Innovation maturity is a sliding scale between two extremes. On one side, some companies start a lab with inspirational, fancy décor and isolate it from the core business.
Meanwhile, other organizations are using innovation as a building block to energize sweeping organizational change in how every employee, from the core to the outer fringes of the enterprise landscape, works and thinks about the business. And, of course, there are those that reside somewhere in between.
The goal of innovation is not to make the core business a startup. Rather, it’s about helping the core business (especially people, processes, and technologies) handle the uncertainty of digital transformation, increased competition, and marketplace volatility. But, first, every organization must find a way to move the innovation needle from uncertainty to momentum to bring about significant change.
To explore how companies can emerge from siloed programs to organizational transformation, we chatted with Brant Cooper, the New York Times bestselling author of The Lean Entrepreneur, and speaker for our upcoming Intrapreneurship Conference Stockholm.
How can businesses best evolve their innovation maturity?
Like the startup itself, companies have to start small and then build up to go big. I believe that the first foray into innovation begins with smaller groups such as an accelerator program, incubator, a product team, or a lab. However, these teams often do not understand that they also have an important role to play in the core business.
Some of these groups fail and are shut down because the wrong assumptions were set. Companies often look to the success of tech startups as a model for their innovation programs. They seek to replicate the startup ecosystem within their innovation groups and expect to see the same results. Some may even go as far as following an accelerator setup with five or six teams participating.
However, in reality, it takes at least 1,000 startups to find the one breakthrough that might turn into an enterprise.
Innovation doesn’t happen by just creating a lab and instructing the team to deliver breakthroughs. Such initiatives are doomed to fail from the beginning because executive leadership cannot see the bigger picture of what is required to discover, grow, and expand.
Many programs are looking for an immediate ROI even when categorizing ideas into three distinct buckets: operational (instant impact), capital expenditure (actualized results within three years), and R&D (realized benefits within five or more years). Each of those different areas needs to be funded with a reasonable expectation of the actual impact and outcome.
When I talk about bringing innovation into the core business, I am not advocating a lab structure. Rather, I am referring to the skill set.
If you are in a lab developing breakthroughs and acting like an entrepreneur, you’re most likely practicing empathy, running experiments to validate or invalidate ideas, and using evidence to make decisions – also commonly referred to as the “3 Es of Lean Innovation.” However, there’s also real value in knowing how to apply this process to address the uncertainty in the core business.
If you talk to leaders from the core business about innovation, they will likely shut you down.
Now, if you flip the script by asking about the objectives they are looking to achieve and pinpoint the uncertainty between the execution engine and achievement, you can then act like an entrepreneur by leveraging empathy, experimentation, and evidence to help close that gap.
At the same time, you are bringing those skills to the corporate environment while justifying the existence of three-year and five-year windows that your innovation team is tackling.
Is bringing the innovation mindset to the core business a matter of language and semantics? Or, is there an underlying fundamental difference that needs to be addressed?
The language that works within the organization is critical. If you come to the core business talking about innovation, the principles of acting like a lean startup, or the desire for growth-hacking talent, the conversation will likely fail because these terms don’t match the corporate vernacular. Immediately, leaders will dismiss this as something that will never work because that is not how the core business functions.
Here’s the bottom line: you have to figure out the language of your audience and understand their objectives.
Many companies do not need to deliver breakthrough innovation right away. Their goals are focused on doubling revenues over the next three or four years. At the same time, a lot of uncertainty is built into this objective – even for companies that generate billions of dollars in annual revenue.
The 3 Es of Lean Innovation will help address this uncertainty. But calling it innovation might not work with leadership in this case; it is important to use words that resonate with the business to get that point across.
What is the new role of innovators who are participating in these isolated teams when it comes to the core business?
In this case, innovators teach entrepreneurial skills and mentor those teams in the core business. In addition to bringing this potentially transformational mindset to the masses, it rationalizes the innovator’s entrepreneurial behaviors and value.
General Electric (GE) and Intuit are two companies that do this extremely well. Creating coaches from within — change-catalyst teams — can help scale and drive the culture around innovation.
What is the real value of innovation for the larger corporate ecosystem?
Innovation is about empowering people to discover new value for their customer.
This change can impact all internal-facing and customer-facing employees as well as existing markets, products, and services. Such a mindset invites people to explore where they can provide new value and whether they are motivated to actualize it.
By allowing the structure of the company to evolve out of this new culture, the company can create the momentum needed to drive the change required to safeguard it from fundamental shifts such as an economic downturn or a change in executive leadership.
From my perspective, this approach can help the business close the performance gap while empowering the operational team to rally behind the innovation group and do whatever it takes to help it succeed in the long run.
If you’re ready to move the needle, join the conversation with Brant Cooper in his sessions during Intrapreneurship Conference Stockholm: How to Balance Searching with Execution throughout the Enterprise and Innovation Transformation Architecture