Many companies have an innovation strategy—a “plan to win” that includes staying on top of macro and micro trends, identifying customer pain points and needs, and investing in new technologies. However, the ability to operationalize and consistently translate that strategy into well-timed and profitable new offerings eludes even the most established market leaders.
That’s why at IA we apply a ventures mindset to innovation strategy—even with mature organizations. We’ve found that when organizations adopt this mindset, they consistently enter the market with new offerings that are cohesive, vetted, and well-timed.
A ventures mindset allows a company to proactively and continuously explore key forces of change in the market, in the context of their business, to identify venture opportunities. Through testing, iteration, and prioritization, they can then identify ideal options and quickly bring them to market.
A ventures strategy creates a continuous portfolio of market opportunities to fuel business innovation.
With multiple opportunities at their disposal, organizations can then develop criteria for advancing the most promising and market-ready options. This early awareness of latent opportunities offers several advantages. It means that stakeholders can get aligned more quickly, it speeds up the pace of innovation, and it lets the organization define and launch new efforts before their competitors, creating the conditions to win in a competitive marketplace.
Four steps to a ventures mindset
To apply a ventures mindset to their innovation strategy, leaders must be in a state of continuous learning and assessment, of their users, the market, and relevant technologies. Then they must extract insights, and apply those insights throughout their corporate strategy.
There are four steps to approaching this in an ideal way.
1. Gain rapid insights about what’s changing in your market.
To rapidly identify insights and hypothesize likely future scenarios, leaders should continuously monitor three forces of change:
- Macro changes: Societal, economic, and technological trends
- Demand-based changes: How users’ wants, needs, and behavior are evolving
- Market shifts: Emerging disruptors and changing customer loyalty
Technology, and how we use it, is an especially important indicator of change. Consider tech at both the high-end of the market (where innovation is most apparent, but may be too expensive or advanced for most customers) and the low-end of the market (where tech is affordable, but not robustly solving current customer needs).
At either end, assessing how users interact—or could interact—with the tech can provide clues on how customer needs and desires will evolve.
Changing technology is just one of many forces of change to consider, but all of these forces take part in shaping the future of business, users, and society.
2. Align insights with an adaptive corporate growth strategy.
To surface new venture options and identify significant opportunities for growth, ask:
- How does this insight align with our enduring mission and vision?
- How does it fit within our strategic portfolio of core, adjacent, and transformational ventures?
- Does it align with our innovation ambition and risk tolerance?
- Do we have the capabilities to succeed? What resources or processes must we develop?
- Do the economics align with current expectations? Will the opportunity’s size and profit margins justify allocating the needed resources to succeed?
In some cases, you may identify compelling insights that fit with the company’s mission and vision, but don’t fit with current processes and economics. In these situations, you may consider standing up separate entities to incubate ideas. This can protect opportunities with high potential, but which are too small to justify needed resources within the parent organization.
By aggregating a company’s mission and vision, ambition, and economic advantages with user insights, leaders can help key stakeholders align on priorities and set innovation goals to ground new ideas.
3. Identify actionable options for growth.
With insights identified and leadership aligned, it’s time to create dedicated project teams, either within the parent company or a separate entity.
Project teams should actively challenge assumptions and envision concept systems that capture, create, and deliver new value. As business opportunities emerge, teams should quickly explore and construct a range of value propositions, to assess which to pursue. These value props should be co-created with users and stakeholders, using “low-fidelity” visualizations, before investing resources to build and test new products and services.
This iterative prototyping and piloting methodology ensures that the team refines and prioritizes the most promising, user-centered opportunities.
4. Bring business prototypes and pilots to market.
The next step is putting “business prototypes” into the market as quickly as possible. Business prototyping strategies can include physical and digital experiments such as service simulations, pop-up locations, and A/B tests. With these realistic prototypes, teams can quickly collect both qualitative and quantitative behavioral data that enables them to confidently prioritize features and iterate in real-time. Managers can identify which options to pivot, divest, or scale for success.
Organizations can then leverage the same data to make informed investment decisions. For example, by comparing a feature’s importance in providing value with its level of effort to deliver, managers can determine which components should be built from the ground up, acquired, or co-developed with a strategic partner.
Ventures strategy in action: two real-world examples
IA Collaborative recently worked with a global pharmaceuticals company to influence the future of their industry. Our team followed the four-step process above to achieve success on several fronts:
- Uncovered rapid insights. We analyzed broader macro-trends—from hyper-personalization to changing subscription service models—then contextualized how they impact buyer behavior. This enabled us to produce a holistic view of competitor dynamics.
- By framing this data to the company’s mission, capabilities, and goals, the team aligned corporate strategy with user needs to create several market opportunities focused on the future of personalized medicine.
- With actionable options at their disposal, the client is now confidently and proactively piloting business prototypes and opportunities that benefit their future users and future business—before their competitors do.
We’re also working with one of the world’s largest investment companies to disrupt the market with future-forward products and offerings. In this instance, we:
- Developed rapid insights by focusing on a single key user and identifying several market opportunities based on macro trends, market research, and user research.
- Contextualized innovative ideas with corporate strategy, which enabled brand-aligned concepts centered on the relationships between parents, children, and finances to emerge.
- Designed actionable options for collaborative money management, and tested several low-fidelity future products to gauge market feasibility, iterate on user feedback, and prioritize opportunities aligned with organizational goals.
By testing multiple options simultaneously, we are now proactively identifying innovative solutions and piloting them in the market—minimizing the risk of future investment in new innovations.
Take steps now to apply a ventures mindset to your innovation strategy.
Business innovation isn’t an ad hoc activity, or something that happens once a year. Organizations investing in proactive innovation need to continually collect indications of the future, aggregate observations into patterns and guiding principles, and evolve criteria for advancement.
Companies that apply a ventures mindset will be uniquely positioned to maintain market leadership, prioritize innovation, allocate corporate development resources appropriately, and make better strategic decisions.
Want to learn more about how you can design a winning innovation strategy? We’d love to hear from you. Start a conversation at firstname.lastname@example.org.
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