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Saturday, June 14, 2014

Corporate Innovation in a Numbers Driven World

This work by Marcelo Bernardes (@marcelobern) was originally posted on LinkedIn.

In his Forbes article, Neil Howe suggests that the shared leadership of Boomers and Gen Xers is a key driver behind the current risk-aversion behavior we see in the corporate environment.

This risk-aversion further challenges corporate entrepreneurs (aka intrapreneurs), and the execution of innovation driven projects, especially disruptive innovation ones. Here are some suggestions on how you can win support from your Gen Xer leadership and even engage millennials, who are eager to innovate and become intrapreneurs!

Be Numbers Driven Yourself

Revenue and profitability are key numbers for most customer facing projects. So start by figuring out how much revenue and profit your innovation project may bring.

It is much easier to convince a numbers driven leadership to invest in an innovation project, once there is a “proven customer demand”. Customer demand can be proven either through traditional means (e.g. market research, customer interviews, etc.) or by using corporate crowdfunding.

Regardless of the chosen approach to prove customer demand, remember that revenue data linked to customers opportunities is much more powerful than market size data. As such, a traditional sales funnel of sorts, or a pre-order list from a crowdfunding campaign are great ways to collect revenue data.

On the profitability side of things, focus on keeping costs down. Determining a minimum feature set, and then scaling up in phases is a great way to minimize costs, and increase profit margins throughout all phases of your project.

Identify your Minimum Viable Product

The term “minimum viable product” or MVP (Wikipedia) can be defined as
that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.
If a few customers can fund your innovation project, you may opt for offering it as a customized solution to be sold to a couple customers (or even a single one). On the other hand, if a high number of customers is required to fund your innovation project, you may do better with a corporate crowdfunding approach.

Keeping costs down during this initial phase will increase your likelihood of fully funding your project with the customers identified, then your numbers challenge will be reduced to proving profitability. Lower costs can be accomplished by using 3D printing for rapid prototyping (Wikipedia) of hardware components and public cloud (Wikipedia) for deployment of software components.

The project focus during this initial phase is to validate the market demand and customer needs. Scalability is not yet a concern, as the solution is not available for the general public but just a few customers.

For continued success, it is critical to use this initial phase to identify potential future customers. If you used a crowdfunding approach, you may want to keep the campaign open, so you continue to gather customer interest. For a customized solution, you definitely want to get the word out to other potential customers and build a sales funnel.

Scaling up to serve a larger audience

Once your customer interest has been validated and you understand the customer needs, it is now time to make your ground breaking solution available to the masses, building scalability into the process. In the numbers game, this phase is all about growing revenue and/or improving profit margins over time.

Get started by leveraging the customer interest gathered in the previous phase. Here is where keeping your crowdfunding campaign open could really pay off, if potential customers continue to express interest, and commit money, as your existing customers start to spread the word about their results.

It is always best to continue to serve your customers without disruption. Look for ways to gradually and smoothly transition from the 3D rapid prototyping and public cloud deployment to a more cost effective and scalable approach. This will also allow you to bring cost efficiencies and revenue growth into your project, allowing numbers to gradually improve over time.

Can these suggestions help you “sell” your innovation project to a numbers driven leadership? Is the corporate crowdfunding or traditional approach a better fit for you? Did you use a different approach to “sell” your innovation project? Feel free to use the comment box below to share your experience and point of view, and please let me know about your innovation project. If there is enough interest, I will look into internal facing and social innovation projects in a future post. And please follow me, if you would like to be automatically notified when I publish new articles.

(Image courtesy of bplanet -; Post updated June/9/2014)

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