In the previous installment of our Corporate Innovation Guide: Problems, Solutions & Real Life Use Cases we analyzed the current landscape of corporate innovation.
In the second part of the Corporate Innovation Guide we’re going to focus on the more practical aspect of the matter and delve deeper into the process of funding and developing corporate innovation.
A good idea, as important as it is for building innovation, is only the beginning of a hard and laborious process. In the end, the solution may or may not result in the solution actually being implemented.
Today, more and ever, corporate innovation is about embracing digital transformation and nascent technologies such as blockchain and NFTs. What started as a quirky niche is quickly becoming mainstream and could very well become a part of every marketer’s arsenal. Billions of dollars of digital NFTs are being traded, generating brand engagement, unlocking new customer experiences, fostering new types of communities and opening new revenue channels.
But the key to the whole process is execution.
Anybody can have a good idea, but if you can convince the top leadership, you’re the one with the initiative and resources necessary to make it happen, you’ve got a good chance to get the green light on your project.
So if you’ve got a board meeting coming up and you need to figure out how to make an impression on the higher-ups with an idea for boosting your company’s bottom line, this guide is for you.
In this article you’ll learn:
- How to approach funding corporate innovation
- What to look out for during the development stages
- What are some of the most effective negotiation strategies
At Iterators, we know firsthand how successful corporate innovation looks like. We designed, built, and maintained custom software solutions for both startups and enterprise businesses.
Schedule a free consultation with Iterators today! We’d be happy to help you design and build your innovative product.
Funding and Developing Corporate Innovation – Build Your Case
Innovation starts with an idea of improvement.
Whether you’re working with a specific product, service, or just overseeing a process, there is a chance there is a technology out there that could make it more efficient.
Finding the right match in terms of tech solution is one thing.
But nothing will happen without a proper fundraising process and solid execution strategy.
It goes without saying, that the process of developing and implementing innovation is complex and there isn’t one way to do it. As a matter of fact, for every company this process may differ tremendously, depending on a series of things such as:
- Company Size
- Corporate Culture
- Talent Pool
- Legal Constrictions
That said, there are some guidelines and best practices that can help you make good decisions and minimize the risk of failure.
Here are some of the things you can do to make sure the fundraising and development of your project go smoothly and bring actual results.
1. Run a SUS Survey
The System Usability Scale (SUS) is a great tool for getting insights about usability issues and building an inventory of existing issues. If you have a process or a system you’re looking to optimize, you should consider this as one of the first steps.
The survey consists of 10 questions and it is fairly straightforward in terms of administering it to participants. It can also bring reliable results even on small groups of users and most importantly – it lets you distinguish between systems that are effective and those that are not.
Participants rate each question on a scale from 1-5, where 1 stands for “Strongly Disagree” and 5 is “Strongly Agree”.
In most cases, even a sample size of 5 -7 users from each persona should create enough insights regarding the system.
The only challenge regarding running a SUS survey is the scoring part, as it is relatively complex. Score for every question is converted to a new number, then added together and multiplied by 2.5 to convert the initial scores from 0-40 to 0-100.
Pro tip: Based on research, a SUS score above 68 would be considered above average and anything below 68 is below average, however, the best way to interpret your results involves “normalizing” the scores to produce a percentile ranking.
2. Map Out the Potential Benefits
Before you schedule any fundraising meetings you should take some time to analyze how impactful the change you’re proposing can be. Mapping out the list of potential benefits will sure come in handy when you need to convince the executives or the investors about the validity of your idea.
Here’s a couple of things to consider during that process:
Estimate the ROI
As we all know, money talks. That’s why calculating the return on investment is probably one of the most compelling arguments you can make when presenting your idea to the executives.
Let’s analyze this in an example.
A relatively big accounting enterprise is looking to optimize its system. Through automating some of the manual data entry tasks the users are able to work faster and with fewer errors. Let’s assume that there are 100 employees who use the system, the change saves them 30 minutes per day and they are paid $30/hr.
Show How the Project Answers Customer Needs
Showing the reduction in costs is one way of convincing to stakeholders to proceed with the change. Another, arguably even more appealing, is demonstrating how the project fulfills the needs of the customers. Finding the right market fit is paramount and something no corporate innovation initiative should do without.
Let’s continue with our example and consider how optimizing an accounting system to save the employees time ties into the business model and ultimately benefits the customer as well.
Secure the Necessary Human Resources
Finding the right team to help you get the job done may sound pretty vague, but the idea and the team are often the only things you’ve got to work with in the initial stages. That’s why you need to make it count.
