The Innovation Stack: How to make innovation programs deliver more than coffee cups

Is your organization full of Hackathons, Shark Tanks, Incubators and other innovation programs, but none have changed the trajectory of your company/agency?

Over the last few years Pete Newell and I have helped build innovation programs inside large companies, across the U.S. federal science agencies and in the Department of Defense and Intelligence Community. But it is only recently that we realized why some programs succeed and others are failing.

After doing deep dives in multiple organizations we now understand why individual innovators are frustrated, and why entrepreneurial success requires heroics. We also can explain why innovation activities have generated innovation theater, but few deliverables. And we can explain why innovation in large organizations looks nothing like startups. Most importantly we now have a better idea of how to build innovation programs that will deliver products and services, not just demos.

It starts by understanding the “Innovation Stack” – the hierarchy of innovation efforts that have emerged in large organizations. The stack consists of: Individual Innovation, Innovation Tools and Activities, Team-based Innovation and Operational Innovation.

Individual Innovation
The pursuit of innovation inside large companies/agencies is not a 21st-century invention. Ever since companies existed, there have been passionate individuals who saw that something new, unplanned and unscheduled was possible. And pushing against the status quo of existing process, procedure and plan, they went about building a demo/prototype, and through heroic efforts succeeded in getting a new innovation over the goal line – by shipping/deploying a new innovation.

We describe their efforts as “heroic” because all the established procedures and processes in a large company are primarily designed to execute and support the current business model. From the point of view of someone managing an engineering, manufacturing or operations organization, new, unplanned and unscheduled innovations are a distraction and a drag on existing resources. (The best description I’ve heard is that, “Unfettered innovation is a denial of service attack on core capabilities.”) That’s because until now, we hadn’t levied any requirements, rigor or evidence on the innovator to understand what it would take to integrate, scale and deploy products/services.

Finally, most corporate/agency innovation processes funnel “innovations” into “demo days” or “shark tanks” where they face an approval/funding committee that decides which innovation ideas are worth pursuing. However, without any measurable milestones to show evidence of the evolution of what the team has learned about validity of the problem, customer needs, pivots, etc., the best presenter and flashiest demo usually win.

In some companies and government agencies, innovators even have informal groups, i.e. an Innovators Alliance, where they can exchange best practices and workarounds to the system. (Think of this as the innovator’s support group.) But these innovation activities are ad hoc, and the innovators lack authority, resources and formal process to make innovation programs an integral part of their departments or agencies.

Innovators vs. Entrepreneurs
There are two types of people who engage in large company/agency innovation: Innovators – those who invent new technology, product, service or processes; and Entrepreneurs – those who’ve figured out how to get innovation adopted and delivered through the existing company/agency procedures and processes. Although some individuals operate as both innovator and entrepreneur, any successful innovation program requires an individual or a team with at least these two skill sets. (More detail can be found here.)

Innovation Tools and Activities
Over the last decade, innovators have realized that they needed tools and activities different from traditional project management tools used for new versions of existing products/customers.They have passionately embraced innovation tools and activities that for the first time help individual innovators figure out what to build, who to build it for and how to create effective prototypes and demos.

Some examples of innovation tools are Customer Development, Design Thinking, User-Centric Design, Business Model Canvas, Storytelling, etc. Companies/agencies have also co-opted innovation activities developed for startups such as Hackathons, Incubators, internal Kickstarters, as well as Open Innovation programs and Maker Spaces that give individual innovators a physical space and dedicated time to build prototypes and demos. In addition, companies and agencies have set up Innovation Outposts (most often located in Silicon Valley) to be closer to relevant technology and then to invest, partner or buy.

These activities make sense in a startup ecosystem (where 100% of the company is focused on innovation,) however they generate disappointing results inside companies/agencies (when 98% of the organization is focused on executing the existing business/mission model.) While these tools and activities educated innovators and generated demos and prototypes, they lacked an end-to-end process that focused on delivery/deployment. So it should be no surprise that very few contributed to the company’s top or bottom line (or an agency’s mission).

