Original posted on Medium.

As a CPO inside a fair sized organization with lots of moving parts and established governance around roles, jobs, expectations, etc, innovating new products was always a challenge. A good friend of mine pointed out the irony in existing businesses having existing marketshare in which to release new products, but don’t have the muscle to do so, versus wide eyed start ups with lots of innovation muscle not having marketshare in which to sell to. The piece that startups don’t have and is by nature what makes them a start up, is the ‘established governance around roles, jobs, expectations, etc.’. A start up lives in the world of testing hypothesis, pivoting, reworking, scrambling until they get momentum and then require governance to be setup to help scale. Established businesses have to deal with existing customers, existing products, existing brand equity, people who do specific jobs in specific ways all of which make the work of ‘innovation’ a competing priority.

I define product, in part, as the execution of an idea, not the idea itself. Similarly, innovation is not the creation of ideas, but rather the testing of the execution around the idea. Innovation not only solves a problem or creates opportunity, it also addresses whether the way in which a problem is solved or an opportunity created is consumed, purchased and used. As a product leader who is solving problems day in and day out, managing priorities and understanding the root cause of problems is key. When an organization wants to innovate, there’s the technical implementation of a solution, but all the questions around consumption, purchasing, usage, access etc, (read marketing and sales) need to get answered as well. A new product brought to market simply raises too many questions around product, sales and marketing simultaneously that most established organizations simply can’t handle finding answers using existing governance.

As an example of how established governance in a business creates friction for innovation, when I was looking to create and package a net new product offering that combined existing technologies and products my first instinct was to test market appetite for the new offering. I had created a simple prototype which demonstrated capabilities and asked both sales and marketing to dedicate some time to speaking about the new product to our clients so that we could get some feedback. One of the first questions sales asked me, was how do they quote it if someone wanted pricing? They asked if we had a contract we could share that provided SLA’s. They asked what collateral we had from marketing etc. Most importantly they had quota to hit. Every minute trying to ‘sell’ something that didn’t have a SKU, contract or collateral were minutes not being spent hitting quota. Its hard to test, pivot, retest, etc when no one is having conversations and trying to sell.

So what is the solution? There is no magic bullet. First and foremost all organizations need to plan for innovation and include innovation as part of ‘what must get done’ instead of ‘nice to have’. The first step is simple acknowledgement that without innovation, the company will die at some point. Following that, based on the conversations I’ve had with senior executives around this topic, the appointment of a dedicated owner for innovation, whether its around a specific theme (Ex: AI) or more broadly seems to be common and makes sense. Following that, innovation needs resourcing across the spectrum of roles, and whether thats a few people doing many different roles or hiring specific people into specific roles, its all the same. The model here also means a hybrid approach to HR, where things like compensation packages might be different for sales working on ‘innovation’ versus sales working on established business. Reporting structures might also be hybrid, where sales reports to an existing VP sales but takes orders from the resource appointed as owning innovation. This is where, innovation requires people to work in, outside and through existing systems.

One other option exists, which is outsourcing innovation to companies who allocate resources to all the tasks discussed here and work on innovating products for a specific organization. In this model, a 3rd party staffs ‘innovation’ the same way a startup would approach it. Ideas would be researched with a prospective market, iterated upon, re-tested in the market until there is some consensus of value should a product be built. From there a small agile dev team would build mockups, prototypes which would then be used to attract pilot customers who derive some value from using the prototype in exchange for delivering feedback. From there, finding other pilot customers and using the feedback to find common ground that can be built on becomes critical. Using outbound muscle to understand marketing and messaging while product is being worked on alongside pilot customers requires dedicated resources doing that. Once some traction is established with both marketing and product use cases, sales resources get involved to see if success can be repeated. Using a 3rd party who can take this on in its entirety becomes extremely valuable as existing businesses can go about their business without making complex hybrid models for product development, marketing and sales.