The intrapreneur’s dilemma (part one: resourcing at pace)

illustration by Austin Breed

ace is a beautiful thing in entrepreneurship. As the barriers and costs to starting a new business come down markedly, opportunities to create new value increase exponentially. If done well, capitalizing on those efficiencies is done both affordably and FAST. Yet in the corporate context, pace breaks things. Critically:

  • Pace breaks the budgeting model
  • Pace breaks the human capital model
  • Pace breaks the transition process (i.e. as it graduates from innovation to its commercial home)

How can corporates overcome this? What can large enterprises do to better remove friction to allow for and, even better, harness the pace of innovation? Here’s a beginning list:

1. Invest, don’t budget

The fundamental financial nature of a scaled business is one of budgets. They are necessary, they are practical, they protect and serve, yet they don’t work very well for things beyond the core business — innovation, in particular. Also, budgets are myopic — obsessed with short-term, quarterly performance, and hitting pre-defined annual estimates. As such, they are a massive drag on innovation efforts.

One constructive shift to make for innovation is to move to an investment model, where funds are metered and doled out in tranches as merited. Rather than being set against past precedents (i.e. hitting pre-set metrics at fixed stages), these are anticipatory funds to be used to prove or disprove a set of hypotheses.

This is a BIG leap, and if you can pull it off, perhaps it’s the ideal place to get to, but I think an in-between state is to simply reframe the budget mindset to put it to work for innovation.

How to do this? Just frame the budget as a pool of funds to be deployed across a portfolio, over time (more than a year), managed as a VC would do. The shift required here is a temporal one — thinking not in quarters or years, but rather over the “life” of the fund — multi-year, in effect. This is a proxy model, sleight of hand almost, but it’s a big step in the right direction.

All of this requires senior “Sponsors” to act like VCs and the team — the innovators/intrapreneurs — to act like VC-backed founders. Shift the mindset and you’ll start to shift the practice as it becomes a collective effort to reduce friction in innovation.

2. Embrace “temporary”

Pace stretches those used to corporate speed limits to the max. It’s like jumping straight from a go-kart into a Formula One car. Not that one is better than the other (though one carries more risk, to be sure), rather driving one is a completely different exercise than the other.

Similarly, skills in executing the core business versus executing an emerging one might overlap on paper, but in practice they’re more different than similar. They’re certainly much more concentrated within a much shorter list of roles. Further compounding the effect, the skills required to execute evolve at the pace of the business, so what’s more static in the core business is incredibly dynamic in an emerging one. The reality then is that you’re likely to be outpacing the skillsets of your team regularly in an incubated venture.

Since this presents a staffing nightmare, to fill the gap you might turn to a temporary solution. Hire a specialist on a contract role. Borrow someone from the core business — especially someone who might be part of this thing if it succeeds and is brought to live inside of an existing business unit. This is of course risk-calibrated too, as such a temporary solution can be turned off. If they aren’t the right fit, their contract is finite. It might be more expensive in the short term, but it’s more affordable in the long term.

This concept extends from human resources to more specialized, even technical ones. As innovation concepts incubate, there comes an inevitable question, “Build or Buy?” This is maybe too binary, however, as sometimes you might borrow to good effect for a fixed period (say, to run a beta test), and then, if justified, build. We’ve seen this play out over and over, especially with new offerings in an established portfolio (e.g. a service in a product pipeline, a connected IoT offering in a manufacturing business, etc.). But it shouldn’t be limited to circumstances where the novel concept is a clear departure from core capabilities. Another article in its own right (here’s more on that from us), if interested, but suffice it to say, a little extra cost in spinning up temporary fulfillment solutions can help maintain pace that creates long term gains.

3. Envision success

Many innovation engines inside of large organizations are built front to back. Meaning, they begin with new strategy and then shift over to building a mode for customer discovery (often leveraging Design Thinking in some form or fashion) and then into ideation and concept development, then prototyping and so on down stream toward commercialization.

As such, many innovation ecosystems have mature apparatuses up-stream for insights, ideas and concepts, but have under-developed or even completely neglected mechanisms for receiving the output of the innovation engine. Surprisingly, few go through the steps of asking, “What if this thing works?” at a mechanical level (it often gets over-asked at an ROI level…).

So to shore up this gap, step one is to build and leverage connective tissue throughout the organization. Identify “landing zones” — “homes” in the core business for successful projects to settle and thrive. They need the right senior sponsor and the right portfolio characteristics (i.e. it can’t automatically become the least important project on their list). Often, you have to rule out some landing zones, especially if there’s an unwillingness to co-invest.

Step two, stretch the definition of “landing zone” and open up new ones — new pathways for an innovation project to follow in the event it’s successful. With a utility client of ours, we created their first-in-its-100-year-history spin-out — something a regulated business like theirs never thought possible — and eventually it became a fruitful joint venture that enabled them to sell to other utilities across the country.

Step three, use early innovation projects to define and refine key parameters for transitioning success to a landing zone. In effect, these are guinea pigs in more ways than one. Ensure you’re getting the multi-faceted learnings from early successes and failures, as they shape the processes and protocols for those that follow and can as easily grease the viable pathways as introduce stymying friction for future innovations.

Doing all this means asking and answering some key questions:

  • Do innovation personnel need to stay with the project for a period, even indefinitely, as it transitions?
  • Does the incubator/innovation group need to co-invest for a period to make it more palatable for the receiver?
  • What non-core pathways are we willing to explore in the event of a success? Are we open to a new business unit? A new spin-out?
  • Where have we seen a market success become an internal failure? What should we change to prevent that from happening ever again?

Ultimately, all of the above is a unique form of resourcefulness, which, at the end of the day, is a key characteristic of the most successful innovators and entrepreneurs.

In summary, pace is something to value and harness, AND corporate innovators have to appreciate that it is a foreign and perhaps dangerous (at least counter-culture) concept in the eyes of the core business.

In response to that tension, you can (1) start with the end in mind and wade pragmatically and cautiously into accelerating innovation, (2) embrace temporary means of filling key gaps, even those that might eventually need a custom-built long-term solution, and (3) treat innovation projects like the financial things they are, risky investments, rather than predictable budget items.

Have you seen this play out in your business? Have you figured out how to achieve pace from inception through to the commercial launch of a new venture? What else has your organization done to reduce friction and accelerate corporate innovation? Would love to hear.

Learn more about our new innovation accelerator, PX, here.

-Clay Maxwell, Managing Partner, Peer Insight + Peer Insight Ventures

Helping orgs channel their inner startup to solve big problems. Using entrepreneurship to design, build & test new corporate ventures @ PX Studio + @peerinsight

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