Designing an innovation process from scratch – a blueprint.

Are you working in a corporate innovation unit? Are you planning to establish a corporate innovation unit in your company? If you want to drive innovation in your company and build your innovation process structurally from scratch, check out this basic blueprint of an innovation process that incorporates the knowledge from designing, executing and improving innovation processes and intrapreneurship programs in various company sizes and industries.

Each company is different, so are their requirements for their individual innovation processes. Take this approach as a guide. Start with your first draft, iterate and improve your process by incorporating feedback and testing new approaches for those parts of the process that need further tweaking.

Set you innovation goals

First, the reasons and objectives for setting up and running innovation activities should be clarified and defined.
We have already explained the sources of innovation, the objects that can be innovated, and the impact that innovations can have in the article “Types of Innovation”.
With reference to the 4 Types of Innovation explained there, all those involved should agree on the influence they want to exert on the market and whether they are prepared or have the possibility to use new technologies for this purpose which have not yet been used in their company:

Impact of Innovations: 4 Types of Innovation

Be aware of your capabilities

After the goals have been defined and supported by all those involved in the process, we critically examine what options are available to us with the current resources in order to successfully bring innovations or the first envisaged innovation projects into implementation:

  • Are we solving an existing customer pain point? Or are we following an idea that has no underlying challenge? Having first customers that already have this pain point that we are trying to solve, ensures that we will have first beta testers that provide valuable feedback.
  • Are we the right company to solve this challenge? Or are other companies on the verge to become relevant competitors quickly? What is our unfair competitive advantage that is hard (in terms of resources like time, staff and money) to copy?
  • Can we construct a business case out of the idea? Or is it impossible to define revenue structures and streams?
Be aware of your capabilities and find the sweet spot.

Set your innovation strategy

Based on your goals and your capabilities, there are different models to choose from, when building your innovation strategy:

Direction of innovation flow:

  • inside-in
  • inside-out
  • outside-in

Priorization of objectives:

  • primarily strategic
  • balanced
  • primarily financial

Compare Tobias Gutmann’s “Harmonizing corporate venture modes: an integrative review and research”.

Innovation formula (*simplified)

What factors make up the formula for successful innovation? Admittedly, this presentation can only be highly simplified, as it is different for every company and every industry. Nevertheless, based on our experience from a large number of innovation projects and in supporting the implementation of different intrapreneurship structures and teams, we can derive a basic formula that includes the fundamental factors, without which successfull innovation seems impossible:

  • Willingness: You cannot innovate with a team of employees that are unwilling to explore new territories, experiment, take risks, make mistakes and fail.
  • Capability: Knowing the right methods (e.g. agile methods rather than traditional waterfall methods), being familiar with the capabilities and basic characteristics of new technologies and
  • Permission: Get permission to work on innovation projects from at least one of the most relevant executives or top-level management. Ideally, you receive the buy-in from the manager responsible for the division you are innovating in.
  • Execution: This should be a no-brainer but sadly is not in all cases. Your innovation efforts are worthless on paper if you fail to execute them.

Mathematically all factors are weighted equally in this formula. In practice, they might vary in importance. For example: You can get permission later in the initial process when you have built a proof of concept (PoC) and want to build your MVP. With the PoC it is much easier to convince the management board than with a vague idea. Read more on the different product maturity stages in the Knowledge Hub.

Designing a continuous process

How does a successful process look like? First of all, a process should be flexible, adapt to change and be improved over time with each iteration. Therefore, the following draft of an initial process should be seen as your starting point for your very own innovation process.

Let’s assume that you want to build a process, where you can constantly teach employees the required methods, let them work on real-world challenges that are relevant to your company, and result in both a successful innovation and an alumni network of intrapreneurs within your company.

Here is the blueprint, let’s break it down:

Innovation process blueprint

1️⃣ set the stage, draft an initial team, learn/teach methods

First of all, you will find many familiar icons from the previous formula: Start with or skip the first step by asking for permission. If you start small, this step can be omitted, if you are shooting for the stars right away (which is most likely not the best idea), you should better ask for permission before you start. This will ensure, that you are allowed to work on innovation projects during your main working hours, that you will receive funding more easily from the beginning and that you do not have to operate in stealth mode.

