In a recent Q&A email, we asked the InnoLead community the following question:
“Who does [horizon three innovation] well? Do you have best practices or process overviews on this front?”
Below are a few of the best responses — but we invite you to post your answer in the comments below.
Advice from Respondents
Brant Cooper, CEO, Moves the Needle
“A great disservice has been done by equating Horizon 3 with breakthrough innovation. Horizon 3 (originally) is about growth that is 5-10 years out, but it doesn’t matter where it comes from. A company might be able to do transformational innovation (Apple back in ‘07), but it also might launch an existing portfolio in an emerging market that generates substantial growth. There’s no clear evidence that a company must even do breakthrough innovation. (It takes 1000 startups to accomplish this.) What is required is an ‘entrepreneurial spirit’ across the enterprise, and a portfolio of startup investments, co-development, acquisitions and yes, teams experimenting at wholesale reinvention. Who’s doing H3 well? Hard to say since we won’t see results for awhile.”
Respondent from the Consumer Packaged Goods Industry
“Not easy to reply in a couple of words, but I would say: have your CEO as a sponsor, set up a small dedicated team (2 or 3 people max) working outside of the business with a clear mandate… [Working] with external partners… going fast to the market to validate your business proposition… Fund your innovation program outside the traditional budgeting process with a clear business perspective (adapted KPIs). Overall, start small to create appetite, trust, [and] belief at [the] senior management level that things are possible.”
“Top 10 List of Reasons Corporate Innovation Labs Are Better at Producing Tweaks (H1 and H2) than Transformation [Innovation] (H3)
- Innovation lab mandates aren’t clear. Incremental versus transformational innovation require very different organizational approaches and support.
- CEOs must own the transformational agenda. Instead they cede authority to line executives who are accountable for the performance of today’s business model.
- Innovation labs overemphasize the production of a better mousetrap, as opposed to a better business model.
- Potential innovation projects that may cannibalize current business are taken off the table, severely limiting the innovation lab’s scope.
- Requiring a financial forecast for an innovation project — before exploring it in the real world — only works for tweaks, never for transformation.
- Corporate innovation labs see emerging technologies through the lens of today’s business model, as opposed to a catalyst for an entirely new model.
- Corporate innovation labs have difficulty shifting their perspective to see opportunities through the lens of customer experience and jobs-to-be-done.
- Corporate venture funds are not innovation labs. They may provide startup capital to entrepreneurs, but withhold the company’s most important assets: scalable capabilities and market access.
- Innovation labs aren’t organized as a connected adjacency to the core, a sandbox where capabilities can be combined and recombined, to change how customer value is created, delivered and captured.
- Companies lack the talent systems to develop future leaders with experience working both in the core and in the innovation lab.”
Advice from Anonymous Respondents
- Start with a formal charter for the idea. Outline the intent of the exploration, the hypothesis to test, strategic benefit, and clarify ownership. Then, get to it!
- Think about scaling up and integration before you start.
- Keep the team separated from current business.
- Impossible to do internally in your regular HQ, get it out of the building with ring-fenced budget which cannot be touched by the mothership, even if times are tough.