Corporate Innovation Insights

Six Corporate Practices Killing Innovative Business Ideas

By October 25, 2023February 7th, 2024No Comments

Thousands of ideas for innovative solutions are generated every month in large corporations. They stem from discussion meetings, active brainstorming, idea contests, intrapreneurship programs, or trend scouting. However, only a few of them are actually validated and only a handful make it to an actual market launch. Why is that? Here are six corporate practices I have experienced in the last 5 years as an innovation consultant that prevent innovation from reaching later stages. I also share suggestions on how to change the system, but “Hey!”, let’s discuss together in the comments.

1) Killing ideas prior to validation

Based on my experience +70% of ideas are killed based on somebody reading and evaluating an idea one-pager (your company is different? Excited to hear from you in the comments!). Most of the time, rejecting ideas does not happen due to the poor quality of the idea, but to reach an artificial maximum number of selected ideas for a further phase (boot camp, incubation/intrapreneurship program, collaboration with startups).

Suggestion: Don’t cut down ideas too early. Take as many as possible into a few weeks’ validation phase (basic research, numbers crunching – see my last article on cheap testing of ideas). For example, in an intrapreneurship program, instead of reducing 100 ideas to 5 teams, involve 30 single “idea sponsors” in a swift 1-2 week validation process. Cut ideas based on validated facts after that!

2) Developing business ideas misaligned with strategic priorities

Many ideas that enter an early validation phase lack alignment with the company’s strategic goals, leading to rejection in later management gates. Teams working on misaligned ideas also find it very difficult to onboard internal sponsors supporting the project beyond an early phase.

Suggestion: Ensure that all ideas entering a validation phase align with high-level strategic priorities (strategic goals and/or defined innovation areas). As a team, use alignment with the strategy in your presentations to convince key stakeholders.

3) Evaluating early business ideas like standard projects

New business models are based on many assumptions that still need to be tested. Often there is no clear project plan or financial forecast for more than 6-12 months. While this is a normal characteristic for early-stage ideas, often management judges those ideas with the same criteria as standard projects. Consequently, many ideas are turned down before a later stage.

Suggestion: In evaluating ideas for new business models, use criteria that emphasize potential rather than proof of success. Additionally, bring in external people who are used to deciding on novel concepts to guide the discussions.

4) Staffing fully utilized employees on the idea development

Companies often expect already fully engaged employees to contribute to new innovation efforts. While they might be fully on board for a few months (e.g. an intrapreneurship program), in the long run, this staffing practice results in delayed implementation or stopping of projects due to resource scarcity.

Suggestion: Plan business development for the long run. Hire dedicated resources for innovation projects to take the burden off core business employees. Let them take over the development of new business models after an initial validation phase with only low involvement of core business employees.

5) Forming teams without validation experts

Corporate teams validating new ideas often lack experience with professional validation methods and tools. Thus, when presenting early-stage ideas to management they base their information mostly on internal discussions. When management asks “why” questions about different aspects (e.g. competitive edge, business case, market demand), teams often can’t explain their rationale and lose support.

Suggestion: Bring in experts for validation methods and upskill employees on validation practices and results presentation. Promote external exploration by encouraging employees to collaborate with market experts or directly engage with customers. Insights from external validation offer more compelling arguments to advance an idea to the next stage.

6) Keeping 100% of the equity to the company

Corporations expect employees to invest time and effort in the development of new business models without offering a share in the potential upside. This often leads to the frustration of employees and a slow death of projects after a few quarters.

Suggestion: Explore ways to involve employees through equity, revenue sharing, or milestone-based bonuses in the new business model’s success. This ensures long-term commitment and advancement of new business models until the launch.

What other practices do you see in your organization that prevent innovation success? Do you agree with the 6 practices presented? Can you share any learnings?

Let’s discuss how to bring new business model development in corporates from an early validation stage to a successfully applied practice.

Michael Wlaschitz

Michael Wlaschitz

Head of Venture Design @Pioneers