Tag Archives: innovation capital

The Components of Innovation Capital

So what convinces people to support an idea, whether the support be their time (e.g., joining your project), money, endorsement or any other backing to help you and your idea? Our research suggests that people and organizations will be influenced primarily by three related innovation-specific factors:

  • Human capital: who you are as a leader of innovation
  • Social capital: who you know with expertise and resources
  • Reputation capital: what you’ve done to warrant a reputation for innovation

The effect of these three types of capital can be multiplied by impression amplifiers that help you gain attention and credibility for your ideas.

How exactly are potential supporters influenced by these factors? In academia, we use what we call a simultaneous equation model to describe how these factors work together. Sponsors are simultaneously weighing all these factors: whether you have the innovation skills as a leader to pull this off (who you are as a leader of innovation), whether you are well-connected with others who will need to support your project (who you know with resources or expertise) and whether you have a track record and reputation for innovation success (what you are known for). Potential sponsors may weigh each of these factors somewhat differently, but they consider all these parts of your innovation capital to decide whether to support you and your ideas.

These combined parts work together like gears in an engine (which is why we have depicted the figure above as a set of gears). As you get each gear moving, it can have a flywheel effect. The flywheel effect, first coined by management expert Jim Collins, refers to the process of getting a huge flywheel (say, a massive 5,000-pound metal disk) into motion. Initially, attempts to move the flywheel produce almost no movement—it is almost impossible to imagine the flywheel at speed. Then, slowly, the wheel gathers speed, and suddenly the momentum of the flywheel kicks in your favor. You push no harder than during the first rotation, but the flywheel goes faster and faster. Each turn builds on the work done earlier, compounding your investment of effort. Eventually, the huge, heavy disk flies, with almost unstoppable momentum. The innovation-capital engine—with its three gears and the lubricant of impression amplifiers—can propel a person’s innovation capital in a similar way.

This analogy is relevant because building your innovation capital starts with small steps that can eventually have big outcomes. Innovation capital outliers—leaders like Bezos and Musk, who are numbers one and two in our ranking—didn’t start out being that different from the rest of us. They accumulated their innovation capital through small steps and then got momentum from the flywheel cycle. Today, they have more good ideas to champion because more people bring good ideas to them; they develop more social connections because of their reputation—people want to know them. And because they have access to a greater number of good ideas and more social connections, they can build their reputation for innovation by launching more innovations. These components are related in a positive way—more of one component leads to more of another (academics call this relationship mutual causality, but you might just think of these components as reinforcing each other). Resource holders simultaneously consider all three components when deciding to give someone their time or resources for an innovation project.