Does the following conversation resonate?
Corporate innovator: We should pursue idea “X” because there’s a viable market opportunity right now.
Manager: Yes that’s a great idea.
C-suite: Yes that’s a great idea.
Corporate innovator: Great, we’ll need a self-contained budget of $Y to get project “X” off the ground.
Management: We don’t have budget, but you can submit a request for funds for the next fiscal year.
Corporate innovator: ….The market opportunity is now. Absolutely now.
Management: Let’s have another meeting with our CEO, CMO, and CTO.
C-suite: We can’t make this happen right now. We can’t catch our shareholders off-guard or affect the stability of our business.
Corporate innovator: If we don’t start rocking the boat now, there won’t be a stable business within the next 10 years. The open market is moving much, much faster than we are, and our core products are losing market share.
Management: We can’t sacrifice our goals for [year].
C-suite: There’s no budget. There’s no plan.
It’s up to you, corporate innovator, to make it all work and to convince your leadership team that the investment in corporate innovation is worth it. To get leadership buy-in for your corporate innovation project, no matter how large or small, you’ll want to include the following three elements in your proposal. Put yourself in the shoes of your leadership and decision-making team.
An Operational Plan for Short-Term, Medium-Term, and Long-Term Goals
David Abney, CEO at UPS, explains that leadership team needs to think about short-term, medium, and long-term goals, holistically. A strong framework to utilize in your communication, he says in an interview with Innovation Leader, is a McKinsey’s Three Horizons of Growth. Horizon 1 represents the core business, according to McKinsey. Horizon 3 contains ideas for profitability down the road. Horizon 2 includes entrepreneurial efforts.
Your job as a corporate innovation leader is an exciting one. You guide your c-suite through the process of moving through these horizons.
“My job involves balancing priorities and dividing my time between all three horizons,” explains Abney in an interview with Innovation Leader. “I am particularly focused on our long-term strategies.”
That’s Horizon 2. What’s challenging about this sphere of business is goal-setting. Divide your goals into three parts. Short-term milestones could include focused, tailored business experiments in the $5K-$10K range. Success metrics would involve the velocity of project completion rates rather than an assessment of whether an initiative was profitable or not. In the medium-term, your goal should be to expand upon whether there exists a path to profitability. Long-term goals involve integration plans with the core business—to take an idea and make it part of a company’s underlying strategy.
Remember that shareholders and key executives are ‘in it’ for the long-haul too, just like Abney, who started working for UPS as a part-time package loader in 1974 and became CEO 40 years later.
McKinsey’s Horizons of Growth Model, coupled with short-term, medium-term, and long-term objectives, can help your corporate innovation team better demonstrate its long-term value. It’s not about immediate profits. Horizons of Growth lead to paths of staying relevant for businesses.
A Plan for Managing Cultural Changes
“UPS is a unique company,” explains Abney in the same interview. “We have our own way of doing things: Deliberately. Precisely. Efficiently. We have a strong and a distinctive culture that’s made us very successful. I couldn’t be more proud of it. But we have to be careful that we aren’t so loyal to our culture that it limits our creativity. That happens when culture itself forms a barrier to innovation and change.”
What’s important to consider, as a corporate innovation leader, is that a company’s culture is ever-evolving. Even organizations as complex and expansive as UPS are open to change.
“But I advocate building a culture grounded in our core values with a focus on the future,” says Abney.
“We are accelerating at the pace of business and moving forward fast. We have a willingness to take on more risks and learn from our mistakes and continuously transform our business to exceed our customers’ expectations.”
Some organizations call for isolating innovation labs from core business units. RocketSpace, for instance, has worked with corporate partners team up to run accelerators with early stage startups.
But what happens if down the line, an acquisition, investment, or otherwise-larger investment makes sense? This accelerator model, with pooled resources and collaboration, minimizes risks, maximizes knowledge sharing, and helps organizations move faster than the open market. Companies are more agile through collaboration. The core business needs to be ready.
“Setting up a separate lab or division can help; at Google we have set up a special program called Area 120, which gives people the opportunity to pursue new ideas with small teams in an entrepreneurial environment, without having to leave the company,” says Eric Schmidt in a recent interview with Innovation Leader.
“We also have spun off companies like Waymo and Verily to pursue big visions in businesses separate from Google’s. So we have had success with the approach of creating separate groups. But we also strongly believe that the main company needs to be innovative as well, so that it can attract talented smart creatives...But we also strongly believe that the main company needs to be innovative as well, so that it can attract talented smart creatives. You don’t want to set up a structure where only the spin-off gets to do cool stuff.”
All executives need to be involved in this process.
Continuous validation and information gathering, especially at early problem-solving stages
Data can tell a variety of business stories. But it can be a challenge to align a short-term pilot with metrics and milestones. The best way to learn is by following the patterns of companies that have been in similar positions as your organization. Corporations, when they pool resources, will also learn from what another to prepare more accurate forecasts for the future.
For instance, the world’s upcoming population boom is not just going to be a sociological and ecological challenge. Businesses are going to need to be ready to react and respond.
That’s why innovation in among food and agriculture companies need to happen in the immediate term. But how can legacy companies pivot their core business models? Take a look at the following relationship between RocketSpace and Rabobank:
Every corporate innovation situation is unique and different. If you’d like to learn more about RocketSpace’s methodology for building embedded pilot programs, click here.
Interested in more reads like this? Subscribe to our Corporate Innovation Blog!
