How to Build a Corporate Innovation Engine - Future Foundry LIVE #7

What are we looking at today? Well, we know that every established company in every category, in every country around the world, is operating in a rapidly changing world of customers, competitors, and technology. But we also know that in the face of this change, most of them feel paralyzed, right? They've witnessed one industry after another become upended by the emergence of disruptively new business models, delivery methods, customer experiences. And we've all seen once dominant corporations either leaving billions of dollars in value behind, sometimes going out of business for good. And the stark reality in and amongst this disruption is that 40% of Fortune 500 companies will disappear over the next 10 years. And that is a mortality rate that keeps increasing. While on the other hand, as of today, there are around 1,200 unicorns in the world valued at over $3.8 trillion. We'll round up and call it $4 trillion amongst friends. And they span everything from AI through to automotive, retail, analytics, cybersecurity, e-commerce, financial services, education, hardware, software, health, telco, supply chain logistics, and travel. And many of these ventures, products, and services, if not all of them, could easily have been launched by a corporate rather than a VC-backed founder. In other words, these unicorns have succeeded for no other reason than because corporates, as the incumbents, have let them. And let me tell you why we believe that is the case. The founders of these startups don't possess some God-given entrepreneurial gift, and there's no inevitability about their rise and your decline. What they are really good at though is using methods like design thinking, lean startup, agile to understand customer pain, to marry that pain with desirable solutions, and place a large number of small bets on those solutions. And see which winners emerge. And these basically boil down into a handful of quite easy-to-replicate activities that corporates should be more than capable of running. And what's really frustrating about that is that corporates can beat the disruptors at their own game and seize those big opportunities, especially when you think about all of the advantages that corporates have over startups in terms of, you know, established brands and reputations, access to thousands, if not millions of customers, and the availability, the readily available sort of working capital that exists inside those organizations. By definition, there is no startup with a reputation, an existing customer base, or a non-dilutive form of funding. So what is it that's getting in the way of corporates? Well, the problem really is that today's companies haven't codified the activities of, you know, top founders and top-tier VCs, and really haven't found a way to leverage the benefits of that corporate environment in order to understand that customer pain, marry the pain with the art of the possible, use technology and trends to solve that pain, and place a series of small bets to remove effectively the greatest amount of risk from those solutions on the least amount of capital. So, instead of having a systematic, scalable, predictable innovation engine, their innovation engines tend to be sporadic, unreliable, and a bit stop-start, right? Kind of like this 1983 Serbian Yugo 55 that I found. And instead of building an engine, most companies are too busy running hackathons. I don't know how many of you have had the deep displeasure of being involved in what is essentially a poorly run idea competition. You know, I'm sure that a vast majority of ideas that get submitted through these never get launched. Most hackathons actually end up with, you know, a voucher for Woolworths and a pat on the back, but no meaningful value that's delivered. The other place that corporates spend their time, which is bewildering to me, is setting up innovation labs. You know, how many times have you heard that over the last decade? And how many of these corporate innovation labs have been responsible for shipping truly transformational new ventures, products, and services? What it usually is, is a group of employees who are given a bunch of technology to mess around with and told to find a market for it. There aren't enough beanbags in this photo. I'll fix that for next time. Or the other thing they tend to get involved in is that they think, well, we can't beat the startups at their own game. So we'll have them join us and we'll run a series of startup demo days where they come in and sort of pitch. How many of you have witnessed, I wonder, your company running these beauty parades essentially? And how many of these startups have you actually ended up partnering with, you know, or even making it past the point of a demo? And while it's a nice field trip for the board to gawp at bright young things in Converse and Carhartt, These are overpriced, unproven models masquerading as solutions. So what is it that's holding corporates back? Why is it easier for them to faff around with idea competitions and beauty parades? Well, I think there's a lot of reasons for this, but there's probably only 3 that really matter, or 3 that we have time to get into today. And the first is methodology, right? Or a lack of methodology. Almost everything inside today's companies is systemized to within an inch of its life, right? From marketing to sales, from operations to fulfillment, HR to finance. But what they fail to systemize is their approach to identifying new opportunities, validating ideas, and scaling new initiatives. And that is because the perceived wisdom is that you can't put a process around innovation and that it is blue sky chaotic and, you know, sort of freewheeling endeavor. And that is wrong, right? There is, as we've seen, a system. The second reason is an inability to leverage the core assets. So we've already seen that established companies have got the, you know, ideas, the talent, the assets, competencies, capital, even customers to create wildly successful new propositions. You know, what helps them beat startups though is their ability to be able to seize that advantage that exists within the core business. But the problem is that companies have inertia, right? Antibodies and orthodoxies that have to be overcome. And what corporate innovators often fail to do is to engage the core and make the shifts in mindset that they need in terms of metrics, compensation, procurement policies, politics, and so on to ensure that their ideas reach what we call escape velocity and thrive. And the final reason is a lack of a portfolio mindset. What I mean by this is that senior executives really have to get out of a management review board mindset and adopt the discipline and perspective of top-tier VCs. And they could do that by stopping placing, you know, a small number of huge bets on unproven ideas. and starting to place a large number of small bets on multiple ideas and seeing which winners emerge. And without fixing these things, you're not really ready for corporate innovation. And if you wanna build a systematic, repeatable, and predictable engine that, you know, runs like a Ferrari 3.9 twin-turbo V8 rather than a 1983 