How to Successfully Kick-Off a Corporate Innovation Project
Written by Ben Yoskovitz, Founding Partner at Highline Beta
Author and speaker, Simon Sinek is quoted as saying, “The hardest part is starting. Once you get that out of the way, you’ll find the rest of the journey much easier.”
Let’s be honest: the entire journey in corporate innovation is hard, but Simon’s not wrong, starting is tough. And if you don’t start, you have zero chance of succeeding.
Figuring out the starting point for an innovation challenge–the initial prompt–is critical to understanding how to go about executing the work, figuring out what needs to be researched and validated, and how to prioritize. This is particularly true when focused on H2/H3 innovation, growth beyond the core, where there are more unknowns.
In our work at Highline Beta, we’ve categorized four starting points for kicking off a growth innovation project, each of which needs to focus on different things, while eventually converging on the same type of work. We call this our Discovery process.
From the narrowest to the broadest starting points, they are:
- I want to leverage an existing asset or capability
- I want to support my core business with new ventures
- I want to capitalize on a disruptive trend
- I have a growth target I want to achieve
These are not necessarily mutually exclusive, but ideally one of these is the key goal for your innovation efforts. Knowing where you’re starting allows you (and us) to define the right scope of work that has to get done, and dig into the things that really matter as quickly as possible.
1. Leveraging an Existing Asset or Capability
This is a fairly specific starting point, where you already have something in-house that you want to use, and expand upon. The asset or capability could be almost anything:
- People’s expertise
- IP (often that’s “sitting on a shelf”)
- An existing product
Large companies often have quite a few under-utilized assets, and valuable resources that they’re not fully taking advantage of. A great example is AB InBev and saved grain.
How AB InBev leveraged saved grain to launch an ingredients company
In 2017, we had the opportunity to work with AB InBev through their growth innovation group, ZX Ventures, to launch a new incubator program. The program ran for 11 weeks, with the goal of validating very early stage venture ideas for potential future investment.
One of the first projects in the program was focused on upcycling saved grain. Saved grain is the barley that comes out of the beer making process. Historically this grain is sold for animal feed, but AB InBev believed there could be a higher value use for the asset.
We worked with teams inside the incubator program to explore consumer and business interest in saved grain.
Fast-forward a number of years, and AB InBev launched Evergrain Ingredients, a B2B ingredients company that upcycles saved grain into food-ready protein and fiber. This was an incredible example of a company leveraging an under-utilized asset to create an entirely new business with a new business model.
Since first working with AB InBev and ZX Ventures on exploring new value propositions for saved grain, we see the opportunity in under-utilized assets everywhere. Our clients often have incredible infrastructure & IP that could be a “gold mine” of potential.
When we kick off a client engagement with an asset in-hand, our goal is to expand the possibilities of the asset’s use. We don’t want to be beholden to how the asset is being currently used. Instead, we want to diverge as much as possible to find new value.
We do so by:
- First understanding the asset / capability and how it’s being used (or not) today, primarily through interviews with internal stakeholders & subject matter experts.
- Next imagine how we could expand on the asset / capability. Often we’ll conduct a series of workshops with key stakeholders to get them to imagine what problems this asset / capability might be able to solve in the world.
- Then we look externally, conducting secondary research, startup scanning (including where venture capital investments are being made) and doing quick market sizing. This is to give us a broad sense of potential opportunities.
Our goal is to come up with a wide set of problem statements that we believe are worth pursuing. We’ll talk about next steps in a moment.
If you’re interested in learning more about problem statements, sign up for our virtual workshop with Paige Halam-Andres, our Managing Director of Innovation on March 23 from 12-1pm EST below.
2. Supporting the Core Business with New Ventures
More companies are recognizing the potential of building new ventures that are adjacent to their core business, with the strategic intent of driving more value back to the core. Companies are building “arm’s length” venture teams, whose mission is to launch new growth initiatives, typically with a focus on H2/H3 innovation. These teams are meant to move more quickly than the core, and have less restrictions.
We’re big believers in this approach, but it’s definitely not easy. There are entire new structures that need to be put in place around governance, hiring, metrics, budgets, etc. That’s a topic for another blog post!
When thinking of building new ventures that support the core business, these are three key criteria:
- Companies need to take a portfolio approach. While the odds of success should be higher than startups (of which 9 out of 10 generally fail), you will have plenty of failures. It’s difficult to realize any scale with this starting point unless you’re planning to build a portfolio.
- A new venture can’t be an incremental feature addition to a core product or service, and ideally has a new business model. If a new venture is too incremental, it’s going to get caught between the core and the new innovation group.
- A new venture needs to be able to survive on its own. As much as the goal of new ventures may be to drive value back to the core (often in the form of lead generation for core products/services), if the new venture can’t eventually “stand on its own two feet” it’s unlikely to survive.
To learn more about how this all comes together, download a full PDF here.
How RBC Ventures scaled a new venture: Ownr
In 2018 we had an opportunity to work with RBC Ventures (now RBC X), which was a new business unit at Royal Bank of Canada dedicated to building new ventures “beyond banking.”
