How To Win Executive Support For Your Next Big Innovation Idea
Innovators think beyond the confines of today. They are able to see potential opportunities that are not obvious to others, and do not limit their thinking to the current moment. The challenge innovators face is "How" to take ideas and engage the executive in developing a shared vision and support for these initiatives.
The reality is that internal competition for funding for projects will remain highly competitive and innovators need to do a better job at positioning and selling themselves and their ideas to the company. In many ways, your innovation proposal is starting off behind other projects because:
there is no guarantee that there will be a successful outcome
while the opportunity may be large, these projects generally have a longer time horizon in terms of economic payback
they are still considered discretionary, where other projects may address real immediate critical needs for the organization
On the positive side, companies realize that innovation is core to their longer term success and remain very open and receptive to proposals and ideas that can show a significant impact on the future prospects of the organization. For innovators to secure executive engagement and support for their ideas, they should be considering the following when pitching internally:
1. Position innovation in a way that resonates with Executives
“Innovation is not an open license to do whatever you want”
In conversations with various CEO's we asked two questions, firstly what are you looking for from innovation, and secondly what are you not looking for.
To the first question, the answers all focussed on how innovation can help create long term value for shareholders. They recognised the role of innovation in developing new revenue sources, as well as improving and extending the life of current revenues sources. The common theme here is around value. When we position innovation, we need to do so in terms of what is the potential value to the organization of what we are looking to achieve. They understand the inherent risks risks associated with investment in innovation, but are prepared to look at this as a risk versus reward scenario.
In terms of what executives are not looking for, we can summarise this by sharing two statements. The first is that "innovation is not an open license to do what you want". The second is that "innovation is not a blank cheque". These two statements are somewhat self-explanatory, executives expect fiscal responsibility and accountability for any funding provided for innovation. The other aspect to this is how to minimise the upfront sunk costs in innovation projects. Executives prefer tranched funding models where the next stage funding is dependent on the successful completion of the prior step. Like most startup type ventures, if we can provide or disprove the concepts quickly at minimal cost, then the whole risk versus reward model looks much more attractive and more likely to get support.
2. Focus on the potential benefits, not simply the technology
Today's employees are strong followers and advocates of technology trends, especially the younger generation. While other companies may be getting onboard a technology trend, that rationale alone no longer makes the cut when deciding where to invest. One of the common mistakes when pitching innovation to executives is focussing too much on the technology and failing to articulate the potential opportunity and benefit to the company from the technology.
Executives have grown weary of big promises from technology. As an executive recently shared, they are no longer prepared to pursue these large technology projects where they spend millions of dollars upfront, take years to become operational and don't deliver on what was promised. Instead, they are looking to solutions that can provide a more immediate impact, and can better support their business needs. For most executives, there is a general awareness and technology literacy, and belief that they should be utilizing technology more in supporting their future business strategy. However, where they struggle is making the connection to how technology can be used to drive business success. This presents an opportunity for innovators that can help executives see a connection between their technology solution and the company's needs.
3. Get to know your leaders innovation mindset
Getting to know your leaders innovation mindset is one of the most important steps to building executive support as two managers can react differently when presented with an innovation proposal; what resonates for one may alienate another. The executive mindset when looking at innovation follows very similarly to a field of study called behavioural finance, where we use behavioural and cognitive psychology to help explain why individuals make decisions that may not always follow rationale convention.
Innovation decision making has very close parallels to investing, there is a potential return and a risk that needs to be considered in making an investment decision. We've defined two leader profiles here that represent the extremes: a risk seeking, big idea disruptor, and the highly conservative risk averse reluctant innovator. What becomes apparent is that in presenting an idea and pitch, you are likely to get very different responses. It's critical that you understand the mindset of your leader and structure your ideas and proposals to what will resonate .
One of the biggest drivers of behaviour is the individual's risk tolerance. To explain how risk tolerance impacts decisions, let's take an example of an innovation proposal with a potential return of $1,000,000 and a cost of $100,000. The chance of success is 10% and the chance of failure is 90%.
The rational manager might look at the weighted chance of success at $100,000 (10% of $1,000,000) and the chance of failure at $90,000 (90% of $100,000). Given $100,000 > $90,000 they would proceed with the project. The disruptive innovator follows a profile of a risk seeker and it likely drawn the potential $1,000,000 opportunity and would pursue the project. The reluctant innovator is risk averse,and under behavioural finance theory is loss averse, meaning that despite the significant upside potential they would not pursue the project because of the potential loss.
Risk profiles also influence other behaviours we see in managers relating to innovation. The more reluctant innovator requires greater certainty, and is hence drawn to incremental projects which have lower risk and greater chance of success. They will also require greater oversight of the projects, and are more likely to be sceptical of any claims or promises. Alternatively, the disruptive innovator will be attracted to the big idea that has the potential for disruptive change. They are looking for the 'home run' and legacy. These individuals are more likely to have come from an entrepreneurial type background and have greater exposure to innovation projects. They will act as a facilitator and enabler.
From Innovator to Entrepreneur
The reality is that it is no longer sufficient to simply be the ideas person and technical expert. You are effectively the manager of your own startup where you need to actively market your ideas, secure funding and manage your internal investor expectations and relationships, all while continually progressing your ideas forward in order to meet the next target date and milestone. As companies continue to evolve their internal process and models more towards that of an internal startup, the role of the innovator will also evolve closer to that of the entrepreneur.