So how do you hire for innovation?
Find talent within the company
Many big enterprises know that fostering innovative company culture pays off and they invest in ongoing internal R&D projects, as well as their own innovation labs or corporate accelerators.
A famous example of that could be Google and their 20% Project, where company employees were allocated twenty-percent of their paid work time to pursue personal projects. The objective of the program was to inspire innovation in participating employees and ultimately increase company potential.
Most big brands are starting their NFT engagements with auctions that raise funds for various causes. Other companies such as Coke and Gucci have also organized NFT auctions for social impact. Coke’s series of four NFTs were sold as a single asset with proceeds benefiting Special Olympics International. Gucci sold a four-minute-long video clip, inspired by its creative director Alessandro Michele’s recent runway presentation, as an NFT in June, with profits from the sale going to Unicef USA to support the nonprofit’s Covax initiative, which aims to increase global access to COVID-19 vaccines.
That said, not all big enterprises are as passionate about corporate innovation as Google and not all businesses have the necessary know-how and resources to get the job done. Not to mention they aren’t as nimble and experienced as specialized software development companies.
If you’re not working in a big tech company, where talent is flowing and managers aren’t willing to pull their employees from their duties, you may want to look into outsourcing a dedicated team.
According to Harvard Business Review, one of the most important reasons for the failure of digital transformation is organizational reasons such as corporate governance and culture. Since innovation sometimes involves replacing workers, internal teams can slow down the development process knowingly or unknowingly.
Building corporate innovation with help from the outside is a common practice and many big enterprises do that.
Working with software development companies has a few major advantages:
- They possess the necessary know-how and experience to build your solution the way you want it
- They have dedicated teams ready to focus on developing your project
- They are nimble and flexible in terms of adjusting to the shifting demands of the project
- Frequently they are more financially viable than building innovation teams in house
But there are a few caveats.
You pick a software development company with a verified track record in developing the kind of solution you’re looking for.
You should also make sure your company cultures align and that you care about the same things. You don’t want to end up working with companies that don’t share your fundamental business values.
Iterators, for example, builds a wide range of software solutions, including:
- AI/Machine Learning
- Big Data
- Recommender Systems
Interested in finding out more? Read our articles on 7 Big Data Technologies Essential for Optimizing Your Business, 4 Amazing Ways AI Personal Assistants Can Impact Your Business and more!
Already know what you’re looking for? Great, schedule a free consultation with Iterators today! We’d be happy to help you design and build your innovative product!
3. Run a Proof of Concept
Proof of concept (also known as pilot) is an inseparable part of developing corporate innovation. Successful proof of concept serves the primary purpose of determining how a specific software solution fulfills the needs of your initiative.
That’s why you should invest time and effort to conduct a thorough proof of concept, working backwards from business results and data driven approaches.
So how do you do it?
Here are the steps we distinguished for running a successful software pilot.
Understand the problem
At the initial phase, it’s important to show the customer that the product you are developing is going to do what it was designed to. It’s also crucial to demonstrate that the product will integrate with the customer’s current system environment and interact with all of its elements.
Establish partnership & metrics for success
It’s essential to start the pilot after making introductions between all the parties that are relevant in the process. Such meetings should serve the purpose of generating a clear picture of what criteria should be used for evaluating the project’s progress and success. Make sure you’re including the legal and security teams, as they may anticipate and effectively mitigate the risk of difficult scenarios stemming from ambiguous or vague contracts.
Pro Tip: An important thing to remember is to loop your IT team early. Their expertise should be helpful during the choice of vendor and creation of implementation plan.
Implement and Manage
During this phase, you should see how easy the solution is to set up and how much management the product requires. You should pay attention to things like:
- Does it need frequent maintenance or supervision?
- How much workforce and resources are needed for the products to function?
- Will the product raise organizational expenses and if so, how much?
Verify Product Performance
At this stage, you should evaluate and document the impact of the solution on system performance and user experience.
Be sure there will be unexpected issues arising during the implementation process and the initial performance stage. You need to be prepared to face them head-on to protect the timeline of the project.
Track Goals and Document Everything
Monitoring the progress and making sure you’re documenting all the steps is absolutely crucial. You want to have as much data regarding your project as you can. That includes recordings of demos, setup documentation, steps you took to get to specific stages.
They will come in handy once you move forward with the solution.
Compliance Techniques – Raise Your Chances in the Negotiation Process
Getting funds and approval for any corporate innovation initiative is intertwined with pitch meetings. During those, you’re going to have to present your idea and how you’re planning on executing it.
