Ten Things C-Suite and New Innovation Executives Want to Know About the Innovation Process

In a rapidly evolving business landscape, innovation is no buzzword; it’s a necessity to survive and grow. If you’re an owner or executive trying to meet ambitious targets – or aspire to be one of those people, or if you work for one of them – the questions boil down to three areas: Who can get it done? How can we fund it? How does that work get managed? Experience offers us ten pieces of advice for you.

In my innovation consulting with Growth Innovation Strategy and as a professor at the University of Chicago Booth School of Business, I’ve worked closely with hundreds of owners and leaders of midcap companies, corporate business unit heads, and founders of fast-growing startups. So far this spring, that also includes listening to and exchanging ideas with executives and government leaders seeking to expand innovative concepts in Japan, Egypt, North and South America, and beyond.

Innovation leadership comprises three groups of people: The first are clever young professionals who want to continuously improve their abilities as professional innovators. They want to know more about research interview and experiment design, de-risking, and best practices for prototyping and iteration. They often work for the second group: Innovation managers responsible for overseeing a portfolio of innovation projects and accountable for budgets and timely reports to business unit leaders, functional stakeholders, and governance committees. Like factory managers, these innovation leaders are interested in efficiency and throughput in their organizations’ innovation engines. All report to the third group: Owners and executives who set ambitious goals for their organizations that require innovation to take place. Their interest in innovation is whether their people can do it, how to keep track of it, and how to promote a culture of agility, curiosity, and transparency.

From these experiences and extensive research, it’s clear that executive leaders face ten significant challenges when striving to meet their business targets through innovation. Here’s a detailed look at these challenges and successful approaches for overcoming them.

TEAM

1. Team Design and Mindset

Question: What kind of team is needed to create a business? What mindsets are needed?

Insight: Successful innovation starts with assembling a team that has diverse skill sets, an entrepreneurial mindset, a common goal, and an agreed-upon process. This is backed by a tremendous amount of research (as well as experience and common sense) on the benefits of challenging unconscious bias on the one hand and benefiting from a wider range of ideas on the other. I kick off training sessions and post-graduate innovation courses with the Innovator’s DNA, a study by Hal Gregersen, Clay Christensen, and Jeff Dyer. The best innovators possess five traits, one of which is a propensity to seek out new ideas from networks. There are a lot of ways to approach it, and diversity is crucial: My executive education participants and University of Chicago MBA students have gained eye-opening insights from the results of a simple, free survey at innovationassessment.com. The assessment reveals preferences across 12 primary and secondary traits, creating 36 innovation styles from ambitious visionary to diligent perfectionist. One takeaway: Anyone can be an innovator. Another: The more we mix and match mindsets on a team, the sharper their ideas become and the more successful they are. Whether you are at a startup, in a corporation, or working alone, having access to challenging outside ideas is crucial.

2. Cross-Functional Skillset

Question: Why is a cross-functional team essential? What skillsets does it really need, and what should we hire for if we’re starting from scratch?

Insight: Cross-functional teams are an excellence multiplier, since they encompass more of the core abilities needed to develop products and learn from customers. We’ve learned that the sector and industry you’re working in matters when it comes to team composition. For instance, B2C software requires skillsets more Design and Products skillsets than B2B hardware manufacturing (which requires deeper validation assessment from experts in Finance, Legal, and Technology). Defining the exact mix of internal and accessible external skillsets needed can be one of the most important factors leaders must consider once they understand their strategy. But suffice to say, cross-functional teams, usually comprising design, product, and engineering, ensure you’ll have the core abilities needed to ship the product and learn from customers. Commonly required skills to test business ideas include design, product, tech, legal, data, sales, marketing, research, and finance. Tools that allow for the creation of landing pages, design logos, and run online ads can fill gaps in missing skillsets. Don’t take this as an invitation to innovate by committee; small teams move faster, and you’ll need that. It’s true that successful teams report regularly and transparently to stakeholders in the wider organization. It’s also true that they’re thoughtful about assembling the skillsets they need to get the job done, and keeping the core working group tight and agile.

3. Diversity

Question: Why and how is team diversity crucial?

Insight: Diversity in experiences and perspectives is fundamental to navigating uncertainty and avoiding biases. Our experience in corporate innovation, consulting, and training shows that in addition to professional skillsets, there is real value to the insights that come from team member diversity, including race, ethnicity, gender, age, experience, and thought. This becomes one more advantage to help teams navigate uncertainty. Without diverse experiences and perspectives, biases get baked into the business. That doesn’t just make it difficult to effectively navigate uncertainty – we’ve seen it lead to loss of market leadership and disruption.

4. Team Behavior

Question: How should the team act?

