Most business leaders will admit that their innovation engine doesn’t quite work the way they would like it to.
Businesses tend to be good at making small, incremental innovations, but when it comes to innovating consistently and at scale, so few are able to do it without developing new organisational structures, bringing in new hires and/or making substantial investments.
There is however a middle ground. A sweet spot between ad-hoc innovation and building a full-scale innovation factory. We call this a minimal viable innovation (MVI).
By taking the same approach to innovation as start-ups do with product development – first developing a minimal viable product (MVP) that is later added to and scaled over time – businesses are able to pilot innovative ideas quickly with minimal risk and cost.
But having an idea isn’t enough, it will need to gain traction internally and later, will require funding and sponsorship by senior people within the business. So how do you do this? See our steps to developing a MVI below.
The steps to innovation success
Identifying the growth gapsThe first thing to do is identify the gaps between where the business is now and where it needs to be. What is the size of that gap? What innovation initiatives could help close that gap quicker?
Understanding the size and shape of the growth gaps will help ensure all ideas and initiatives are aligned to the medium-term strategic and commercial objectives of the business. It will also establish how bold the team needs to be with innovation projects as, the larger the company’s growth gap, the bigger and more ambitious the innovation initiatives will need to be, and the longer it will take to realise substantial revenue from them.
Generate new growth initiatives
Now the gaps have been identified, innovation efforts need to be centred around strategic opportunity areas in order to make best use of what, at this stage, is probably limited resources. These should be new-growth initiatives that are large enough to take a decent chunk out of those growth gaps.
How do you pick them? Conduct a maximum of three weeks research, meeting at least a dozen customers, probing for unmet needs that could be the foundation of a new-growth innovation, and investigate new developments in and around your industry.
It’s also worth at this stage taking a closer look at the new-growth efforts currently bubbling up inside your organisation as these often indicate an unmet need that simply hasn’t had the attention from senior management that it deserves.
Identifying and agreeing on what the new-growth initiatives are will mean that the team’s energies are used to really drive the business forward and deliver change that supports business growth.
Build small, dedicated innovation teams
Even a minimum viable innovation requires that at least one person (usually more) is dedicated to innovation projects and is driving things forward.
Remember, we are working lean here so there is no need to build a massive team. Build a small, nimble team dedicated to just a hand full of new-growth initiatives. This will not only keeps things simple but also removes the need for teams to spend time justifying the time and resource being committed to innovation projects. The project team can grow once an idea has traction.
Once the innovation machine is running at pace and ideas are starting to become commercially viable projects, it’s time to build a senior leadership team around the new-growth initiatives. This team will have the autonomy to make decisions about starting, stopping, or redirecting efforts on innovation projects.
It’s often best not to default to the current executive committee as so often this leads to decisions being made on corporate process rather than merit. Instead, pick a group of people from the management team to serve on an ‘innovation board’. These people will then be responsible for helping steer any new-growth ideas.
Embrace the VC model
Anyone who has gone to the market for investment will have witnessed first-hand the wildly different opinions VCs had on their business.
Bill Gates famously shared Microsoft with 1,200 people and only 11 were interested in investing. Those 11 will now be very rich indeed.
The same approach should be taken when it comes to developing an MVI, with each project only requiring one senior executive sponsor or champion to believe in it deeply. It shouldn’t require approval from the entire group to go ahead.
The VC model should also be followed when it comes to investment with project teams allocated a budget that they can spend themselves without asking for leadership approval.
Likewise, funding shouldn’t follow a quarterly or annual budget cycles. When the innovation team meets a key milestone, this should unlock further investment in the project.
Scaling the MVI
Once all the above has been completed, the innovation team should have established a commercially viable, well-funded innovation project that has an executive sponsor attached.
It’s now time to scale the MVI and formalise different parts of that idea in the same way you would a business.
For example, you could start a rapid prototyping exercise in order to turn the the strategic initiative in to a fully-fledged product or business unit.
If the idea is really big, you could even start to hire a new business team who can pitch for development funding or form partnerships and alliances with complimentary businesses to help amplify new-growth efforts and increase the speed to market.
No matter the sector or size of business, making innovation more systematic and strategic will help make the whole process less daunting and more efficient.
Creating an MVI will help the business make tangible progress in key strategic areas and close the growth gap quicker.
Just remember the way the business, and those in and around innovation, treat failure is more important than how they reward success. Hiding or fearing failure creates unambitious ideas that fail to materialise and reduce the team’s capacity for innovation.
Build an open, transparent and team focussed environment where innovation can flourish, follow the steps above, and start unlocking game-changing innovation from within your business.