Every Company Needs A Repeatable Process For Turning Creative New Ideas Into Profitable Businesses15 September, 2017 / Articles
In every large organization I work with, at some point, we get into a contentious conversation. I keep saying they need to be more innovative. A few executives in the room find this statement annoying. After some back and forth, one executive inevitably says something like:
We don’t have a problem with innovation here. Remember last year we launched that digital platform or application thing! That was a great success, right?
Of-course they are right. There are very few companies on the planet that are totally devoid of innovation. What is different across companies is the number of hoops that employees have to jump through to get innovation done. In a lot of companies, intrapreneurs have to be long-suffering and patient diplomats in order to get any creative new products developed and launched. It often takes a combination of tenacity, brute force and political skills that most people just don’t have. In other words, intrapreneurs are faced with a company whose management processes work against its own interests.
The real question that underlies my conversations with most leaders concerns what happens when low ranking employees have great new product ideas that could result in revenue growth for the company. Is there a clear and repeatable process in the company that employees can follow to explore their idea, test key assumptions and take successful products to market? Or is innovation success more of a hit-and-miss?
What most companies lack is an innovation ecosystem; a clear repeatable process for turning new ideas into profitable business models. So most employees with good ideas have no clear place to start. And in the process of figuring out what to do, there is a risk that every conversation with leaders and managers can result in the idea getting killed. Ultimately, the creation of innovation ecosystems is the responsibility of senior executives who need to do the following:
Remove Obstacles: Before creating any new process, leaders need to understand what is getting in the way. In a lot of companies, the annual budgeting process is a challenge. Product roadmaps are set at the beginning of the year. So if any new ideas come up during the year, there is no funding available for them. But even in those companies where resources for innovation have been set aside, the way leaders make decisions to invest in certain projects over others can be problematic. Employees are expected to created long business cases and only those projects that have the ‘right’ ROI get investment. This process can kill good ideas early, resulting in companies only ever investing in new products that very similar to their current products.
Provide Resources: Early on in the process, new ideas need testing with customers before products are launched. At this point, any projections of ROI or five year revenues are mostly fiction. What leaders need to do is provide early funding for intrapreneurs to test their ideas through experiments with customers. These can be relatively small amounts of money that can be released without the need for long business cases. If intrapreneurs show positive results from their experiments, then more funding can be released to them.
Provide Guidance: The availability of such resources for innovation should not be hidden from employees. Leadership need to provide clear guidance on how to get such funding. What types of ideas are they looking to invest in? What amounts of resources are available? What is the process for getting ideas funded? How are intrapreneurs expected to use the resources? What are the success criteria for receiving the next incremental batch of funding?
Innovation Sandbox: Even with clear resources available, intrapreneurs do need space to experiment. Within large companies, legal and compliance place a lot of constraints on what intrapreneurs can do. This is not a problem in itself. It is important for the company to preserve itself, even as it is testing new products. The challenge is that intrapreneurs have to revisit compliance questions every time they want to run a new experiment. It is much better to work with legal and compliance to provide clear guidance to intrapreneurs about the types of experiments they can run. Such a sandbox means that intrapreneurs always know what is allowed and don’t have to jump through the same hoops every time they want to test an idea.
The Right Expectations: The resource that intrapreneurs in large companies need the most is time. Time is an issue I hear raised most often as a barrier to innovation. Limitations in time often result from management expectations around the success of current core products. Most employees are incentivised and given bonuses to execute on the current core products and business models. There are no incentives for innovation. As such, most intrapreneurs have to find the time to innovate outside of their day-job. This is where leadership needs to set the right expectations. In order to free up their people’s creative energy, leaders have to reward experimentation and testing of new ideas; and this means sometimes having to accept and celebrate failure.
Innovation is not a one-off process during which companies work on only one or two new products every three years. In the current business environment, sustaining innovation is key to survival. Every company now needs a repeatable process for turning creative new ideas into profitable businesses. The challenge for every executive running a large organization is to identify and remove all the unnecessary hoops that their employees are having to jump through to innovate.