This is part of a 4 part series called The Innovation Journey.
Month 12 - 24: Proving Value
In your first year as an innovation leader, you have defined your purpose, engaged the workforce, and built a healthy pipeline of real opportunities. You might be wondering: “What else would my organization possibly want from me? I’ve delivered.”
No, you haven’t. At this point in your journey, outcomes are what matter. The halo of excitement around the newness of innovation has expired, and you are on the hook to show tangible results.
Organizational optimism and anticipation will morph into skepticism if you can’t show real business value. The pressure of having to prove this often triggers a downward spiral of resentment. Innovation leaders complain that the expectations are unrealistic. When the CFO or someone from the finance department asks for an ROI calculation on the innovation program, they get frustrated. Really? They don’t get it. Right?
Most large companies have a metric that is hard to refute: value. Value can be subjective, but most of the time it translates to money. How is the innovation program making us more competitive, more valuable, and stronger now? If the answer to that question is not extremely clear, support for the innovation program begins to decline rapidly.
Your job now is squarely focused on translating all of your efforts into language that the organization understands and finds objectively valuable. You cannot be in every room to defend yourself or your team at all times, so the metrics need to stand on their own. The CEO, CFO, and other leaders want you to succeed. They need you to. But you have to help them communicate your value in language that will resonate with their audience. In the early days, anecdotes around culture, mindset, and engagement help. After a year, they matter much less, and you need language around results.
The best innovation leaders learn how to translate value in one of six ways. Assess your pipeline of ideas and projects and put them into these six buckets.
1 — Efficiencies Gained
If you’re approaching innovation correctly, you are solving problems. How have those solutions saved time, reduced costs, or simplified processes? How have new technologies accelerated progress toward your company goals? How have employees been able to do more with less?
2 — Revenue Generated
New revenue comes in several different forms – better revenue (higher margin), expanded revenue (more sales of current products), and new revenue streams (sales from new offerings). See where innovation has played a role in driving any of these revenue streams. Can the innovation team point to any of these forms of revenue?
3 — Capabilities Built
Experience has taught us that while CFOs care most about financial performance, CEOs care most about capabilities. You might be surprised to see your CEO lean in on this topic. How have you upskilled the workforce? What new competencies have you embedded into the organization? What new partners give your company greater flexibility and an expanded set of approaches?
4 — Options Created
My colleague, business school professor and author of Grow from Within, Rob Wolcott, says, “Corporate innovation is the disciplined practice of creating options for the future.” The world changes constantly, and it is changing at an ever-increasing pace. Traditional corporate planning methods are not suited for the world we live in. How is innovation formulating, testing, creating, and validating new strategic options?
5 — Talent Attracted
Senior leaders understand the importance of attracting the best talent in the world to the organization. And fortunately for you, the greatest talent often wants to work for innovative companies. How has the innovation team helped create an environment that attracts these people? How has the quantity and quality of applicants improved from the company’s innovation programs?
6 — Learning Applied
It is mind-boggling how much money is sunk into large-scale projects at large companies, that result in an eventual failure and write-down. In an effort to demonstrate investment, they often risk too much on unproven concepts. Innovation teams can help with this. How has the innovation team’s work mitigated risk and, in some cases, prevented the company from spending money where they shouldn’t?
The most successful innovation programs in the world are creating value in each of these buckets. It was not an accident. The leaders of those programs designed these outcomes into the process from the start, knowing that they would inevitably be accountable to report out on them. As the saying goes, “The best time to plant an oak tree was 20 years ago.” The same is true for these outcomes. It is never too early to tabulate your successes into language your organization can understand and rally behind.