November 3, 2017
Don’t Just Indulge in “Innovation Theater”
Are we seeing accelerating growth from our innovation efforts, especially from large corporations? That is highly questionable.
We have all become totally wrapped up in the “Innovation Theater.” Some have complained of song and dance routines; others, like Steve Blank, have described their view of “innovation theater” based on the current obsession of setting up outposts, mostly in Silicon Valley.
We seem to be layering on more and more activities to grab the attention and spread out our innovation resources. This exploring of different innovating activities includes a growing number of many of our larger companies (perhaps with deeper pockets) trying a variety of creative thinking concepts. At first, they try to imitate startups — going to Silicon Valley, taking organized bus tours, guiding money to accelerators, attending the latest “fashion show”/conference/workshop, hiring a prophet or innovation guru, setting up offices/layouts/hot desks/open formats with creative areas, encouraging the “casual” and changing the environment to how they think innovation will work and thrive.
Honestly, the list gets longer by the day. Is this for excitement and buzz, trying to show that large organizations are hip, reacting to market and shareholder pressure? Or is there a real underlying purpose of building innovation capabilities in well-thought-through ways?
All this activity shows that innovation should be treated as different
I have absolutely no problem at all with any of these activities. They are creating and changing the innovation environment, climate and culture.
But to draw out some of the necessary differences that are required to create a clearer innovation environment, let’s start with the need for different attention, different attitudes and different treatment to connect it all.
Innovation needs to be treated for what it is: emerging in design, not established in its routine and maintenance of what has been achieved to date. Innovation holds the future, and that is always uncertain, unpredictable and uncomfortable.
Yet, is the sum of all these efforts actually moving that innovation needle forward? Are we seeing an accelerating growth from our innovation efforts, especially from large corporations? It is highly questionable when most of our larger organizations are mostly short-term-focused and highly risk-adverse. Innovation simply struggles to sit alongside( or even within) the business when there is this overriding need to be cautious and horizon-one-driven. We often end up with better incremental innovation, whereas the radical or distinctive innovations still seems to remain elusive.
Step back before we take on more of the innovation theater
Perhaps we need to step back before we keep investing in all this worthwhile “innovation theater” and restate some of the very basic needs on what innovation needs to achieve.
There are some basic tenants for innovation.
- In all our activity and pursuit of innovation, we need to maximize the value. We need to learn how to make better investment decisions. This is not to drown ourselves in even more metrics that are aligned far more to the mature organization. Most of these don’t even work in innovation exploratory work. It is the art of constructing better investment decisions that simply increases the return on innovation investment with better value outcomes.
- We need to find sustaining ways to balance our investments. All the initiatives that require innovation investment need to be managed effectively. You can’t hide from this fact, otherwise innovation remains ad hoc, often discovered by chance or simply copying others to keep growth moving along. Balanced portfolio’s and healthy pipelines are essential to deliver the best message to the ones supplying the money of “we are focused, back us.”
- We continue to fall into those easy traps of not aligning innovation to the business strategy. We fail to have a robust understanding of alignment and often get caught up in the excitement of a discovery that is totally disconnected from this alignment but was a wonderful experience to work upon. We do need to align innovation to corporate need.
- We fail to establish different time horizons of innovation need. Finished innovation outcomes do not neatly fit into the calendar year; they need to be seen and evaluated differently, based on their complexity, newness to the world and value potential. The three frames of thought, referred to as the three-horizon framework, break innovation down into three horizons. Horizon 1: goals or outcomes that contribute to the immediate plan and can be budgeted in good, granular ways with solid detail. Horizon 2: goal objectives that move concepts or ideas forward but have longer-term horizons before they yield a outcome return, where some actual spending gets accounted for in multiple years where you can provide reasonable forecasts or milestones towards validation. Horizon 3: ideas that offer the potential for a new state of innovation that explore many unknowns but are working toward a new future state. This final horizon is where pilot money is allocated and projected out over learning activities and agreed milestones; where understanding and recognizing investigation may involve years of exploration, connecting up multiple dots and growing recognition of different degrees of failure. Planning and acknowledgement of each horizon need must be recognized as distinct, accounted for in their differences and laid out in some form on innovation roadmap to cover all three for balanced progression.
See also: Innovation Maturing Into Major Impacts
Speeding up innovation comes in thoughtful ways
There is this missing element of knowing the best speed of innovation, and, surprisingly, this can come through managing a robust portfolio management system to speed acceleration and acceptance. If we don’t have this clearly defined pathway or roadmap, we can’t create the culture of innovation that is required to offer a sustaining route. A route where people, ideas, concepts, processes and tools can be developed, refined and improved to sync on a sustaining basis. If we allow innovation to disconnect and remain fuzzy, we enter the world of guesswork, lowering the identification of leadership buy-in. Getting this pathway established takes lots of hard work, and it needs a broad governance understanding and a combination of piloting and shepherding of all its areas across the parties that have a vested interest. I have continually recommended an overarching integrated innovation framework approach (a work mat methodology) to work through as it clarifies and communicates the innovation intent throughout the company.
