Innovation? Forget corporate metrics

If you make your innovation a hedging process – like we discussed here – then how do you lead and manage innovation? What are the particular ways of reversing the process to foster valuable innovation?

Leading innovation and what is considered good leadership are not the same. The default conception of the leader’s role – setting out a vision and inspiring people to follow – works when the solution to a problem is known and straightforward, but is counterproductive when it’s not. If a problem calls for a truly original response, no one can know in advance what that response should be. By definition, then, leading innovation cannot be about creating and selling a vision to people who are somehow inspired to execute that vision. The moment you attempt to foster innovation within a permanent organization designed to execute a repeatable and scalable business model, your chances of innovation success are slim.

Those successful of driving innovation are proven masters at fostering organizational innovation and acknowledging the element of team sport in innovation. Instead of trying to come up with a vision and make innovation happen themselves, a leader of innovation creates a a temporary organization designed to search for a repeatable and scalable business model — a context, an environment — where people are willing and able to do the hard work that innovative problem solving requires.

The difference?

In a place of innovation capabilities metrics in areas such as hypothesis testing, business model testing, customer development, agile development – will replace the conventional management metrics in areas such as execution, accounting, products, and engineering. To successfully lead innovation you must prioritize continuous deployment, continuous learning, self organizing teams, minimum feature sets and pivots more than manage plans, goals, processes and personnel.

To successfully lead innovation, you will have to start changing your mindset and thinking away from managerial thinking – or casual thinking – and select among given means to achieve a pre-determined goal as you typically would in an operation; and start leading the innovation with entrepreneurial thinking – or effectual thinking – and imagine a possible new using a given set of means.

According to effectuation – a logic of thinking, discovered through scientific research, used by expert entrepreneurs to build successful ventures – the following principles are critical to fostering innovation:

Bird-in-Hand (Means) Principle: When expert entrepreneurs set out to build a new venture, they start with their means: who I am, what I know, and whom I know. Then, the entrepreneurs imagine possibilities that originate from their means

Affordable Loss Principle: Expert entrepreneurs limit risk by understanding what they can afford to lose at each step, instead of seeking large all-or- nothing opportunities. They choose goals and actions where there is upside even if the downside ends up happening.

Partnerships Principle: Expert entrepreneurs build partnerships with self-selecting stakeholders. By obtaining pre-commitments from these key partners early on in the venture, experts reduce uncertainty and co-create the new market with its interested participants.

Leverage Contingencies Principle: Expert entrepreneurs invite the surprise factor. Instead of making “what-if” scenarios to deal with worst-case scenarios, experts interpret “bad” news and surprises as potential clues to create new markets.

Control vs. Predict Principle: By focusing on activities within their control, expert entrepreneurs know their actions will result in the desired outcomes. An effectual worldview is rooted in the belief that the future is neither found nor predicted, but rather made.

In a corporate world, there is yet little room for these metrics, principles, and ways of thinking. There is no way around. The more you bet on innovation the more you have to adopt the thinking of entrepreneurial leadership – particularly in the corporate world!