Even though it can sometimes (OK, regularly) feel like a struggle, corporate innovation is a fun field to work in. The excitement of ideation, journey-mapping, product validation and prototyping new solutions makes enterprise innovation a challenging, rewarding task. Yet for corporations, that’s only one piece of the puzzle. Beyond proving you have a product that works, innovators must often prove they have a business model viable enough to warrant investment.
It Takes Money to Make Money
While not every innovation project is destined for commercialization, innovators still need to think beyond the costs of demonstrating a market demand for a new product. While it’s great to develop a new product or service that works well and users love, the enterprise still needs to find a way to monetize any new idea. According to a recent Gartner report, every $1 an enterprise spends on innovation and new product development, they’ll spend an average of $7 deploying that solution to the marketplace.
When trying to sell executives on a new idea, corporate innovators should look to their peers in the startup space. Startups secure funding from venture capitalists and investors by presenting a business plan, not just an innovative idea. By building a business plan – even one that doesn’t focus on profit and loss – around an idea, innovators can help executives examine an idea in terms they understand: customer acquisition, growth rates, churn, and more.
Your Innovation Lab Should Be a Business Lab
Fundamentally, innovation needs to align with long-term business goals and become an integral part of corporate strategy. While new ventures shouldn’t be held to the same P&L standards as the core business unit, innovators can map out the near-term future of a product. Executives shouldn’t judge new products just like the core business unit, innovators need to build a growth and revenue roadmap. Tools like the Y-Combinator model of customer acquisition and revenue growth can expand the scope of your project beyond just the product.
Innovation consultant Tendaya Viki points out, “Innovation is the combination of creative ideas with sustainably profitable business models.” Innovators often get stuck in the mentality of pure ideation, yet successfully pursuing innovation requires a broader mindset that aligns with the business objectives of your organization.
It’s already difficult enough to encourage the C-Suite to rally behind an innovation project, so innovators need to consider a number of variables like user-acquisition cost, lifetime value of a customer and how a new product can integrate back into the corporate structure.