Nine big don'ts of corporate innovation

Corporate innovation is often costly and marred with failures to meet the management expectation. But it doesn't have to be that way.

I've worked with hundreds of innovators and executives, and I noticed certain costly mistakes that happen again and again.

Watch the webinar recording below to learn more about nine specific issues with corporate innovation and hear pragmatic advice on how to deal with them.

You can find the recording, timestamps, summary, transcript, and license information below.

Based on your feedback, I've written an ebook that you can download here.

Webinar recording

Webinar timestamps

Webinar summary

The 9 Big Don’ts are nine recurring, costly mistakes that undermine corporate innovation in large enterprises. Innovation failures stem not from a lack of ideas but from systematic process errors that ignore the unique challenges of scale. Large corporations, with their multiple business units, competing initiatives, and complex structures, require disciplined, evidence-based approaches that differ fundamentally from startup methodologies. I argue that better decision-making processes can prevent the waste of significant resources.

The 9 Big Don’ts I cover in detail are:

1. Don’t invest in thoughts. Thoughts are unfinished concepts lacking the structure required for action. An idea must define its value proposition and target audience. Investing in thoughts leads to frustration and wasted resources.
2. Don’t waste time prioritising ideas. Complex prioritisation frameworks create delays and distraction. Use innovation strategy as a filter instead. If an idea aligns with strategic objectives and passes basic criteria, it warrants initial exploration without extensive ranking.
3. Don’t invest in orphan ideas. Ideas without a committed owner, team, or objective are orphans that rarely succeed. Execution depends on people’s passion and context, which are lost when ideas are merged or reassigned. Venture capitalists invest in teams first, ideas second; corporations should adopt the same principle.
4. Don’t invest too much, too early. Large initial investments create pressure to justify expenditure, often masking critical assumptions. Institute metered funding tied to specific learning objectives and market validation milestones. This prevents bloat and maintains focus on evidence gathering.
5. Don’t skip market development. The market development stage—exploration, validation, and audition—is essential for innovative offerings. Skipping it assumes market understanding that often proves incorrect. Even established brands must validate demand for new value propositions.
6. Don’t under-invest. Time is the primary early-stage investment. Allocating only 20% of an employee’s time on top of regular duties is unsustainable. Dedicated resources prevent burnout, enable proper validation, and signal serious commitment.
7. Don’t forget that size matters. Innovation opportunities must align with enterprise scale and ambition. A €40 million revenue stream may be transformative for a startup but insignificant for a €10 billion corporation. Simple calculations can quickly filter ideas that lack sufficient potential.
8. Don’t forget to capture and share learning. Innovation teams generate valuable insights that benefit the entire organisation. Document each experiment’s goal, method, data, interpretations, and resulting decisions. This creates reusable knowledge and immediate value through cross-pollination.
9. Don’t base decisions on sunk costs. The sunk cost fallacy leads organisations to continue funding failing projects based on past investment. Define clear stop criteria and decision points upfront. Past expenditure should never justify future spending.

Key takeaways I wish to highlight are:

• Innovation is a learning process. Treating innovation as a series of experiments reduces risk and improves outcomes. Evidence, not opinion, should drive decisions.
• Process beats creativity. Most failures result from process breakdowns, not a lack of ideas. Disciplined processes address the root causes of corporate innovation failures.
• Knowledge is immediate ROI. While financial returns may take years, reusable knowledge from innovation efforts can benefit the organisation immediately.
• Scale requires tailored approaches. Large enterprises must adapt processes to their size, complexity, and strategic objectives. Different types of innovation require different metrics.
• Discipline enables creativity. Clear guidelines and filters free teams to focus on execution rather than internal competition for resources.

One practical thing you can do today:

Implement a mandatory idea template requiring every proposal to answer two questions: what is the idea, and who is it for? This filter eliminates vague thoughts, forces clarity, and ensures resources are directed only toward actionable, well-defined ideas. Introduce this requirement in your next innovation review meeting.

Webinar transcript

Machine generated and cleaned up by hand, might contain errors.

Hello, welcome to Nine Big Don'ts of Corporate Innovation webinar.

My name is Bruno Pešec, and I help business leaders innovate profitably. I have over a decade of experience failing and succeeding with innovation in very diverse industries and with very diverse products, from regulation-defined freight trains to award-winning educational board games and everything in between, including battle systems, battle tanks, financial systems, everything, including the financial systems, hundreds of start-ups around the globe, and so on. Now, in that timespan, I got opportunity, and I had the good fortune of working with many talented and creative people, hundreds of innovators, hundreds of start-up founders, a lot of managers, a lot of executives. And what I started to notice over this time is there are some patterns.

There are some mistakes that keep happening again and again and again. And I just decided to sit down and write down all the simplest mistakes I could think of that I've observed repeatably in different industries, with different people, different professionals, and some simple solutions that, again, worked in different industries and with different products. Because people often say, "Hey, we are making certificates," or, "Hey, we are providing healthcare services," or, "Hey, we are in B2B," or, "We are working with government. This doesn't apply to us." So the nine things that I will share applies to everything, or at least has so far in my experience.

