Best Practices in Corporate Innovation: Borrowing from Entrepreneurs
Innovation projects need funding. For entrepreneurs out in the world, that means you pull money out of your own pockets, your friends’ pockets, maybe your family’s, and then, if you’re lucky and you’ve got something that shows signs of bearing fruit, you graduate to angels and later to VCs. For those within the confines of a corporation— intrapreneurs — it’s quite a different story on the face of it. Your personal money isn’t at risk (assuming your company views failure — a likely outcome — as a learning experience not a fireable offense), and your friends and family might not even know you’re working on it. So, much less is personally at stake, but it’s still no cakewalk – far from it. In our experience, there are actually plenty of parallels worth sharing between these two worlds. Here’s an outline of some of the differences between the two:
Some pretty big differences, indeed. So, where might it behoove corporations to replicate entrepreneurial realities in-house? Here’s a beginning list:
- Reward intrapreneurs for going above and beyond, in particular if you want to keep these “rock stars” around.
- And, grant them some autonomy. Let them hand-pick their team, and give them freedom to reach across functional areas for insight and/or collaboration.
- Redefine success criteria for each new venture. Innovation units should protect new ventures from being held up against historical precedents.
- Fund initiatives as if you are VC. Consider innovation projects a venture portfolio. Stage funding, but give line of sight to future funds. Require them to hit key learning milestones (note: NOT quantitative metrics, yet). More on this in a future post.
- Keep projects off-platform (i.e. not stuck within a business unit) so they have the freedom to grow untethered from expectations of and comparison to the core business. This also allows for the projects to pivot significantly as necessary (and it's almost always necessary).
What do you think? What would you add to these lists? How does it work in your organization? Let me know!
- Clay Maxwell (@bizinovationist)