As an innovation expert, I am sometimes asked what the ideal roadmap looks like to bridge the gap between the definition of a strategy and its execution. A strategy provides a compass, a clear direction and a framework for decision-making. The execution on the other hand, is all about progress and results. How to balance ‘think’ and ‘build’?
In this post, I will cover 5 steps to execute a strategy.
Vision and plan: Start with the end in mind.
Talent: Capability building for innovation projects.
Process and Tools: Humans are tool-using animals.
Context: Growth Thrives in Conducive Surroundings.
Value for money: When the rubber meets the road.
1. Vision and plan.
The best way to predict the future is to create it. - Peter Drucker.
An innovation plan or vision is always based on two types of knowledge: data about the past, and information about the future.
Big corporates are rich in historical data and become more and more proficient in the use of data science and artificial intelligence. This can help them to detect patterns and trends, which in turn form a great foundation to create a vision for the future. Smaller companies often lack this body of data, that’s why startups and scaleups tend to compensate this with a competitive future vision on product development. Call it ‘secret knowhow’. They know where the market is going or they deeply understand how a specific technology evolves - they are specialists in a market segment and possess capabilities which make them uniquely suited to build and protect a business in their respective niche.
Over the years, the old school business plans as thick as books have paved the way for very concise plans that allow a decision maker or investor to make a decision fast. Even trendier is a startup pitch, and much has been written about the best formats for such a pitch. The creation process of these plans and pitches has also evolved: from the desk of the CEO or founder, to a co-creation process with the entire team. Hackathons and startup bootcamps are also a great way to co-create a vision or a plan in a very short timeframe.
2. Capability building for innovation projects.
A strong vision or plan on itself is not sufficient to start a project. A key question to ask is whether or not you have the right capabilities to execute.
There are a couple of important considerations when building capabilities. Key among them are time, budget and strategic importance. If there is no time, companies can hire talent from outside. If there is no budget, the resources have to be found within the current organisation. Depending on the mix inside/outside, the price of talent, complexity of management and expected quality of the results may vary.
It all starts with finding the right project leader. The best leads are entrepreneurial individuals with a proven track record. These entrepreneurs have a passion for the product and approach problems with a trial- and error mindset, they are not afraid to be proactive and dare to take calculated risks.
The leader of a project is proficient in identifying talent. He knows how to manage a cross-disciplinary team and can provide the right processes and tools to make them work together. In a big company, it’s important to create an environment and context in which these individuals can thrive, so they are unburdened by bureaucracy and too much governance.
There are a couple of trends that allow you to ‘hack’ your way towards the capabilities you need:
Become a part of an innovation network populated with experts and specialised companies. By interacting with such an ecosystem, an innovation team often finds creative solutions to problems it faces, an environment like this acts as an accelerator.
Create scale by making use of online platforms. This is ‘exponential organisation design’, a term coined with the book by Salim Ismail. The key takeaway is that anyone, anywhere in the world, can use cloud services to build a competitive infrastructure, and platforms like Upwork or Freelancer to find the right expert for the job.
Some companies are unable to build the right capabilities because of endless tender procedures, which prevent any flexibility in matching the right talent for the job. The same is true for politics, or a culture of only wanting to work with the biggest brands: they might prevent building the best team.
3. Process and tools.
Over the years, many new innovation methodologies were introduced. Methodologies are key to manage risk and have a team work effectively. From my experience, a combination of design-thinking, lean startup and agile development provides excellent results for innovation projects.
Design thinking urges your team to diverge and converge ideas at every project phase to answer the unknowns. The best ideas to execute are voted upon and entered into a project backlog. Lean startup thinking provides a ‘scientific mindset’ and translates all the idea decisions into experiments - which have to be validated before they are deployed on a more permanent basis. Agile development in turn finds a balance between workload, budget and doing the right things.
Some teams work with innovation coaches to facilitate this process, this prevents the team to get lost in the details of the project management approach. Overall, too much focus on the process might paradoxically prevent innovation from happening, the lack of consistent follow-up on the other hand, will result in chaos. Finding a good balance between process, governance and executing on the backlog is paramount. The project management methodology moves slow at first but once the team is familiar with it, magic happens.
The project leader not only has to choose and implement a project management system, also a toolstack. This is equally important for the productivity of a team in the long run. Tools are needed for communication (Slack, Skype, …), marketing (Hubspot, Salesforce, ….), design (Adobe, Sketch, …), analytics (Google, Kissmetrics, …), coding (GitHub, Selenium, ... ), CRM, and so on. To choose the right stack out of the thousands of options, some things to consider are: the experience with specific tools in the team, price, features, competition, … As a PM, your job is to make sure all the tools are adopted by the team, and to keep them updated.
4. Innovation context
‘Skunk Works’ was first introduced by a manufacturer of military equipment (Lockheed Martin). The goal was to develop advanced military aircraft in the shortest possible time frame.
To realize this, the team was given great autonomy outside of the normal business and engineering environments. This way, product decisions did not end up in endless meetings and fixed processes with different departments in the corporate company.
Here is a link to the 14 rules and practices of Skunk Works. Many of these rules have been adopted in innovation guidelines at other companies. Small project teams, flexible designs, iterative processes, a minimal amount of reports required, and so on… The resemblance with the ‘garage rules' for entrepreneurs is no coincidence: they both state that innovation happens in an environment where it’s safe to dream big, experiment and make decisions fast.
Launching a project in a stimulating environment can create a real competitive advantage. Early-stage access to technology partners, potential customers, talent or investors, can provide acceleration for a team. Creating the proper context for your objectives is paramount.
‘The only way to win is to go faster than anyone else.’ - Eric Ries.
The science of ‘innovation’ has evolved a lot over the past years. There are blueprints for the design of environments for all kinds of sub-innovation topics such as: digital innovation, employee engagement, venturing, working with startups, rethinking R&D, creating a future lab, experimenting with new ways of working, and so on. Do the research when embarking on a new project, re-use the best and invent the rest.
5. Value for money
Innovation becomes real when an idea becomes a product and lands in the hands of a paying customer. However, the road to get to that point is long and full of unknowns.
So how exactly do you measure return on innovation? Investors have written much about the difficulty with financial projections for early stage innovation. Somehow, all the financial slides in a startup pitch seem to end with a nice hockey stick curve. But how realistic is this?
Rather than making long-term financial projections, another way to approach this is to start from the cost of the core innovation team. Many startup founders only raise money when they have reached ‘ramen profitable’, meaning the profit they generate allows to cover their living expenses. This removes part of the early stage uncertainty for investors, and creates a more attractive case for them to invest.
Big companies sometimes work with a model like the Investment Readiness Level by Steve Blank. A framework like this makes it clear to intrapreneurs which milestones they have to reach to unlock the next investment for their project.
Other more intangible benefits such as perceived product value or additional customer satisfaction are more difficult to measure and to determine a ‘return on innovation’, yet it is important that those benefits are also weighed and translated to clear metrics. A way to do this is to measure things like customer loyalty and average customer lifetime value, topics I like to cover more in the future.