Here is when the knowledge of compliance techniques comes particularly handy.
What are the compliance techniques?
Compliance techniques are methods of convincing or persuading someone to alter their behavior as a direct result of a request or direction of another person.
Which is exactly what you need to do when you’re pitching your idea to the executives.
The success or failure of your pitch will rely on your strategy and, of course, the idea itself.
But there are many ways you can present the idea and increase the chances of executives greenlighting your initiative. Here are some of them.
Pro Tip: It’s worth noting that compliance differs from obedience. The latter is connected to being in a position of authority, whereas compliance doesn’t rely on being in a position of power or having authority over others.
The foot-in-the-door technique starts with a small request and then, upon receiving a “yes”, making a bigger request, which is the one you’re actually trying to get past the executives.
The way this works is you’re trying to get an initial say-so, before presenting the real offer, so you’re really looking to get the proverbial foot-in-the-door.
This technique can be effective because of the human tendency to decide future behavior based on the perception of our own actions. The initial agreement that comes relatively easy paves the way for the bigger request that is harder to refuse because we’re inclined to stay consistent with our previous action.
Of course, there are caveats. The bigger the differential between the gravity of both requests, the bigger the chance of refusal – if you ask someone to marry you after they agree to go on a date with you, chances are you’re getting shut down.
But let’s analyze this in a more corporate-innovation-oriented scenario.
You have a meeting with corporate executives about the implementation of an AI-based technology that could potentially disrupt the whole business model.
You don’t pitch the innovation of the business model straight away, because a change of this magnitude is too drastic.
Instead, you’re pitching innovation of one section of your business, to demonstrate how beneficial it could be for the entire enterprise.
Door-in-the-face is another classic sequential technique, which is basically the reverse of the aforementioned foot-in-the-door technique.
Instead of starting off with a small request, you’re starting with an unreasonably large request.
The strategy here may be a little counter-intuitive or borderline risky because you’re trying to get someone to refuse the first demand. The intended demand comes right after the big one, looking like a reasonable compromise.
The way this works from a psychological standpoint is it plays with our sense of guilt. Declining someone’s request may leave the subject of the proposal feeling guilty for not “helping” out the other person. Then, when the second request comes, the subject may feel inclined to redeem themselves for refusing the first request and therefore granting us fulfillment of the second one.
Another rationale behind this technique states that the refusal of the first demand may tarnish the reputation of the person in question. People don’t want to come off as uncharitable or uncooperative.
Similar to the foot-in-the-door method, the low-balling technique starts with a reasonable request that is intended to get a “yes”. Upon receiving such, the requestee proposes minor changes and tweaks to the conditions of the deal, to get themselves closer to the intended goal.
The key here is to get the subject of the proposal to commit to a minor goal and then raising the terms or stakes of that commitment.
While this method is often considered unethical, it is fairly common and can be pretty effective as well.
Low-balling relies on our need to maintain the reputation that we believe we hold amongst our peers. Declining to a bigger request, having agreed to the smaller one, can be seen as erratic or unreliable, and so the subject may be inclined to agree to the secondary changes.
Norm of Reciprocity
This compliance technique is based around the natural need to repay altruistic gestures directed towards us. It is something that we tend to both commit to ourselves and expect from others.
One known example of using the norm of reciprocity to get what you want could be the so-called “favor”. Offering to do someone a favor, even though it might not be needed or expected, can put you in the position of being able to ask for something in return.
Bottom line here is people are more likely to comply if they know that someone has already done something for them. And that’s simply because most people have been brought up in a social environment that conditions them to believe that acts of “kindness” need to be repaid.
Funding and developing corporate innovation can be a rewarding process that enables new solutions to change the way we work for the better. It does, however, require a lot of pre-planning, a vision and a dedicated team of experienced professionals.
Without those things, your initiative is bound to share the fate of many corporate innovation flops that we’ve seen throughout the years. Companies naturally fear failure when it comes to innovation.But there is no need to be wary. Outsourcing innovation is an optimal strategy and helps companies constantly improve their business processes.
But if there is one key takeaway regarding the funding of corporate innovation, it should be this: it’s not about how much money you put into the project – it’s about putting the right kind of money into the right kind of project.
Thank you for reading! I hope you enjoyed the article. Now, let’s start the discussion.
1. How many of your business processes could be optimized?
2. What are some of the major obstacles you encountered when fundraising for innovation?
3. How has digital transformation influenced your business?
We’d love to hear from you! Let us know if you have any questions or observations regarding the topic of data cleaning! Leave us a comment and we’ll be happy to respond. 🙂