One of the ironies of the tools/activities groups is rather than talking about the results of using the tools – i.e. the ability to rapidly deliver new products/services that are wanted and needed – their passion has them evangelizing the features of the tools and activities. This means that senior leadership has pigeonholed most of these groups as extensions of corporate training departments and skeptics view this as the “latest fad.”

Team-based Innovation
Rather than just teaching innovators how to use new tools or having them build demos, we recognized that there was a need for a process that taught all the components of a business/mission model (who are the customers, what product/service solves their problem, how do we get it to them, support it, etc.) The next step in entrepreneurial education was to teach teams a formal innovation process for how to gather evidence that lets them test if their idea is feasible, desirable and viable. Examples of team-based innovation programs are the National Science Foundation Innovation Corps (I-Corps @ NSF), for the Intelligence Community I‑Corps@ NSA, and for the Department of Defense, Hacking for Defense (H4D).

In contrast to single-purpose activities like Incubators, Hackathons, Kickstarters, etc., these curricula teach what it takes to turn an idea into a deliverable product/service by using the scientific method of hypothesis testing and experimentation outside the building. This process emphasizes rapid learning cycles with speed, urgency, accepting failure as learning, and innovation metrics.

Teams talk to 100+ beneficiaries and stakeholders while building minimal viable products to maximize learning and discovery. They leave the program with a deep understanding of all the obstacles and resources needed to deliver/deploy a product.

The good news – I-Corps, Hacking for Defense and other innovation programs that focus on training single teams have raised the innovation bar. These programs have taught thousands of teams of federally funded scientists as well as innovators in corporations, the Department of Defense and intelligence community. However, over time we’ve seen teams that completed these programs run into scaling challenges. Even with great evidence-based minimal viable products (prototypes), teams struggled to get these innovations deployed at scale and in the field. Or a team that achieved product-market fit building a non-standard architecture could find no way to maintain it at scale within the parent organization.

Upon reflection we identified two root causes. The first is a lack of connection between innovation teams and their parent organization. Teams form/and are taught outside of their parent organization because innovation is disconnected from other activities. This meant that when teams went back to their home organization, they found that execution of existing priorities took precedence. They returned speaking a foreign language (What’s a pivot? Minimum viable what?) to their colleagues and bosses who are rewarded on execution-based metrics. Further, as budgets are planned out years in advance, their organization had no slack for “good ideas.” As a result, there was no way to finish and deploy whatever innovative prototypes the innovators had developed – even ones that have been validated.

The second root cause emerged because neither the innovator’s teams nor their organizations had the mandate, budget or people to build an end-to-end innovation pipeline process, one that started with innovation sourcing funnel (both internal and external sources) all the way to integrating their prototypes into mainstream engineering production. (see below and this HBR article on the innovation pipeline.)

Operational Innovation
As organizations have moved from – individual innovators working alone, to adopting innovation tools and activities, to teaching teams about evidence-based innovation – our most important realization has been this: Having skills/tools and activities are critical building blocks but by themselves are insufficient to build a program that delivers results that matter to leadership.  It’s only when senior leaders see how an innovation process can deliver stuff that matters – at speed—that they take action to change the processes and procedures that get in the way.

We believe that the next big step is to get teams and leaders to think about the innovation process from end-to-end – that is to visualize the entire flow of how and from where an idea is generated (the source) all the way to deployment (how it gets into users’ hands). So, we’ve drawn a canonical innovation pipeline. (The HBR article here describes it in detail.) For context, in the figure below, the I-Corps program described earlier is the box labeled “Solution Exploration/Hypotheses Testing.” We’ve surrounded that process with all the parts necessary to build and deliver products and services at speed and at scale.

Second, we’ve realized that while individual initiatives won “awards,” and Incubators and Hackathons got coffee cups and posters, senior leadership sat up and took notice when operating groups transformed how they work in the service of a critical product or mission. When teams in operating groups adopted the innovation pipeline, it made an immediate impact on delivering products/services at speed.

