–out business plan for commercializing it, and then pitch that plan to an internal venture board, generally in order to get funding for it. This is not unlike what entrepreneurs do on the outside when they pitch to Venture Capitalists to get funding for a new company, except that in these cases, it is all internally–focused — the individuals are intrapreneurs pitching to an internal venture board for internal funding to develop a concept for use internally by the business. Otherwise the vibe is very much the same. There are usually cash prizes and other incentives for the winners and runner–ups. After the competition, the winning teams are typically given a Series A round of funding to further investigate, research, and otherwise prove out their concept and business plan. If that phase proves successful, they may be awarded a Series B round for additional proof–of–concept development / testing, and so forth. If the concept proves strong enough, it may ultimately make its way all the way through to commercialization (implementation) within one of the company's business units. How this happens can vary widely from one company to the next. In almost all cases the endeavor will be handed off to a special team dedicated to this purpose, but where exactly this takes place will vary considerably. In some cases, it will happen early on. In other cases, it will happen later, relying on the original team to continue pursuing the Series A, Series B, etc. work (on top of their normal day jobs) until a certain milestone has been reached. Considering the amount of (volunteer) work that teams must invest in these competitions, companies typically host them only once or twice per year. In some cases, they are also used as the venue for a formal intrapreneurship program. In the context of a Corporate Innovation program, these competitions provide an excellent tool for surfacing and funding many non–core, and potentially disruptive, business innovations. Depending on the scope of the concept and how much follow–on development work is required, business impact can be on the order of months to years.
Captive Accelerators — These are startup accelerators set up exclusively inside of larger corporations. Their purpose is to give internal teams (consisting of employees who have demonstrated entrepreneurial tendencies, interests, and capabilities), the venue to develop, build, and test out completely new, different offerings and/or business models that the organization's existing business units never would. It includes taking the new offering / business model into market — typically under their own brand or a derivative corporate brand (e.g. Google Labs, Telefonica Labs) — to test it out and learn what traction it can gain. Successful internal ventures can then either be spun out as independent companies, set up as new business units in the corporation, or integrated into existing business units. These give intrapreneurs the opportunity to experience the fun, creativity, and hard work of a startup without ever having to leave the safety of their organizations. It gives corporations access to potentially radical new ideas that they may otherwise never pursue.
Joint Practice Sessions — These are highly–focused group sessions designed to engage key business leaders around specific challenges and opportunities facing the business. Their purpose is to bring awareness to these challenges and opportunities, and to collaboratively develop actions plans for offensively going after them. Joint Practice Sessions are typically set up as regularly recurring events in order to drive continuity and momentum in the actions. They often end up producing shifts in priorities, plans, resources, KPIs, and so forth. As such, they serve as a highly strategic piece of a broader Corporate Innovation program.
Collectively, these seventeen mechanisms can be clustered into four broad groups based on how fast they "rev the engine". These are:
- Low RPM — for generating a steady flow of actionable intelligence.
- Communities of Practice / Expert Forums
- Medium RPM — for sparking new ways of seeing and thinking about core challenges and opportunities.
- Speed Dating / Idea Conferences / i-Mentors / Flash Builds
- High RPM — for uncovering "outside the core" opportunities and generating equally novel solutions.
- Maverick Panels / Idea Challenges / Innovation Kits / Innovation Jams / Hackathons / Innovation Workshops
- Red Line — for actively pursuing "outside the core" breakthrough innovations.
- Innovation Tournaments / 5 x 5 Team Competitions / Business Plan Competitions / Captive Accelerators / Joint Practice Sessions
At any given time a healthy Corporate Innovation program will employ a variety of these mechanisms so as to feed multiple parts of the program and drive a range of outcomes. Since each of these will resonate with a different audience, this portfolio approach allows the program to maximize overall engagement, while also benefiting from a diversity of personalities, styles, and organizational capabilities. This also produces outcomes that will impact the short, medium, and long term time horizons for the business. The important point is for the program to seek out high–caliber ideas anywhere and everywhere it can, and to create productive communities of collaboration any way it can.
For any of these mechanisms, the timing for their actual impact on the business can be anywhere from immediate to several years. This will be a function of scope and market–timing — how much follow–on is work required to implement a given idea, and how "ready" is the market for that idea.
RECOGNITION & REWARDS
Corporate Innovation programs must put into place mechanisms for recognition and reward, and will need to use these consistently across all the mechanisms of engagement, whether inside or outside the company. This is critically important, as it is the relational aspect of Corporate Innovation and serves to ensure the right signals get sent (and sent consistently). They bring the program full circle back around to the people who created ideas on the front end, while including those who executed them on the back end, and everyone in between. This create the reinforcement the program needs to keep it moving forward and working effectively year after year.
Recognition in particular should be given broadly to everyone involved. Different forms and amounts can be given depending on whether an individual or team was an ideator, a strategizer, or an implementer (it always takes a team to make innovation happen). Recognition should take place inside of regularly–scheduled celebrations, where awards, mementos, and the like are handed out. Recognition should also happen within the corporate communications used to support the program (see Public Relations below). Inside these communications in particular, there is the opportunity to profile individuals, teams, and projects so that everyone can see and understand how the Corporate Innovation program works, what sorts of efforts people are putting into it, and what sorts of outcomes the business is seeing as a result.
