You might have heard about “innovation” or “venture” or “growth” boards and wondered what are they about.
In simplest terms, they are special-purpose governing bodies with mandate to invest into innovative projects and ventures that are expected to contribute to the organisation’s revenue and margin growth.
Hence, why they are sometimes called different names.
Expected benefits from having such a board are:
- Faster decision making.
- More efficient resource allocation.
- Aligned innovation efforts.
- More satisfied innovators.
- Better use of internal innovation capabilities.
- Better ROI compared to traditional innovation management approaches (e.g. smashing hits like “the loudest guy gets the budget” and “everybody is at a standoff so the fastest way to innovate is by hiring an external agency”).
None of the above manifest if the board acts as a committee.
Does that sound interesting? If yes, here are the basic ingredients for a venture board that stands a chance.
Inputs for establishing a Venture Board
- Investment mandate. What is the case for innovation in your organisation? Not fluffy, PR piece, but hard expectations like “30% of our revenue should come from products and services introduced in the last five years.” What investment & innovation vehicles are acceptable? What innovation types? Freedoms? When does the innovation board have to escalate? And so on.
- Budget. How much is to be invested and over what period of time? Is it sizeable enough, relative to the organisation? 100 million Euros might be a good number for some, but won’t matter much for a multi-billion organisation.
- Decision making power. One of the key jobs of this board is to make yes or no decisions. Domain experts and talented interns make for fine guests, but if the board is to deliver on their mandate, core members must be from top management ranks. A well respected member with gravitas and critical thinking facilities is better than an innovation fan.
Above make for the very basics. Without them, you risk burning cash.
Operating a Venture Board
Depending on what led to the creation of the board, some of the initial tasks might include:
- Formulating an innovation strategy. Should be complementary to the corporate and business strategy. Should breakdown and clarify how innovation will contribute to overall goals. Should specify what kind of investments are acceptable and what aren’t. The last point is to ensure that collected ideas can be filtered efficiently.
- Establishing an innovation portfolio. Define different portfolio views (e.g. type of innovation versus project maturity, type of innovation versus risk adjusted return, and so on).
- Founding a core innovation management team. Since the board will mostly consist of executives, it is worth appointing an operational innovation manager who takes care of minute details, organises necessary workshops and discussions, ensures the numbers and information are up to date, and so on.
- Issuing a call for ideas and projects to invest in. Once the Innovation Board has clarified the above, they shouldn’t assume employees will be aware of them. Hence, it is worthwhile communicating it in plain language: this is the type of projects we are looking for, this is the type of funding and support we provide, this is how you can apply, and this is what you can expect to happen once you apply.
With that in place, the board should meet on a regular cadence. Again, the main job of the board is to fund innovative projects that are aligned with the strategy. They should regularly review the portfolio, and adjust as necessary. One of the key success factors is to release limited funding.
The board should consider the following questions when evaluating an innovation project:
- What’s the maturity level of this idea?
- What has the team told us they will do?
- What did they do?
- What were the results?
- What were the learnings?
- What is the team proposing to do next?
- What are they asking for to do that?
- What are data and insight are they basing their proposal on?
When convening innovation teams and projects, the board should strive to avoid the following mistakes:
- Not taking a deliberate decision.
- Not documenting taken decisions.
- Inconsistent scheduling and cadence.
- Inconsistent structure and timing.
- Running it as a status meeting.
- Running it as a brainstorming session.
- Running it as a pitching competition.
- Asking ill-suited questions.
- Handing out minute tasks.
- Framing it as “us” versus “them.”
- Failing to create a transparent and collaborative space.
And most importantly: the Venture Board should adjust the strategy, portfolio, and themselves, based on the market response. It is a dynamic governing body, not a static one.
- How to run effective corporate venture boards. The most important function for maximising your returns on innovation investments.
- The 9 Mistakes Venture Boards Make.
- How to formulate a winning innovation strategy. A practical framework you can immediately use to formulate your innovation strategy.
- Create your own innovation portfolio in three simple steps. Disciplined innovation management at scale.
- Innovation Accounting book.
Since every organization is different, it stands to reason their Venture Boards would be different as well.
The above advice is based on my experience working with companies in different industries. I attempted to generalize it as much as possible, and leave it up to you to adjust as needed.
It should be sufficient to plan and launch your first Venture Board. Feel free to reach out should you have any questions or require further help.
A version of this article has originally been published at pesec.no.