Serbian Yugo, then it's worth fixing because you can succeed against clever new startups. Beat them at their own game. You can leverage the brand, customers, and capital that startups could only dream of. And you can disrupt from within and generate meaningful growth perpetually by building a corporate innovation engine. And we know that building a perpetual capability for innovation in the form of this engine to launch multiple new ventures, products, and services every year is far less expensive than, you know, losing out on market share, or, you know, being forced to buy into overvalued startups, or even see your brightest and most entrepreneurial talent walk out of the door. So today, what I'm going to do is share everything that we've learned about how to overcome these barriers and to help you just step away from innovation theater and into building an innovation engine. Now, through 15 years' worth of trialing, learning, and iteration, We've perfected the build of this engine with corporate clients, and we've proven that complex organizations from all over the world, regardless of industry, whether you're in fashion or healthcare, charities, energy, pharma, retail, financial services, whatever it might be, we've proven that they can build a systematic, scalable, and predictable innovation engine. And we've codified everything into our innovation operating system. It's called Velocity, and so far it's given thousands of frustrated changemakers around the world way more speed, way more focus, with way more impact through a complete set of simple concepts and practical tools. In essence, it turns innovation into something that is less sporadic and more repeatable and scalable for your company so that you can establish a pipeline of portfolios, a pipeline of propositions that drive growth, unlock efficiencies, delight customers. We won't get to the whole Future Foundry experience today, obviously, but I will show you the best path to overcoming innovation inertia and becoming the formidable company that your competitors and startups most fear. So, here's a bird's-eye view of the Velocity Innovation Operating System that you should be implementing. We're not going to focus on all of it today, we're just going to focus on how to get the basics in place to enable you to move with more speed, focus, and certainty. And that's in the stage of the operating system that we call Engine Build, which is about building your capability to innovate successfully. You know, when we're working with clients to build their capability, there are 10 key components that will make up their engine, and all 10 of these have to be in place before they can even think about you know, running identification sprints, validation missions, or scale accelerators. And if they're not, you'll find yourself back in this stop-start world of resistance, internal politics, and stakeholder management. So what are those 10 key components? We've got objectives, the basics, process, governance, talent, operations, experience, communication, finance, and technology. And these are the 10 things that you have to get right before you can even get started. So let me walk through each component and share the questions that you need to be able to answer. In some cases, you know, we have a point of view on what the answer should be to some of the questions that we're posing. In other cases, all we can do is give you the question to ask and let you apply that to your organization-specific context. But let's start with your innovation engine's reason for being. This is the reaction that I get when I speak to most C-suite executives and innovation leads when I ask them what their vision for innovation at company is. They know they should be doing something. This kind of feels like something, but they can't articulate, you know, why they're doing it, or what they're doing, or moreover, what it is that they want to get out of their company's innovation efforts. And if your objective is to, you know, identify, validate, and scale new propositions to drive meaningful growth, then that's great, right? But how much meaningful growth? What contribution do you want your innovation efforts to make to top-line revenue, operating margin, EBITDA, for example, over the next 5 years? Maybe there's a slightly different objective, and it's about driving the company into adjacent markets. Great. What adjacent markets, and when do we want to venture those by? And your objective might also be a bit more cynical, right? You know, we see a lot, especially publicly traded firms, using innovation as a way to transform brand perception and drive up share price, just because they can talk about the fact that they have this innovation engine, right? And even if that is the goal, let's be honest about it. You know, how do we want people to feel about the company? when they hear about what we're building, and what impact do we want it to have on our firm's valuation? Now look, there's no right answer here, but you do need to have an answer, right? Without a North Star to guide you, you're gonna quickly find that you don't have a lens or a filter to apply to any of your activities, much less, you know, the ventures, products, and services that you're building. And if you want innovation to make $100 million, contribution to EBIT, for example, you know, is spending your time on incremental initiatives a really good use of that time? This is going to provide you the filter that you need in order to make those decisions. Now, to set a North Star for innovation at your company, there are really 3 things that you need to do. The very first thing that you need to do is get into a room with your CEO, your sponsor, and your innovation team. Or, you know, if you don't have an innovation team, maybe you're starting out, then just you. I don't mean just you in a room. I mean you with your CEO and sponsor, and you've got to get together and articulate the ambition for what innovation is trying to achieve within that company, which is specific, measurable, achievable, relevant, and time-boxed. And as well as making them smart, we'd also suggest making them smarter, right? Where the E stands for evaluated and the R stands for reviewed. In other words, When are you going to evaluate progress towards this goal? And when will you review that goal entirely? We have a really powerful agenda to help you to do this. But you know, you can create your own. You have to get into the room with the CEO. If you don't get into the room with the CEO, then you don't really have a starting point, because you don't really have sponsorship and the highest level of support for your company's innovation efforts. So that in itself is a litmus test. The second thing that you need to do is to identify which assets from the core business you'll need to leverage in order to reach this goal. So, you know, maybe you'll need to lean into the brand to leverage credibility for your new propositions. Maybe you'll need to borrow from R&D to commercialize some of their technology, or maybe you'll need access to capital. Whatever it is, spell it out. And you also need to identify the people, or, you know, the teams maybe within your organization who are critical to