Now, you heard me say corporate innovation, and I just want to clarify what do I mean by these two terms, because I think that's important for you understanding the advice I'll be giving and how you can use it. So innovation, the definition I go with is something new that creates value. New doesn't have to be new in the history of mankind, but new to you, the creator, the innovator, and new to the market you're launching this in. And value is determined purely from the standpoint of the recipient. We usually say end customer, but in some cases, it might be someone downstream in your supply chain. So that is how I talk about innovation.

Now, this corporate part that I'm using, that's important one. So I'm calling it corporate innovation because the things I'll be sharing is pertaining mostly to large enterprises, to bigger companies that have multiple business units, that are competing in multiple marketplaces, and sometimes even multiple industries. The reason I'm specifically talking about corporate innovation is because such companies face different challenges than start-ups and SMEs and smaller companies that have a single product in a single industry in a single market. They face many different challenges and much more challenges because the bigger the organization is, the more initiative it has, which are continuously competing with each other internally for management attention and for resources.

Therefore, you need to be much more crueller and much more savvier at managing these initiatives versus smaller companies or companies that have highly focused efforts. And that is why you will often hear start-ups that turn into scale-ups and then grow very large, that they will be all about focus. Focus is very important. But if you are a large conglomerate, your focus is the conglomerate. Your focus isn't a single product in a single market. But enough about it.

So, as I said, this is a webinar. Make sure to use the functionality at hand. So at the bottom of your screen, you should see a chat box, you should see a Q&A box. So please drop in whatever you want, any questions that come to you, any comments that come to you, and I'll try to take them as we move on, and I'll definitely try to take them before we wrap up. So that is as it is. Now, back to why you're here.

So I want to start with number one. It's my favourite. So don't invest in thoughts. This is not semantics. There is difference between a thought and idea. Maybe there's no difference in your language, but I'm sure that you can find some meaningful difference even in your language. And even if you go into English dictionary, you might find that thought is defined like idea. That's perfectly fine. But here, again, we're in the world of corporate innovation. I had many cases when you're working on some issue, some new challenge, a new entrant in the market, and someone comes up with, "Hey, how about we do feature A, B, and C and launch with the price X?"

Okay, that's a thought. It's not an idea. I cannot immediately put 100 million euros behind that thought. When I present it like this, I'm sure that everybody is nodding their head or is like, "Yeah, this is pretty obvious." But then I invite you to think back to your brainstorming session or any team session that you had when you were trying to generate a large number of ideas to decide which one to move forward with. And I'm sure that in that process, you came up with a lot of thoughts. Now, you can say, "Well, that is part of brainstorming." Sure, of poor brainstorming. Good brainstorming is limited, constrained, and has some specific guidelines on what is supposed to be created.

Because if you end up with a bunch of thoughts, that means you have more work to do on them. Now, how do I differentiate between thought and idea, and how did I help different... Well, I don't want to say clients, but yes, clients and those that are not, and ask just for questions and to help out is, a thought is, by its nature, unfinished. It has a kernel A core of an idea. An idea has a clear what is it about and who is it for. At the very minimum, these two things. So when someone comes and proposes a thought, "Hey, how about we do A, B, and C?" You can ask back, "Okay, what is this actually about, and who is it for?" That is at the very minimum.

Different organizations implement it differently. Some have idea cards, like a small A6 index or index card where you can just write down what is it about, who is it for, what is the problem at hand, what is the need, et etcetera. Other companies like to have a bigger, kind of A4 type of thing where you describe an idea. My proposal is go as simple as possible, and make sure to call out thoughts versus ideas. Here is an example.

So one team, they were working with their whole division, so it was around 120 people, and they were coming up with a bunch of ideas they thought. So they collected them and started to look into what to do with them. And they quickly realized that they don't really understand a lot of these things. The reason they didn't understand them was they were not ideas. They were just unfinished thoughts, which is a by-product of brainstorming and similar generation activities, but is not the end product.

So eliminate thoughts, give a chance to those that propose to turn them into ideas, and that's it. Investing in thought prematurely instead of an idea is just a recipe for frustration, and it ties into my second big don't, and that is controversial one, but, I mean, that's why there are nine big don'ts, and that is don't waste time prioritizing ideas. You heard me right. Don't waste time prioritizing ideas.

That ties into my previous point where I said thought versus an idea. Usually, when team is facing either management group or innovation manager or a group who has been tasked to come up with a bunch of ideas to create the future of the organization, they will try to describe ideas and then find some criteria to rank them.

And usually, it turns into Excel monster with 12-plus criteria from profitability, nothing against that criteria, to feasibility, viability, laying out, okay, is this technically possible? What about this? What about competition? Are we better?

Ta, ta, ta, ta, ta.

This kind of analysis has its time and place, but not at this stage of most of the innovation journeys within large companies. If you're able to generate and write proper filters, then you can assume that whatever idea passes through them is worth your time.

