Executive Summary

Introduction: Why Innovation Leaders Need a Checklist

In today's rapidly changing business landscape, innovation has become the lifeblood of organizational growth and sustainability. Yet despite its recognized importance, many companies struggle to implement effective innovation programs that deliver measurable results. The challenge isn't just about generating creative ideas—it's about establishing systematic approaches that can transform those ideas into tangible business outcomes.

"Innovation theater is engaging in activities that look like innovation—brainstorming sessions, idea challenges, hackathons—but fail to produce real results," explains innovation expert Dr. Rita McGrath. "The real work happens after ideation, when you need processes for testing, validating, and implementing those ideas."

This is why we at Strategyzer have developed "The Innovation Leader's Checklist"—a comprehensive framework that addresses the three critical pillars of successful innovation leadership: people, portfolio, and process. This checklist serves as a practical guide for innovation leaders seeking to drive meaningful growth and tangible results within their organizations.

The People Pillar: Building Legitimacy and Credibility

As innovation leaders, it's critical to focus on what truly matters to ensure your work has the intended impact. An effective innovation leader's checklist starts with evaluating the human elements that drive innovation success.

The Dual Role of Innovation Leaders

Innovation leaders have two essential jobs that must happen simultaneously. The first is making progress on innovation initiatives—showing success and building traction within the organization. This aspect typically attracts people to innovation roles: the opportunity to work on exciting projects and make a meaningful impact.

However, there's a second half of the job that's equally important but often overlooked: growing your reputation within the company and building key relationships. As Tendayi Viki, Partner at Strategyzer, emphasizes, "The other half of the job is relationships. You have to be building the reputation of your innovation function and your innovation team."

The Power of Idiosyncrasy Credits

A critical concept for innovation leaders to understand is "idiosyncrasy credits"—a psychological term coined by Edwin Hollander that refers to how much permission you have to be different within an organization.

The fundamental question is: "Are you popular enough to be different?" The way you build idiosyncrasy credits is through the accumulation of positive impressions about yourself and your team, especially around contributing to the organization's success.

When you have credibility within the organization, you can "spend" those credits on pursuing more innovative and potentially disruptive ideas. The more credibility you build, the more latitude you have to explore transformative concepts.

Unfortunately, many innovation teams don't invest enough time in building these credits. Instead, they focus exclusively on their projects without nurturing the organizational relationships necessary for long-term success.

Innovation's Organizational Position

A critical consideration for innovation leaders is where innovation sits in the organizational structure. Research shows that higher-status people in companies have more leeway to lead in their own way—making organizational positioning an important factor in innovation success.

The ideal scenario is one where innovation has equal status to running the core business. For example, at Ping An, the CEO appointed a co-CEO who also serves as Chief Entrepreneur, creating equal standing between innovation and core operations.

While this represents an ideal scenario, a more typical arrangement places the innovation leader reporting directly to the CEO. This arrangement at least signals that innovation is viewed as a central part of the business.

However, status alone doesn't guarantee innovation success. As Viki points out, "Status is not the same as legitimacy."

Status vs. Legitimacy

People can be given organizational status while still not being viewed as legitimate. This distinction is crucial for innovation leaders to understand.

Research shows that people resent those who exercise power without legitimacy. In established companies, resistance to innovation initiatives often doesn't manifest as direct opposition.

Instead, as Viki explains, "In established companies, people don't have to fight you to resist what you're doing. They can slow-walk the process. You might say, 'We need to talk to customers,' and they'll respond, 'For that, you need legal and compliance approval,' and then just sit on your request."

This creates a situation where you might have high status but lack momentum because of passive resistance. Building legitimacy through relationships and demonstrating value is essential to overcome this challenge and get things done.

Building Buy-In for Innovation

Gaining buy-in for innovation involves two critical components: First, people must positively evaluate your work and accept it as legitimate. Second, they must be willing to participate actively—either by advocating for it or contributing resources, time, and energy.

Without these elements, driving successful innovation becomes extremely difficult from a human perspective.

When mapped on a matrix of evaluation and participation, four distinct responses to innovation emerge:

• Resistors: People who neither like what you're doing nor want to participate
• Compliers: Those who don't support your initiatives but participate because they must
• Endorsers: People who like your work and publicly support it but don't actively contribute
• Champions: Those who both positively evaluate your work and actively contribute to its success

The ultimate goal is to develop champions who truly buy in to your innovation efforts. This leads to the final question in the people pillar: Do you have champions who actively support your work?

Research suggests that having between 5-15% of people willing to champion your innovation initiatives provides sufficient momentum to drive change. These champions evaluate your work positively, accept your legitimacy, advocate for you to others, and actively contribute to your success.

The Portfolio Pillar: Strategic Direction for Innovation

The second pillar of the Innovation Leader's Checklist focuses on establishing a clear strategy for your innovation portfolio.

