Five Principles for Building Innovation Capabilities in Established Companies

Five Principles for Building Innovation Capabilities In Established Companies

Tendayi VikiPrincipal Consultant

Disrupting Education

Lean Enterprise

=Dad At The Disco

The basic problem confronting an organization is to engage in sufficient

exploitation to ensure its current viability and, at the same time, devote

enough energy to exploration to ensure its future viability...

James G. MarchStanford Professor

Author – Explorations in Organizations

It is important for large companies to learn how innovation really works and avoid engaging in

innovation theatre.

Innovation = Creative Ideas Profitable Business Models

Profitable Business Models = Customer Value Sustainably Profits

This is the innovation sweet spot!

An Innovation Ecosystem

Principle 1 - Innovation Thesis

Innovation can not happen in a vacuum. Teams need to have strategic guidance.

We invest in large networks of engaged users,

differentiated by user experience, and defensible through network effects.

Fred WilsonVenture Capitalist

Union Square Ventures

This strategy is not rigid but emergent. It is a combination of leadership vision and market learnings.

Principle 2 - Innovation Portfolio

Every company should have a balanced portfolio of products, services and business models.

Every company must have products that span the three types of innovation.

Every company must have products that span the three horizons.

Principle 3 - Innovation Framework

Company must develop innovation frameworks to guide teams as they do their work.

The Waterfall

These frameworks must NOT be waterfall.

Frameworks must be iterative and allow teams to learn from the market

before they go to scale.

Running Lean

The Lean Product Lifecycle

Principle 4 - Innovation Accounting

Innovation cannot be managed using traditional accounting methods.

Reporting KPIs● Connected to innovation practice:

○ The focus is on product teams, the ideas they are generating, the experiments they are

running and the progress they are making from ideation to scale.

Governance KPIs● Connected to innovation management:

○ The focus here is on helping the company make informed investment decisions on a particular project based on evidence and innovation stage.

Global KPIs● Connected to innovation strategy:

○ The focus here is on helping the company examine the overall performance of their investments in innovation in the context of the larger business.

Use incremental investments in ideas to see what is working.

Start with small investments then increase as teams start

to show traction.

Moneyball for Innovation reworked on slide 11

Principle 5 - Innovation Practice

Use lean innovation methods to create products that people want.

Ideas are easy to spread, [but] practices are very hard to spread with fidelity, especially when they are not supported by good tools.

Jim Shelton Head of the Education Division

Chan Zuckerberg Initiative

Iterating is a method of systematically searching for

customer value and a sustainable business model.

Capture Idea

Identify Assumptions

Prioritize Assumptions

Brainstorm Tests

Falsifiable Hypotheses

Get Out Of The Building

Capture Learnings

Make Decisions

Talk to customers. Then get them to

do something.

Breakdown silos.

Cross-functional collaboration is key.

The ultimate arbiter of value is the customer.

Get out of the building early and often.

An Integrated Framework

Thank You

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