Framing out the house is confined by the foundation. So too is the building out of an innovation center of excellence. The strategy defines the portfolio of where you are going to look for innovation within the business and from the outside. It is in essence looking at where the “white space” is within the strategy and creating portfolios and structures that look to address those “white spaces.”
Innovation Project Selection/Prioritization is key to getting the frame of your house of innovation built. Many organizations take a shotgun approach, “show me what’s new in the world.” This often results in showing off innovation for innovations sake and not for what will have operational and customer impact as it relates to the core competencies or emerging customer markets. Clearly this ties back to the White Space within the strategy and to the customer voice. How do you think we have got to the idea of photos on our phone and sharing instantly with all our friends? The white space was allowing our customers to share what they are doing in pictures easily. The voice of the customer was to instantaneously share a picture of what is happening right now not only with those they are sharing the experience with but with the rest of their circle of friends and acquaintances (i.e., Snapchat, Instagram).
Innovation Project Valuation is one of the hardest things to communicate and one of the hardest things to estimate. First, Project Valuation is not ROI. In the world of innovation, you have no idea the costs of scaling until you get further down the road of development and testing. From a cost perspective, size of market, actual scale size and client base are all factors in how big the investment in capital expense and operational expense might be. This does not consider discounts for scale or customer/client capabilities to help fund. Example, a large company may be able to negotiate better rates on items if they are your client than you can, or pricing of a commodity might fluctuate during the POC to implementation phase that cannot be effectively forecasted. However, value of a product or service is easier to predict with good assumptions. You can predict what the revenue will be on a product based on market research etcetera. This valuation prediction is what really drives a project to proof of concept. Innovation must drive value in some form for it to be considered in the corporate world.
When you have a solid understanding of Selection/Prioritization and Valuation it gives you a 2-factor guide on how to prioritize the work within the team. Resource Balancing across the innovation portfolio keeps you working on what is important to the strategy and customer along with what out of those is likely to have the best value to the company.
None of that will make a difference to anyone unless you have Portfolio Reporting/Dashboard to show where the walls and doors are within the process. People/Executives will want to know what you are working on and why. This formalized prioritization approach will create a level of comfort on how sturdy the frame of your house of innovation is and can be, even during difficult times.
The portfolio approach defines what the rooms are within the foundation and how the house is divided into sections. Now your team can focus on the work.
Well, that was easy (ha-ha). Next, we must start thinking about the Structure of the House. Some walls, the roof etc. Sounds like I should get writing.
Until next time…
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