We worked closely with the team to build the foundation for RBC Ventures, including thesis development, developing a validation framework, supporting the governance structure, training employees and more.
One of the ventures that emerged from RBC Ventures was Ownr.
Ownr started by streamlining the process of setting up a new business. It has since expanded to provide more capabilities for small business owners. And Ownr has done an excellent job of accomplishing two things:
- Building its own user base and business model
- Providing lead generation and value-add back to the core bank (through opening business bank accounts)
This is a great example of the strategic benefit in building new ventures. Ownr is significantly different in terms of value proposition and how to execute its growth than what RBC does in its core business, which means Ownr requires a different structure, methodology and team. But Ownr also drives significant value back to the bank–thus justifying the bank’s continued investment in it.
Ownr connects with users before they need to engage with a bank, and so it’s a perfect value add service for RBC to offer. As Ownr scales and wins (independently from RBC), RBC also wins through driving new customer acquisition.
When a client comes to us with a starting point of building new ventures to support the core, we need to identify strategic goals and relevant adjacencies. There’s a risk with this starting point that you go too broad, and so it’s important to set guardrails.
If you’re starting with an asset or capability, you likely have a strong strategic fit, and an answer to “why” you’re pursuing specific opportunities. That’s not necessarily the case when the starting point is focused on creating new ventures. We don’t want to pursue areas where our corporate client doesn’t have a right to win or unfair advantage.
At a high-level, the work starts as follows:
- Stakeholder interviews to explore strategic areas of opportunity that are adjacent to the core business.
- Secondary research to understand what’s already happening in the market, and explore user/customer pain points.
- Market mapping and sizing to determine potential whitespaces where you have a right to win.
- An assessment of strategic fit – identifying problems that are in adjacent industries, customer segments, technologies, etc…
Our goal is the same as when the starting point is an asset or opportunity, but we come at it from a slightly different angle, with an exploration of different problems or spaces where we believe you, as a corporate partner, have a right to play (and win.)
3. Capitalizing on a Disruptive Trend
It’s impossible to ignore big trends that could have a significant impact on the future of our businesses. Most recently, everyone is speaking about Generative AI; a few months ago it was the Metaverse. There are also broad population trends that can materially affect a business, including an aging population, immigration, etc.
The problem with a trend is that it’s very broad and everyone sees it coming (whether they act on it or not is a different story.) Trends are not user or customer problems; they’re too nebulous. And so we need to dig deeper.
At Highline Beta, we like to start by identifying product or user niches so we can narrow the focus and not try to “solve trends.” It’s important to figure out what to ignore or park, as much as it’s important to figure out what to focus on. We identify relevant product or user niches by:
- Conducting secondary research: The benefit of trends (especially “mega trends”) is that they’re infinitely searchable; you can “Google them” and start collecting lots of interesting information. Plenty of digital ink is spilled about trends, and our job is to sift through it looking for meaningful patterns.
- Market mapping and startup scanning: It’s important to understand what’s “happening in the market” by looking at competitors, startups (of all stages) and others that are also exploring or entering the market.
- Conducting user research on a high volume of topics to narrow in: You can only learn so much through secondary research; at some point you need to speak directly with users. When exploring broad trends, it’s important to identify a few potential user groups and then interview a handful of people in each–this will provide signal as to the importance of the trend for those users, but also potential pain points they’re experiencing.
Our initial goal is to narrow down from a big trend into a few user groups or product niches that seem interesting, where we believe there is potential for new venture building.
Once we have a set of relevant user groups or product niches, we know where to dig further. Our next step is to identify a broad problem set within each user group or product niche that we want to pursue. We want to explore as many problem spaces as possible, with the goal of narrowing down at the next stage.
In order to identify meaningful problems worth pursuing, we do the following work:
- Validate the strategic fit with the company: We don’t want to pursue a problem or opportunity space without having a sense of whether or not it’s interesting to our client. Assessing the strategic fit means working closely with our corporate partner to understand the potential for any solutions within the problem space we’re exploring: Do they have an unfair advantage that could be leveraged? Do they see the benefit to growing their core or achieving other goals they have by pursuing a specific opportunity?
- Determine the potential market size: You can begin to define market size once you have a user group that you’re interested in pursuing, because that user group can be defined and will have purchasing power. We look at analogous opportunity spaces to help determine market size, and imagine the potential solutions (without having built them) to figure out what markets we are in fact proposing to work in.
- Conduct lightweight concept testing to quickly narrow (i.e. card sorting): At this stage we may have ideated some very rough solutions–not in order to determine if we’re right, but to further validate the problem or opportunity space. These concepts are put in front of users within the identified markets to get very quick, early feedback. Those concepts help us further narrow into more precise problems that we believe are worth pursuing.
Our end goal is similar to when we start with an asset/capability or a focus on supporting the core business with new ventures. Everything leads to the identification of a problem (or set of problems; sometimes still quite broad), where we have an identified user/customer group, in a large market, and our client has a strategic advantage. If we have those variables in place, we move to the next stage.
