Meaningful innovation requires sponsorship. It always has.
In 1959, one of the most important economists you've never heard of — Edith Penrose — pointed out as much by chronicling the nature of firm evolution. Penrose explained that all things equal, a firm's history determines its future. We seed our organizations with resources — people, capital, and equipment — and those resources have productive value in certain areas. Maximizing their value will naturally lead us to make the next decision and the next decision and so on.
At its core, Penrose's idea is the reason innovation requires sponsorship. Without the foresight and intervention of senior leadership, the firm will simply concentrate on the opportunities that it was destined to concentrate on. Middle managers with limited resources and set evaluation metrics will simply operate in a predictable fashion. It's why Christensen's Innovator's Dilemma is so difficult to overcome. Firms naturally preserve their margins and satisfy their existing customers, steering away from disruptive opportunities. It's why Howard Yu's Deep Dive concept is so sensible. Without a senior executive taking an active role in a project to overcome organizational antibodies, even the most thought-through plans can fail.
Unfortunately, while we in the field of innovation are happy to acknowledge the need for executive sponsorship, we rarely talk about when that sponsorship is needed. We rarely talk about how that sponsorship should occur. And we almost never talk about the consequences of bringing too much sponsorship on, too early.
The difficult truth is that sponsorship as it's traditionally considered inside of large organizations is a double-edged sword. Sponsorship overcomes organizational roadblocks but often comes with a set of inherent limitations. Senior executives focus on big issues every day, when they turn to innovation they need their novel solutions to be equally as large. That's because nominally, the execs that matter inside of large organizations are used to moving the needle. So when it comes to innovation, executives are trained to value acquisitions, high profile product launches, and anything else they might use to surprise their analysts; without such surprises they can't generate unforeseen growth and placate investors.
The problem with this is that many of the most meaningful innovations — the disruptive products, the step-out innovations, the discontinuous changes — have their seeds in very small experiments, rather than large initiatives. As Eric Ries and Steve Blank are so quick to point out, innovation requires iteration. In the process of experimentation and iteration, companies will expose how products and services can come together more effectively. They can develop a better understanding of their value proposition and tailor the business models of innovative offerings before wide-scale launches. Small victories point us in the right direction, and small failures tell us how to change.
But small victories are just that — they're small. No one notices them initially. They're generally difficult to explain to investors. They're often not even statistically significant. So even though small victories are necessary, even though big organizations need small victories (and failures) to get to the large ones, they're just not interesting to the people who would need to sponsor them.
So the challenge becomes, how can you make your small victories interesting? How can you garner sponsorship but avoid being steered toward experimenting in such a large, public, fashion that failure results in shuttering the innovation effort?
1) Have a grand vision, but a simple plan.
In any situation, getting sponsorship requires the potential to move the organization. What it doesn't always require is the immediate promise of results. Too often, innovators will try to solicit sponsorship through the promise of a grand vision alone. Executives think they're buying into that future, and don't always see the long, arduous path to get there. That's not the sponsor's fault.
Innovators hoping to solicit sponsorship and still allow themselves room to pursue small victories need to come forward with a simple way to articulate how their small experiments fit into the larger puzzle. Innovators need a step-by-step plan, in simple language. Playing 'hide the ball' does no good for anyone. It simply backs innovators into a corner, forced to pursue the large wins when they're not quite certain about the opportunity.
2) Don't pilot, "mini-test."
When I was at BCG, a mentor of mine used to call small experiments mini-tests. He was adamant that in all materials, we referred to any sort of experimental initiative as mini-tests and nothing else. For years this confused me. Everything we were doing was equivalent to traditional pilot endeavors. We would roll out an experimental system, measure, iterate, and experiment again. But we would never say we were piloting or prototyping anything, we were only mini-testing.
It's taken me six years and a sustained study of innovation to understand Brian's genius. By changing the jargon, Brian changed people's preconceived notions about the test. By mini-testing and not prototyping, releasing betas, or piloting, people didn't know what to expect. He could experiment and fail and change scale and that was okay.
Managers not only need a simple, manageable plan to get to their grand vision, they also need a way of changing reference points so the types of failures that would normally draw unhelpful attention draw none.
Oh, it also keeps innovators from sticking their feet in their mouths when their hypotheses are wrong. If you end up being incorrect in your assumptions, the small experiments aren't so public that everyone in the organization realizes it. It adds a bit of humility to the process.
3) Measure, validate, repeat.
Small victories are important in informing innovators how to move forward. But inside of large organizations they're also vital in getting key stakeholders on board. For intrapreneurs, the information gleaned from small victories can serve as the ammunition for the uphill battle that comes as any group tries to scale a new product inside of a large organization.
The key is understanding what matters to key stakeholders. What information is likely to get them interested in your project? If innovators know what that is, they can experiment, measure results, validate the importance of the initiative, and repeat. That way, when the group tries to scale, it has irrefutable evidence of its importance — protecting the executive sponsor and helping to garner additional sponsors.
These are by no means comprehensive. But hopefully they are helpful.
What do you think? Have any ideas we should include on harnessing the power of small victories inside of large organizations?