Clear Innovation Guidance

One of the most important elements of successful innovation leadership is providing clear guidance about what types of projects teams can explore. Without this direction, resources can be wasted on initiatives that don't align with company objectives.

As Alex Osterwalder, Founder and CEO of Strategyzer notes, "Every company has limited resources. Very few have unlimited resources. So you want to channel them into the right things." He further points out that "letting a thousand flowers bloom is not a good innovation strategy."

While investing based on evidence is essential, evaluating strategic fit is equally important. Without clear guidance from leadership about the future direction, teams lack the focus needed for effective innovation.

Testing Your Innovation Strategy

A good way to evaluate your innovation strategy is using what Osterwalder calls the "strategy smell test" inspired by Roger Martin: "If you look at the core strategy choices and then ask, 'If I make the opposite choice without looking stupid, then it's a strategy.'"

For instance, claiming "we want great products" isn't a strategy because no company would choose the opposite (making poor products). That's simply a ticket to compete in today's market.

Osterwalder references Roger Martin's observation that "90% of companies don't actually have a strategy at all," making the development of a clear innovation strategy even more challenging but essential.

Modern Strategy Making

Modern strategy making involves providing direction for both existing and new business initiatives. Companies need to develop guidance for their established operations (exploit) and their exploratory initiatives (explore).

A compelling example comes from Ping An, which established clear strategic guidance that applied to both portfolios. Their overall direction included playing in five arenas (financial services, healthcare, real estate, smart cities) and investing in five technologies, along with committing 10% of their profits from existing businesses to new ventures.

For their existing business (exploit), Ping An focused on improving customer experiences, cutting costs with AI, strengthening risk management, and boosting efficiency. For their innovation portfolio (explore), they prioritized exploring new business models, becoming more like Alibaba than a traditional financial institution, transcending industry boundaries, and focusing on users first rather than clients first.

This comprehensive approach to innovation guidance helped Ping An move from being among the top 500 companies globally to consistently ranking between the top 20-50 companies for the past decade.

The Right Portfolio Mix

A common question innovation leaders face concerns the ideal mix of innovation types—how much to invest in efficiency innovation versus sustaining or transformative initiatives.

Many academic sources suggest specific ratios (like 70% efficiency, 20% sustaining, 10% transformative), but Osterwalder cautions against one-size-fits-all approaches: "There is no truth. If you are in a fast-growing business and have a strong sense that you're not going to get disrupted, it's actually a waste of time and energy to put anything in transformative innovation."

The right portfolio mix depends entirely on your specific context and strategy. "There is no right or wrong. It's all called strategy," emphasizes Osterwalder.

However, he notes that many companies allocate 99% of their innovation resources to efficiency improvements while their business model faces disruption: "They more efficiently die. That's the wrong strategy."

Innovation Funnel vs. Tunnel

A critical portfolio management question is whether your organization has an innovation funnel or tunnel. A tunnel approach keeps every idea moving forward regardless of evidence, while a funnel allows projects without traction to stop, focusing resources on validated opportunities.

An effective funnel approach can be seen in Bosch's innovation process:

Bosch structured their innovation process into clear phases, with teams starting by focusing on customer profiles and understanding jobs, pains, and gains. They allocated three months and €120,000 per team for this initial phase. Subsequent phases focused on developing value propositions and validating business models.

Most importantly, they established a process for filtering ideas based on evidence. Starting with 214 teams working on different ideas, they systematically narrowed these down through validation. By the final phase, they had 19 businesses with validated ideas, business models, and products.

The Process Pillar: From Ideas to Outcomes

The third pillar of the Innovation Leader's Checklist focuses on establishing effective processes for moving from ideas to measurable outcomes.

Evidence-Based Decision Making

Innovation leaders cannot simply pick winners by looking at ideas. Instead, they need to create conditions for winners to emerge through systematic testing and validation.

Carol Hill, Program Director at Strategyzer, emphasizes that "whatever you're doing, it's really important to note that activity on its own is not what you want to be measuring. You want to be looking at progress."

Simply running many tests or conducting customer interviews doesn't guarantee innovation success. What matters is the evidence generated and what it tells you about your ideas.

The Business Design Test Loop

Strategyzer's Business Design Test Loop provides a framework for evidence-based innovation. This iterative process includes ideating, prototyping (mapping out business models and value propositions), assessing, and testing with customers.

The process involves continuously cycling through these steps, checking assumptions, testing with customers, learning from the evidence, and making decisions based on what you discover.

As Carol Hill suggests, "Design like you're right and test like you're wrong."

Reducing Risk Through Evidence

The fundamental purpose of innovation processes is risk reduction. By conducting tests and gathering evidence, teams can validate or invalidate their hypotheses, building confidence in their innovation decisions.

Carol Hill emphasizes the importance of not just gathering evidence but evaluating its strength: "Even more important is to look at the strength of the evidence." The quality of evidence matters as much as its quantity.

As a leader reviewing innovation projects, your decisions shouldn't be based on gut feeling but on the evidence presented by your teams.