That is borrowing from the Toyota Production System, from the flow system, thinking about flow. So you usually hear about push and pull. So push was referring when you were manufacturing, expecting demand, you were pushing it to the market, and pull was kind of saying, okay, market starts demand, that trickles into our supply system, that trickles into our manufacturing system, so we start manufacturing to that demand.

What people usually miss in this description is that pull is admission of failure. So pull is an intermediary solution. It's not push or pull. The ideal is flowing state, kind of like a river, where we're continuously flowing to meeting the demand. And I take the same logic to innovation pipelines, innovation management systems. So you don't want to be prioritizing.

You want to set up such clear guidelines that at the end of the day, when you put in the effort to generate ideas, that whatever ideas came out at the end of that process are worth of your time, at least for the initial stage, instead of trying to come up with 40 ideas and then spending another day, two week, month prioritizing them.

That's why I say don't waste time prioritizing ideas. Now, in the past, I have talked about how to formulate a great innovation strategy, and part of that was using innovation strategy as a filter, exactly for this type of filter. So when you're clear about what kind of business models you want to explore, what kind of business models you want to invest in, what kind of technologies you want to invest in, then it becomes much easier to use that as a filter and pushing that through and just, okay, this is what we ended up with.

Let's get to it. Now, big don't number three is don't invest in orphans. Orphan ideas, that is. Ideas by themselves are nearly useless. What you need to have is idea plus team plus objective. That turns and creates an innovation project that's investable. Just having a great idea, however you define great, by itself isn't that useful, because it's humans that execute on ideas. Again, this is something where you will be nodding your head. This is pretty obvious. We always do that.

But I cannot tell you how many times I've encountered large organizations that do have ideas that are promising, but then force, yes, I'm saying force, people to work on them. That's very weird, and it doesn't really work.

Psychologically, this is my advice if you're in a large enterprise. The person proposing an idea should be kept at the initial stage because they usually have the biggest and strongest drive to take this forward. What you absolutely should not do is if you're running some sort of idea generation, like you're collecting a lot of ideas that people are proposing, and then you, as a manager or management group, say, "Okay, these seven ideas are very similar. How about we merge them and put those people together and tell them, 'Go work on this idea because it's actually the same idea.'"

That never works out well. So why it doesn't work out well is because when people put that down, they really don't have all the information that they know and need to put it down, and that is what ends up confusing. So you just have a partial view of that idea, and that is-- Sorry, just a moment. I need to move a little bit because of the sun. Yes. It's sunny here in Oslo, so just adjusting. Returning for my main point.

So what I said, investing into orphans, you really need to have specific idea connected to specific person and then to specific team. And that has been seen in start-ups, entrepreneurship as well. Venture capitalists invest in teams primarily, not into ideas themselves. Ideas are basically secondary in this case.

Now, I'm talking a lot about investing. So let's say you have your ideas, you have them connected with proper people, talented people, and you have specific objectives. Then the next thing is fourth big don't, don't invest too much too early.

Again, this is something that's now becoming more and more present and more and more prominent in successful companies that are, well, companies that are successful innovating and managing their innovation funnels and pipelines, portfolios, et etcetera, is that they realize that, okay, there is an innovation budget, but it's distributed to initiatives in more like a trickle-down way.

So kind of if you have, let's say, a 100 million innovation budget, then you will not immediately release that to a single idea, but you will perhaps release €100,000 instead of whole 100 million or 10 million or even one million. And that is specifically tied to a specific learning objective in the end. So, investing too much usually leads to longer times and failure to deliver and bloat.

Because when it starts that way, a lot of assumptions that do exist will be pushed to the side, and it's basically the marketing machine that will start getting the most money. And I've seen, again, that happen again and again and again where it's, "Okay, this is the market that we're already in. Our engineers know what kind of product we need to make.

We just need to set up some marketing campaign that's a bit different and that will attract and convert well." And then three years later, which was a year over the actual planned time, the product flops. The better way to do it is to institute metered funding. And in a very simple terms, it's basically defining specific target learning goal together with market goal and assigning in advance specific amount of money to it. So let's say that you have 11 ideas, all of them aligned, all of them worth of your investment.

And then you might say, "Okay, first idea, you get €100,000, and you get two months to validate that there is a market need." And this is how we define a market need for your own specific case. So it needs to convert that and that many, that and that many letters of intent, that and that many signed contracts, whatever works for your industry and your specific product.

Tying again into fifth big don't, and that is don't let yourself and don't allow your teams to skip market development stage. Now, when I say market development, some of you might remember oldie but goldie from '60s, I believe, maybe even '50s, the product life cycle. So the product life cycle, the original conventional product life cycle, has four stages. So it has market development, market growth, market maturity, and market decline.

And the thing was, a lot of teams that I worked and seen and read about, they try to skip market development. They want directly to market growth because they assume because we are a large company, we're already in this market. What is there to develop? Our customers know us. They trust us. So if we launch another product, they will immediately recognize our brand and the power of our brand and will immediately hop on.