Draft your first team of like-minded innovation enthusiasts. Everyone in the team should be beneficial with his or her skillset, background, network and of course, they should all be motivated. Usually, the team should be drafted based on the skills needed for the specific challenge. In this case, when we are starting from scratch and still need to explore the process, it is beneficial to set up a motivated team first, in order to ensure that everyone is interested in exploring and establishing a suitable process and obviously keep everyone accountable. There you have it: your first batch in the innovation process.

Before you start, get a common understanding of agile methods. You are entering the land of unknown territory by working on innovations. There is no blueprint to copy from so you cannot apply traditional waterfall project management. You have to think in iterations. Ideally, you will have someone like an agile coach, an internal or an external facilitator skilled in those methods on board.

2️⃣ define challenges, ideate solutions, iterate

This second phase revolves around applying typical agile methods like design thinking or design sprints. Choose a method of your liking or get inspired by literature revolving around testing business ideas or digital innovaiton. Enter this stage as soon as you have formed your pioneering team of intrapreneurs and have a couple of relevant challenges in your backlog. At this stage, some team members will ask themselves, how they can handle the daily business and the new innovation projects within the range of a typical 9-5 job. The answer is difficult and starts with “it depends…”. Usually, the best way to start new projects is by learning how to prioritize, saying no to irrelevant things and by admitting, that most people are not 100% productive throughout the whole day. Squeeze the most important to-dos from your daily business into the first half of your day, innovate the second half. Timeboxing is very important in this step in order to not get tangled in the temptation to overthink the innovation projects. (More on this topic in a separate post.)

Focus on defining your generic and specific challenge first. Work on real challenges that you have identified as a customer pain point before. Iterate through this process as many times as needed before you start with ideating the solutions.

After narrowing down the specific challenges, start with ideating solutions. Start with quantity, end with quality. Write down your most critical hypotheses that need to be answered by a proof of concept. Be honest with yourself: Do not ride on a dead horse or follow the sunk-cost fallacy. It is okay to fail. See it this way: The earlier you fail, the more time you have left to spend on relevant challenges and ideas.

3️⃣ ship your prototype, receive funding, scale

When you have build a proof of concept or even a first prototype, set up a business case and derived a business plan and are clear about the initially needed resources, you are ready to enter this stage. Find out, who would fit your team to execute this project. This do not have to be the same team members with whom you have worked on surfacing this innovation project in the previous steps because most likely new/other skills are required for the execution. Sometimes you also need external partners to cooperate with during the execution phase.

Define the key performance indicators (KPI) that are able to capture the success of this project. At least one relevant financial factor will be beneficial but you can also come up with cost/time/resource saving KPI, efficiency KPI, sustainability KPI, etc. Take this homework and get the needed resources like financial funding, commitment to spend X hours of your time per week on this project.

Reach out and connect with relevant stakeholders, start building your venture and do not forget to both monitor the relevant KPI and also stick to agile methods by iterating to sprints in which you validate your ever-arousing hypothesis.

🔁 repeat, learn, grow

Congrats, you have successfully navigated your first batch to a simple yet proven process for building your innovation unit! Now it is time to adapt to your learnings and grow a base of innovative employees within your corporation.

Search for good mentors that can accompany all of the batches that run through this process. Those mentors can be internal stakeholders like top-level management but also the alumni of this process. Build an alumni network from all batches that participated in this process. keep them up to date, engage with them and invite them as experts to help rookies while working on their first projects.

Not all innovation projects end as a unicorn start-up! Be aware that teams will also “fail” – well, they will be the winners by finding this out themselves. Give everyone the chance to exit successfully: incorporate the findings in the daily business, simply terminate projects and start with something totally different or even let people take on new challenges outside of your company but stay in contact – you will never know when you can collaborate again in the future.

Conclusion: better done, than then perfect

Developing the perfect innovation process for a company takes time and cannot be achieved by a team of bright minds poring over a big blank sheet of paper. Rather, it takes a smart but above all risk-taking team to rise to the challenge and simply take the first step to venture the first iteration of their process and then adjust it after each iteration based on the insights gained.

It is better to start and then perfectional your process than to not start at all.

This post will be edited and extended from time to time. Make sure to bookmark it and come back, whenever you are improving your innovation process to benefit from the latest findings from the community.

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  1. Pingback: Why innovation contests are designed to fail. | Intrapreneur.Tools

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