Beyond Experiments - Aligning Innovation With Corporate Strategy

Summary

In this insightful talk, Cindy discusses the challenges large companies face in adopting Lean Startup methodologies. She explains how innovation efforts often clash with corporate structures, leading to misalignment between experimentation and decision-making. Cindy highlights the importance of aligning investment strategies with the rhythm of innovation, encouraging companies to create an innovation thesis that directs their strategic goals. She outlines a process for managing innovation through clear decision-making, strategic alignment, and regular progress reviews, ensuring that innovation initiatives are not random acts but intentional, targeted efforts to respond to future trends.

Takeaways

• 😀 Large companies face significant challenges in adopting Lean Startup practices due to internal organizational structure and processes.
• 😀 Startups have external enemies, while internal innovators in large companies face enemies both inside and outside the organization, making their challenges more complex.
• 😀 The build-measure-learn loop for innovation needs to align with investment decision-making processes within large organizations.
• 😀 Large companies often struggle to connect innovation strategy with overall business strategy, leading to wasted resources on disconnected innovation projects.
• 😀 An innovation thesis is crucial for guiding innovation investment decisions, helping to align resources with strategic intentions based on market trends and future projections.
• 😀 Investment decisions in innovation should be treated as experiments in business strategy, assessing which areas of innovation align with the company’s overall vision.
• 😀 A key challenge for innovators is securing resources for scaling, especially when their innovations are not aligned with the company's strategic priorities or roadmaps.
• 😀 The process of managing innovation should involve both a product council (for specific project decisions) and a portfolio council (for overarching strategic decisions).
• 😀 Strategic allocation of resources should be based on portfolio analysis and a clear understanding of gaps and opportunities within the company.
• 😀 Every investment dollar should align directly with the company’s strategic goals, avoiding funding disconnected or speculative innovation activities.
• 😀 Innovation ecosystems within large organizations require alignment between individual projects, investment decisions, and overarching innovation strategy to ensure success.

Q & A

What is the main challenge that large companies face when trying to implement Lean Startup processes?

The main challenge is rhythm misalignment. Large companies have a different operational rhythm compared to startups, making it difficult for innovation teams to implement Lean Startup practices effectively.

Why do startups often have an advantage over large companies in innovation?

Startups typically face external challenges, while large companies face both internal and external challenges, making their innovation efforts more complicated. This internal resistance is one of the reasons why large companies often lose to startups.

What does the 'Build, Measure, Learn' loop refer to in the context of investment decisions?

'Build, Measure, Learn' in investment decisions means investing a small amount, tracking progress, and reviewing the results. If the project shows promise, additional investments are made; if not, the project is exited.

What issue arises when a startup within a large company is successful but struggles to scale?

The problem is that successful startups within large companies often do not align with the company’s existing strategic plans or roadmaps, making it difficult to secure the necessary resources for scaling.

What is the importance of having an 'innovation thesis' for large companies?

An innovation thesis helps a company focus its innovation efforts by defining a clear perspective on the future and how to respond to it. It ensures that investment decisions align with the company’s strategic vision and goals.

How does the concept of an innovation thesis differ from a business strategy?

An innovation thesis is a hypothesis about the future and how a company plans to use innovation to respond to it. It is more flexible and experimental than a traditional business strategy, which is usually more rigid.

What role does the product council play in innovation decision-making?

The product council is responsible for making investment decisions on specific innovation projects as they progress through their lifecycle. They decide whether to continue funding a project based on its validation and alignment with the company's strategic goals.

How can large companies better align their innovation strategy with overall business strategy?

By conducting thorough analysis and mapping their portfolio, identifying gaps and opportunities, and creating a vision for the kind of innovations to pursue. This allows them to make informed decisions about resource allocation.

What is the key philosophy behind resource allocation in innovation projects?

The key philosophy is that no dollar should be spent on an innovation project unless it aligns with the company's strategic intentions. Every investment must be purposeful and connected to a broader strategy.

What is innovation accounting, and how is it used in managing innovation projects?

Innovation accounting is the use of specific metrics to track whether the customer needs and solutions being tested are real, whether the market opportunity is valid, and how well the project is progressing. It helps companies track the success of their innovation investments and adjust strategies as necessary.