That sometimes work if you're literally just adding one more feature or removing feature or something simple like that. But if you're really innovating, remember what we said, something new that creates value, something new to you, something new to your customer segment, then the only thing that they have is your brand. And maybe they won't even have that if you decide to introduce it under a different brand.

So it's critical that every innovation project spends quality time in the market development stage. Now, back in the '60s, the product life cycle, we didn't obviously know as much as we do today. So today, we have lean start-up, design thinking, customer development, agile methodologies. We have a lot of ways to work faster, iteratively learn, implement that learning, and adjust.

So for simplicity, I divide market development stage in basically market exploration, market validation, and market audition. You see, I needed to remember myself. So exploration is just dipping your toes in and trying to understand, okay, does this really exist, or we are just imagining this market? And then validation is trying to see, okay, are customers actually going to react, even in small numbers?

And then the third stage of market development is actually going and putting the smallest thing in that market and seeing if it's possible to get some early traction that looks like it will be possible to grow within this market. And that's why it's important not to skip this stage. If you believe that some of your ideas or your team or yourself shouldn't spend too much time in this stage, that's perfectly fine.

If you can find all the evidence you need that this is a market worth growing, then by all means, go spend a week, two, three weeks, whatever, 15 minutes if you believe you have all the evidence, and move on. But don't just skip it, because if you remember the product life cycle, it goes like this. So kind of that small flat part that's slowly growing, your costs will grow like that if you skip it.

And you cannot get that investment back, because usually when you skip market development and go immediately into building a big machine that's designed to grow the market and then mature the market, you have a non-returnable investment. You cannot get that back. You cannot get that money back. You cannot get that time back. And in some cases, you won't even be able to reuse parts of that machine.

Many companies went bankrupt because of investments like this. Many start-ups went bankrupt because of investments like this. Webvan, or whatever was their name, lost now to time. They were Amazon before Amazon, but they were too early, and they invested too much into the whole logistical system way too early because they skipped the market development stage. They don't exist any more. They're now just a case study in failed investment. Okay.

Again, talking a lot about investments, I said don't invest too much too early. I said don't skip market development stage. Now I will say don't under-invest. So if you did everything right in the previous five steps, you have an idea, you have the right team, you have the right project, you're doing market development properly, then the next thing is, don't then under-invest. So that is the opposite. Again, I have seen, and I'm seeing more, which saddens me.

In large corporations, there is a concept of time percentage. So you tell your employees, "Well, that's great. You have one day a week to work on this innovative idea." Or, "You have 20%-- You can spend 20% of your time to work developing this idea." Or maybe you're generous, you say 50%. The thing is, the smaller the percentage is, that doesn't go out of the regular work hours. That goes on top of them.

So you're doing an unethical thing even though you're not intending to do that, because that is how it's going to end up. So you need to allow your employees, your colleagues, more time. Because here investment isn't just allowing them to expense, I don't know, some software-as-a-service product to test stuff on-line or to make a landing page. Who cares about that? That's simple stuff. That's pennies.

They can buy that on the corporate card. No. The biggest expense in the beginning is usually man-hours, because if you have good salaries, that can be quite expensive. So people are afraid. So in the beginning, in the initial stages, it is exactly the man-hours that are your biggest investment that you should not under-invest in or with.

If this is an idea that's promising and aligned with your strategy and you have a good team to execute on it, why shoot yourself in the foot and sabotage yourself by saying, "Hey, you have 20% of your time to work on it." That's going to end up with that team or people torn, trying to do their regular duties and trying to cram in this innovation project. It will be fun for maybe first few weeks, and for masochists among them, for a few months, but it's not a sustainable way to continuously innovate and create value for yourself and your customers. So if you get everything right, do not under-invest.

That does not mean to over-invest and say, "Hey, this is promising. Hundred people, hundred million." It means when you commit to it, commit to it for real. You will not lose those people, and they will be grateful that you have provided them a chance to do something different. And I'll come to a bit later how to create extra value from that, because that's another big note.

But another thing, this is a silly one because it used to be that that was the thing when large companies were assessing ideas, and somehow now it disappeared and we need to relearn that. And that is size matters. Don't forget that size matters. So for large companies, you're not a damn start-up. So even if you find an idea that's, for example, 40 million euro revenue potential, annual recurring revenue potential, that might be great for some start-up. It might be absolute meaningless for a large enterprise that operates on billions or larger than billions in revenues.

So you need to be realistic. And when I say you here, I'm referring to management and executive. That goes into your innovation strategy. What is your innovation ambition? What kind, what scope, what scale of revenue or cost reduction or impact on lives of our customers are we talking about and we want to see and achieve? And that is, if you don't have that, then you might again end up working on the wrong ideas.

And you don't know how big the idea is until you work on it. That is part of the market development stage. Because in the market development, you do need to find out first if this idea is relevant to whomever you decided to be your customer, and then is it relevant for you, the creator.

Because sometimes you will find out that, hey, this idea really can make a difference in the life of a customer, but it won't make a difference in our life. And then you have many options. You can spin it out. You can sell the idea. You can stop it, make knowledge public if you believe that this is something of broader public interest. You have many options. But there is no force to say that, "Hey, you must do this. You must now make this investment and create new things, new divisions, new sections, new business units, et etcetera." Whatever.

