If you focus corporate innovation on outputs driven by checklists, you’ll fail.
Every. Single. Time.
To be clear: we do believe corporate innovation—be it in an innovation lab, embedded throughout the organization, in a corporate venture studio, or some other form—needs process and a framework for validating opportunities and pursuing them. This is where applying Lean, Design Thinking, JTBD can be effective. Having a simple way to evaluate ventures and innovation initiatives (apples to apples) is also useful.
But too often there’s a top-down effort to implement an insanely rigorous process that is tantamount to building a factory that spits out widgets. If you’re manufacturing the same widget over and over, you use a factory. It makes perfect sense.
Corporate ventures aren’t widgets.
Here’s what happens when you try and implement an overly rigid innovation process:
- Everyone focuses on crossing tasks off their to-do list (outputs) as opposed to actually creating value (outcomes). It’s the belief that, “If we just follow the steps, things will work out.” (They don’t.)
- Everyone who is entrepreneurial becomes demotivated by the endless work that comes with “managing the process” versus doing what actually matters. All corporate innovation teams and leadership recognize the importance of attracting entrepreneurial talent to work on new ventures, but then they unfortunately take all of the entrepreneurial spirit out of the process, leaving people following along mindlessly.
- Things get built, and stuff happens, but no one can tell if the work is creating any meaningful results. You still end up—despite trying to systematize everything down to the minute—with no clear value creation.
If you want to build new business lines and corporate ventures properly, here are our suggestions:
- Have an overarching framework for evaluating opportunities (i.e. Is this a space/vertical we should explore? How valuable would this be to the core? What benefit can the core provide the new venture? Etc.)
- Have an overarching framework for moving new opportunities through a “funnel” — from problem finding to ideation to concept testing to MVP building, etc. Most companies have some version of this; it’s only a question of how many reasonable versus less reasonable hoops intrapreneurs are asked to jump through.
We’ve implemented systems like this with clients in the past. A few things that are important to think about:
- You want to keep this simple, especially at the beginning. Don’t try and plan or design for every eventuality. You should think about how to kill things if they’re not working, but new venture building has a certain amount of uncertainty in it that you’ll have to be comfortable with.
- Recognize that whatever framework you put in place for evaluating ventures will change over time. Just as you preach iterative experimentation within a venture, you need to take the same approach with evaluating all the ventures within a portfolio. So whatever you design initially isn’t going to stay exactly the same. You’ll learn how the framework works, and hopefully tweak it along the way.
- Look at how startups operate and systematize their progress (which many do.) As chaotic as startups may seem, the best ones do things in a logical order. For example, in Lean Analytics, which I co-wrote along with Alistair Croll we published the 5 Lean Analytics Stages (Empathy, Stickiness, Virality, Revenue and Scale.) After interviewing and researching hundreds of startups, he recognized that most successful companies go through a similar trajectory. Each stage has a definition, with goals you have to hit to move to the next stage; with a big caveat that the goals (and metrics you track) change depending on the type of business you’re building.
- Don’t focus so much on the precise work that is done within each stage. Don’t try to systematize this with a blueprint or playbook that ends up becoming a checklist. You do need to provide guidance on what needs to get done at each stage, but more importantly, you need to hire people that know what to do. Trust your people to figure this out. If they can’t, they probably shouldn’t be building new ventures. By all means train people on Lean Startup, Design Thinking, JTBD, etc. Give them the tools—for example, I’m a big fan of the Lean Canvas. Highline Beta has built an entire toolkit of stuff you can use. But these are “tools in a toolbox” and your intrapreneurs / founders / venture builders need the freedom to figure out what tools to use and when to use them.
It’s so easy to dictate precisely what people should do at each stage, but then they’re measured on their performance against a checklist, as opposed to what really matters, which is whether or not they found a real problem, and are on their way to building a valuable solution for users/customers. For example, we worked with one client that spelled out how many user interviews needed to be done in the earliest stage of building a new venture. As a result people focused on hitting that number as opposed to really mastering how to do customer interviews and learning from them.
- Stop trying to measure everything. Startups are messy. New corporate ventures are also messy. You have to be OK with the uncertainty. That does not mean you should spend $50M without any traceability or accountability (you shouldn’t even spend $50k without those things.) It doesn’t mean intrapreneurs / founders / venture builders don’t have a responsibility to report back on progress. And it doesn’t mean you shouldn’t have a basic framework for measuring progress on specific ventures and on the entire portfolio. But you can’t simply measure your way to victory. New corporate ventures are like babies; there are some key vital signs we have to be aware of, and then some basic guidelines. Babies walk on average around 12 months, but it varies from < 9 months to 18 months. Do parents panic if their kid doesn’t walk quickly? Sure. But there’s no way to measure exactly when your kid will start walking, or talking, or dating, or…
New corporate ventures are the same way. Actually, this baby analogy could probably be taken further—you cannot know early on what your kid will be like (personality, interests, etc.) Sure you can influence them, but kids have a way of figuring things out on their own. New corporate ventures are the same way—you simply cannot know early on what they’ll be like as they scale.
Big companies are spending more time building “a process” than doing the actual hard work of building ventures for users & customers that create value.
If you try to plan your way to everything and then assume the plan gets followed perfectly and you win, you’re in for a shock. It just does not work that way.
Corporate ventures, venture building and corporate innovation are not meant to be a complete gong show of crazy, with no frameworks or processes; but equally you cannot build something so rigorous, complete and detailed that you make it impossible to actually succeed at the sometimes nebulous and ambiguous work of creating something new.
What does your innovation system look like?
As leaders within our organizations we tend to easily dial in on processes, checklists and outputs to build and measure our innovation system that helps us build new ventures. The question then becomes: Does this truly add value back to our organizations, or are we focusing more on these processes, task-lists, outputs and versus outcomes that drive real value?
We’ve put together an Innovation Measurement Dashboard that builds on Lean Analytics, a book Founding Partner, Ben Yoskovitz co-authored with Alistair Croll to help you demonstrate the value from your innovation initiatives back to your organization.
Click here to download and start using it today.