77% of internal innovation efforts fail. Here's a 4-step checklist for ensuring that doesn't happen to your company.
- Legacy companies challenged by new startups are rushing to create cultures of innovation internally in the hopes it will spur the next great product offering. Many of those efforts, however, fail to produce results.
- To tackle the challenge, organizations are turning to intrapreneurs, a relatively new role within companies that is responsible for helping to lead and build excitement around innovation projects.
- Organizations should start on their innovation journey by analyzing where they are currently and the ideal "future state," according to Simone Ahuja, found of advisory firm Blood Orange, which has advised companies like UnitedHealth Group on its own intrapreneurial efforts.
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When Procter & Gamble wanted try to disrupt the household insecticide market, it relied on a smaller, more nimble team to develop Zevo, a kid-and-pet-friendly product that was initially purchased as a startup by the company in 2017.
It's a testament to the ability of the Cincinatti-based consumer goods maker to find new ways to spur research and development across its 92,000 employees. Zevo, for example, began selling in Target earlier this year. It's also an inceasingly common strategy. Legacy companies challenged by a surge of nimble startups are rushing to try to create cultures of innovation internally in the hopes it will spur new competitive offerings.
But among companies that have invested in so-called "innovation units," only 23% say it has yieled a successful product, according to a recent study. That's a whopping 77% fail rate.
Hence the need for the "intrapreneur"- a word coined in 1978 but freshly relevant in large companies as they recast themselves as tech firms. The intrapraneur is the visionary, cheerleader, and cross-functional coach who advocates for, and pushes along, innovation efforts. But, as CTOs have told us, the very environment of an organization can stymy the innovation that's being sought.
For many companies, the biggest challenge is figuring out how to begin, according to Simone Ahuja, founder of advisory firm Blood Orange and author of intrapreneurship guidebook "Disrupt-It-Yourself."
"When I talk to leaders about innovation generally, they are kind of overwhelmed," she told Business Insider. "They don't know what to do, they don't know where to start."
Ahuja, who advised companies like UnitedHealth Group and Stanley Black & Decker on internal innovation efforts, outlined the four-step checklist organizations should consider when aiming to formalize their own programs.
Be clear on the innovation strategy
A company's innovation strategy should be an overarching set of principles that are used to guide efforts across the organization.
The first step for executives, according to Ahuja, is figuring out where the company is currently and the ideal "future state." That can include a move from an environment where leaders don't micromanage to one where they say "yes" more often to riskier projects.
Formalizing that process, however, requires buy-in from the top, according to Ahuja. That's why the conversation will typically start with a group of high-level executives. But that doesn't mean completely ignoring the rest of the company.
"The mandate starts with senior leadership, but immediately we go across the organization to find out how to define this vision for the future," said Ahuja.
All overarching goals should also include smaller, more specific action-items to make execution easier so individuals don't feel overwhelmed.
"This is where everybody seems to get stuck. Give them some very, very tangible things that they can dive into. Or better yet, ask them to create it," she added.
Say a company wants to make it less risky for employees to pursue projects outside the scope of their daily jobs. One immediate action item could be finding several examples of other organizations that have such a culture and figuring out what makes it succeed.
Launch an 'intrapreneur protection program'
One of the most difficult tasks for companies is figuring out how to incorporate intraprenuers into the organizational structure.
Legacy firms are typically built on rigid structures to give employees a clear path towards advancements. But if organizations are trying to create a more innovation-driven culture, workers could be spending more time outside of their regular job tasks on initiatives that may or may not succeed. Organizations must assure employees that, if a project does fail, they won't lose their job.
"Senior leaders can ask for it but then the question becomes, 'Why should I take this risk? I'm not being measured for this,'" said Ahuja. "It's almost like you need an intrapreneur protection program."
One way to do that is to tout examples of projects that didn't go to market - or went to market and failed - but provided valuable information for future efforts. Another is ensuring that those employees who drift from their daily job tasks are able to re-enter the more formal organizational structure when their projects wrap up. That becomes easier as companies promote more of those individuals to senior management roles.
The most successful intrapreneurs "are the ones that had the air cover from leaders who are also kind of intrapreneurial," Ahuja said.
Create the right intrapreneurial team
Another key question that executives must answer is whether to hire externally to help lead innovation-heavy projects or to appoint someone internally.
For so-called "core innovation" efforts, or those that don't carry a large amount of risk, Ahuja says internal teams are fine. For initiatives that go beyond the scope of incremental improvements, like the creation of an internal startup accelerator, it's more necessary to bring in outside experts.
"This is one of the most challenging and artful pieces of innovation because a lot of it is just testing and trying it out," said Ahuja.
But external hires - even those with a strong track record of success or were past leaders at companies viewed as leading the innovation charge, like Google - still need to be paired with those who intrinsically know the ins-and-outs of the organization.
Craft clear metrics for success
Companies should partner clear financial goals with "softer targets," like how many new ideas were generated or whether you figured out if customers are willing to pay for products outside the traditional offerings, advises Ahuja.
"You've got to have some metrics that start to build a culture and the capabilities of intrapreneurship, but eventually you also have to draw a line in the sand and get clear about how long you are willing to experiment on this," she said.
And evaluations should be done on a continual basis - as often as once a week - to figure out whether the project needs to be pivoted or shelved. Along those lines, Ahuja says intrapreneurs should be empowered and rewarded to end initiatives that are failing to produce results.
While individual innovation efforts will vary wildly by company, these four steps can serve as the foundation as organizations craft their own modernization journey.