Now, how to do this simply?

Many different ways, some of them more complicated than the others. A very popular way to do this is so-called TAM SAM SOM analysis, or total addressable market size analysis, where you try to calculate it and then turn it into dollar value and et etcetera. You can use whatever you're most familiar with for market sizing. Where most of the teams go wrong, but I'm sure that you can fix that, is they do not define the customer segment well. So they believe this is for everybody, this is for the whole customer segment, and then everything goes sideways.

So it's important, back thought versus idea, when you're defining an idea, who is it actually for? So when it comes to actual market sizing, you can start with that. And here, back of the napkin calculation is perfectly fine in the initial stage. And why is it important? When you have completely defined ideal customer segment, if the whole customer segment doesn't make sense for your company, you probably can abandon idea.

If it's good, it'll come back. Or you need to figure out if you can launch more expensive product offer and value proposition, whatever, to make this meaningful for you. It's highly unlikely you will dominate the market. It's highly unlikely that you will have more than 50% of the market. So even if on the paper 100% doesn't make sense for you business-wise, move on.

Of course, how big you need, again, is defined by your innovation ambition, and you need to adjust it sometimes. So your core business, you can have similar requirements as core. But if you're moving into adjacencies, meaning that you're expanding your customer base or you're expanding your product and service offering beyond what you usually do, then perhaps you need to have lower expectations in that sense.

Because you're not a strong player in that area, so maybe you need to start with smaller revenue that is actually profitable enough to grow, and then you can start developing operational excellence and increasing profitability through having lower and lower costs. So that is keeping it simple.

Now, number eight, what I said before about the teams, and this is, again, people usually think, or within corporate teams, they usually think that number one thing that they can bring value to the organization is making money.

That's true, long-term. No real innovation, if I can use those words, will be bringing money within three weeks or three months. Heck, three years. Sometimes it takes 10 years or longer, depending on the scope. If it's a paradigm-shifting innovation, if it's a technology that's new and needs to be actually disseminated and companies start changing and regulations start catching up, it can take long time.

The fastest way corporate innovation teams can bring value to the whole organization is by capturing and disseminating knowledge. Because if you're running your corporate innovation teams right, that means that they will be conducting a lot of experiments, trying to learn about customer behaviour, customer preferences. How do they react to specific product features, services? How do they react to specific pricing models, et etcetera? So the teams will be doing a lot of experimentation, and they will be doing a lot of learning. So then the easiest way to increase the value and to reduce, actually, the cost of your investment in innovation is to help those teams document, capture that learning and insights, and share them within the organization in understandable and usable way.

That is something I usually call reusable knowledge, and it comes from lean product and process development. There is a whole concept of this reusable knowledge, avoiding discarded knowledge and et etcetera. So that is something that's very applicable in the world of corporate innovation as well.

The easiest way to do this is simple. Whenever a team runs an experiment, like lean start-up style of experiment, they need to capture what was the intended learning goal, what did they do to learn that, how did they go about learning that, and then what did they actually learn? Now this, what did they learn, should be divided into separate things.

One is data, and another one is interpretation. So data can be numbers, like number of people that did A, B, or C, observations. It's objective, it's dull, it's boring. Interpretation part is the juice. It is what these people have interpreted based on their experience and the data they have collected. So here's a simple difference. If I do this, then data observation is Bruno crossed his arms. Interpretation might be, I don't know, Bruno perhaps feels pressured, and he's trying to comfort himself, so he's going into, I don't know, protective space or whatever. That would be interpretation.

So it's important to separate these two because then later on, when you're studying that or some other team is studying that, they might see something in the data that this team hasn't, or they may see something in interpretation that the team hasn't.

And the final thing that needs to be captured is decision that happened at the end of that experiment, because experiments should be run with the purpose of making a better decision. So when you have that, and that can be captured on a single page, no matter how difficult or complex the experiment is.

When you're able to share that in a very simple way within the organization, then you're able to gain competitive edge, competitive advantage from your learning efforts. And when that works, it's magic. So, without too many details, I worked with... What was it? It was 12 teams, and each one of them was running weekly experiments. It was B2B, an industry that's usually considered very slow, but these teams were moving very fast since they had great help.

So they were moving very fast, learning very fast, and then magic started happening around week six. Because two teams started also internal meetings because they tried to figure out what they were learning from customers wasn't the same that they were hearing from few internal departments, divisions. So they went to them, and they shared, "Hey, this is actually what the customers are telling us, and you're serving the same customers, and you told us something different. So what's fishy here?" Now, what was important in that approach was they didn't approach the other division like enemies. "Hey, you told us the wrong stuff. We're going to set this record straight." No, it was kind of, "Hey, this is the data that we are finding. What's happening? Let's investigate together."

And then this other division that usually didn't have any budget for nothing innovative or inventive, they saw a massive gap that they could fix overnight. And then they didn't fix it overnight. It took them a few weeks to fix it, but they fixed something that was actually plaguing them for a few years, and they managed to fix that because of learning of another team.

