5 Simple rules of innovative venture

April 10, 2020
Posted in innovation
April 10, 2020 Antti Merikoski

Are you asking yourself how can this company be be innovative? How can I improve the inventiveness?

5 Simple rules of innovative venture

I recently had the opportunity to explore these questions in one of the most innovative areas of the world, the Silicon Valley. To explore these topics I went to discuss with the masterminds – the Stanford professors and researchers, Silicon Valley entrepreneurs, venture capitalists (like Randy Komisar), technology ventures (Tesla, SAP, Google). I asked what are their insights to those two questions.

After the trip I drew some conclusions. And here we go. Are you ready?

Warmup!

In this era of digital transformation and start-ups, it is clear that innovation is the name of the game – whether we talk about innovation as a technology, process, product, service or business model innovation.

Innovation – as we all know – is a game of uncertainties, breakthroughs and failure. But mostly, innovation is a game of opportunities, opportunity for growth and purpose.


Innovation is a game of opportunities, opportunities for growth and purpose


Is it possible to draw simple rules of innovative venture?

Well… yes and no.

Yes because these rules do sound easy. No because it is not easy to make sure that venture will follow the rules. You can be confident that by following these rules probability of innovativeness will increase but the rules still don’t guarantee the outcome.

Whether a small or big venture looking to thrive for innovation, you can identify some critical factors and characteristics that will enable innovation. For startups the innovativeness comes easier than for established companies, evidently because the foundation for startup is often an innovation. But both types of organizations still suffer from similar problems: negative culture towards failure or lack of vision guiding innovation actions in long-term.

Both start-ups and established companies suffer from negative culture towards failure or lack of vision guiding innovation actions in long-term.

Buckle up it is time for some rules!

FIRST RULE: EXPLORE THROUGH PURPOSE

PURPOSE AND LEADERSHIP

The true essence of innovation is the search for something new and something unexplored. Something that has lot of uncertainties. The organizations or teams in search for ‘new’ need to have a purpose – a direction, what to pursue. Otherwise it is too much a game of gamble.

Take Google for example. Google’s purpose is to “Organize the world’s information and make it universally accessible and useful”. Tesla “Accelerate the world’s transition to sustainable energy”. Both of these mission statements are high level guiding purposes. However, they are just words, if not combined with great leadership.


Leadership is the secret sauce that makes people to thrive these missions and
understand the individual purpose in this path of innovation. 


INNOVATION HORIZONS

Besides purpose and great leadership, the organizations also need an innovation roadmap – an innovation strategy. Innovative ventures mostly operate in simple three horizons model, a model that sets the course for innovation within timeline. Each venture might have different names for the time horizons but the idea behind them is similar.

The horizon model helps ventures to have clear structure and scope for the innovation process – when and what to pursue.

These time horizons are simply:

Real-time – something that is now
Short-term – something that is in near future of 1-3 years
Long-term – something that is within time range of 5-10 years.

What separates the most innovative ventures from the not so innovative ones is the time and effort they put into managing these horizons and their innovative scope actively.

 

SECOND RULE: NURTURE THE TEAM

No matter whom you talk, whether a venture capitalist or profound researcher and expert of innovation, they all mention capable people as a one key component in innovation. More accurately a team of capable people. You will need a diverse team that understands and values each member, has a safe culture and has a clear leader with the suitable vision that will steer the team actions.

Diversity in the team is a mix that will bring different angles to the teamwork, something that is crucial in innovative environment. Diversity however, is not easy to lead and nurture.

Imagine an example of an established venture where you combine different functions together or even external 3rd parties. That group would include, let’s say, really basic functions such as marketing, customer service and product development. This time really working together to pursuit innovation. It is not hard to imagine that such a diverse team would have the ability to innovate new solutions.

So why many established ventures seem to suffer from the lack of diversity in teams? Teams are often working in silos and restricted by the invisible boundaries.

While listening and talking with these innovation masterminds, I strongly believe that in the world where many products are to be shaped into services – combinations of physical product and clear service element – a diverse team that combines experts from various functions is crucial in the innovation of such new services.

 

THIRD RULE: EMBRACE FAILURE

This is probably the most common rule you hear when talking to Silicon Valley most inventive leaders, teachers, tech-heads or any other venture leaders who put a lot of effort to stay ahead of the game. You need to fail in order to find the next day solutions, technologies, tactics or new business models. 

Ask yourself, how well does your organization tolerate failure by answering these following two points?

  1. Does your innovation have a clear, intentional journey and do you try to find the correct answers on that path? Or do you just blindly shoot around?
  2. Does your venture have a culture that supports safe fails? An environment that understands that failures will happen when searching for right solution?

The essence of failure is path to learning, learning what works and what doesn’t.

 

FOURTH RULE: BE AGILE

This is a sister or brother of embracing failure rule. A venture needs to fail fast and progress in an agile manner. Presumption is also that, innovative ventures do not fail big time, instead they fail with modest costs and with purpose. Innovative ventures break their progress into so granular level that they pivot one component to test their hypothesis and learnings to keep their fails small. That leads to a continuous but agile progress. All the agile actions should also be backed up by strong analytical data and capabilities, so that the decision making based on probing is on strong foothold.

 

FIFTH RULE: COMMIT TO INNOVATION PROCESS

It also became very clear, when exploring the Silicon Valley ventures and case stories, that the most innovative ventures did have a clear and strong commitment to innovation.

Firstly, innovation process was a normal process within the ventures, a self- evident and important part of the venture strategy.

Secondly, in innovative ventures adequate resources were allocated for innovation. For example, innovate ventures have innovation centers or they consistently allocate each employees’ work time to actions that support innovation.

Thirdly, innovative ventures have clear pacing in their innovation process – when to pursue what, not too much or too little and taking into account the external factors like industry characteristics.

The golden rule seems to be, the commitment to innovation process with adequate resources, pacing and purpose drives the ventures into a regenerating mode. A mode, where they have adequate novelty – the venture is regenerating itself in the union of old and new.

 

5 simple rules of innovative venture in a nutshell

  1. EXPLORE THROUGH PURPOSE
  2. NURTURE THE TEAM
  3. EMBRACE FAILURE
  4. BE AGILE
  5. COMMIT TO INNOVATION PROCESS

Thanks for reading!

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