With so much uncertainty about, well, everything, people are realizing that innovation – the process by which new things create value – is essential to thriving going forward. This article sets out a set of best practices for managing innovation, structured around five big questions that can be asked to begin.
What is your growth gap?
Ask your organization to articulate their growth gap
- At some point in the future, how much new growth do you expect to get and where will it be coming from
- Look at your portfolio of opportunities – the projects and programs that you are working on right now
- Assign spending to what is necessary to keep today’s business going
- Determine what to invest in the next generation of your core
- Explore options for the future that offer long odds on a huge return
- Examine whether you have projects that are potentially capable of closing the growth gap, recognizing that your existing core business is likely to experience a decline over time
The Strategy Scorecard Dimension
Exceptional if… Acceptable if… Unfavorable if… Gives the customer an edge
- Appreciated by customer’s, but impact is modest
- Neutral for customer
- Is innovative
- Involves improvements to features or processes, but not dramatic ones
- Disruptive if… No change to feature or processes
Where does your innovation group belong?
There are at least 7 archetypes for how to locate an innovation group within the firm
- Put the innovation group inside an existing business unit
- Create a division within an existing unit specifically for innovations
- Throw it into R&D
- Have innovation report to a dedicated, senior staff function with direct responsibility and a line of sight to the top leadership
- A whole new ventures division that is segregated from the existing business and allowed to operate independently until they are mature enough to stand on their own
How will your innovation practices be governed?
Ideal scenario: a committee meets frequently, has a set of agreed-upon metrics for what kinds of opportunities deserve further development, and is courageous about stopping or parking things that aren’t ideal to move forward
- Best practice: funds the growth board is managing should be separate from those that support the base business
- Losses incurred by a new business should be borne by this fund not by the business unit leader
How will you get started?
Pick a couple of smallish projects in which success can be demonstrated in a small way and use them to begin to train people on how to plan uncertain projects using a discovery-driven growth approach.
- To do this, you will need practices that deliver on three outcomes: ideation to generate potential ideas, incubation to find product/idea/market fit and to test for customer enthusiasm, and acceleration in which now-successful new ventures get to “grow up” and join the parent company in some meaningful way.
How will you allocate resources for innovation?
Go through a process of translating the grand strategies of your firm into specific screening scorecards
- Good strategies imply choices.
- Scorecards let people see the logic behind your strategic choices throughout the organization and spell out what good looks like for your strategy and what does not.