So that's why I say that big don't of corporate innovation is avoiding, or not really avoiding, people don't want to avoid. But forgetting that documenting insight from your innovation teams and then disseminating that knowledge in the organization is a very, very important thing. Because innovation managers should be reporting on their performance. But if their performance is considered revenue generated, and you're really working with innovative ideas, you won't have anything to show for many years.

In the meantime, what you should be held up to and what you should be showing is amount of knowledge generated that's reusable within the organization. And then make sure to follow up with everybody who uses it and add that to your performance sheet and say, "Well, this is cost reduced.

This is expense saved because of the work we did with innovation, and this is revenue increase because of the work we did with innovation." So that is secondary or second-order effects. But then at the same time, make sure to document the revenue potential of every innovative idea that you're harbouring and developing. Because this revenue potential is kind of showing you, I don't want to say a North Star, but it's indicating if this will be promising at all.

And if you want to get a bit more technical, which we won't today, but I'm happy to have conversation with anyone. If you want to go full-blown innovation accounting, then if you want to really track numbers, you could multiply revenue potential with the risk factor of that specific innovation project, which depends on the idea and the team themselves to have basically discounted valuation of that specific project. So that you have a more, let's say, correct view of how valuable this project is. Because then you can start comparing also, what if we put another team to this? Will this become more valuable? Will this become more worthy?

But okay, this is not webinar about innovation accounting. This is about nine big don'ts with simple causes and simple solutions.

Final one, and that is after you did everything right. The most humane thing, it happens again and again and again, but it's something that you should have tattooed, not on your forehead, because you cannot see it, but maybe you should have it tattooed on the forehead, so your colleagues can see it, and they can get it tattooed on their forehead, so you can see it. But otherwise, maybe your palm, so you can look at it like this.

And that is, don't base your decisions, and especially not investment decisions and innovation ideas, purely on the amount of time and money you have spent on them so far. Technical term for this is, sunk cost fallacy or logical fallacy. In reality, that happens all the time to all of us.

I remember once, it's a ridiculous example, but it was perfect example because I spent a lot of my professional life also studying cognitive biases, logical fallacies, how to make better decisions under pressure, under uncertainty, in extreme conditions. So I spent a lot of time deliberately trying to make better decisions and trying to make executives, innovators, and business owners to make better decisions.

And I make these simple mistakes. So it was now a few years ago. It was a snowy morning. I was waiting for a bus in Oslo to pick me up, so I can go to work. And I was waiting for a bus and, Norway, it's like a snowy country, and that morning, there was a lot of snow. So you would expect that buses here are equipped for snow. But it turned out it wasn't really. So my bus, I'm looking at the time, and my bus is late already 20 minutes. And now I have an option. I've been waiting for 20 minutes.

I can continue waiting, or I can take a walk to the metro station that's 10 minutes away. I can wait for metro, and I can use metro to get to the client. I decide, "No, I've been waiting for 20 minutes. The bus should be around the corner. Let's wait." So I wait for 20 more minutes. Now, I've been waiting for 40 minutes. Sunk cost investment is getting bigger.

Okay, I should take a walk to the metro station. I've been waiting for 40 minutes. Even if it now comes in five minutes, who knows what will be with the bus. Will it be in a good shape? Maybe it will be full of people. Who knows? I decide to wait for the bus. So 15 minutes later, the bus comes. The bus is full of people. I cannot enter. So I need to take a walk anyway to the metro station.

As I said, this is a ridiculous example of sunk cost fallacy, and it's easy to laugh at this example now, but in the boardroom, in your meeting, when you're talking, "Okay, we have been working on this now for two ideas. We have been developing this idea for two years. Let's give it another chance." Maybe it is worth another chance, but if you decide to give any idea another chance, what you need to do, you need to define what this chance is in advance, what does it entail, and what is a stop criteria.

I worked, in this case, it was a group of founders. I wouldn't call them a start-up because they're experienced professionals who pooled sufficient money and had corporate investment, private equity investment, and they had a great idea, extremely talented team, and they said, "We're going to disrupt that and that market."

Two years later, no traction, no revenue. The problem was, even though there is no traction and no revenue, they did have clients. The problem was these clients were not returning clients. These clients were not paying enough, and they were at a standstill.

To everybody who was on the outside, it was obvious that this has unfortunately failed. This venture should be stopped, terminated, liquidated, and these talented people should put their talents to something else. It was not obvious to them, and it was very difficult for them to move forward.

So when I worked with them, I sat down and we spent, okay, and we defined three more months. In three months, this is the bare minimum. If this doesn't happen within three months, when we look at it, we shake hands and we walk away.

That's what happened. But psychologically, it was easier. It was less traumatic than immediately cutting that. Now, in the corporate world, as innovation manager, you always need to be aware of that.

That's why you shouldn't fall in love with any specific initiative that you brought money to and that you helped invest in, and you're maybe coaching those teams and helping them move forward.

