I never seemed to have a shortage of ideas but getting the business support necessary to actually drive them through to implementation was at times struggle.
We have heard many times over that a tangible and impactful innovation program requires alignment of strategy, vision, leadership, culture, processes, systems and communication. Easy right? We all know it is not that simple, and the truth is, in many cases we find ourselves faced with a business that wants ‘Innovation as a core pillar for growth’, however at the same time it quietly resists this change making the job of innovation managers feel more like ‘innovation sales’ one day and ‘innovation politicians’ the next.
So, how do you actually get this magical alignment, prove to leadership the business is innovative and in turn get buy in for the resources and expertise you need to meet the innovation targets?
Well…..you turn it on its head!
Forget about trying to move mountains and focus on what you do best – deliver innovation. Let the momentum from successfully delivered innovation be the catalyst for everything else to fall into place.
Become creditable and relevant.
Innovation is about creating something that is new or different, and therefore it should come with a fair amount of uncertainty. As innovators we thrive on this uncertainty, however to budget owners and leadership this is big fat RISK, reducing the appetite for support (despite your amazing presentation showing promising returns).
It is how you manage this uncertainty that is the difference between you having a credible innovation program, or having a database full of ideas going nowhere.
Which type of these discussions do you think would be more effective?
Conversation One: ‘We have a concept to develop a new service for a Virtual Reality Meeting Service. We project a steady state annual revenue of $50M. We need your approval to invest $250k and 4 Full time resources for 6 months to develop the prototype so we can take it to customers and get their feedback’
Conversation Two: ‘We have a concept to develop a new service, for a Virtual Reality Meeting Service. We project a steady state revenue of $50M, however there is uncertainty around the expected volume of 35,000 customers making 2 calls a month. We would like to invest $5k for a 2 week test cycle to gather learnings to reduce this uncertainty.’
I know I would much prefer to have the second conversation! So how do you get to the position to be having the second conversation? Here are 5 simple steps to try:
- Start with a SIMPLE business model….Create a basic ‘back of the envelope’ business model for your idea as to what it would look like as a steady state business focussing on the profit you would like to make, this will drive the revenue and allowable cost. Also, remember not to get sucked into spending loads of time on detailed business models with complex spreadsheets.
- List all of the assumptions that you have made about this simple business model giving each assumption a value range. For example, we have said we expect a revenue of $50M:
Assumption 1: we assume that we will have an annual volume of customer of 35,000, with a low threshold of 20,000 and a high threshold of 50,000.
Assumption 2: we assume customers will pay $3,500 per month to subscribe to the service, with a low threshold of $1,500 and high threshold of $5,000.
- Prioritize your assumptions based on the sensitivity to the business case, for example does the assumption around the volume of customers have more impact to the success of the business case than the assumption around what they may pay?
- Create and execute your plan based on how you will test the assumptions (based on the order of priority) with quick, cheap and effective tests. When creating your tests consider starting with Mock-ups, then Minimal Viable Products before you invest in prototypes – you can learn so much by engaging early and often with customers. I have been in situations where I have taken a basic drawing of an idea to a customer, they grabbed a pen and started collaborating on the idea with me. This cost a few hundred dollars for a slightly better drawing than my stick figures, but resulted in both advancing the idea quicker, and having a customer engaged from the outset.
(Look out for future blogs where I will go into more around effective testing)
- Apply the learnings and review the plan with your innovation leadership to consider the impact of the test, and to decide on whether to continue to the next test in the plan (and in turn committing resources), or pivot the plan based on the new learnings, graduate the idea, or perhaps curtail the idea all together (which is a success in itself as by this stage there should be minimal invest made!).
You will find, that by changing your approach with faster, cheaper and more impactful cycles of learning, the whole dynamics of how the business engages with innovation will also change. Just because the business has said it wants innovation led growth doesn’t always mean the leaders of the business known how to drive innovative change, and this approach will provide them the framework to learn a new way to drive innovative thinking and will promote creative leadership.
The key is to start small and get some wins on the board to gain the credibility, and for the business to realize that innovation is actually not just sitting about on brightly coloured bean bags playing with new gadgets, but in fact a commercially viable part of the business with tangible impact on future growth.
Lastly, remember all of those other elements that need to be in alignment…you will find once you get some wins on the board, and embed this approach, these will actually fall into alignment, and hopefully, the business will be knocking down your door for more innovation!
For more information on this innovation methodology and some creative ways of testing assumptions, please do not hesitate to contact me at email@example.com or visit my website at www.fernandrose.com
This article was originally published on fernandrose.com.