unlocking the access to them. So they might be in IT, they might be in finance, compliance, you know, sales or marketing team. But use a stakeholder map to do this. And the final thing that you wanna do is develop some early-stage hypotheses around which territories you're gonna focus on in order to reach that goal. You know, is it shifting consumer behavior? Is it an unfamiliar competitor set or some sort of emerging technology? You know, whatever those territories are, write them down. Then what you want to do is take the outcome of all 3 of these strands and turn them into what we call a challenge statement that frames everything that you and the company want from innovation. And a great challenge statement should provide you with 3 things, right? It should establish the aspiration for your company's innovation engine. It should speak to some early hypotheses around how you're going to achieve that ambition, and crucially, it should give you some guardrails so that your innovation engine doesn't go rogue. So, component 1, get that clear goal for what innovation is trying to achieve written down, properly communicated, and shared with everyone in the company. Sounds very obvious. Very few innovation teams have that North Star, and without it, you'll become rudderless really, really quickly. So, let's assume that you've got this North Star, And that's great, and that's really good progress. But before you get going on running sprints, missions, accelerators, there are some fundamentals that you need to have in place before you're ready to fire up the engine. And if you overlook these fundamentals, we call them the brilliant basics, they'll become a spanner in the works later on down the line. So what are they? In our experience, the best corporate innovation teams in the world can confidently answer 7 questions. when they're in the hot seat. The first question is, are you an internally or externally focused team? If you're internal, then you are usually serving the whole company, right? Specific business units or discrete corporate functions. If you're external, then you're serving corporate partners, customers, maybe external startups. But what you can't have is 6 masters, right? You need to pick one. The second question that they can answer really confidently is, are we in one location together, or are we in multiple locations virtually, and we're a remote team? And this is a real gripe for a lot of corporate innovation teams at the moment, and it's a gripe for us too, because innovation moves too fast for you to be hybrid and have to consider multiple modes of communication. Pick whether you're all going to sit together in one space, or whether you're all going to work remotely. But please don't pick a middle hybrid ground. You have to land on one of those things. The third question that you've got to be able to answer is, are we going to operate globally? We're going to operate in specific regions, or are we going to operate locally? Now, this sounds like something that you would have clarity on, but I can't tell you how often a lack of geographic focus really scuppers people's corporate innovation engines. If you're going to operate globally, then that's great, but you need to know that, right? Because that's going to impact your processes, which we'll come to a little bit later on. And if you're going to operate in specific regions or in local markets, then that's brilliant, but you need to think carefully about how you interface with those other regions and local markets. You need to make sure that you're running the same methods, for example, that you're speaking the same language— not literally, but you have the same terminology. and maybe the same technology stack as well. The 4th question that you need to be able to answer is, where does your involvement end in corporate innovation, and where does the cause begin? So, most innovation teams own the opportunity identification and the idea validation stages, but it's really unclear in most companies who owns getting the thing to market. But unless your business units are going to be rewarded for taking your propositions to market, then you probably should keep them until at least after the scale accelerator stage where you found product-market fit with that initial MVP. I think that's helpful, right? Because once you prove that, you know, you're generating some initial revenue, you can onboard some initial customers, then hand it back to the company. They're going to be way more excited about the potential of the thing that you're building if you can demonstrate that early traction around revenue and customer acquisition. If you throw them overboard too soon, what happens is that they tend to wither and die. What we're actually advising more and more innovation teams to do now is to keep hold of them until they're a business line in their own right, however long that might take. The 5th question that you need to be able to answer is, what is your criteria going to be for killing new ventures, products, and services? Now, there's 3 obvious ones that we talk about all the time. If you can't prove that it's desirable, I.e., that people want it. If you can't prove that it's technically feasible, if you can't prove that it's commercially viable, then you need to kill it. But, you know, your core business will find loads more reasons to kill them than that. You know, it might be that they're too capital intensive as propositions. You know, maybe the payback is going to take too long. You know, maybe you don't really have all the talent that you need to staff that thing long term. Maybe it doesn't leverage the core assets and that's important to the company. Or, you know, maybe it doesn't meet certain ESG criteria. The best way to stop the core from killing your ideas later is to flush these guardrails out now upfront and use them in your decision-making before you invest time and money into testing or even launching ideas that we know will be rejected by the core. The 6th question that you need to be able to answer is, how are we going to launch new ventures, products, and services? And I don't mean what's the go-to-market strategy. I mean structurally How will the propositions that you're building operate in the long term? Is everything going to spin back into an existing business unit? Are they going to be wholly owned subsidiaries, or are they going to be separate revenue streams? Do you want to spin them out and go and raise external funding? You know, if you know what the outcome needs to be, you can adapt how you do identification, validation, and scale. And that's really important, right? Because in a world where your innovation engine is producing 5, 10, even 20 new things every year, then you need to work from the future backwards, right? Or at least understand which options are on the table. And the final question and kind of subcomponent of the Brilliant Basics component is, what services do you provide, and what is the course providing? So, you know, you'll remember earlier on we talked about the importance of stakeholders, the importance of mapping those when you're setting objectives. This is why it's really crucial, because unless you're shipping more than 20 new propositions