This article is part 5 of a 5 part series where we take a deep dive into the 5 common challenge to innovation that an organization faces. This article focuses on an organizations reluctance to invest in new ideas for fear that they won’t work, and what techniques they can employ to limit their exposure to that risk.
Comparing Apples to Oranges.
You’ve probably heard the saying before. But you’ve never truly lived it until you’ve had to justify whether to fund Project A or Effort B. How do you compare a new marketing initiative to developing a new feature to expanding your sales team into a new market? On their surface, they are each totally different.
The trick is to break them down into elements which you can compare and use those to determine which of those efforts would bring the great value. That’s the beauty of or InnoSpecting Framework.
When we work with companies, one of the additional perks is that we provide them with our InnoSpecting Framework Management Tool. And while we customize this tool to support our different clients, within the tool, we provide our own formula to ranking new ideas. Common elements that we take into consideration include:
- How well does it align with your company’s strategic direction?
- How likely is the effort to succeed?
Why Do I Need to Rank, and When Does it Happen?
The Rank step is the first step in the REFINE Phase and immediately follows the completion of the Capture Phase. And the ranking for each innovation captured is reviewed and agreed upon at the regular Innovation Pulse meetings. Meaning, the final decisions on ranking come early and they come from the very top. This helps ensure organizational alignment, and it is promoted through a strong Communications Plan.
We talk to the idea of ranking new initiatives because all companies are inherently resource constrained. Amazon spent more than any company in the world on R&D in 2017, and I’m sure if you could call Mr. Bezos he would say he wish he could have invested more.
Luckily for most companies, you don’t have to spend in the billions on R&D. You just need to consistently spend money and you need to spend it wisely. Which again, is why the Rank step is so important.
So let’s take a closer look at the elements listed above, and what should be considered for each.
How Well Does it Align with your Strategic Direction?
There is no need to innovate if you aren’t going to push your organization’s strategic direction forward. NONE! It is better to go nowhere than to go in the wrong direction. As such, as new ideas come in, responsible leadership needs to ask “does this get us closer to where we want to go?”
Now, word of caution. Don’t confuse that with “this is what we’ve always done” or “these are the skills the company has onhand.” It is absolutely encouraged to move awa
y from what has always been done before. And it is absolutely encouraged to look to acquire new skills. BUT, they have to be in support of an end goal.
If your company wants to build a rocket-ship to take passengers into space. You may not want to spend your time working on a more efficient water purification system. Maybe you want to build an airplane to test out new aerodynamics. Maybe you want to build new software or a new space suit. But make sure that wherever you are investing your resources, it’ll get you closer to your ultimately goal.
How Likely is it to Succeed?
In our tool we call this something different, but the premise is, how likely is your company to be able to pull this off? If your organization has a background in developing and testing vaccines, the odds of you successfully building the next mobile phone competitor are probably not high.
For one, you may not have the development or managerial skills to facilitate such a project. …and that’s probably just what you know. Socrates is credited with saying “wisdom is knowing what you don’t know,” and since innovations fail are ultimately wasted, what we promote is moving into tangential markets where the unknowns are constrained. In the example above, moving from vaccines to mobile phones requires completely different business models, completely different technologies, completely different supply chains, completely different industry contacts…. It is just too much.
Instead, by continuously moving into tangential markets, corporate’s core competencies will grow at a manageable rate. Again, the key is to continuously invest in new ideas instead of trying for them all at once.
Wrap UP
As every company is intrinsically resource constraints, it is imperative that they are able to determine which ideas to invest their time, talent and energy. In order to do that effectively, they need to understand how to compare the potential benefits of a project across business groups. Two of the key aspects to take into consideration when evaluating the potential for ideas are how well the idea aligns with the corporation’s strategic direction and how likely is the idea to succeed.