Corporate innovation can have a lot of mixed meanings. I view it as the entrepreneurs role in a corporate setting. New territory is being forged but the end result requires a return on investment. Since these are new businesses and ideas being pursued, it’s a different landscape from the efforts of optimizing an established business.
One of the key aspects, for me, is that we’re still figuring out the true potential of the initiative and why it’s dependent on experimentation. R&D has a lot of similarities, but I view that as even more forward thinking. By the time an idea is ready for commercializing, we should be running a series of experiments to figure just how it all works.
Willingness to Experiment
Entrepreneurs live in a world of rapid experimentation. Lack of traction or evidence of positive accomplishment will prevent revenue from customers and funds from investors. If you can’t demonstrate value, in immediate terms, to one of those audiences – game over.
To quickly demonstrate value for corporate innovation efforts you need to run smaller experiments. Create the hypotheses, define success and run the test. It’s important to establish all three as it’s too easy to apply a narrative after an effort that tells a preferred story. We’ll skew to heavily toward everything looking good, rather than having a truer picture of met expectations.
Small Iterative Steps
Experimentation helps create a process that’s smaller grained, iterative, more rapid and cheaper. We don’t need to do a lot of large project work to learn enough to determine if it’s worth investing more, or if, instead, we should kill it or shelve it for now.
By thinking and working small, we can execute the tests quickly and improve overall velocity for knowledge gains. The more tests we run, the quicker we can make a decision and move on to the next thing. It creates a host of mini stage gates so investment goes to the ideas worth supporting. We also get to place a lot more bets, because the missteps die early.
Spend the Same, Return More
In this world, you’ll often hear Lean Startup referenced. It’s a good model. But Lean isn’t free, and it may not even be cheap. It’s a more informed use of resources and, like the venture model, investing is put into traction. If you can demonstrate success and therefore show the result of further investing, you make it easy to apply those funds and invest when it makes sense. Merit of progress brings further investment.
The spending must occur and it may be the same amount of resources spent, even with experiments. But because initial stages are cheaper, and you kill poor performers early and invest in the successes – overall returns should be greater.