every year, there's really no economy of scale in duplicating all of the functions that exist in your core business and putting them in your innovation engine. Our advice is that the engine should provide legal, marketing, sales, product procurement, finance, talent acquisition. Legal because, you know, the cause internal counsel is almost always too slow in every instance. Marketing, because your core marketing team are there to be brand police, really, you know, not growth hackers. Product, because it's impossible to get anything prioritized on your internal engineering roadmap. Procurement, because if you have your own budget, then why shouldn't you be able to spend it? And finance, because you need someone who understands startup business models and metrics. And talent acquisition, because you should in theory always be hiring people to staff the things that you're launching, right, in the long term. Then our advice would be that the core provides things around compliance, operations, supply chain, manufacturing, and probably IT, right? Unless you're a remote team, in which case you're probably gonna need a point person for IT and tech support. So having clarity on these 7 questions is super important. And you can hopefully start to see why mapping those internal stakeholders early on and engaging them is so critical. So that's component 2. You've gotta get clarity on who your innovation efforts serve, plan for what you'll do with successful ideas once they're proven, and agree on what your criteria is gonna be for killing bad ideas. Okay. Almost all failing innovation functions that I speak to have not found a standard way to identify new opportunities, validate new ideas or scale them once they become initiatives in market. And I've spent the last 15 years telling anyone that will listen how crucial having a systematic, scalable, and repeatable way of doing this is. Without methodology, you can't build even a cadence or rhythm, right? Much less any momentum. You need to know exactly what to do when an interesting territory emerges. You need to know exactly what to do when you find an interesting new opportunity. You need to know exactly what to do when you've validated a specific idea. And if you're really honest with yourself, does your company know what to do, or is there a new variation of a project that's spun up every time? Now, the last 3 episodes of Future Foundry Live have been focused on the sprint, mission, and accelerator process that you should be using to do that identification validation, and ultimately scale. So I'm not going to cover old ground here, and, you know, the episodes are on YouTube if you want to check those out. But before you start building new propositions, you need to land on a methodology for how you're going to do that, right? You know, which methods are you going to adopt in order to run a repeatable, scalable model? You know, your identification sprint really is about how you get from territories Um, into opportunities. Your validation mission is about how you take one of those prioritized opportunities and find ideas or solutions within them that solve genuine problems for customers and users. And your scale accelerator is about how you take an idea from a mission and turn it into a scalable initiative in its own right. So that's component 3. You've got to have proven processes for getting the work done. So, that requires deep domain knowledge and design thinking, in Lean Startup, in Agile, and you've got to use that to build a systematic, repeatable, predictable method for identifying opportunities, validating ideas within them, and scaling those into market. Okay, here's some actual footage of a corporate passing responsibility for innovation in their company. Clearly, it isn't— this is the Buffalo Bills, actually, who are my NFL team. Warming up, we had a tough year in the playoffs this year, but aside from that, you know, the likeness is pretty uncanny. Most corporate innovation teams that we speak to have really poor governance surrounding them, from sponsorship to go/no-go decision-making on specific ideas, and creating like a soft landing zone for successful propositions within the organization. I never thought I'd get Jeff Goldblum into a presentation twice, But to overcome this lack of governance and to create this line of sight, there are a few things structurally that you need in place and that you need to do. The first thing that you need is C-suite sponsorship and support. The second thing that you need is— well, second and third thing that you need is an innovation engine board and an advisory group. And the third or fourth thing, depending on how you look at it, is some standard operating procedures for how you work with other business units. Let me break that down and provide some clarity. You're never going to build a successful corporate innovation capability, much less an engine, unless you have a C-level sponsor that acts as the conduit between you, the mothership, and the innovation engine board, which we'll come to in a second. And they need to provide you with 3 things, right? Air cover for you and your team, engagement with the wider C-suite in your innovation efforts and what you're doing, And ultimately, they need to become the top escalation point for removing any blockers that you, that you come across. The second thing that you need is to build a board made up of pretty influential executives from across your company who are capable of behaving like top-tier venture capitalists. And by that, what I mean is that they review your progress at each critical juncture, from identification through to validation through to scale. And they make decisions on progressing between each of them based on the evidence that you're uncovering and providing. Closely linked to that is their second responsibility, which is access to metered funding. As the intermediary between the core and the propositions that you're building, they're acting as a fiduciary. Essentially, they're managing the core's investment through a series of different funding rounds. And finally, and this is why it's really important that they're influential, They need to be willing to clear the path for you to access all of the critical components of the core. This is ultimately, as we've already heard, what gives us a massive advantage over startups. They have to be able to let you leverage the IP, access to customers, and new markets that exist within the firm. The final thing that you need is an advisory board. Now, an advisory board is a really great place to put the naysayers. Within your organization, do some serious stakeholder management with them. But moreover, what you're trying to build here is a group of advocates that are there to provide expert advice, which could be on anything from manufacturing to supply chain to compliance. But they're also there to engage the rest of the company in what we're doing and taking the gospel back into their functions and units, essentially becoming evangelists for our corporate innovation. And the final thing that they need to do is to be able— not just able, they need to be willing to do— is to open up access to the core's capabilities, right? Whether that's in the form of