corporate innovation
Corporate innovation startup: for speed, make sure you do this
75% of all corporate innovation startups fail*. Do you know why? It’s not because of lack in product or service value. Or not enough customer traction. No, they fail because of the changing dynamics within large organisations. The longer you are dependent on your corporate environment for the development and growth of your innovation startup, the bigger the risk your project will fail.
* according to 500 Startups
Corporate dynamics risk increases linearly with time
Some time ago I experienced this myself when developing a consumer product that ticked every box there is. Aligning with a massive trend, tackling consumer problems and initial sales for the solution we were developing. However, the project was stopped just before we we’re fit for scaling. The reason? An unexpected market development impacting all budgets, including the budget for innovation. And since our project was still very much dependent on the innovation budget, we eventually draw the short straw and were stopped prematurely. That’s an awful way to stop, believe me!
Corporate dynamic risks: How can lack of speed impact your innovation project:
- decision makers & sponsors change over time (they get promoted, get fired, get other priorities)
- corporate context will change over time (changing budgets, new strategy, competition surprises)
- Loss of (your) innovation history (prior decisions/support tend to dissolve over time)
Speed will earn your freedom
Speed is your answer if you want to mitigate the risks described above. With speed (and the results that come with it) you earn your projects ‘freedom’. And with freedom I don’t mean a spin-out or anything complex. What I mean is the freedom to follow your own path without to much dependencies from factors operating in your company’s environment (the dynamics).
So, innovator! Make sure you adopt this mindset for speed:
1. #*ck the process of innovation
In my experience every innovation lab, accelerator environment operates with some sort of innovation process. The names can vary, the process is usually more or less the same. Innovation projects are supported with a process that starts with idea generation continuing into problem validation. And then forward to a solution validation, a (MVP) build phase and onward to scaling. And within those process steps milestones are defined upfront.
To you innovator/entrepreneur I advise you wholeheartedly to be an *sshole more when it comes to the innovation process and ignore the required procedures whenever possible.
In the end the only thing that matters is success, measured in revenue and growth. Don’t let the corporate process hinder your speed to market and try to cut the corners whenever possible. Trust me, as soon as you have a profitable business model you will be forgiven for your extreme focus on your innovation success.
2. Run your team agile and focused
I’m not going to say a lot on agile way of working or about other fancy methodologies. What I do want to point out is that you can move a lot faster than you/your team think: when you are able to focus on what really matters.
Easier said than done, but with focus you will be able to always move forward on your initiative road map towards your goals. Use the riskiest assumption methodology for example, as a tool to help you here (I’ve written a post on this earlier)
In addition, what works really well is to work in 1 or 2-week sprints. Meaning you have to make your scope smaller in order to deliver every sprint cycle. This is a main benefit of working agile in my opinion, because this way (provided you deliver) you will always move forward.
Working in short delivery cycles (called sprints in Agile), you also get quick feedback helping you FOCUS even more on what most critical to do.
3. Invest equal time for distribution and development
Do you also recognize that you spend all your time on product development? It’s so much fun and tangible to create a new product or service. Of course you would dedicate your time to this. I do!
However, after spending days/weeks/months on product development you are not moving forward enough in terms of sales or growth. And with time progressing the need to deliver ‘big number success’ builds up. Usually my stakeholders always push for speed, because they want to showcase success.
To solve this problem, I strongly advise you to spend your time building in parallel to testing your distribution channels.
Distribution strategy (or traction channel strategy) and product development are of equal importance and should get about half of your attention. In 2015 Gabriel Weinberg (founder DuckduckGo) and Justin Mares published a great book called ‘Traction’ and they named this principle the 50 percent rule:
For me the key benefits of pursuing product development and distribution strategy in parallel are:
- Helping you build the right product because you can incorporate the feedback from your traction efforts/experiments
- You can grow more rapidly when your product is ready, because you get to experiment and test different channels before you launch anything.
- You make sure you will end up with a viable business, as you are able to find your business model early on, making sure you can get enough customers in an affordable way.
Tool: The Bullseye framework to help you find your core distribution channel
According to Gabriel and Justin there are 19 distribution channels. And for your innovation startup there is one core channel that will give you the traction you need to be successful and earn your freedom. With the bullseye framework approach for channel selection, you can guide your team to run parallel tests for both validation as speed of growth.
There are 19 distribution channels. Using Bullseye you will find your core channel:
Targeting Blogs; Publicity; Unconventional PR; Search engine marketing (SEM); Social and display ads; Offline ads; Search Engine Optimization (SEO); Content marketing; Email marketing; Viral marketing; Engineering as marketing; Business development; Sales; Affiliate programs; Existing platforms; Trade shows; Offline events; Speaking engagements; Community building
I advise you to buy and read the book Traction for more details how to use the bullseye framework. I’m a big fan of this approach to growth and happy share the love. You can buy it at Amazon. (ps. I get a small referral fee from Gabriel & Justin if you follow this link)
In short, this is how it works:
Step 1: Brainstorm strategies for every single traction channel
First thing you need to do is get your team together for a few hours. And start imagining what success would like in each channel, and what you must do to get it. Write this down for the outer ring, for each channel individually. Do this for all 19! I know it’s a lot of work, but its meant to help you systematically counteract your channel biases. For each channel you should identify one decent channel strategy that has a chance of moving the needle.
Step 2: running cheap traction tests in the channels that seem most promising
Select the few truly exciting and promising channel ideas: minimum 2 – maximum 5.
For each selected channel build and launch a cheap traction test you can run to determine if the idea really is good or not.
These test should roughly answer the following:
- How much will it cost to acquire customers through this channel?
- How many customers are available through this channel?
- Are the customers that you are getting through this channel the kind of customers that you want right now?
Keep these initial test small and cheap: for example max. €1.000 for a period of 1 month. And track what happens. So for example you can set-up a small Facebook ads campaign for lead generation on a specific value proposition. See how that converts and compare it to the traffic you get from a guest blog post (content channel) on a relevant niche site.
Tip: don’t disregard the underutilized channels and strategies. Many successful companies in the past have used them.
Step 3: Focus solely on the core channel that will make the impact for your startup
Now that you have found your core growth channel, go for it! Put all your focus and effort on this distribution channel and wring every bit of traction out of it. Don’t get distracted from other channels marketing efforts/options while running. Until you notice the results are not what you want. Then maybe it’s time to adjust to a different channel for your startup growth stage.
Wrapping-up:
With the bullseye approach I was able to focus my marketing efforts to the traction channel that will maximize growth results, while still developing the product. For corporate innovation startups this is key, as traction trumps everything! It’s freedom!
Enjoy the ride and make a difference!
Menno
This post is part of a set of articles on corporate innovation startups, sharing practical tools & tips for corporate innovators. You can sign-up for a free e-mail masterclass if you like.
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