Leaders often struggle with picking the right innovation projects. It’s even more difficult to select the right ideas in today’s extreme market uncertainty when you’re pivoting your business model or value propositions to assure the survival of your company. When faced with several teams or several new innovative business ideas, leaders find it difficult to choose the ideas to give further investment and the ideas to stop. Each team will be passionate about their idea and convinced of its potential success. The real question for leaders is whether there is evidence that the teams are close to finding value propositions that resonate with customers and business models that work, even in today’s market environment.
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I was recently working with a leader of an innovation lab that is run by a global manufacturing company based in Amsterdam. They had invested in several innovation teams that had been testing various business ideas. The leader was now faced with the challenge that his budget was getting cut. These reductions in funding meant that he could not continue to invest in all the innovation projects within the lab.
The leader needed to make a choice about which innovation projects to give further funding and which ones to stop. After several conversations, I was able to convince him and his team that they should make their decisions based on how close each project was to finding a business model that works. The decision would be based on evidence, rather than conjecture or projections in a business case. This would ensure that leaders did not select their pet projects or ideas that seem cool because they are working on new technologies.
To make their decisions, the leaders used an early version of our Innovation Project Scorecard. We created this tool to help leaders to evaluate how much evidence innovation teams have for the desirability, feasibility, viability and adaptability of their business idea; in addition to assessing how strongly aligned the innovation project is to the company’s strategic goals. The scoring favour teams that have evidence from more than one experiment, for each of the key elements of their business model. Teams will get the highest possible scores if some of those experiments involve getting customers to perform the desired behavior (e.g. placing an order).
With this tool in hand, the leader at the innovation lab was able to evaluate how much progress each project had made towards success. This assessment led him and his team to make an informed decision to stop working on half of the projects and only focus their resources on those projects that were close to finding business model success.
When it comes to innovation, corporate leaders need to accept that they cannot pick the winning ideas on day one. Instead, leaders need to make small investments in a number of ideas and provide the context in which teams can test their ideas. These teams can then earn further investment by showing evidence that they are getting closer to finding business models that work. The Innovation Project Scorecard is a useful tool for making these decisions.
In addition to the above case, the Innovation Project Scorecard can also be used by:
If you would like to make similar decisions within your company - please download the Innovation Project Scorecard for free:
You can find this tool and many others in our latest book The Invincible Company.