Getting the Most
from Innovation Programs
24th August 2016

Over the past 10 years, Smallfry has been involved with developing several internal innovation programmes for SMEs, healthcare organisations and large companies. More recently we have been participating in mentorship roles with startup companies at universities and technology accelerators.

In almost all cases, these companies are looking to accelerate commercialisation of their products or drive innovating thinking across departments. Digging a bit deeper into the current challenges of their structures and processes, we have noticed a few common areas that could help the innovation programs and their companies see more successful commercialisation outcomes.

Tip 1 – Don’t Try to “Instruct” People to be Innovative

Many times the filtering process for who participates in innovation programs is incomplete or incorrectly incentivised. Some companies “volunteer” people to participate, while others set up entire innovation departments that highly encourage participation in programs that may not be properly structured to produce innovation.

The best innovation tends to be accomplished by a self-selecting group of people who are really engaged in trying to solve a problem they’ve identified. Notice that this means the groups themselves have happily taken on the accountability to solve a problem, not seen a program that incentivises them to participate in pushing a solution or product out to the world. These teams are also resilient in their desire to solve a problem, whichever form the solution may take and for however long it takes. The self-selection of the groups ensures that the team members come together naturally and can persevere through the ups-and-downs of the innovation process. This is why attempting to “assign” innovation may yield in less than stellar results.

You should allow teams to select and work on innovation in areas they themselves find interesting. However, it would be wise to set parameters for teams who want to be innovative to have the right expertise and skill set to address their innovative idea. For example it is very difficult for a non-technical team to deliver an innovative solution that fundamentally hinges on a technical component. Even if the team has can find a way to outsource the technical components, you tend to lose too much user or customer insight (lost in translation) and time (back and forth development) to properly deliver innovation to your market.

The most important thing an organization can do is to encourage teams to take the time to empathetically view their customers and ensure teams feel they can bring their ideas forward, no matter how crazy sounding at first glance or how far outside of the current core business area it may seem. Then give them the freedom, support and accountability to bring their ideas forward to the point where they can show that they have found a product-market fit for their problem/solution, as well as a market for the product that could show a promising future.

Tip 2 – Don’t Worry About ROI at the Start

When looking at innovation from return on investment, participants and reviewers should understand that the initial idea will probably change several times as it adapts to solve the problem. In many cases it could take 2-4 years for the product or service to gain wide acceptance whilst it builds a solid foundation in smaller segments of your overall market. Be cautious of your initial judgments because the pace of innovation can make today’s idea obsolete by the time a product is in front of customers. Conversely it also means that an idea may not have a sizeable market today, but will have a great market in 5 years that is also growing extremely fast.

There should be a clear and specific rationale as to why you think solving a particular problem will actually matter in 5 years time. You should be able to identify something that is changing in the market place that is deeper than industry research reports, and then be able to connect that change to your value proposition for the market. If you can show that solving the identified problem is critical to a segment of the market, then the participants stand a chance of having their solution take hold and grow to a larger market. Notice that the key is “solving the problem is critical”, not per se going to market with the exact idea that they may have originally come up with.

Tip 3 – Measure Actual Progress

This tip might sound harsh but this is where a bit of tough love is needed. Innovation programs should measure something that at its core gives an indication of real progress in a commercial market – i.e. an indication that at some point in the future a customer will pledge cash to a product or service (or provide cost reduction or whatever the idea is actually suppose to deliver).

Things that do not count as real progress include:
– Acceptance into an innovation program
– Participating in business pitch competitions
– Corporate award programs for new ideas
– PR campaigns that get stories in newspapers, magazines, and social media followers
– Getting a grant, winning some cash, or finding investors

Things that do count as real progress:
– Actual sales
– Actual users
– Evidence that shows the proposed solution is solving the “right” problem for customers, not just the problem you see
– Something that shows people are using or have a willingness to adopt and pay for your product to solve their problem (you may have to be creative when it is a solution that can’t be immediately shown to people and give them a service instead that simulates the product)
– There are also a handful of other indicators for specific industries that can be measured to clearly show market adoption

Bear in mind that some of the things listed as “not counting as real progress” can be good for business or a project, but only to the extent that those activities are actually furthering the things that do count as real progress.

