Design a Winning Innovation Strategy
How to Apply a Ventures Mindset for Sustainable Growth
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 that strategy and consistently translate it into well-timed and profitable new offerings eludes even the most well-established market leaders.
At IA, we apply a ventures mindset to innovation strategy. We believe the organizations that apply this mindset are able to consistently enter the market with cohesive, vetted, well-timed new offerings.
The following article describes how organizations can benefit from applying a ventures mindset to their innovation strategy to place smart bets on their organization’s future.
The Winning Approach: Ventures Strategy for Growth
Applying a ventures mindset to innovation strategy means that organizations proactively and continuously explore key forces of change in the market, in the context of their current and future business, to identify multiple venture opportunities. Through testing, iteration, and prioritization, ideal options emerge and are quickly brought to market.
A ventures strategy creates a continuous portfolio of market opportunities to fuel business innovation.
With this approach, organizations have multiple opportunities at their disposal and develop criteria for advancement of the most promising and market-ready options. This application of a ventures mindset – in the context of innovation – creates early awareness of latent opportunities and enables swift stakeholder alignment.
Because several possible market opportunities are continuously identified, a business can consistently define and launch new ventures before others do – and create the conditions to win in a competitive marketplace.
Activating a Ventures Mindset
To apply a ventures mindset to their innovation strategy, leaders must continuously conduct research with their current and future users, assess technology shifts and other macro and market factors to identify signals of changing demand, and align these forces with corporate strategy.
To rapidly identify insights and hypothesize a range of likely future scenarios, three forces of change must be continuously monitored:
- 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 the tech is interesting, but may currently be too expensive or advanced for today’s customers – and the low-end of the market – where the tech is affordable, but not robustly solving current customer needs. At either end, how users interact with the tech (or could interact with it) can clue organizations in on how customer needs and desires will evolve.
Changing technology is just one of many forces of change to consider, but all take part in shaping the future of business, users, and society.
Adaptive Corporate Strategy
By taking a ventures mindset, an organization translates key forces of change into user insights, and filters the insights through corporate strategy. For new venture options to surface, 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 be developed?
- Do the economics align with current expectations? Will the opportunity’s size and profit margins justify allocating the needed resources to succeed?
If your insights are compelling and they imply a “fit” with the company’s mission and vision, but aren’t a fit with its current processes and economics, don’t necessarily say “no”. Consider standing up separate entities to incubate ideas. This approach can protect high-potential opportunities that are currently too small to justify needed resources within the parent organization.
By aggregating company mission and vision, ambition, and economic advantages in combination with user insights, key stakeholders can align on priorities and set innovation goals to ground new ideas.
Informed by powerful insights and aligned leadership, dedicated project teams are created; either within the parent company, or as part of a separate entity. Teams challenge assumptions, and envision concept systems that create, deliver and capture new value. Through the process, multiple business opportunities – or “options” – emerge. Teams quickly explore and construct a range of value propositions. Using “lo-fidelity” visualizations they quickly co-create value props with users and stakeholders before investing resources to build and test new products and services. The most promising opportunities are refined and prioritized for prototyping and piloting.
Business Prototypes and Pilots
The next step is to put “business prototypes” into the market as fast 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 behavioral data that is both qualitative and quantitative. This enables teams to confidently prioritize features and iterate in real-time as data is gathered. Managers can identify which options should be pivoted, divested, or scaled for success.
Organizations can leverage the same data to make informed investment decisions. For example, by comparing a feature’s importance in delivering on the value proposition with its level of effort to deliver, managers can determine what components should be built from the ground up, acquired, or co-developed with a strategic partner.
Ventures Strategy in Action
IA Collaborative recently worked with a global pharmaceuticals company to influence the future of their industry. Our team uncovered rapid insights by analyzing broader macro-trends – from hyper-personalization to changing subscription service models. We then contextualized how these changes impact buyer behavior and produced 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 opportunities that benefit their future users and their 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 possible market opportunities based on macro trends, market research, and user research. By contextualizinginnovative ideas with corporate strategy, brand-aligned concepts emerged centered on the relationships between parents, children, and finances. We 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 proactively identifying innovative solutions and piloting them in the market– minimizing risk of future investment for new innovations.
Applying a Ventures Mindset to your Innovation Strategy
Innovation strategy is not a “once a year” or an “ad hoc” activity. Organizations investing in proactive innovation initiatives should continually collect indications of the future, aggregate observations into patterns and guiding principles of need, and evolve criteria for advancement.
Organizations that apply a ventures mindset will be uniquely positioned to maintain market leadership, can more effectively prioritize innovation and corporate development resources, and make better strategic decisions.
Want to learn more about how you can design a winning innovation strategy? Start a conversation at firstname.lastname@example.org.