Every Company Needs An Innovation Thesis4 July, 2018 / Articles
As the importance of innovation is starting to become clear for corporate leaders, there are a few myths and bad practices that also taking hold. For example, I have heard several innovation leaders talk about letting a thousand flowers bloom and espouse the notion that there is no such thing as a bad idea. In my experience, this premise is flawed and can lead to innovation having less impact within our companies.
Not all ideas are created equal. In fact, there is such a thing as a bad idea. In the context of established companies, a bad idea is one that the company would never take to scale – even if it is financially viable. Companies cannot possibly invest of every idea they are pitched. There are finite resources and time; and it is impossible to achieve excellence when a company is pulled in multiple direction in terms of that resource and time.
So leaders have to make choices. But when it comes to innovation, the leaders I have met seem to be making random unconnected decisions. Employees with political connections or the most appealing slide decks get attention and resources. Leaders have no clear innovation strategy to help guide their decision making.
Random acts of innovation do not provide good returns. This practice also makes it difficult for employees to come up with good ideas. I have met several leaders that bemoan their team’s inability to generate enough good ideas. But when I ask them how they would know a good idea if they saw one, they have no clear answers.
In order to lead innovation successfully, every company needs a clear innovation thesis. Leaders need to take a point of view about where the world is going and how they plan to use innovation to respond. This innovation thesis must be aligned with the overall corporate strategy. In order to develop an innovation thesis you first need to do the following two things:
Portfolio Analysis – If innovation is a journey, then you need to know where you are as a company before you decide a direction to take. As such, companies have to review their current portfolio of products and services. What is the balance in our portfolio in terms of core, adjacent and transformational innovation? Do we have products and services that are in decline and need to be retired? What are the gaps in our portfolio in terms of our core business versus future facing products?
Business Environment – After looking internally at our company, we then need to look at the world around us. What key trends are emerging that are likely to impact our company in the future (i.e. economic, technological or social)? What is the landscape of startups challenging our business? What key changes in customer preferences are we noticing? When it comes to technology, I often hear leaders talk about how hard it is to look into the future. However, I agree with the folks at Singularity University – the future is already here, it is just unevenly distributed. If we are paying attention, we will be able to notice the technologies and other trends that may impact our business in the future.
When this analysis is complete, we can then develop our innovation thesis. This is a broad statement about where we are as a business, where we think the world is going, what sorts of ideas we think will succeed in that world and how we are going to use innovation to respond (i.e. what we will invest in versus what we will not invest in?.
An Innovation Thesis Is A Hypothesis
Because we cannot predict the future, our innovation thesis must developed and viewed as a hypothesis that will evolve over time. Our investments in various ideas will be the experiments we run to test the thesis. On a quarterly or biannual basis, we can then get together as leaders, review progress and refine our thesis.
With our innovation thesis in place, we can then start soliciting ideas from our teams. We have given them a canvas to paint on and given ourselves as leaders a lens through which to evaluate ideas and make investment decisions. It is not about letting a thousand flowers bloom – but letting the right flowers bloom.