🔴 Preparing your innovation department for an economic nuclear winter

Not to be too overdramatic, but my spider sense has been tingling lately. Given the massive uncertainties ahead of us for the next three years and the numerous signals that large tech companies have been emitting while shutting down entire departments to “concentrate on the core business” I believe that many innovation departments will face the possibility of a nuclear winter. And I would extend this warning to our friends in design as well.

This may seem surprising. After all, the logic would be to double down on investment into innovation projects in various ways. In volatile times, restlessly exploring the future of your market should be the equivalent of oxygen masks dropping in your plane’s cabin.

Well, sure.

In practice? Two things are playing against you if you’re leading an innovation department. Firstly, in a crisis, few executive committees manage to keep their eyes beyond the next few quarters. Secondly? Many innovation departments never manage to justify their ROI. And while I cannot simply help you with your executive committee (things can be done nonetheless), I can share some ideas to address the second problem.

Systematically check-list your contributions

Whenever I work with an innovation department at a strategic level, I always have in mind three key questions regarding the output of the numerous program they run :

1. How did your innovation program develop or reinforced customer intimacy in key segments?  
2. How did you enhance the operational excellence of leading business units?
3. What leadership level did you create or help sustain in various product categories?

Three questions. One about the market, another about production, and a final one about competitive advantage (leadership). These questions are, by design, extremely open-ended and yet very practical.

For instance, your contribution to “3. leadership” could come from various angles:

• Some very simple actions reinforce your brand value as an innovative company because you regularly contribute to talent attractiveness by working with a few leading management, design, or engineering schools. Or because you are center-stage to flex technological muscles with key prototypes demonstrated in international trade shows. Don’t overlook these seemingly obvious contributions.
• But this can be about more direct impacts too. Are you helping business units deploy new products faster, testing key hypotheses (before Gartner explains what to do to the rest of the market), agile prototyping, creating new business models, digitizing products in services, …?

Going through these three questions and check-listing all your contributions over the last few years should already give you an interesting box of material to work with.

Organize a portfolio of projects and impacts

The second step is to sift through this material and organize it as a portfolio.  

To do that, it’s necessary to have some impact assessment: evaluate all the contributions check-listed, asking if they had a short-term measurable impact, a medium- or long-term one.

If there’s no impact you can find or imagine, scrap the contribution or project.

But if there’s an impact or ROI you can point at, make sure to involve the internal stakeholder in your company that benefited from this. Each impact listed is a potential storytelling opportunity, and a simple and precise verbatim goes a long way.

One of the perks of this step is that it will force your innovation to verbalize what these impacts were. The worst-case scenario for you is not to be able to demonstrate at a granular level what’s the point of having such an innovation department.

The final touch for me is lastlty to organize all this in a portfolio framework as such:

I’m being fairly technical here, but it’s really not a lot of work at this point, and you’ll see a huge payoff at actually mapping your innovation strategy (you had one all these past years, did you? 😉).

If you missed my series of articles on what is an innovation portfolio, here they are:

🔴 Building a proper innovation portfolio – Part 1

Few corporations have been capable of transitioning from a pipeline to an innovation portfolio. We can blame well-known business books for oversimplifying the issues at stake, but also, the non-linearity of a portfolio strategy genuinely baffles most executives. Let’s share some insights…

Innovation CopilotsPhilippe MEDA

What’s your lizard’s tail?

I would also prepare a simple discussion for your executive committee in the context of possible budget cuts. Which essentially is pointing at a lizard’s tail you’d be ready to shed from your perimeter.

Offering practical options while securing your core innovation activity? That, too, goes a long way.

What if?

Again my spider sense is tingling very actively, but I might be wrong on a case-by-case basis.  It’s possibly not all doom and gloom. You might even be surfing a strategic wave where your visionary executive committee wants to pump more resources into your department. In this case, all of the above will be even more useful in discussing the strategic axes that should be reinforced.