In building an Innovation Program there are many components you need to consider including;
- Sponsorship & Funding
- Skills & Capabilities
- Implementation & Execution
- Measurement & Metrics
- Tools & Technologies
These in turn can be assessed and benchmarked through an Innovation Maturity Model that can help you identify where you are and how you can advance your program design. Interestingly when you discuss how certain companies build and develop their innovation programs you come to realise that whilst these have similarities it’s the differences that can help you understand the steps to advance the state of the components from more novice states to advanced or even optimised ones. One of the most overlooked yet key components that need to be more fully appreciated and embraced is that of Funding.
In the past, like many other people of course, I have attended conferences to learn about the new things I could potentially bring to the innovation programs I help to design. Through presentations, round tables you start to hear about the constructs of other companies innovation programs and we all note down things to add to ours. During one such session the interesting topic of funding came up and it is something I have been looking into for some time now as I think it is often under appreciated in terms of it being a key driver of any innovation program.
At the table we had two completely different funding models from two different companies. The first model looked to discover new ideas that could add value to the business. Following their evaluation the best were then pitched to a panel of senior leaders and funding was then appointed if the leadership agreed with the Innovation Program Managers assessment. The Innovation Program Manager revealed how successful this funding model was for them and how his leadership team absolutely trusted him in the opportunities he raised as he continually demonstrated success and value.
The second model did pretty much the same to a point. It too looked to discover new ideas that could add value to the business. Following their evaluation, it diverged from Model 1 and the best ideas were then funded from a sizeable ($30m) Venture Capital Investment Fund the Innovation Program Manager had direct access to without having to go to senior leadership. This model was very successful too, as the Leadership team absolutely trusted him in the opportunities he raised as he continually demonstrated success and value.
So which is the better model? Well both are for their respective companies at this point in time. That is critical to acknowledge and this was when the discussion became interesting. So the Innovation Program Manager who went to leadership for approval and funding said his leadership would never give him $30m – that was just plain crazy. So I asked the Innovation Program Manager who had this fund – “what was the model you had before the Venture Capital one”? He then reflected and answered pretty much like the model the other Innovation Program Manager had described.
So what had changed? Simple, the trust he had from leadership had translated into a change of ownership and governance on the funding model, which had passed from leadership to the Innovation Program Manager. This created a faster development time and also enabled them to manage the portfolio at a program vs. a more project-by-project level, which in turn increased the output and overall value generated. So should Innovation Program Manager from Model 1 go back to his company and ask for a Venture Capital fund? Probably not. He didn’t feel his leadership culture was quite ready for that level of autonomy for their Innovation Program. However, it wouldn’t surprise me if he moves to this model when the timing is right. And for me this was the key moment in the discussion that initially Innovation Manager 1 was defending his model as the right one as he had never considered the need to fix something that wasn’t broken. He could, however, following this discussion see how he could move to the next level of maturity that would in-turn enhance his ability to implement and execute. This is a critical learning point as he could also see how this change would impact not just implementation and execution output but later how that could in turn self-increase the funding as it becomes its own P&L vs. the ad-hoc funding model within their business. So rather than going straight from $30m he could start at $5m and through that increase it to $10m, $20m and even $30m as he demonstrated the maturity and success of their Innovation Program at each stage.
One thought on “Advancing your Innovation Funding Model”
Pingback: Advancing Your Innovation Funding Model - via @Mindjet's Conspire #ideasquad