corporate functions like HR, legal, IT, or in specific business units or specific revenue lines or even geographies. You have to work together with this board to establish the gives and gets between your innovation engine and the core business. And for all 3 of these things, just a note on compensation here. You've gotta be thinking about, you know, why is it worth their while? So most modern corporations are pretty busy places, right? I think we can all attest to that. So how will the core make it worth your while to, you know, sit on the innovation engine board or to sit on the advisory? Could be promotions, could be equity in the portfolio, could be pay rises. Again, you know, the answer here will depend on you and your company, but you need to have an answer for this. Without these 3 things in place, you're not going to be able to build the corporate innovation engine or even manage it, and you're not going to be able to manage the core itself, right? And managing the core, managing it upwards, is a really critical skill that you've got to master in order to build corporate innovation engine. So that's component 4: get your efforts sponsored by a C-suite executive. Obtain enthusiastic support of the broader leadership team, get some of them to sit on your innovation advisory board, and make sure that there's an established procedure for how you interface with other business units and functions. Now, while we're talking about people, one of the things that always really surprises me is the way in which companies set up their corporate innovation teams. I think it's fascinating. They're responsible for the future growth of the business, in some cases the future of the business. Yes. You know, maybe it's 3, 5, or 10 years out, but the investment in this team pays dividends quite literally in the future. But most corporate innovation teams that we work with represent, I would say, less than half a percent of the company's entire workforce. Now, there's nothing wrong with that per se, and, you know, we'd always advocate for, you know, tight, lean, fast-moving teams over cumbersome, slow ones. The problem really is that almost none of them are staffed with the people that they actually need. And in many cases, there are some super confusing roles within them. Now, the number of people that you need in your corporate innovation engine team is going to be determined by how many new ventures, products, services you want to ship in a given year. But there are some key roles you're going to have to have in place if you're going to form an A-team, or the Power Rangers even. So, you know, through our engagements with clients, you know, we provide many of these roles, but I want to highlight to you which must come from your team, which you can be flexible on, i.e., you know, they could come externally, could be internal, and which ones really should, should come from the, from the core. So in essence, you should have a fixed team. So this is the minimum number of roles you should have full-time in your engine. You should have a flexible team. This is a resource that you can scale up and down depending on the number of new propositions you want to get through. And you should also have a core team, right? So those are roles that are provided by the existing business, sometimes at very specific junctures within the process. But in your fixed team, someone should be leading on operations, almost as like the COO to your CEO of the innovation engine, and they should be leading that effort and all of the subsequent activities of the innovation engine. One of the main things that they need to manage is the calendar, right? Notably, When are identification sprints happening? When are missions taking place? When are we pushing go on scaling accelerators? We need to understand when they're scheduled, making sure that we've got critical workshops happening, pitch days, weekly standups, portfolio reviews, whatever it might be. Look, 50% of having a corporate innovation engine is about direction, and that's your job. 50% of it is about speed, and that is their job. The second person that you need within this team is someone who has a really great finance mind. So that person's responsibility should broadly break down into 2 parts. The first is about managing the budget for the innovation engine itself and the subsequent sort of funding rounds that you get on a per-proposition basis from your innovation engine board. But the second part is being able to work on things like market sizing and pitches with specific initiatives. So an understanding of kind of model business models, that would be something that's very important for that person to have. The final role that you really need to have is kind of an admin, you know, somebody who can work very closely with that COO, schedule, organize all the interface points between the engine, the core, your external partners. And again, I would say don't overlook this, right? This is another speed role, and you're going to move much faster without having to book and schedule your own meetings. So that's what the fixed team should look like. In flexible, there are 4 roles that you need. You need someone to undertake in-depth customer discovery and validation work. So, you know, they should own everything from customer recruitment, conducting qualitative and quantitative research with customers across sprints, missions, accelerators. And they should also be able to ingest quite a large amount of outside information, particularly within the identification sprint program, and synthesize it all down. So you need a real all-rounder here that I would say, but the most critical thing that they have to be able to do is lead on those discovery and validation experiments. The second role that you need is someone to own each opportunity area that you're servicing, each idea that you're testing, each idea that you're scaling. So this is a strategist, or, you know, sometimes you might call them like an entrepreneur in residence, somebody maybe from a product background in a very successful startup, or maybe from an innovation team in a very successful corporate. Their role really is to lead sprints, lead missions, lead accelerators, and orchestrate all of the other flexible and core roles in such a way that we're continually identifying, validating, and scaling initiatives that link back to the overall objective that we set as part of the engine earlier. And they may, at some stage, move on out of this team, to lead and launch a new venture product or service, almost like a mini sort of MD or CEO of that business line. You also need a designer. In fact, it's probably a little bit more full stack than design. You know, you need someone who makes things real, moving beyond decks and words to create demonstrable low, medium, high fidelity prototypes, things that we can use to tell the stories of our solutions, right? I'd say it's actually more important that they're a great engineer over being a great designer, they can come from either that design, that UX, or that engineering world. And the final role that we need in this flexible team is a systems architect. So, you need someone who's capable of mapping out a blueprint for how a new proposition