Note: This is part of a series of posts explaining the individual parts of The Innovation Matrix. See this post for a description of the full model and what can be done with it.
Stars (at Risk)
However, there are some firms that are awfully good at executing new ideas and getting them to spread who don’t have huge levels of Innovation Commitment. This is a pretty interesting category. They are innovation stars, but the big question is whether or not that success is sustainable. I call them Stars (at Risk).
This is an interesting category because in some ways, this seems like the best place to be. Your innovation outcomes are excellent – that’s why you’re a star. But your investment is smaller than that of the World Class Innovators. This is because the Innovation Commitment for Stars (at Risk) is lower. Typically, this shows up by having fewer resources invested in innovation – less employee time earmarked for it, lower R&D spend, etc.
The same results for less investment has to be good, right?
Well, not necessarily. The issue with firms in this category is that because their innovation commitment is lower, their success is at risk. The tricky balancing act here is figuring out how much investment in innovation is enough. The fact of the matter is that if you want to make your innovation success a consistent, repeatable process, then it requires commitment.
The kinds of firms that end up in this category are often rising stars. They may have just made the transition from being a startup to being an established firm. Startups usually begin life as Accidental Innovators. As they cross the chasm into serving mainstream markets, they must add management capability and processes in a number of areas. One of these is innovation. As they do this, some make the transition from Accidental Innovator up to Stars (at Risk) by using this increase in structure to really start cranking out innovation.
Facebook a few years ago is probably a pretty good example of a firm in this category.
The other route to here would be an established firm that is a Fit for Purpose innovator who gets better at idea execution. I have a harder time coming up with examples here, because this is a much harder route to take. Once you are an established firm, with routines and processes in place, it is hard to make this jump in Innovation Competence without either changing your processes or increasing your Innovation Commitment.
The critical issue for Stars (at Risk) is balance. They are innovating very well – that’s why they are stars. Adding more structure through increasing Innovation Commitment can be risky, because the threat is that doing this will introduce bureaucracy, which might actually reduce innovation outputs.
Here are some steps to take for firms in this category:
- Assess why you are successful: it’s likely that there is still an element of randomness to the success that firms in this category are seeing. Consequently, it is important to try to understand what is working so well. Try to figure out what works, and what it is that is driving your current innovation success.
- Identify ways to increase your Innovation Commitment: once you have a better understanding of why you are currently successful, the next step is to increase your Innovation Commitment in a way that supports your current strengths, eradicates current weaknesses, or both. It may be the case that there is limited top management involvement in innovation – particularly if you are a transitioning startup. Now would be a good time to increase that. Or to integrate innovation into your overall strategy. Or to increase the resources available for innovation by giving your people more time and opportunity to innovate.
- Figure out how to differentiate yourself through innovation: this ties in closely to the idea of integrating innovation with strategy. What is it that makes you distinctive? Now is the time to implement processes that will enable you to use innovation to emphasise this point of difference.
Overall, being a Star (at Risk) isn’t a bad place to be. After all, the level of innovation success is high, while investment is low. That seems like a great situation. The key issue is to work out how to make that success sustainable. Firms in this category have the opportunity to build a competitive advantage based on their innovation prowess. If they do this, then they’ll be a World Class Innovator.