I had a very spirited discussion with the top technical leader in a firm recently during a diagnostic phone call. We were talking about the innovation function of the firm (it is always interesting to explore why firms set up a separate innovation function) and the character of the projects they were taking on there.
As we unpacked the projects, it became clear that while these projects may have been new to the firm, they were not new to the market. You see, many times deeply curious subject matter experts take on small “hobby” projects that take “off the shelf” demonstration capability like the Internet of Things or some data analytics. These “side projects” can become inadvertent mainstream activities when “picked up” and championed as part of demo day.
It’s so easy for personal interest and passion to result in a premature “demo” project going mainstream. This occurs more frequently than you might guess, and the leaders in the firms doing this work have their hearts in the right place. They can see the future and they want to make sure that their firm at least has an oar in the water when the inevitable occurs.
The concern is that the business model work hasn’t been done and the end client will not see the new and unique value, but simply another market entrant. While they had the intention of pursuing new and more once they had a “footprint,” the concern is that this stage is frequently never really established.
The real downside here is that for a similar investment, differently employed, they could be enjoying some truly differentiated benefits.
How Might They Change Their Approach?
The path to making growth investments that move the needle in complex firms requires a rethinking of the above. Too many firms have had very talented people build it, hoping the business teams would find it attractive (yes build it and they will come), without the firm getting the payoff. It’s one of the reasons that innovation labs have such a short life.
The better path is to distribute the work into the firm via a chartered, powerful, cross-functional team.
This approach needs to have three key elements to be successful.
- Inertia: The firm must realize just how powerful the pull of its existing flywheel is. Using frameworks that are meant for early-stage firms will not get the results that a larger, more complex firm needs. The project needs the scope, governance, and gravitas to move the status quo to make a meaningful commitment. If you are not Steve Jobs, it is very hard to do organically without a clear signal from the senior leadership of the firm.
- Insight: Growth is driven by insights, full stop. Insights are any change in the product, service, delivery methods or constituents that transfer new value to the end-user. These insights are not limited to those who are charged with implementing them but can occur across the entire firm and its supply chain and distributors. Helping the firm methodically discover them is a science and is teachable.
- Integration: The full scope of the firm needs to be brought to the table, proportional to the need for the project at the outset. The plan needs to be made in a way that the ownership and landing zone of the project needs to be determined at the outset. It is fine to do incremental development (in fact it’s preferred, see post here), but the framework used for the project needs to take it all the way to commercial success – from the moment of the first kick-off meeting.
Starting with a different playbook and intent – one that is structured around growth – is the key to unlocking much more value from the efforts of the hard working resources on the “innovation team.”
If your “conversion fraction” isn’t what it should be for breakout work, we should talk. You don’t need to be content with less than 20% success rates of idea to balance sheet benefit (the average). Feel free to give me a call at 847-651-1014 or use this link to set up a short call.
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