will work, whether that's physical or digital, and translating those blueprints into requirements and ultimately into a product backlog. And then, from the core, really, there are 3 roles that I touch on. On a case-by-case basis, you're going to need some subject matter expertise. Could be you know, an SME around products or, you know, specific markets. You'll need some form of IT support. And as I said, if you're remote, you know, you're going to need someone dedicated preferably. And finally, you should be doing an element of continuous hiring, right? And you'll need not just to source new talent but also to onboard and retain them as well. And the other reason that you need this HR role is compensation. So I want to talk Just again about compensation for a second. It's going to be really hard for you to retain great people within this corporate innovation engine if they don't share in the upside of the propositions that they're shipping. And I'm constantly astounded by how many corporate innovation teams still employ this traditional sort of salary-for-time model. You're not going to attract great entrepreneurs that way, and you certainly won't keep them around for very long. You know, they'll go and work on their own thing, or They'll do something in startup land or build equity that way. Now, equity is really hard in corporates unless you're going to spin your propositions out. But at the very least, I'd recommend creating phantom stocks at a portfolio level for everyone on this slide, and probably at a venture product and service level for the team that carries it forward. The other benefit of that is that salaried team members in corporate innovation teams tend to keep flogging dead horses. But if there's an upside, you know, it's amazing how quickly that focuses the mind on, you know, tuning into customer pain, the art of the possible, really listening to what your experiments are telling you. So that's component number 5 of the engine. You've got to find or have access to all of the talent that you need, and you've got to compensate them beyond the traditional salary model and also create a documented process of finding recruiting and onboarding those team members. The next thing that I want to touch on is, I think, an issue that most corporate innovators are up against is that they find themselves fighting for budget, right? Every time they want to explore a new territory or test a new idea or, um, you know, get a, a well-validated idea to market, they're really fighting for that budget, and that is not fine. Okay, we'll come on to finance shortly. But first, I want to talk about planning. You wouldn't believe how few corporate innovators can show me a sheet of paper with their annual plan on it, just telling me how many territories, how many opportunities, how many ideas they're going to focus on this year, and how many initiatives ultimately they want to scale. How can you know the scope, size, and budget for a corporate innovation engine without knowing this cadence? If you want to launch 4 things a year, that means you need around 40 ideas. If you want to test 40 ideas, you need to identify 160 opportunities. And that's the way it scales, right? If you're ambitious and you want to launch 20 things, then you need 200 ideas, 800 opportunities. Think of it like a funnel and let that dictate your team size. Once you've made that basic decision, you need to think about rhythm, right? When are you sourcing territories? Where can unexpected new things drop in. Are you going to run sprints, missions, accelerators based on themes? Are you going to stagger the start date? Are they all going to happen at the same time? When is customer recruitment going to happen? This is an actual plan that we're working on with one of our clients this year. Um, pretty straightforward, you know, they only want to explore and launch kind of 4 new things, but you can see how that's staggered out here and what that means for kind of team size, shape, and cadence. And you really need to get to a place where you Visualize your plan and stick to it. That's really going to help you with budgeting, recruitment, you know, even through that expectation and stakeholder management, everything. So that's component 6. You've got to agree on the number of new propositions that you want to scale every year, and subsequently how many ideas you need to validate and how many opportunities you need to identify in order to get there. Turn that into an annual plan, visualize it all. The next component I think really speaks to culture more than anything else. I think, you know, there's a lot of innovation teams that are butted up against the core So much that they've become quite dismissive of the mothership, and they act and operate a little bit like a castaway on their own desert island. You know, we've seen that you can't operate that way. You know, we need things from the core, and if we alienate ourselves, access to those things just becomes harder and harder. So we need to ensure that the core has a fantastic experience with the Corporate Innovation Engine, and that we add value the other way back as well, right? Now, one of the best ways for your innovation engine to give back to the mothership is to help the core business to stay current on the art of the possible, right? You're at the leading edge, so that's what you should be doing, is helping the company to create a community of employees who are both up to speed on what's going on outside the company and 100% focused on leveraging those innovations to solve customer pain and ultimately to drive growth. And the best way for your engine to do this is actually through 3 different event types that inspire, enable, and excite the broader employee base within your company, drive engagement with them, and ultimately helps to develop sort of future leaders or future team members, at least for the innovation engine. Some of the ways that we help clients with this is by programming monthly webinars just on small topics, you know, even like techniques that other team members might, might find interesting. There's quarterly masterclasses on externalities like interesting customer trends or, you know, exciting startups, emerging technology. And then on an annual basis, we program a symposium where the whole community are invited to get an update on what you've been focused on within your corporate innovation engine, what your portfolio looks like. And also a really exciting part of that symposium is always sharing some early demos and prototypes of the things that we have in the pipeline. We also underpin it with just like a weekly newsletter to keep everyone informed of what's coming up. And I can't stress how much value these 3 events add to not just the continued professional development of your team, but also the wider organization, and how much it's going to help you to engage key stakeholders and influencers, and how much they'll help to inspire the whole company about what the future holds. So that's component 7. Build a program of events that you can use to engage the broader company in what you're seeing, what you're doing, and ultimately why you're doing it. Now, the next thing is kind of linked to experience, but I