You should not get too attached so that you can also serve as an internal mirror reflecting back to them, "Hey, people, are we making the decision because there's something promising in this idea? That this is a promising customer segment, that there's some sort of evidence that this is worth pursuing and investing in, or are we basing it purely on the money, effort, sweat, blood, tears invested so far?"

All respect goes to hard effort that has happened, but it should not be used as the reason to continue with something. And in those rare cases, when you decide that that is the reason, it's extremely beneficial to be upfront and say, "That is the only reason we are giving this another chance." And then also be upfront with what is the very tangible success or condition to continue or stop with it.

So those were nine big don'ts. I will repeat them, and I have written them down for myself, so it's easier to repeat them. So nine big don'ts of corporate innovation with simple causes, simple solution.

Number one, don't invest in thoughts. Make sure to clarify what you consider to be an idea and provide your employees with a simple template to describe an idea.

Number two, don't waste time prioritizing ideas. Have innovation strategy. Have clearly defined what you want to invest in, and then give a chance to everything that passes your critical filters. It's easy to tweak your filters. Do it every quarter or every year when you have a well-oiled innovation management system.

Three, don't invest in orphan ideas. Ideas don't get executed on themselves. Make sure that your innovation projects have idea, team, and specific objective.

Four, don't invest too much too early. Ensure or secure a proper innovation budget. Depending on your size, that may be hundreds of millions, or it may be a million or a billion. Again, depending on your size. Ensure the budget, but do not release it to a single idea as lump sum. Institute metered funding and connect budgeting or funding to learning and progress in market. Evidence trumps everything.

Number five, do not allow yourself nor your teams to skip market development stage. Make sure to invest quality time and quality effort in finding out and exploring if this market is worth your attention, validating if there will be customer demand and if they will do anything, and then finally, auditing the market to see if it's worth your proper investment.

Number six, don't under-invest in your teams. When you have selected everything, allow them to spend quality time, meaning more than 20% of their work time, work hours- Maybe even more than 50%, it really depends. But give them a chance to realistically develop these ideas. Otherwise, what you're risking is burnout long-term, because the less time you give them, the more that time will be spent in addition to 100% work hours. People care about their ideas, they want to develop them, so they will pour hours in it. Don't do that. Make sure you invest properly.

Number seven, when you're finally assessing further investment down the line, do not forget that size matters. So make sure to do back-of-the-napkin analysis in the beginning, and later you can use TAM, SAM, SOM analysis, that is total addressable market size. Or you can just reach out, if you're a conglomerate, to your financial department and ask them whatever market sizing exercise they use in their business development or business controller functions.

Eight, do not forget to capture and disseminate insight collected with your innovation teams. Short-term, that is the easiest and fastest way to generate benefit for the whole organization. I would say that this is responsibility of the innovation manager to act as a kind of a bee pollinating, cross-pollinating across the organization, having, "Hey, this is the insight that we have collected. I thought this may be handy to you." If you can establish pool from the organization, even better. If you can establish flow of insight within the organization, even better. Organize events, reach out to people directly, offer insight. Never be brash and say, "Do this," but say, "This is what we learned from the customer, and I thought this might be handy. What do you think about it?"

And number nine, never, just don't base your decision to continue or invest more into an idea based on how much you have spent so far in time, money, and resources. So those are nine big don'ts, and I see some comments. I see some comments, so let me check that right now. "Maybe have a replay so I can catch up." Of course.

So everybody who signed up for this webinar, including you here right now and those that couldn't attend, in few days, I will provide you a link to the recording. If you have any other question, feel free to drop down or write it.

We still have some time, so we will see that. In the meantime, while I'm getting the question. This is a problem with technical set-ups, but just give me a second, then I will see what the question is. But while I'm waiting for the question, why did I cite these nine big don'ts, and why did I call them big?

I called them big because they're big in their effect. I'm sure that half of those, you were nodding your head, or maybe you were even thinking, "Come on, man. This is so obvious." They're obvious. They're simple, but they're not easy in any way.

They're not easy not because of their technical nature.

They're not easy because of our human nature.

Innovation is deeply personal.

It's something that when you ask someone to come up with something, it is act of putting yourself out there. It is act of putting your ego, pouring part of your ego in an idea, in an initiative, in a proposal. And that makes it different from a lot of other activities.

It's more personal, which means we get more attached to it and makes it a bit more difficult to manage. So my advice to that is to always treat ideas also, to some extent, as people, as other humans. At the same time, to maintain a position where you treat humans that actually propose them very gently, but you treat those ideas roughly.

So whenever I work with ideas, I say, "Hey, I understand this idea is your proposal, and I want to make it clear that anything I tell you, I propose, I observe, and I share with you is with the intent of making this idea better.

If I say something rough or harsh about this idea, that's not to say anything against you. That is specifically about this idea." And then we shake hands, and we go for a fight. No, I'm kidding. No fights. Let me check that.

"How can corporates adapt to innovation accounting methods? It seems leaders are not willing to change their method. Any suggestion for influencing them to metric-based investing?"

