Large-scale innovation programs can transform your business. With the right goals, funding, and organizational support in place, we’ve seen initiatives produce unheard-of solutions and uncover surprising, sustainable revenue streams in just a few (intense, dedicated) months.
Of course, that’s not always the case. As every innovation manager knows, nothing is a sure thing. This is especially true of those elusive, time-consuming, transformative, and much-desired horizon 3 innovations. Funding can be pulled mid-project, business priorities can change, and technological advancements or disruptive market shifts can result in exciting solutions being made redundant before they’re even released.
But there are things you can do to de-risk your innovation activities. Here are 5 of the most common pitfalls, along with tips for avoiding them.
All of an organization’s innovation activities should align with its overall corporate strategy. If innovation accelerators, sprints, and intrapreneurship programs don’t obviously contribute to long-term goals, they will be deprioritized all too soon.
Unfortunately, strategic misalignment befalls many innovation initiatives. Almost half the respondents to a recent survey of corporate innovators by KPMG indicated that their innovation efforts were only “somewhat connected or aligned” or “not at all connected or aligned” to their organization’s overall business strategy. Only 40% suggested that their innovation efforts were considered strategic.
Why does strategic misalignment occur?
- Organizations might explore innovative solutions for the wrong reasons (i.e., investing in new technologies simply because they’re cutting-edge and not because they’re solving a current problem).
- There might be a change of leadership resulting in differences of opinion and strategic vision.
- A change in context and lack of adaptability.
- An inability to effectively communicate corporate innovation strategies (loftier initiatives with longer timeframes may appear misaligned with immediate corporate strategies).
- The person responsible for implementing innovation initiatives might have little to no practice creating a narrative that is compelling enough to gain traction. But doing so is important, not only for leader buy-in but to optimize resources. If teams don’t communicate innovation methods across the entire organization, which can be difficult for multinationals, they might miss out on the opportunity to find similar initiatives running in other places. This can lead to duplicated efforts and wasted resources.
To avoid strategic misalignment and give your project a higher chance of success, lean towards investing in projects or ventures that utilize an organizational asset, target an adjacent market, or build on a trend or technology within the organization’s interest.
Additionally, ensure your innovation activities are adaptive and implement agile investments and experimentation to meet evolutions in the company vision. Even if you’re a year and a half into a project that’s already absorbed a considerable investment of both time and money, be prepared to pivot.
Reassessing your innovation strategy along the way will help you de-risk the project.
Limited financial & human resources
Your organization needs to allocate dedicated people and resources to take ownership of innovation projects. Though we’re all about doing a lot with a little, innovation activities will easily be deprioritized and teams will fall back into routine behavior if time and money isn’t set aside.
Of course, many companies find it difficult to sell such a prospect internally. Deloitte’s recent “The Innovation in Europe” report found that European firms are often reluctant to form partnerships to grow their wealth of external resources for innovation efforts; however, they argue, it is essential that corporations collaborate and engage in knowledge-sharing with external partners to foster a sustainable innovation program.
What’s more, a 2018 survey of CIOs, IT leaders, and financial decision-makers from a range of industries across the globe by market research firm Vanson Bourne found that most respondents agree on “the importance of innovation and business transformation.” The barrier? Convincing their organization’s board without evidence of a “hard” return on investment (ROI). Of course, it’s difficult to produce return on innovation without investment in innovation. Though 37% indicated that innovation directly resulted in increased revenues, while 35% had evidence of reduced costs.
To avoid the pitfall of financial constraints to innovation activities due to board disapproval, corporations need to develop and spread an organizational culture that encourages risk-taking and acceptance of failure for innovation and learning. Developing an ecosystem of innovation is a powerful tool that may be used to bypass pitfalls in finding adequate human capital for innovation activities.
What’s more, your organization’s leadership team should not only consider freeing up the resources for initial business design activities but also think about how to further support the winning project after an acceleration journey. That’s how activities become results. Without dedicated follow-through, true market success will be hard or borderline impossible to reach. Consider involving an existing business unit in the process, launch a separate innovation team outside the organization, or set up partnerships.
Lack of governance & ownership
Each project or solution should be supported by a small, agile team with clear responsibilities. If the roles are blurry, teams will lose precious time worrying about stakeholder updates, process and timeline changes, and review meetings. This is absolutely not to say that you shouldn’t involve key stakeholders, but rather that you must have the common sense only to involve them when they’re needed.
The solution? Set up a simple, structured organization and governance model. Each team member should have clear KPIs and responsibilities based on proven methodologies. And one person should be in charge, tasked with keeping the project on track and championing the cause of innovation, argues Phil Swisher in a 2019 article for Harvard Extension School.
Appoint an innovation program leader to:
- Determine the allocation of resources.
- Shepherd a disruptive growth engine that consistently produces innovations that contribute to the overall business model.
- Identify changes in circumstances and assist innovation teams with adapting to these contextual shifts.
- Have the skills and freedom to anticipate threats, explore insightful opportunities, and be responsible for taking risks with innovation efforts.
Additionally, board members should ditch the traditional ‘risk mitigation’ mindset and instead be encouraged to develop informed innovation activities. Risk is an inherent part of innovation, so it’s critical that the organizational culture promotes the exploration of new ideas.
If your organization hires 5 versions of the same profile, you could end up with a homogeneous team that lacks diversity in opinion and reinforces inherent biases. Indeed, a bad team will kill any great idea, and a great team will kill any bad idea (and enable you to pivot to find a better one)!
While diversity of temperaments and opinions may lead to tensions, organizations with successful innovation programs are those that establish an environment in which teams can recognize a difference of opinion and approach, identify any conflicts, and work through them constructively. Studies have shown that diverse teams are smarter, more creative, and more thorough in their analysis.
To build a good team, you’ll need to bring in a range of different profiles. Certain mindsets and skills will deliver value at different stages of a venture’s maturity. For more information, check out our piece on the 4 types of innovators.
No business impact
A project should always contribute to the growth of an organization by producing value in the long run. This might seem like common sense, but confirmation bias (in which people seek out data that supports their pre-existing beliefs) often gets in the way.
Having a problem worth solving is one thing, but it’s important to understand and validate the size of the market early. Otherwise, you might waste time developing a solution with no indication of whether there is a big enough market for it.
That’s why we consistently warn teams against falling in love with their ideas. If you’re too attached to a concept, you’ll be more inclined to overlook problems in the business model.
The question is: How can you verify whether there is enough of a market to ensure your solution will be valuable for the business? Simple tools like the business model kit, business validation plan, and ballpark figures calculator can help you to overcome this at an early stage.