Corporate innovation teams are one of the most important groups we see working with startups to help drive revenue. Individuals who work in these groups are tasked with helping their company grow through mergers and acquisitions (M&A), strategic pilots, or partnerships with startups nimble enough to work with a larger corporation.
If startups are going to have increased chances of succeeding, corporate innovation groups are going to play a larger and larger role in the startup ecosystem, which I personally believe is good for everyone.
Unfortunately, as I’ve met corporate innovation leaders around the world, so few of them actually know how to do corporate innovation well (or even what to do at all). I don’t have the answer, but what I am saying is this: Corporates simply haven’t been given a roadmap.
Not only are they operating in some of the first-ever corporate positions intended to engage with startups (and, of course, to drive revenue from working with them), but they don’t often have structural support within their own companies. By way of example, when I speak with individuals leading corporate innovation or strategy, I consistently hear a few key themes:
- They have a hands-off CEO who trusts that they’re going to do the “right” thing.
- Their senior leadership team gives them the mandate to, “Figure it out and come back to us in a few months or a year.”
- They’re shouldering the pressure of the company’s belief that this type of innovation will work and will solve any number of revenue issues for the company.
- They have no clear goals or KPIs around why their company is doing innovation other than “help us innovate.”
Where It Goes Wrong
So when it comes to goals and KPIs, I always ask one thing early in my conversations with people working on corporate innovation teams: “Why are you doing this work?” Consistently, I’m given no clear answer. Corporate innovation leaders often respond by telling me that their bosses just believe it’s good for the business, but it doesn’t go any further than that. In fact, if you ask five people on any corporate innovation team why they’re doing what they’re doing, you’re likely going to hear five very different answers.
As I said, this lack of clarity causes all kinds of challenges, for the corporate and for the founding teams at startups who want to engage with that corporate. Here are a few examples, from our experience, of what happens when corporate teams are unclear about their fundamental goals:
1) The corporate innovation team is stranded on an island within the company, navigating everything on its own.
The biggest result of this is that whatever goals that the corporate innovation unit defines almost never align with the goals of the company as a whole—not because the corporation doesn’t have goals, but because the goals of senior management are almost always changing. So, unless senior leadership (and ideally the CEO) helps to set goals for the innovation team, the innovation team is inevitably at the whim of whatever goal that the company has that day.
2) The corporate won’t innovate.
This one is pretty simple. If you don’t have a strategy to innovate, you’re probably not doing much actual innovation. It’s more likely that you’re working toward disparate objectives (both from within your own innovation team and from the company as a whole), and no true milestones will ever be achieved.
3) The innovation team, startup founders, or both end up frustrated and confused because nothing is actually accomplished.
If your innovation team doesn’t have clear goals, there’s no way to critically examine whether you’re working with the right startups. You’re likely to make choices based on varying factors (whether you just seem to click with the founder(s), you’re a personal fan of the product, etc.), and not actually examining if any particular startup is also hoping to do what you’re trying to do. In other words, you have no idea if a relationship is mutually beneficial. So, after a lot of time, a lot of money, and a lot of effort, your team and/or the startup team feel like the entire thing was a waste that could have been avoided by having some clear conversation about shared goals on Day #1.
4) The innovation team will get fired in 18-24 months.
I see this over and over again. The corporate innovation team is given the mandate to innovate. They spend a year trying to figure out what innovation for the company should look like. They then share their findings with management. Unfortunately, by this time, senior management has already moved onto another shiny object because the innovation team hasn’t found a magic bullet to help with revenue. And then the innovation team gets the ax.
So, What Are Ways to Do It Well?
This should be obvious by now, but get clear with management.
It’s vital to hear senior management tell you exactly why you’re doing this and what your expectations are. This is the vision, the over-arching reason you’ve developed an internal innovation team, to begin with. Are they doing this to help with top-line revenue or expense reduction? Or something else? It’s important to know the reasons for the innovation in the first place.
Then, set-up three year, one year, and one-quarter goals immediately—and get sign-off.
Once you know the big goal from senior management and the reason the company has started an innovation arm of the company, it’s time to make smaller, more specific and very tangible goals. When I hear from innovation teams, they always seem to be setting up goals that are 12 or 24 months out, but they stop there. The only problem is that 12 or 24 months makes senior management feel like they gave the innovation team too long of a leash. When groups set up three-year, one-year, and then one-quarter goals, two things are accomplished. First, there is clear direction and alignment with the company. The innovation team knows where they need to go for the next three years. But, secondly, the true secret is having goals just for the next quarter and not beyond those first few months. They help everyone feel like traction is being made on the larger goal(s) and, frankly, a lot more gets done.
As much as possible, also make them SMART goals (specific, measurable, achievable, relevant, and time-bound). At the very least, aim for specific, measurable, and time-bound. That way, you know exactly what you need to deliver and when. Adding the “measurable” piece means management can’t come back to you and say you didn’t do your job; if you hit your measured goal, you succeeded.
Once you’ve done that, get management to review and approve, if possible. Again, the more everyone is on the same page, the less anyone will be surprised down the road, and it gives you buy-in. Everyone should know what they’re trying to achieve and whether those goals are being met, and why or why not.
Review, revise, and finalize plans for the following quarter.
Corporates like to have a very clear roadmap for exactly how things will look in a year and the exact ways to get there. Unfortunately, the world (especially the startup one) is moving too quickly for that. Most startups know that you can have a North Star (let’s call this your annual goal), but the roadmap to get there will change every few months. So you shouldn’t set the following quarter’s goals until you’ve had a chance to review and discuss your goals from the previous quarter. This kind of review will also give senior management a chance to let you know if they feel like you need to move more quickly or to slow down. Basically, it’s a good chance to shift where necessary, gain more clarity, use any learnings you made from your initial plans after a chance to put them into action, and get on the same page again. Buy-in, trust, and open communication—novel ideas, right?
And, If You’re a Startup?
In the same way that corporates need to get clear with their teams on what they’re trying to achieve, you also need to have frank and honest discussions about expectations with the corporate innovation team. Because, just like when I wrote that post last week, encouraging startup founders to ask investors what they care about, the same holds true for corporates. If you don’t understand why they want to work with you and don’t have a clear goal you’re mutually trying to meet, run away…fast.