An operating group can be a corporate profit and loss center or anything that affects revenue, profit, users, market share, etc. In a government agency it can be something that allows a group to execute mission more effectively or in a new disruptive way. Operating groups have visibility, credibility and most importantly direct relevance to mission.

Where are these groups? In every large company or agency there are groups solving operational problems that realize “they can’t go on like this” and/or “we need to do a lot more stuff” and/or “something changed, and we rapidly need to find new ways to do business.” These groups are ready to try something new. Most importantly we learned that “the something new” is emphatically not more tools or activities (design thinking, user-centric design, storytelling, hackathons, incubators, etc.) Because these groups want an end-to-end solution, the innovation pipeline resonates with the “do’ers” who lead these groups.

(One example of moving up the Innovation Stack is that the NSA I-Corps team has recently shifted their focus from working with individual teams to helping organizations deploy the methodology at scale.  In true lean startup fashion, they are actively testing a number of approaches with a variety of internal organizations ranging in size from 40 to 1000+ people.)

However, without a mandate for actually delivering innovation from senior leadership, scaling innovation across the company/agency means finding one group at a time – until you reach a tipping point of recognition. That’s when leadership starts to pay attention. Our experience to date is that 25- to 150-person groups run by internal entrepreneurs with budget and authority to solve critical problems are the right place to start to implement this. Finding these people in large companies/agencies is a repeatable process. It requires patient and persistent customer discovery inside your company/agency to find these groups and deeply understand their pains/gains and jobs to be done.

Lessons Learned

  • Companies/agencies have adapted and adopted startup innovation tools
    • Lean, Design Thinking, User-centric Design, Business Model Canvas, etc.
  • As well as startup activities and team-based innovation 
    • Hackathons, Incubators, Kickstarters, I-Corps, FastWorks, etc.
  • Because they are disconnected from the mainstream business/mission model very few have been able to scale past a demo/prototype
  • Use the Innovation Stack and start working directly with operating groups
    • Find those who realize “they can’t go on like this” and/or “we need to do a lot more stuff” and/or “something changed, and we rapidly need to find new ways to do business”
  • You’ll deliver stuff that matters instead of coffee cups

14 Responses

  1. Steve,

    Could not agree more! I ran an innovation team at a large UK bank for 2 years and witnessed all that you spoke about. I now am helping companies to look end to end to build better “innovation machines”. Only when we increase the throughput and the actual delivery of projects will the innovation function get full Exec buy-in and achieve credibility as you mentioned,

    Thanks for the posts, always enjoy your pragmatic approach to innovation!

  2. I know what I will be studying this weekend. Thanks for sharing Steve, and I hope (fingers-crossed) this is the start of a book 🙂

    • Couldn’t wait until the weekend 🙂 There may be a minor typo in the paragraph before “Operational Innovation” – “one that started with innovation an sourcing funnel,” Should that be “one that started with innovation in the sourcing funnel” or something similar?

      I also wonder if the last section could/should be “Operational Innovation and Leadership” or do you plan on discussing leadership of innovation further in another post? You do mention the importance of leadership recognition of operational innovation.

      • 1. clarified the funnel sentence – thanks
        2. i have another post about the role of leadership I’ve been thinking though. A few key ideas:
        – leadership operates not in vacuum but with explicit guidance from above (board of directors, secretary of defense, etc.)
        – they have guidance for execution but not innovation
        – in a perfect world they would get innovation guidance. it might be something like:
        * Replace capabilities that are lost to attrition (old technology, products, tradecraft, etc.)
        * Create new capabilities that get us ahead of competitors/adversaries
        * Create new processes to do more faster
        * Create a way to rapidly reconfigure and standup new organizations as new threats and tech emerge
        * Create innovation processes, procedures and the organization to do so with authority over budget, process and people
        More in the next post.

  3. I do wonder if the results are different for private vs. public companies. Public companies are so focused on quarter to quarter financial results that they may be less inclined to take “risk” than private companies.