think when you work in corporate innovation, you do some really cool shit, right? You know, that's why I work in corporate innovation. I assume it's why you work in corporate innovation. It might be because you love learning new things every day. You know, I know, I know I do. And what do most of us do with all of the cool shit we see and all of the things we learn? we lock it away, we don't really talk about it, like we don't really share it outside of the team. Whereas in reality, what we should have is a communications plan that helps tell the stories both internally and externally of what cool shit we're doing and what we're learning. Internally, it's really important because that's going to consolidate corporate support and sponsorship, and externally because you need to be able to communicate the value that you're building. On the latter, You should especially have a plan in place if your objective is, you know, a more cynical objective around raising share price or transforming brand perception through having this corporate innovation engine. Hardly any innovation teams do this, and I think it'd be really helpful, but you need someone ultimately to capture it, to synthesize it, and to share it widely across the company. And, you know, maybe where appropriate, share it through your either investor relations or your corporate PR team. And I would think about it like internal and external comms. You know, internally, you know, you should be the eyes and ears for your corporation, capturing and disseminating interesting market trends, you know, working perhaps with your M&A teams to connect them to interesting startups that you're seeing, maybe sharing best practices from other industries and different areas. Both internally and externally, this kind of straddles both. What your communications plan should do is support the recruitment and retention of really great people, not just in your team, but across the business. And you can do that by, you know, sharing stories about your team members, you know, broadcasting the interesting problems that you're working on, talking about the event programming that we just touched on and how that contributes to ongoing development. And then externally, you know, you should become probably the favorite source of key stories for your investor or public relations team, talking about how you're disrupting from within, dialing up that you're a growth, not a value stock, and spelling out what your investment in innovation looks like. And also, obviously, talking about the successful new propositions that you're working on scaling. I wouldn't overthink this, but it does help to create this really nice flywheel. So that's component 8, share those successes inside and outside of the organization, Capture and share learnings with colleagues and sponsors, and use these stories to recruit, develop, and retain top talent. This is my favorite GIF of the day, I think. I wonder how many of you on a daily basis find that you're fighting for the budget that you need to be able to do your job. Now, I would say that this is without doubt the number one spanner in the corporate innovation engine works that I see. You know, we have a budget for the tech that we need. you know, for the salaries of the team and some subscriptions. We're all just sitting around here, right? Like, we have no budget to actually do anything. You know, I can't imagine a marketing team having to pitch every time they wanted to develop a new creative, or, you know, IT having to pitch for budget to fix a server, or sales pitching every time that they need to take a customer around. So I'm not sure why corporate innovation teams feel like they have to. As I say, you know, most companies have considered the costs that are involved in establishing some sort of innovation capability, but the issue really is that not many of them have secured budget to go away and identify, validate, and scale initiatives that exist within that capability. They've also usually not given much thought to the metrics by which the engine will be held, right? And you need to have this in place to know how much funding you're going to need, and to clear the path to enable you to go and do what it is that you do. Now, I would say that there are 3 pots of money that you need to account for when you're building this corporate innovation engine, and we call it kind of building, running, and launching. Ultimately, a really important note on this: your budget for building the engine and running your activities all the way up, I would say, to scale accelerator, should come in the form of seed funding for the innovation engine. So this is the bare minimum commitment from the company, and it's your budget to manage. Yeah, there's no point having the budget to build the engine but none to run it. Otherwise, you're going to get to a place where none of your ideas reach escape velocity. So that's what your budget should look like, and it should fund a number of sprints, a number of missions, a number of accelerators. Then what you should have is a pre-agreed amount of money available, although, you know, you maybe don't have it just yet, but you know that it's available that you can raise various rounds against. You know, a Series A round to take a validated idea into a scale accelerator, um, a Series B, C, and D, and so on, to launch beyond an MVP, all of which are approved by your innovation engine board and kind of granted by them. So you should be able to do the number crunching to know what your seed and series funding looks like, and to be really clear on the metrics that are required of you to unlock that series funding and to justify the seed funding that you've got in the corporate innovation engine as well. Now, I could spend all day on this, but I'm conscious that there's a lot we need to get to. The only other thing that I would say is that the metrics that you measure yourself against need to be aligned with this small bets, fail fast VC mindset. We're not looking for profit to be a metric in your series funding decisions. because it's way too early, right? We have scorecards to help you do this, but your metrics really, when you're raising serious funding, should be around customer acquisition and revenue, right? Really traction-based metrics, not profit metrics. You're building startups here, not, not running the core. So that's component 9, one to go. You've got to agree on a base budget to keep the innovation entity running and an agreed-upon funding amount to identify, evaluate scale ideas at the right volume. Throughout the year. Okay, the final thing that you need if you're going to build, launch, run this corporate innovation engine is a really great technology stack. I still have meetings with innovation teams for whom Zoom is banned by corporate IT. Now, that is an inconvenience at a sort of collaboration level, but if you can't build a sandbox environment to do things like customer research, to ingest external research, to capture knowledge, build prototypes, MVPs, to ship experiments, you build business cases, then you have a really fundamental challenge. Look, I'm not saying that information security isn't important, it's absolutely essential, you know, but startups