The speed of change in technology and customer expectations across industries has made innovation and digital transformation foundational for sustainable, long-term success. As the leader of a large organization, it is important to foster a culture of innovation enabled by a team mindset of rapid experimentation and execution to de-risk and scale new business ideas more quickly.
Here are some tips to guide you towards effective corporate innovation programs that create long-term value for your company.
Communicate a clear innovation vision that promotes experimentation & accepts failure
The pressures of the quarterly earnings cycle can make it hard to shift focus away from short-term core business optimization toward innovation initiatives. As a CEO, you are uniquely positioned with the authority to help your teams understand the criticality of innovation to the health of your business.
Start by connecting your organization’s broad strategic goals to your innovation initiatives. Then, focus on creating a culture that rewards appropriate risk taking and welcomes failure as a part of learning about market needs through experimentation. A culture that expects failure will be able to more quickly understand and implement new business models to meet market demands.
Secure buy-in across the organization
Leading change requires buy-in across the organization. The results of your innovation program are directly tied to your broader team’s clarity of purpose, collaboration, and teamwork that then turn into business results. To achieve buy-in, you should engage and involve stakeholders early in the project and seek feedback in order to gain cross-functional commitment toward building ideas as a team.
It’s important to keep a pulse on buy-in across the organization — and to begin with a small cohort that can grow and evangelize new mindsets and operating models over the course of months and years. Keep in mind how long your organization has refined its core business and be patient, but unwavering, in your efforts as the process of change takes place.
Incentivize the right behaviors
Promoting innovation in the workplace can be a challenge. If your organization’s incentive structure favors the status quo, then your new ventures will likely struggle to gain traction. You can overcome this obstacle by creating incentives that reward risk taking and creativity.
One of the most effective ways to incentivize innovation is through recognition and rewards. Employees who contribute innovative ideas and solutions should be recognized and rewarded for their efforts. While monetary incentives are a must, many innovators are also motivated by a desire to create change as much as by external rewards. Capitalize on this by ensuring every contribution is taken seriously and appropriately recognized. Your teams will go beyond the call of duty if they feel their ideas and efforts are instrumental in getting a new business off the ground.
Set clear metrics
Setting clear, focused metrics will help you lead the team more effectively throughout the innovation life cycle. Clarity of metric goals across the organization provides insights on what’s working and allows the team to more autonomously make adjustments in real-time. Each innovation stage — from ideation, to validation, market testing, building, and scaling — should be tracked with stage-relevant metrics and time horizons. Consistency of metrics across innovation stages and business teams enables better understanding across new business teams of what success looks like.
Important metrics to consider in early product development are quantitative and qualitative customer satisfaction metrics of early prototypes. As new business ideas grow, annual recurring revenue rates that also demonstrate a path to financial operating profit viability are most critical. New ventures should be tracked and judged in a very different manner than scaled businesses. New ventures metrics must be focused on market sales traction and future potential. Scaled businesses will have a greater diversity of refined metrics, lower growth expectations and a significant emphasis on business profitability.
Innovation teams need a place to experiment, learn from mistakes, and iterate quickly without the same operating model you use for your core business.
Create a safe space to innovate
Innovation thrives in a safe space where collaboration is encouraged, and leaders are held accountable to support an innovation operating model. Innovation teams need a place to experiment, learn from mistakes, and iterate quickly without the same operating model you use for your core business. Your innovation teams need to work toward the goal of finding the truth behind market needs, while working in a connected workspace that encourages collaboration.
Finally, it’s important to structure these initiatives for the long haul, rather than your organization seeing your innovation efforts as the latest “flavor of the month”. Keep in mind that innovation is a marathon, not a sprint. Continuously reassess your approach and be prepared to change directions based on what you’ve learned.