  4. Hey Mr. Blank,
    Thanks once again for sharing what you have learned in your innovation travels. You are once again helping the community immeasurably. I have experienced all that you describe above, as I’m sure other corporate innovators have, and I appreciate you organizing the “stacks” in such a simple an coherent manner. It makes me feel less like an outlier. For people just beginning, the innovation pipeline / stack Steve mentions represents the stages you will experience in varying degrees on your own journey. Thanks again Steve for making the path a bit more clear…

  5. Excellent article! Now that you said it, we can quote you saying this!

    I would like to add that in my humble opinion, the problem you are describing, is a set of symptoms caused by pushing innovation practices into an organization instead of making the organization pull them.

    It’s the same thing that is happening with Agile transformations in a lot of XX century management organizations.

    A lot of innovators and early adopters are smuggling practices from organizations and teams that were designed to play the game of discover value faster, not to play the game of deliver what we planned last summer.

    Instead of first smuggling and then training a lot of people in practices that have an impedance with the current mode of operation, or vector of optimization of the system, organizations should start changing top down the game, causing the change, by pulling the change.

    How do you do that?

    In order to pull innovation instead of pushing it, you need to have a top level goal of increasing the revenue share of new business models or new products and services, untill someday you can can have something like a top level goal that dictates that 20% of the total revenue from the organisation should be coming from products and services that are less than 3 years olds.

    This creates a never ending game of continuous innovation.

    This goal will create the internal “forces” that will pull the end to end pipeline that you describe, without going the heat of trying to push practices into a player that don’t want to play the new game.

    Do you think that make sense?


  6. Great article, thanks a lot for sharing. Surprising was your definition of innovators = people who invent things. I would call them inventors. And this is actually (and in the literature) the difference between invention and innovation. Invention is turning money into ideas, innovation is turning ideas into money. So for me the difference is between inventors and innovators, with innovators being very close to your definition of entrepreneurs. Not sure if this makes any sense …

  7. Excellent article reflecting m experience of running Concept Development & Experimentation projects in the Swedish Armed Forces. We got to the level of having an innovation lab close to the business while running an MODAF-based enterprise architecture project in parallell. The aim was to swicth from a documents-based approach to a model-based approch to know our own business enough to became a smart customer when devleoping acqusition data for official government procurement.

    Also had some issues with innovation = invention. To me innovation is to combine existing things in new ways thus focusing on the ”glue” rather than inventing the building blocks. In a software-driven world reuse of existing frameworka and whole platforms is key to capaitalize of other´s inventions.

  8. HI,
    Very timely for a group that we recently met who are revisiting their internal innovation hub model.

    One question may be a bit picky. Should “Innovators vs. Entrepreneurs” be “Inventors vs. Entrepreneurs”? I have tried to distinguish the innovator as being someone who gets the invention into practice. They may be an entrepreneur depending on the route they follow.

  9. Innovators are the real game changer in a company whatever the size it is. “Just because something works doesn’t mean it can’t be improved.” If you have these kind of people in your office, then expect a huge leap in your business in no time.

  10. Innovators are the real game changer in a company. Whatever the size of your business, if you have these kind of people then expect a huge leap for your business. “Just because something works doesn’t mean it can’t be improved.”

  11. Maybe the distinction is that inventors can create something that interests them but tit doesn’t need to be practical, desirable to others or particularly novel, while innovation is novel and has a broader application.

    My brother invented the mustard sandwich (no joke, it was 4 layers of bread with mustard in between), but I wouldn’t call it innovation. If he had been in the forefront of molecular gastronomy and changed the state of the bread or mustard, that would have been innovation.

    I agree that innovators can be game changers in a company, but if the company doesn’t want the innovation, it may not matter. They can be game changers in the industry.

    Steve makes the point that innovators don’t necessarily have the skills to find the product/market fit, partners, finances, and all the other parts of making an innovation come to life as a viable, scalable, profitable business – that’s the forte of the entrepreneur.

    Steve, great article. I’m looking forward to proposed blog about leadership!

  12. Awesome article, Steve. Thanks a lot for sharing with us.

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