Over the years I’ve seen some successful Innovation Programmes fail, almost overnight vs. a gradual wind down. Why is this? Why would any company not want an Innovation Programme and especially one that is successful? Surely if they have a great ROI, loads of case studies, new products/services they can showcase, innovation labs, white papers, conference proceedings, patents etc. they are good? Well surprisingly they are no guarantee of sustainability.
Upon further investigation I have come to realise they have all hitting the same three problems, which has ultimately led to their cancellation.
The first problem is how they define their success? There are many KPIs which these programmes choose including the Return on Investment (ROI). This is often the first problem I’m seeing is how the ROI is being reported and measured by these programmes. It is rarely the Innovation Programmes ROI and is in fact owned by the part of the business that brought it to market.
The second kind of relates to the first and that is how are these Innovation Programmes funded? Often the budget is setup as a cost vs. profit centre. Now it is not to say Innovation Programmes should be a profit centre from day one but if it does not mature a way to fund itself, it is always vulnerable to Corporate Change.
Then third problem is how an Innovation Programme operationally matures? This is critical and actually builds on the foundations of the other two points. Where success and failure ultimately sits is can the Innovation Programme sustain itself through Corporate Change e.g. a change in corporate leadership, market pressures, change in corporate strategy, programme lead etc.
So this is the rub. At some point in time, someone always asks “how much does this cost and who is paying the bill”? In fact it can even be a reflective question from the Innovation Programme Sponsor (i.e. why am I paying the bill on my own). What we typically find are those that benefit in a P&L are not those who are funding The Innovation Programme. Sometimes because its more complex than that but mainly because no-one has thought to connect these things up and mature the model to be sustainable. It is quite shocking really when you realise that leaders should have been working on maturing this model all along, vs. getting caught-up in the excitement of driving innovation in their companies. You have not won by innovating alone. It needs to be able to support itself without you or your current leadership backing it as the right things to do vs. seeing the numbers and knowing how they map from investment to return.
So lets break this down. What do you need to do?
Well firstly set the right KPIs and truly understand which are the good indicators and what are the real returns your Innovation Programme that you can truly declare and how (shared or direct ROI).
Secondly, actively work on maturing your funding model to move it from investment to self-sustaining. It is a far better place to be going to your CFO with numbers that show the true ROI with forecasts that predict next years returns through increase investment vs. trying to maintain budgets with little material benefits to make your case.
Finally, figure out how to navigate and grow the operational capacity of your Innovation Programme. If you are still the Innovation Sheriff with a bunch of Deputies 3 years after you launched, you are missing one of the key things to making Innovation Programmes sustainable and immersive in your organisation.
So hopefully these thoughts are useful and applicable? Leaders have a role to play and its a tough one to take Innovation Programmes forwards to mature the Funding and Operational Models. Fail to do that and your Innovation Programme, no matter how successful, is always open to the risk of being canned. Don’t be that Innovation Programme, be the one that succeeds and sustains.
Anyway a second blog post inside a week. Clearly I have been storing a few up. Looking forward to sharing the next one.