Recent conversations with a new Imaginatik client, from late 2017, have stuck with me these past few months. It highlights the importance of a new concept that every corporate innovation leader needs to internalize: the Path-to-Value for each innovation. If this notion is not already in your vernacular, it needs to be.
To understand why, we’ll dig into the story from this client. Let’s call them Acme Corporation.
Like many companies, Acme Corporation has a new (ish) corporate-level innovation program. Executives are hoping for big things from the innovation group. They realize that new digital technologies – everything from drones to machine learning – threaten to make their current business practices obsolete. The resulting changes in ecosystem dynamics could erode their margins, depress the stock price, and perhaps put them out of business.
Despite high hopes and active exec support, the innovation group has struggled to find its footing. There are a variety of reasons for this. One is that “innovation” is a fledgling unit with almost no staff, and very limited budget. Although the company knows innovation is important, it needs the newly-chartered team to show they can be successful before opening the purse.
This puts everyone in a catch-22 of sorts. Still, that’s a solvable problem, given enough time and good faith.
The main issue is a lack of focus. Although the innovation group’s original charter was to focus on disruptive digital technologies, they quickly found themselves working on everything from small process tweaks in Customer Service operations, all the way up to incubating entrepreneurial projects trying to re-architect the company’s global billing processes on the blockchain.
The problem is that these are very different types of innovations. They require different staff, they have different time horizons, and they produce different types of business value. They carry vastly different levels of (un)certainty and (un)predictability, and they typically must liaise with different enterprise stakeholders.
For “Horizon 1” operational improvements, the hard part is soliciting ideas and getting everyone on the same page regarding “what needs to change.” Once ideas have been collected and vetted, implementation is straightforward. It’s a sharp contrast from “Horizon 3” transformative innovations, where concept development is typically incubated within a “lean” or “stealth” team. Throwing around world-changing ideas is super fun – but that’s the easy part. Much more difficult is building a workable prototype. Harder still is connecting that prototype to real-world levers for capturing value – i.e., the long and difficult slog through the entrepreneur’s journey.
The VP of Innovation at Acme Corporation was aware she was becoming victim to mission creep. But the C-Suite leaders created so much excitement in the organization that she couldn’t afford to say “no.” This meant always forcing vastly different workstreams through a small team that hadn’t yet mastered the skills for either.
Acme’s story is surprisingly common. In large part, lack of focus explains why so many well-intentioned Innovation Labs and Digital CoEs have been quietly been shuttered over the past 1-2 years. Too many smart leaders, and too many important initiatives, have failed before they had a chance to succeed.
To Innovation Leaders looking to avoid the same fate, here are a few tips:
- Embrace “Path-to-Value” as a foundational concept. You’ll want to explain repeatedly, from day one, that different categories of innovations have different glide paths. When structuring your team, create different swim lanes for Horizon-1, Horizon-2, and Horizon-3 innovations. Make it clear to others what capabilities and resources need to be available for success in each. Brief the C-Suite incessantly on the necessary and sufficient conditions to kick butt, given your mandate. Use Path-to-Value logic as a way to say “no” to inbound requests that don’t fit within one of your swim lanes.
- Leverage software dashboards and digital analytics. Many innovation leaders take shortcuts in portfolio governance, lumping the progress of all innovation types into one master funnel view. They want to avoid the added complexity of managing multiple program workflows in parallel. But that added complexity is critical to success, and modern software applications make it easy to track each Path-to-Value separately, according to its own business logic. The end result is a reduction in overhead, and an increase in head-nods.
In recent years, more and more enterprises have begun building Innovation Labs, deliberately entering the disruption game. Correspondingly, we’ve seen a sharp rise in the frequency of issues from a lack of portfolio discipline.
Path-to-Value is so important now that we’ve built it into Imaginatik’s core Innovation Central product platform. The marquee new functionality in our newest release, Innovation Central Winter 2018, includes a comprehensive and highly flexible Path-to-Value Dashboard to help our clients make sure every idea, and every innovation project, gets the treatment it needs to succeed.
If you’d like to discuss these issues in more depth, to see if we can help you create a better structure for your innovation program, please contact us today. We’ll be happy to start with a free 30-minute consultation to see if we can help.