Incentives and rewards, too, play a major role as a positive feedback mechanism in creating this self–sustaining cycle. They are an effective tool for sending a message about what value the organization places on innovation. This is the "handshake" between the organization and its participants… the agreement that they will work together for win–wins by providing meaningful rewards to those who initiate valuable innovations, particularly those that get implemented and commercialized. But incentives and rewards can be a sticky issue, so it is important to get them right. The wrong rewards can actually do more harm than good, while the right rewards can tell people that the organization is genuinely serious about innovation and growth. So while it is a given that there should be appropriate incentives and rewards, there is unfortunately not always uniform agreement around what is most "appropriate" in each case. Each company will need to consider this and decide for itself what it feels is most appropriate in its situation.
In thinking about incentives and rewards, an organization will be well served to first stop and think through individuals' and teams' motivations for getting involved and participating in the program. The following matrix highlights just some of those motivations.
Considering that there can be some very strong motivators, it should be apparent that some possible "rewards" might therefore include:
- Getting their idea implemented / having the opportunity to be a part of that implementation.
- Career promotion or placement to a role of greater influence.
- Salary increase.
- Profit sharing — an actual portion of the profits realized from the implementation of an idea.
- One–time bonus / monetary reward tied to a particular outcome.
- Recognition and celebration across the company, including by select executives.
(this does not work for everyone; some individuals may not desire this level of visibility).
Not surprisingly, different types of rewards will resonate with different types of people. For this reason, there should be some flexibility in the rewards offered, where people are given choices so that they feel they have some amount of say in how they are rewarded.
Corporate Innovation leaders should also be aware of sensitivities around the issue of fairness in rewards. This is particularly true considering that a number of different individuals will have contributed vastly different levels of involvement in realizing an innovation (thus the debate… does one more heavily reward the ideators, the strategizers, or the executors). Each company and its leaders will need to think this through and structure its rewards program accordingly.
If a Corporate Innovation program is to take root and be truly effective, a very strong PR presence, both inside and outside the organization, will be mandatory. Furthermore, this has to take place at two levels — strategic and tactical.
At the strategic level, because the program will be a foundational centerpiece of the company's growth and innovation strategy, the message it brings must be compelling to the business' three stakeholders — its markets, its participants, and its investors. In each case, this message must be tailored to the particular stakeholder so that each stakeholder gets a message that captures their imagination! This in and of itself requires that the right messages be used to announce and promote the program, including how the program is expected to positively impact the business and drive deeper engagement with its markets (and once established, how in fact it is doing so). For the market, it is the opportunity to drive home a message of innovation and progressiveness that builds the brand. For participants, it is the opportunity to drive home a message of purpose and mission that compels them to press forward with "the new". And for investors, it is the opportunity to drive home a message of commitment to increasing growth and long term resilience — something worth investing in. Together, these three messages have the power to "light fuses". Of course, to be believable, they must convey a coherent message about how the company intends to deliver on innovation. That in turn requires having a solid program design behind the message, so that a real theme can be developed.
At the tactical everyday level, the Corporate Innovation program requires ongoing internal messaging with its participants. These communications spotlight and celebrate specific "wins" the program has produced and their impact on the business (including important things the organization has learned, even if they did not produce immediate commercial gains). They also recognize and celebrate the people — at all levels — who have contributed to these wins (over time, repeat innovators often garner some level of "hero status" in the organization). Together, recognition of the efforts, of the wins, and of these heroes, will continue to stoke the fire of excitement for the program and drive ongoing engagement and participation in it — all crucial for sustaining the momentum it needs.
Ultimately, Corporate Innovation Public Relations should be treated no different than any other engagement marketing campaign. The role of professional communication in the program is that important. This will require that appropriate resources be allocated for PR, and that specific roles and responsibilities be defined accordingly in order to drive the effort at both the strategic and tactical levels.
No two Corporate Innovation programs will be exactly alike — nor should they be. Each program must be custom–tailored to fit the needs and strategies of the business — and its external realities.
Therefore, when it comes to designing the program and establishing the details of these eighteen elements, each element must be considered in turn, and carefully examined so that the organization can decide what will work best for its particular situation. The company's level of "innovation maturity" will play an important role in these considerations.
In most all cases, designing a Corporate Innovation program will benefit from the perspectives of an outside third party who has experience across a range of companies evaluating organizations and designing innovation programs that most effectively fit those organizations. This tends to yield far better long term results than does going it alone.
SERVICES ASSOCIATED WITH THE RESPONSIVE INNOVATION ENGINE ARCHITECTURE
Responsive IE provides the basis for our consulting work in Corporate Innovation (in which we custom design Corporate Innovation programs for clients using this model as the foundation). To learn more, please see our Corporate Innovation Consulting page, or to engage us in this capacity, refer to our Management Practice Engagement page.
Responsive IE and Market Stream IM (together) provide the basis for our Corporate Innovation and Innovation Management training course.
To learn more, please see our Corporate Innovation & Innovation Management Training page, or to engage us in this capacity, refer to our Management Practice Engagement page.
The Responsive Innovation Engine (Corporate Innovation) Architecture ™ and Responsive IE ™ are trademarks of Legacy Innovation Group.