Sectors will vary as to what constitutes a good adoption rate, but to be clear innovation programs should not confuse fake progress with real progress. Programs should set expectations that drive teams to find real progress as soon as possible for their sectors (some industries like energy or pharma may take longer relative to others). More and more this timeframe is shortening, so if an indication of real progress is not seen within a year or less then the team is probably not focused on solving the right problem.

Tip 4 – Don’t Over-complicate the Solution

Short and sweet … keep things simple. Ask yourself what is preventing the team from getting their product or service to the market or “live” within 2 weeks.

There are typically only 3 valid answers to this question.

1) The team doesn’t know what to create. If this is the case then they should be actively focused on talking with stakeholders to discover the right solution to create.

2) The team knows what to create, but will need time to create it. If this is the case then you should ensure that they are not “overcomplicating” a solution or trying to be perfect to the point of paralysis. They should focus on a solution that solves the vital few most important issues to get it out and then test with real people. The opposite of this is building the most complicated thing that tries to solve everyone’s problems, taking too long to get it out to people and then if any changes are needed you’ll have a big complicated thing to “re-engineer”. Enforce prioritization of the problems that “should” be solved out of a list of all of the problems that “could” be solved.

3) The team knows what to create and has developed the appropriate solution, but doesn’t have the funding to move forward to implement or scale up the solution. If this is the case, then the obvious answer is to get funding. Innovation programs that are self-funded by companies should have already agreed on the “table stakes” so the budgets are available when needed. Otherwise they have lost an opportunity for their teams to work on a problem that they were actually capable of funding and taking to market. For teams who must seek investment (inside or outside of the company), you should focus on getting commitments from potential customers, get direct feedback from potential customers on their commitment to buy a prototype version you’ve created or get people to sign up for some scaled down version of the service you are able to offer today. It is much easier to get the cash from the executive board or investors if you can show growth in one of these or a similar metric.

Tip 5 – Fund All the Moving Parts

Many times innovation programs that do a good job with the above tips don’t have the funding or capacity to help participants with all of the skills needed to commercialize their ideas. Startups or intrapreneurs can’t and shouldn’t be expected to have all of the expertise to go from concept to a commercially successful product.

However, they should be expected to take on a bit of good advice and assistance and then be able to use it quickly so they can become successful enough to acquire the proper resources (this is where the resiliency and teamwork in the filtration process kick in).

Some of the things I see that most participants always need help with include:
– Finances (accounting, forecasting, budgeting, ROI, and fundraising – where to find the budget if you’re an intrapreneur)
– Legal (patents, IP, contracts, licensing, staying out of court)
– HR (hiring, payroll, benefits, outsourcing)
– IT (even IT startups don’t have all the IT skills covered)
– Product design & engineering (making something beautiful that actually works)
– Sales (sales, distribution channels, routes to market)
– Marketing (clearly explaining their value proposition to the right channels and then delivering those messages)

Without the right support and training, participants can get bogged down in the stuff that takes them away from identifying and building the best solution for their specific problem. They often end up running out of time, money or resilience to carry on the path to commercializing their ideas.

Be careful not to “false start” with these moving parts. You shouldn’t look to focus on addressing these needs until you have clearly identified the product-market fit and have a tested solution ready to deliver.

Tip 6 – Compound Innovative Success

This final tip comes after an innovation program has produced some successful outcomes. Since the goal is to bring a concept to market, some might think that the program is complete. What more could you ask for than a team that successfully brought a new idea to market?

A good innovation program compounds its successes. Its first big effort should be to highlight the successful team so the team can gain more traction. This has the added benefit of attracting attention to themselves and pulling in the most qualified applicants to the next round of your innovation program. Which also means that the innovation program itself should have some measurements of “real” progress.

The program should connect product successes with complimentary ideas or other product ranges that compound the opportunity to use the innovation in other areas. This is especially exciting if the innovation can be used in a market that traditionally has been stagnant or doesn’t seem like a match at first, because this means there are probably limited competitors doing something innovative in that space.

Compounding the success can also be extremely efficient at accelerating ideas to commercialisation if past participants can be testers, users or customers of current participants. This allows problems to be solved quicker because of real-world feedback and iterations. It gives the new participants the ability to commercialise quicker and scale up. If you look at ROI spread out over time, this should also bring better returns to future innovation programs with less investment.