More than ever, innovation is a real, tangible competency at many Fortune 500 companies, which are investing substantially in their innovation capabilities to build new businesses, explore new technologies, and find new avenues to creating value. However, for every company that has produced substantial impact through innovation, there are many others that have struggled to produce real results. Tempted by the hope of disruptive products and beyond-the-core growth, less successful business leaders discover that making innovation happen at a large company is harder than they imagined. After a few years–usually three–they find that their budgets are dramatically cut and their priorities realigned. In some cases, their entire innovation structures are eliminated.
What separates the great innovation organizations from the good ones? Simply put, it’s the ability to account for what I call the “pipeline paradox.”
The Innovation Pipeline
The traditional graphical depiction of an innovation pipeline is a funnel. The wide end is filled with lots of different ideas, which through a series of stages and gates, get distilled down to just a few worthy ones–the ones that emerge at the end of the funnel. Because of this mental model, innovation leaders tend to place disproportionate emphasis on finding the big idea. They hire staff with fuzzy front-end skillsets. They do cross-company brainstorms and buy market research. They may even buy a dedicated idea-management system to collect ideas.
After substantial time and effort, these idea-focused innovation leaders eventually alight on a few concepts with great potential. But then what happens? These same innovation leaders discover they must overcome the pipeline paradox.
What Really Happoens
Once a company decides on the ideas it wishes to pursue, it must invest more time, people, and strategic thinking to get them to market; this inverse relationship between number of ideas and the amount of resources is the pipeline paradox.
Too often, companies make substantial investments in finding new ideas but fail to allocate enough resources and staffing on graduating projects beyond the funnel and ensuring they can be easily integrated into a business unit. As a result, a lot of ideas get suspended in the middle of the pipeline.
By the time an idea leaves the innovation pipeline, it should be market-ready. The marketing plan needs to be established; details around manufacturing and operations must be aligned; partner and channel implications need to be addressed. Failure to account for this transition increases the likelihood that an innovation group identifies great ideas but produces few tangible results.
A Path Forward
To better account for the pipeline paradox, corporate innovators should follow these steps:
1.) Begin with the end in mind.
Over 20 years ago, Steven Covey stated in his first Seven Habits book that starting with the end goal is crucial for highly effective people. This is equally true for successful innovation pipelines. From the very beginning, think about what it will take for the idea to become a business. Which functions need to be involved in scaling the business? Where will the staffing and resources come from?
2.) Be clear about the goals of your pilot.
Although all innovators know the value of piloting, truly savvy innovators are explicit about the goals of their pilots. They know what assumptions they are testing for and they are thoughtful about building the pilot around those assumptions. The next time you set up a pilot, be sure to ask yourself, “What is the smallest, lowest cost way to obtain the greatest validation about my key assumption?” By answering this question, you will build a great pilot; or even better, you may discover that a smaller-scale (and lower-cost) study is more appropriate.
3.) Figure out a way to turn a profit in the short term.
As a corporate innovator, it can be very tempting to say to yourself, “In five years, this idea could be a $100 million business.” Avoid this type of thinking. All companies, especially public corporations, are judged by quarterly results. Your boss won’t have five years to show results, and neither will you. As you build out your innovation and get closer to the end of pipeline, be proactive about identifying near-term ways to monetize the innovation. Making money in the near term is a sure way to earn your group the right to think about the long term.
And One More Thing …
Steve Jobs famously said, “Design is not just what it looks like and feels like. Design is how it works.” When it comes to creating breakthrough products and services, corporate innovators can be great at designing the ideas. In many ways, the idea generation and screening is the more exciting part of innovation. But a lot of hard work is required to figure out how the design should work, and that means devoting time and resources to guarantee its success.
Originally posted on Fast Company: Co.DESIGN.