Insight: Successful teams exhibit six key behaviors: They are data-driven, experiment-oriented, customer-centric, entrepreneurial, iterative, and willing to question assumptions. Many people get hung up on “data,” thinking they must have reams of it to parse or a huge budget to access and understand outside research. Each certainly helps, but the process of innovation is a data-creation process, and innovator’s are curious about three kinds of data: Do people want this? Can we feasibly do what people show they want? And can we economically make money at it? That kind of focused curiosity, channeled through the behaviors above, fosters a culture of continuous improvement and adaptability that is essential for innovation. Experience offers one more insight: You can supercharge those behaviors by using a repeatable process.

FUNDING

5. Thinking Like a Venture Capitalist

Question: How to approach funding?

Insight: Adopting a venture capital-style approach to funding, with incremental investments and a small decision-making investment committee, helps manage risks and ensures that only the most promising innovations receive continued support. Our experience suggests that instead of adhering to big bang, annual funding styles, incremental funding with three- to five-member investment committees that make decisions every three- to six months is more effective.

6. Innovation Portfolio

Question: How to structure investments in innovation?

Insight: A staged investment approach—comprising seed, launch, and growth phases—allows for tailored funding, team size, objectives, and KPIs at each stage. Our experience shows this structured approach ensures focused and strategic allocation of resources, whether it’s in the technology group of a Fortune 500, working with startups, or working with VC partners. For example, seed phases involve funding less than $50,000 (a fortune, since simple discovery and validation experiments can be done for less than $100!) and be conducted by small teams working 20-40% of their time to understand customer needs. The launch phase sees increased funding and team involvement, focusing on proving interest and profitability, while the growth phase involves full-time teams scaling proven models.

SPACE AND ACTIVITY

7. Team Environment

Question: How can we design an environment for team success?

Insight: Teams need to be dedicated, well-funded, and autonomous. Providing access to customers, necessary resources, and clear strategic direction with defined KPIs is crucial for fostering innovation. Our experience emphasizes that teams need an environment where learning can occur, where the costs and risk of learning can be contained, and where the lessons learned from proving AND disproving hypotheses can be recorded and shared. What the uninitiated call “failure” is in practice simply proving that a previously untested hypotheses was not true and why that is so. The notion of “failing fast” really means “learn quickly and inexpensively.” Join me in reframing this discussion at your organization. At any event, remember that success is most likely among small, dedicated teams running a backlog of inexpensive experiments that validate or invalidate critical assumptions, while working on a budget from a venture-capital style approach to funding.

8. Team Alignment

Question: How to ensure team alignment?

Insight: Space and tools that help you define, visualize, and share critical ideas ensure that all team members are on the same page and working towards common goals. Critical ideas for innovation include the mission, period, joint objectives, commitments, resources, and risks. It’s important to remember that when they’re being formed, teams often lack understanding of a shared goal and don’t yet share a common “language” for what must be done. Tying innovation to strategy requires both. This is as simple as putting up on a whiteboard the shared mission, timeframe, and shared objectives, and then identifying who will do what, which resources will be used, what risks and obstacles can be anticipated and addressed, and a schedule to complete all of the above. It may seem simple, but it’s essential for holding more productive meetings and structuring conversations to identify perception gaps early on, preventing misalignment.

9. Implement a Structured Experiment Processes

Question: How do you run an innovation process?

Insight: Create a repeatable and structured innovation process that values efficiency and learning through focused experimentation. Limiting the number of concurrent experiments helps maintain focus and productivity. Lessons learned and next steps should be discussed at regular meetings, each with their own purpose: Planning, standup, learning, retrospectives, and stakeholder reviews. For instance, our experience suggests a 15-minute daily standup and a 60-minute weekly learning session can significantly improve team coordination and progress. Teams also need to be able to visualize their progress on quickly moving experimentation and development. This can be as sophisticated as product charters and collaboration software, or as simple as a dedicated corner and notecards on a corkboard. Either way, a simple way to visualize your experiments, limit experiments in progress, and record continuous experimentation is critical to staying on target. Think of a software team’s Kanban Board as a basic framework: A list of projects (no more than three or four – or fewer if your team is small and time is limited) and, for each, a column showing the backlog of experiments, a column for experiments in setup, another for experiments under way, and a final column showing lessons learned.

10. Continuous Experimentation

Question: How do we maintain flow of experiments and development?

Insight: Combining quick, cheap experiments with longer, more in-depth ones as understanding increases helps balance short-term and long-term goals, keeping ultimate business objectives in sight. Visualizing experiments in a common location or dashboard while limiting the number of concurrent experiments maintains focus and productivity, reducing uncertainty over time and fostering continuous learning and adaptation. Our experience recommends visualizing work on an experiment board and using principles like limiting work in progress and continuous experimentation to achieve flow, as discussed above.

We hope this helps you think through your challenges, and we’re always happy to serve as a sounding board. We’re available at innovation@growthinnovationstrategy.com.