Innovation labs - First, get your culture right!
Updated: Jun 25, 2021
I did recently a review of literature in corporate innovation management and I was surprised that most of the recent focus is on culture. An interesting fact in innovation lab, as compared to the rest of their companies, is that remuneration, retention and loyalty intention are perceived very low. Is there a link between disengagement and culture?
The innovation labs have two kinds of employees:
The project intrapreneurs who are maturing concepts/projects along the pipeline. Their goal is to make sure that their individual project secure some funding, survive key milestones and create value (sales, co-investment, exits...)
The innovation enablers who are managing programs and supporting intrapreneurs while building overall a strong portfolio of projects. Their goal is to make sure that their innovation lab spread risk among successful projects
Illustration: Jerry Maguire - the athlete (intrapreneur) and its agent (enabler)
From the project intrapreneurs point of view. After discussing with several project members in different companies, we observe that, at the beginning, maturing a concept can be a strong intrinsic motivation for an employee of a large corporation. The first success in securing funding, the visibility among corporate leaders, the new role and a bit of salary increase are convincing enough to bring the project to the next level and onboard the team members. This also the right time for a transition from an intrinsic to an extrinsic motivation lever. And here starts the difficult part, the project has to reach several milestones to survive and potential monetary reward are often late. In the field of deeptech, this can take two or three years to get to the first value inflexion point and this is quite rare, considering only 30% of projects get there. For the 70% remaining failing projects, the intrapreneurs will often move to a pool and reapply for jobs within the company.
From the innovation enablers point of view, when looking at exploration activities in innovation labs, we often observe a mix up of two mindsets and approaches. One mindset relates to incubator, being entrepreneurial, where each every concept that got selected should strive to make it to the next stage even if it needs to pivot 5 times, here usually the enabling teams are very supportive, resilient, with positive thinking, looking to give every opportunities the chance to move forward. The second mindset relates to investor, being more critical, looking at the weakness of each every concepts, putting them in competition, asking for precise data, writing detailed proposal where only the best one would get past the next stage. Those two mindsets and approaches, when combined are extremely powerful .... When separated, they put an innovation lab at risk. Finding the best combination is an art which possibly relates to culture. This could explain why there are so many articles on the topic of culture and innovation lab failure.
I hear sometime some enablers with investors mindset asking the intrapreneurs to "show the money" and prove their work deserve reward... Unfortunately intrapreneurs have only one way to get funding... this makes the power balance quite unfair... Not rewarding their potential and only their outcome is no different from the classical business unit, while the inherent risk is at higher rate. Maybe, changing this lack of incentive can «remove the punishment» for intrapreneurs as Prof. Gina O'Connor wrote in a recent article?
Getting the incubator and the investor at the same time is potentially the most successful aspect of an innovation lab enablers, wile transitioning from intrinsic to extrinsic motivation lever is a strong way to keep intrapreneurs engaged.