move with speed and agility, right? So our innovation engine needs to be able to do so as well. When you're in exploration mode, you need the freedom and a different set of digital tools. There are kids in their bedrooms today who I'm pretty sure have better access to the technology and comms tools that they need to build new businesses than most corporate innovators do in gigantic companies. Um, IT's job should be about removing the friction, making sure that your engine can move with the same speed as the startups with which you're competing. Our philosophy at Future Foundry is to learn and to be iterative, and I wanted to share our current recommendations for what that stack should look like. So imagine if this was kind of Maslow's hierarchy of corporate innovation needs, right? So first thing you need to be able to do is communicate with one another, with stakeholders, with customers. So get Slack set up, you really don't need Teams, it does way too much. Get Zoom for stakeholders outside your innovation team and use that for customer interviews as well. And if you're fully remote, I'd suggest maybe considering using something like Tandem to build like a virtual drop-in office environment. Then you obviously need to be able to schedule and book meetings aligned on availability. I would use like Google Calendar, way easier to share availability. I would integrate that with Calendly for scheduling not just your internal meetings but also your external customer research get-togethers. And then use Miro as like a virtual, virtual whiteboard. The next thing you need to be able to do is obviously to prototype things at varying levels of fidelity. So for lo-fi prototyping, Balsamiq is a, a really great subscription, does everything that you need it to do, nothing that you don't. Then I'd consider something like InVision for medium fidelity mockups and probably Sketch for high fidelity prototyping. You also need to be able to capture and store everything that you're learning along the way. Um, I would use Notion or Airtable at push to store everything from like, you know, project cadence through to your customer database, interviews, transcripts, um, feedback, you know, business cases. Keep them in one searchable database centrally so that you make sure you're not covering old ground all the time. I would use Google Drive to avoid, you know, having local versions of documentation saved on individual machines and Also a really great tool called Otter that we use to transcribe video meetings. Really, really helpful, particularly when you're running customer research. That's going to save you weeks, if not months, every year and give you this searchable sort of database of insight and feedback. We mentioned Google Canva and Drive, but I'd probably suggest switching your whole team to G Suite and just creating a separation from the core that way. You know, that's particularly useful when you're working on new propositions and you want to spin up the URLs, you know, venture-specific email addresses, that sort of thing. And the other thing that you should consider is creating an API layer that connects all of these tools into one central dashboard, something that we're doing more and more of with, with clients. So that is the final component. You've got to create space where you can validate and scale new ventures, products, and services that exist off the technology stack of the wider organization. That's going to enable you to establish problem-solution fit, product-market fit, um, really, really quickly. So hopefully what you've seen today is that before you're even ready to identify new opportunities, test interesting new ideas, scale proven new propositions, you've got to have these fundamentals in place. And it's only then that you're able to become systematic, repeatable, and predictable— predictable in the best possible way— so you and the wider organization. Remember, though, in the same way that we're iterative with everything else in innovation, you should check in on these components monthly, quarterly stretch to see how strong each component is. You've got to be able to quickly identify any malfunctions in it, fix them before you get to the kind of the grinding halt. So ultimately, we've got a diagnostic tool that helps you to do that in a few minutes, but it's pretty easy to build your own way of kind of checking in on these 10 components. And it's only by building these foundations that you're going to be able to emulate what the world's most innovative companies do. And that's create a system where the more opportunities are fed into the engine, the more ideas it generates, the more initiatives get to launch, and ultimately the more value is realized. Building an innovation engine gives you the platform, the people, the methodology, and the tools to create a pipeline and portfolio of new propositions that will drive growth in perpetuity for decades to come. Every company can and should stop innovating by accident and build this engine. You know, they require a fraction of the capital that is spent on things like marketing, IT, missed opportunities. And ultimately, you know, while we've covered a lot of ground today, it's really not rocket science, right? We want to leverage the benefits of our corporate environment, in order to understand customer pain, marry that pain with the art of the possible, use technology and trends to solve that pain, and place a series of small bets to remove the greatest amount of risk using the least amount of capital. I hope that by sharing this blueprint, many years in the, in the making, that you've learned from the mistakes that we've seen and been inspired by how we've managed to perfect the model. Because if you do, you'll get to a place where you can drive meaningful value by building and launching a portfolio of high-quality new propositions. You can manage the downside by reducing the greatest amount of risk for the least amount of capital, and you should develop a laser-like focus on solving customer pain across your organization. The next thing you'll be able to do is send a message that, you know, you're a company that's committed to real innovation, not innovation theater, and you're providing tangible growth opportunities for your people, you know, not just shareholders, which in turn is going to enable the company to recruit, retain a pool of really highly motivated, often exceptionally talented internal entrepreneurs. And the third thing that you're going to be able to do by focusing on growth through an innovation engine is that you'll be able to shift your mindset out of the pure exploitation of the existing business model into the exploration of what's next and adapt and adopt the disciplined mindset of top-tier VCs. That is all for now. Keep an eye on your inbox for the next Future Foundry Live, which is coming up in April. Thanks so much for joining us. If you'd like us to run this episode of Future Foundry Live inside your company, we did that a few times for the last one. We're happy to help out and do that. Also, if you've enjoyed this episode, head to LinkedIn, share your feedback, tag us in that. We'd love to hear it. But for now, that's it, and we'll see you next time. Thank you.