It is the “combination effect” of strategic alignment, with innovation investment providing thoughtful resource allocation and accessing good information and data that progressively reveals itself as the innovation potential we are in search off. This requires high levels of visibility across all parties or stakeholders to deeply appreciate how innovation is contributing into the total corporate picture.
Many often argue that by having a structured innovation process, this portfolio management approach slows down the process. Established and accepted tools inhibit freedom of selection, and established processes often take away essential decisions and flexibility. Perhaps.
Regretfully, in large companies you do need to optimize. It’s engrained in the way business is done. Operationalizing innovation simply doesn’t crush creativity or entrepreneurial spirit; it helps provide checks and balances and assess risk if it is more visible or structured for the multiple voices to relate to. The coordination of this is hard work, often trapped within the stage-gate process, which can, if allowed, be a pity if it becomes too overbearing in its process evaluation needs. I liked the “What’s Next? After Stage-Gate” provided by Dr. Robert Cooper, the creator of the Stage-Gate, that suggests taking a triple-A approach (adaptive, agile and accelerated) toward modernizing the gate-process. The table of the next-generation system — alongside the established, well-known Stage Gate method within this document — offers a view on am ideas-to-launch methodology that reflects more of today’s reality.
Look a little deeper into the portfolio management system
Firstly, managing the portfolio management system is a skill. It needs to account for this balanced investment in innovation to achieve different horizon objectives of business need. These innovation investments need funding, resourcing and tracking as they progress to move toward those business objectives. It is made up of desired business objectives and the concepts that contribute to this. The portfolio is dynamic and should be evolving and optimizing. It needs to be visible, and it really requires a robust software solution to allow traceability, tracking and monitoring — meaning the portfolio needs to be structured and repeatable.
To invest in such a system, you can assess its return through different criteria. You can check the work undertaken if it aligns into the company strategy. Decisions can be tracked, traced and measured for time. You can look at things based on resources to bear and development decisions to be made. You can be alerted to slippage and delve into the reasons why. Additionally, the system can visualize the dynamics within the product portfolio to allow for better decisions and recognition of innovation’s contributions.
One critical point of any portfolio management system is setting the right investment criteria
It’s not simply ideas that need to be within the PPM. Concepts, development initiatives and in-market products need to be included if you want a clear line of sight into your innovation portfolio.
There are multiple perspectives to determine their level of fit and importance. For example, you have the expected financial value (revenue, achieved and projected — ROI, NPV, IRR, RONA, etc.) that constantly change as data and information change; they are highly dynamic and valuable if they are constantly updated. Then there’s the need to establish the customer/consumer value, the strategic value, the degree of alignment and the outline of feasibility and the ongoing indication of resource demands. There also needs to be a note made of dangers to be flagged if there are signs of slippage or changes in key criteria that require collective management attention.
CISCO has developed a “Value at Stake” that looks at the value often left on the table because of a lack of digital investment or thinking in broader value generating ways. This investment criteria takes on a whole forward-looking assessment when you look through this type of value-by-the-stake concept.
Establish a basic but critical set of criteria for a good product portfolio assessment
We must establish a consistent set of messages to guide the conversation and assessment for those to recognize the innovation contribution value. So often we fight shy of attempting these, and this is even more often the reason why innovation fails. Of course, finding, validating and explaining these in clear factual ways is hard, because much in innovation is unknown.
Avoiding the attempt to quantify simply relegates innovation to a side show. Management is sensible enough, in most cases, to recognize much can be open to interpretation and still needs clarifying. We must accept we don’t live in a perfect world and that innovation is balancing emerging ideas within a set of risk judgements. I would suggest embracing this part of any discussion robustly and taking it as essential — it prepares you for strategic management.
Strategic criteria in any assessment
You have to show the rate of change, risk and transformation that everything is undergoing — your markets, your competitors, etc., anywhere technology changes. Get a good handle on your competitors’ perception, directions of travel and strengths/weaknesses. You need to be ready to highlight competitors’ specific initiatives or recent patent activities that show emerging hotspots and might even point to emerging opportunities. Know and be able to clarify your position in the industry, across markets and in customer perceptions. There needs to be a healthy discussion on the appetite of risk, experimentation, learning and impact of technology.
See also: Innovation Pivots: 10 Lessons Learned
The specific innovation criteria assessment
The specific innovation criteria assessment includes the uniqueness of the idea or concept, probabilities of success from different perspectives of technical and commercial challenge, the current and predicted cost to completion and the timing and any next decision points where investment is required. Then you need to discuss the barriers or potential of ease of copying by others and the forecasted durability of any competitive advantage or new emerging ones. These need evaluating and rating within the portfolio to provide a clear understanding of the value of innovation.
If you don’t have a good, robust portfolio management system in place for innovation, you will struggle. No amount of innovation theater will make up for this basic need. Portfolio management is a cost that it requires dedicated resource commitment and investments (in specialized software and dedicated people schooled in project management and strategic and tactical evaluations).
A good management portfolio has a central role to play in contributing to your innovation activities. If the innovation theaters generate sound and excitement, how you house and capture the value will determine if the efforts are well-directed, well-centered and fit for purpose.
The article was originally published on Hype.