The 10 key components of a Corporate Innovation Engine

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. 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 the 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 timeboxed. 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 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. And 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. 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? 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, in the hot seat. The first question is, are you an internally or externally focused team? 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? Are we going to operate globally? We're going to operate in specific regions, or are we going to operate locally? 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? What is your criteria going to be for killing new ventures, products, and services? How are we going to launch new ventures, products, and services? And the final question and kind of subcomponent, the brilliant basics component, is what services do you provide, and what is the cause providing? So that's component 2. You've got to 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 going to be for killing bad ideas. 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. 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 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, into market. 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. You're never going to build a successful corporate innovation capability, much less an engine, unless you have a C-level sponsor that that acts as the conduit between you, the mothership, and the innovation engine board, which we'll come to in a second. 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. They have to be able to let you leverage the IP, you know, 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 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. 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. The second person that you need within this team is someone who has a really great finance mind. 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. In flexible, there are 4 roles that you need. You need someone to undertake in-depth customer discovery and validation works. 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. 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. 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'd 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. Uh, so that's component number 5 of the engine. You've got to find or have access to all of the talent 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. This is an actual plan that we're working on with one of our clients this year. Pretty straightforward. You know, they only want to explore and launch kind of 4 new things. But you can see how that's staggering 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 can visualize your plan and stick to it. That's really going to help you with budgeting, recruitment, you know, even things like expectations, 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. 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. Um, 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 the cool shit we see, 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. 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 see, maybe sharing best practices from, 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 sharing stories about your team members, 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. 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, 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 serious 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 team 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, 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. 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, I don't know, 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, 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 also need to be able to schedule and book meetings, align on availability. I would use like Google Calendar, way easier to share availability. Um, 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 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 you can make sure you're not covering old ground all the time. I would use Google Drive to avoid, you know, 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. Uh, we mentioned Google Calendar, 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 new 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 a 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 a 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 for you and the wider organization.