On the agenda for 2024 – a better way to keep track of your innovation portfolio?

I was delighted to be part of a virtual event sponsored by the good people over at Innov8rs, in which a field of 10 experts shared their perspectives on the prospects for innovation in 2024, launching the organization’s now much-anticipated annual handbook.

Conversations about what we can expect for corporate innovation in 2024

Ten of us, involved with corporate innovation in various capacities, were invited to appear in the virtual event – the format was that each of us got about 8 minutes to offer our perspective on what would be on the agenda for innovation in 2024.

The panelists provided a question in advance to hint at their part of the conversation. Here’s the rundown (fascinating topics, all):

Myself: 2023 was an innovation bust – but it will be unavoidable for organizations in 2024

Alex Osterwalder: In 2024, senior leaders will ask for an explicit Return on Investment from innovation

Tyler Anderson: Excel in short-term, low-risk Initiatives to secure long-term investments and navigate through recession

Frank Mattes: As corporate startups need to be linked more closely to "core", monitoring startup health is crucial 

Alf Rehn: AI will have a deep impact on corporate innovation, but the shape and effects of this might surprise many.

Jennifer Riel: 2024 will be a year of big choices and smart experiments when it comes to corporate innovation and emerging technologies.

Gina O’Connor: Innovators and their leaders will need to incorporate new habits of ethical considerations that innovation opportunities raise, and break current habits associated with governance of strategic innovation

Andrew Binns: Innovation and business models for sustainability: only capitalism can be fast enough to save the planet 

Dan Toma: Global companies, grappling with sustainability concerns, remain confined to PowerPoint presentations due to a lack of innovation capabilities 

Elvin Turner: The innovator's career pivot: why ‘Innovation Coach’ just became one of 2024’s hottest jobs, and why you should become one

The presentations were thought provoking, and I believe that Innov8rs is planning to make them available as recordings. So do get in touch with them if that sounds interesting.

My polling question: Only 5% of the respondents feel their organizations have got this right.

We were all each asked to provide a polling question for the participants – who numbered, I’m told, over 1,000 people with innovation as some part of their responsibility.

The question I asked was, “How well do you think your organization aligns your strategy, budgeting, innovation governance and incentive systems?” Participants had the choice of responding:

Extremely well

Somewhat well

A bit well

Not well

Not at all well

One would think, with all the noise that gets made about innovation, all the accelerators, incubators, VC-like structures, resources poured in and so forth that most organizations would have figured this out.

Not so. In fact, here’s a picture of the results:

Only five percent (!) of respondents felt that they could answer “extremely well” with confidence. Moreover, the majority (71%) definitely reported lackluster alignment, and 38% were dubious, with a full 9% clocking in at “not at all well.”

Why a lack of alignment matters

A primary leadership mandate today is to balance the demands of serving the existing core business well and keeping it healthy, with making the necessary investments in new opportunities so that when today’s core becomes commoditized or obsolete, the organization has a future. All too often the core business exerts such a powerful gravitational pull that this second role not only takes a back seat – it can become little more than an exercise in what I and others have called “innovation theater.” Sure, we’re going through the motions and have hired someone who is ex-Apple or ex-Google and we talk with great pride about our beautiful state-of-the-art innovation space, but the reality is very different (for a good laugh, have a look at one of my favorite infographics on the process). This disconnect between systems is one of the surest places that a lack of true commitment to innovation shows up.

Think about it. Strategy, when it’s done right, pulls you into the future. It is informing everyone of where we plan to play, how we plan to compete, what our unfair advantages are and how we will create value for customers. It may imply that new terrain must be entered even as older, commoditized or obsolete spaces are left behind.

Then we have the budget process. Ask yourself honestly, where does this year’s budget start? In way too many organizations, the answer is “last year’s budget!”. So, budgets, quite without anyone intentionally choosing them to, anchor you in the past. Executives find moving budgets around to be an excruciatingly painful political process, so in all too many cases, it doesn’t happen.

Now consider the resource allocation governance process – the systems by which organizations decide which programs get the green light, which will be stopped or paused, where they will be located in the organization and who will work on them. Often, quite astonishingly, the people with decision rights in that system have little, if any, connection to either the strategy or the budget systems.

In fact, if you pick up the proverbial lid on a typical corporate portfolio, it’s a hot mess. You’ve got someone’s pet bunny in there from 2 CEOs ago, and no one is asking the question, “why are we still doing this?” You have mission-critical, urgent initiatives that have half an intern working on them. You’ve got critical next-generation adjacencies duking it out for key capacity and people with existing lines of business. And the list of dysfunctions goes on.

Moreover, the incentive systems that inform how people believe they will get ahead are not designed to promote alignment. Very often, such incentives are backward-looking and designed primarily to deliver to today’s core business.

Perhaps a simple tool could go a long way

Lack of commitment to innovation and even fear of it surely bears some of the blame. Indeed, no less a figure than Machiavelli pointed out that, “It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones.”

But I think another contributing factor may play a big role – perhaps bigger than we realize.

What if a major part of the problem is that it is just so hard to stay on top of a rapidly evolving portfolio of opportunities? I’ve had experience with enough companies that I can say with great confidence that the state of the art in managing complex, even multi-million dollar, portfolios, continues to be spreadsheets, PowerPoint and maybe a few interns. Just pulling together the current state of a portfolio is often a six-figure consulting project involving manual number crunching and painful exercises in reconstructing history.

Which is why, some seven years ago now, I started playing around with building a piece of software that would provide a tool to help leaders transparently and simply manage innovation portfolios. It bridges that tricky space between having an idea and finding a business worth commercializing. It’s called the SparcHub system, and you can see an on-line demo of it by visiting this web page.

We’ve used it in conjunction with advisory relationships so far with extremely positive reviews. We are looking forward to January, when we plan to have a version that is priced to be very accessible ($15 / user / month) and to allow for user self-service. If you’d like to get on the early notification list for that release, please sign up at our contact us page. Let us know if you’d like a live demo – we’ll be setting up some open sessions for those with an interest.

Don’t miss the upcoming Fireside Chat featuring Kelly Richmond Pope

On December 8, I’ll be chatting live with Kelly Richmond Pope, a forensic accounting professor an author of a fascinating, if sobering, look at the trillion-dollar fraud industry. She looks at different kinds of perpetrators, how we can protect ourselves (when it is possible) and the role of whistleblowers in making sure just outcomes ensue. To register, click here (11:00 EST on December 8).