4. Achieving a Growth Target
This is the most open ended starting point for any innovation engagement. Often clients at this stage have already decided that they want to build new ventures, but they’ve also got a target in mind — i.e. “We want to generate $100M in 5 years from H2/H3 innovation.”
There’s no reason not to set ambitious growth goals for innovation efforts, otherwise it’s hard to measure macro-level success or failure. But, this starting point provides the fewest guardrails, and so it’s our job to narrow the focus and be able to identify actual opportunities worth pursuing.
Typically when we start an engagement at this level, we begin by exploring disruptive trends (see 3. Capitalizing on a Disruptive Trend above.)
The client may already have an inkling towards which spaces or very broad opportunities they want to pursue. If that’s the case, we’re able to move quickly into exploring trends, and narrowing from there.
Sometimes that’s not the case, and we work with our corporate clients to develop a thesis (or theses) on which areas are worth pursuing.
How Colgate-Palmolive worked with us to discover & validate 6 new venture opportunities
Colgate-Palmolive (Colgate) was balancing fitting transformative innovation efforts with the everyday delivery of the business. This is a common challenge for big companies as, in addition to time resources, it requires a notable shift in mindset and processes to make those efforts effective and repeatable.
Accordingly, Colgate hired us to help support growth-driving innovation in the H2/H3 space. The objective was to have 4 to 5 new validated ventures, supporting a portfolio-based approach to innovation.
Beyond the initial starting point–what happens next?
As mentioned above, the work we do to kick off an innovation and new venture development project depends on the starting point:
- I want to leverage an asset / capability
- I want to support my core business with new ventures
- I want to capitalize on a disruptive trend
- I have a growth target I want to achieve
But the goal in every case is the same: Find a broad set of problems, with an identified user/customer group, in a large market, where our corporate client has a right to win.
From there, we work with the corporate client to pick a narrower set of problems to further explore.
Click here to download a PDF.
In the next phase of a Discovery project, our goal is to go very deep into a narrow set of problems and learn as much as we can through iterative experimentation. The specific tools we use vary at this stage (often depending on whether we’re pursuing B2B or B2C opportunities), but generally we will:
- Conduct subject matter expert interviews
- Conduct customer/user interviews (targeting at least 5-10 per problem)
- Run value proposition tests (using ads and landing pages)
- Run conversion tests (using ads and landing pages)
- Run concept tests (through interviews or digitally)
- Experiment with pricing (through interviews, surveys or landing pages/prototypes)
- Experiment with business models
- Run solution tests (through paper or clickable prototypes)
The final output from our Discovery process
Once our Discovery process is complete, we’ve further narrowed down from our initial set of problems, and we bring forth our recommendations on next steps, and which ventures are worth pursuing.
This culminates in making a business case for each venture that we believe has merit. The business case includes these core elements:
- A validated user/customer problem (with clarity on their functional and emotional/social needs)
- Early & core user groups identified (with defined personas)
- An understanding of in-market hacks & competitors (i.e. what are people using today to solve their pain points)
- Market sizing
- Business model (often including go-to-market hypotheses for potential solutions)
- Right to win / strategic benefit
- Solution hypotheses (i.e. what are the solutions we believe could solve the problem in a meaningful way, and what needs to be tested next)
- Recommended next steps
How Cincinnati worked with Highline Beta to discover and validate two new ventures
Cincinnati recognized they had a challenge many companies face: coming up with and executing truly breakthrough innovation quickly. This is often a challenge because it requires a shift in the way the company thinks about innovation: moving from focusing on problems close to your business to looking instead at problems in the world that you could be well positioned to solve. With this in mind, they knew they needed an external partner who could help them make that shift quickly, and they felt Highline Beta was the right one.
Specifically, Cincinnati wanted to delve into the topic of financial security, and the challenges many people face, going beyond an exclusive focus on insurance. The goal was to identify and validate new venture opportunities that could help Cincinnati deepen their relationships with the agencies they work with and their customers.
In the end, Highline Beta presented two validated new venture opportunities to Cincinnati. We had validated the problems, early adopter customer segments, solutions, go-to-market strategies and business models. In addition, we had identified the key unfair advantages that Cincinnati brought to both ventures. Our work concluded by providing go-forward plans and product roadmaps for both ventures based on a recommendation to build, spin-out or partner with an existing startup.
Our business cases are always rooted in deep research and experimentation. This provides us with the confidence to make recommendations on what to do next. Typically after Discovery, we move into Venture Validation, which is a further exploration of the solution, go-to-market and business model, increasing the level of detail in terms of validation.
If you’re struggling to find a starting point, sign up for our virtual workshop with Paige Halam-Andres, our Managing Director of Innovation. On March 23rd from 12-1pm EST, Paige will be walking innovation leaders through an interactive workshops that focuses on Turning Your Business Challenges into Problem Statements for Innovation, click here to sign up.