Innovation happens in big corporates

Mind The Product Session with Tendayi Viki, author of “Pirates in the Navy”.

Link: Builders and Farmers in Tech Companies

The difference between creativity and innovation is that innovation needs to deliver value to someone - most commonly the customer. In this sense, if what you build doesn’t have an impact, you can be creative, but you won’t be an innovator.

Contrary to popular belief, most innovation don’t come from startups, but from big enterprises. Also, it’s worth noting that there is no correlation between having created a product / company and getting better at it. Teams, therefore, never reduce the uncertainty when they’re innovating.

How can we have more leaders pick innovators in big companies?

First of all, leaders should not be in a position to pick the winners (like having a innovation contest where they’ll pick the best one). As mentioned above, there is no correlation between even having entrepreneurship experience and picking winners. They should, instead, focus on creating a context for teams to foster innovation from the ground up.

This innovation from the ground up is accepted and cherished by leadership if it is quick, cheap and - most importantly - don’t put their reputation at risk. If you ask for a big budget upfront, it’s not just your reputation that is at stake, their is too. You should, therefore, follow what Eric Ries calls “metered funding” in his book Startup Way.

Innovation teams cannot work in silos, so they have to build connections across the organization. For their work to be impactful, teams like Legal, Support, Finance, etc will need to get involved.

How can we measure impact in a quantified way, and, even better, assess team performance in this context? One good example comes from 3M: Innovation teams are considered successful (and compensated for) if at least 25% of the revenue comes from products launched in the last 4 years.

The case against business cases

It’s common that companies ask teams that want to submit ideas and projects to do a business case. These can have many shapes - one pagers, a deck and a pitch, and so on. To the extent of what you can, avoid these. There’s no way it will end up reflecting the reality.

Instead, innovators can ask: “How much money would you give me without a business case?”

Akin to venture capitalists, who usually have an “investment thesis” teams should have an “innovation thesis”, with their view of the world and areas of focus, instead of specific projects and budgets. With this thesis, you can move to get an executive sponsor, who will help you navigate across the organization and give you the resources to test and iterate. If this sounds a bit like internal politics, it is. There’s no way around it.

Here’s on example from a credit card company where they used this framework to send regular updates to senior management. In a matrix, have these 4 boxes:

| | | | --- | --- | | Our idea, what we’re working on | What we know right now, things we have evidence for | | What we still don’t know | What we plan to do next |

If you’ve built a reputation across the organization, have an executive sponsor, focus on the impact of your innovation, you’ll be in a much better position to move forward. Having a long, detailed document will not contribute to its success, given the very high degree of uncertainty.

At 3M, 25% of your revenue has to come from products from the last 4 years. This is a fantastic example of a performance metric on innovation.