Incremental Funding Based on Evidence

An effective approach to innovation investment is providing incremental funding as teams reduce risk through evidence gathering. This means funding teams iteratively, giving them more resources as they demonstrate progress in validating their ideas.

Tools like the Project Scorecard help assess evidence levels across dimensions like desirability, feasibility, viability, adaptability, and strategic fit.

This evaluation framework helps teams and leaders assess confidence levels based on evidence types, from no evidence to irrefutable proof. It distinguishes between say-evidence (what people claim) and do-evidence (observed behaviors), with the latter carrying more weight.

Innovation teams can use this self-assessment tool, while leadership teams can use it to evaluate project progress and make informed investment decisions based on evidence strength at each development stage.

Real-World Innovation Examples

The innovation leader's checklist principles can be applied to companies of all sizes, as demonstrated by these examples:

Portfolio Exploration at Strategyzer

As a smaller company, Strategyzer has applied portfolio management principles throughout its growth journey. Starting as a software company, they initially balanced iPad app development with revenue-generating masterclasses.

When their web app didn't grow as quickly as expected, they expanded into consulting and e-learning—areas showing stronger traction. By 2015, these had developed into substantial businesses.

In 2021, seeking more recurring revenue, they decided to run all their programs on their software platform, merging their technology and service offerings.

Through experimentation, they discovered that innovation programs—structured experiences on their platform with or without coaching—emerged as a compelling offering. This led to the development of their program library, expanding beyond innovation to other business domains.

Business Model Innovation at Laura Star

Swiss company Laura Star provides another example of effective innovation. Initially focused exclusively on high-end steam irons, they decided to diversify into handheld steamers.

Rather than just focusing on product development, they explored multiple business model options. They considered 14 different ideas, including mass market positioning, hotel industry applications, and health-focused approaches.

After testing three different business models, they selected one to start with—positioning their handheld steamer for home disinfection rather than just clothing care.

Their innovation journey didn't stop there. As they learned more about their market, they evolved from positioning their product in the "panic arena" (during COVID) to the broader "health arena," launching Laura Aura to create healthy home environments.

This evolution led to a significant business model shift—moving from purely transactional sales to incorporating recurring revenue through refillable scent elements, aligning with their long-term strategic vision.

Cross-Cutting Innovation Challenges

Beyond the three pillars, innovation leaders face several cross-cutting challenges that affect their success:

Innovation Handovers

A common challenge occurs when innovation teams attempt to "hand over" their work to operational teams. As Osterwalder notes, "When we hear 'hand over' and 'give it back,' my alarm bells already ring. What are you going to give back? You're going to give them something and then say, 'Hey, here's some more work,' as if they haven't been working."

He explains that handovers can work when innovations fit perfectly into existing channels and metrics. "If you're making a new Lego set and you just put it right into the channel because it's exactly the same thing, same sales metrics and everything," the transition can be smooth.

However, "The moment it's slightly different, you're done. You have to have that buy-in," which connects back to the importance of the people pillar and building relationships throughout the innovation process.

Coordinating Innovation Efforts

Another challenge involves coordinating innovation across the organization. Osterwalder identifies two key aspects to consider. First is governance: "That's the CEO and senior leadership's job—to make space for governance that can embrace other business models."

Without appropriate governance, existing metrics and structures can strangle new ideas: "They're so well managed that no other business model can survive because all their KPIs are tailored to their current business model."

The second consideration depends on the innovation type: "If it requires a new P&L, only the CEO and the executive committee can do that. But you do need to be willing to create new P&Ls for completely new business models."

Attempting to force innovations into existing business units often fails: "What's not going to work is shoving it into somebody's business unit. They'll say, 'I have a P&L. This is different. I don't care.' It's going to die."

Conclusion: The Path Forward for Innovation Leaders

The Innovation Leader's Checklist provides a comprehensive framework for driving meaningful innovation results. By focusing on the three pillars—people, portfolio, and process—innovation leaders can increase their chances of success significantly.

People:

• Is innovation at the right level on the organizational chart?
• Is your innovation team seen as legitimate?
• Do you have champions across the organization who support your work?

Portfolio:

• Do you have clear guidance for the kinds of innovation you want to pursue?
• Is your portfolio mix appropriate for your context and growth ambitions?
• Are you operating an innovation funnel (not every idea proceeds) rather than a tunnel?

Process:

• Are explore and exploit projects managed differently?
• Do you have clear criteria for making decisions on projects?
• Do you make decisions to kill projects that aren't making progress?

Innovation leadership is challenging, but with the right checklist in hand, you can navigate the complexities more effectively and produce the growth and results your organization needs. By balancing the human elements with strategic direction and systematic processes, you can transform innovation from theater into tangible business impact.

Want to learn more about implementing the Innovation Leader's Checklist in your organization? Explore Strategyzer's new program library, featuring outcome-oriented programs designed to help you achieve real results.

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