Yes. A lot of questions. We have good time, so I will go from the beginning.

Innovation accounting methods, how to help them adapt that. The easiest I have found is to demonstrate the benefit of that. So all the big consultancies are running surveys all the time, so you can find the, what was it? McKinsey, that 80% or whatever executives are not happy with their innovation, blah, blah, blah, blah, blah.

So all of that is, it's nice to have, but when you actually walk into the boardroom, you have two sides of the organization. One is the actual organization that is customer-facing, that is providing products, services.

They have P&L responsibility. And then you have the other side of the organization that is support organization. And sometimes these lines get blurry, especially with more modern approaches to organizational design.

But the support organization is usually cost centre. I'm not saying this to detriment or to degrade them or anything, but they do not earn money. They provide shared services for efficiency, et etcetera. Now, in the support organization is the usually financial function, but at the same time, the CFO and his or her office is usually second in power in the whole organization. That's most common.

You have the CEO, strong CEO is in control. Then you have the CFO, who is usually the second most powerful person or shares power with a COO or co-founder, if it was scale. So the CFO organization is the one that you want to influence when it comes to innovation accounting, because it is actually infringing.

I'm saying infringing because that's a strong word, because that is how they perceive it, that it infringes upon them. So if you want to help a large organization implement innovation accounting, then you need to understand the CFO office, how they operate, how they're structured, and what do they value, and then approach them and work together with them to set up proper measures.

Because innovation accounting has a lot of measures now, but not all of them should be implemented. Where it starts is understanding, okay, how does the CFO, how does the financial function right now value organization? How do they measure all these things? And then finding ways to collaborate with them instead of positioning them as enemies.

So in two large-scale transformations I was involved with, we allowed business controllers to become stars of the process. Because when we went and had interviews and conversations, we, I, when I spoke with business controllers, what I found out was that in a lot of cases, they felt like policemen, police officers, harbingers of bad news.

They would need to evaluate these ideas. They would need to run business case and then say, "Well, sorry, this sucks. We really shouldn't continue." They felt like they were unwanted, and they were unwanted. People did not want them because they consider them, okay, this is person coming with a death kiss for my idea. So what was critical on a group level to change this dynamic. So we started involving business developers.

First, I work with them to find out, okay, how do you actually do your business case assessment right now? Okay, can we do it differently for innovative ideas and innovation projects? And I explained why. They're accounting experts. I'm not the accounting expert myself.

I know it good enough to have a conversation with them and see what they're doing and figure out how should the innovation accounting system look like, but they're the accounting experts. So if you're able to work with the CFO office, you will have strong, strong power for implementing innovation accounting system. It is called innovation accounting system. It is addition, not a supplement, addition, something that adds to and benefits to existing accounting systems.

The narrative I usually use is sports teams. So in most companies, employees are considered the expense. In high-profile sport teams like NBA and so on, players are considered an asset. So, hey, how about we start fixing?

Innovation is about considering your talent and your people as assets, and it also works with uncertainties. And they work with risk. They know how to discount based on risk. And you're doing the same in the innovation accounting system. You're discounting the revenue potential, the cost reduction potential of ideas based on their risk factors.

Now, I see more questions coming in. If you want to continue conversation on innovation accounting, just reach out. There is a book coming out hopefully this year. Dan Toma, Esther Guns, and I contributed a whole chapter on innovation accounting. So it will have strategic, managerial, practical innovation accounting, how to implement it, whole systems, everything, including also governance of environmental and social targets.

But enough about that. Let's see another.

"Related to third point, idea plus team plus objective. What to do when the best people are fully booked on non-innovation projects? How to get them free?"

So these are two questions. I gonna answer first one. So, depending on the stage of your idea, if you already have the revenue potential, or you can somehow calculate the revenue potential or cost reduction potential or whatever potential of the idea, that is the best way to do it.

You have potential of an idea, and you say, "Hey, this has a potential to bring, let's say, 100 million revenue." The team, the people that we can assign right now, I give them 50% likelihood to actually execute on this idea. Therefore, those 100 turn into 50, because 100 times 0.5.

Now, if you can get me the best people, that will have 0.8, because it should never be 100%. You cannot guarantee innovation. Okay, now by assigning the best people, you increase revenue potential from 50 million to 80 million. You presented your case to the decision-maker, management, whatever, and then it's up to them.

If they still don't want to put in the best people because they believe that those best people can somehow earn those 30 million by doing the work that they're doing right now, that's the right decision on the group level.

But if those people cannot do that and they're not assigned, what you're incurring is opportunity cost. So that is what I would suggest in this case.

How to get them free? If you cannot use this method, then it's classical navigating the organization, a little bit of hustling and trying to be charming and making a case. But joking aside, what I've seen work so far, and very successfully so far, is when the idea has the revenue potential, and you can demonstrate team A, B, and C, how much they impact the actual end result of it.

You cannot guarantee the end result, and sometimes the underdog may come up as actually a strong team, and sometimes great performance might underplay it. What I found more important for the innovation project is strong champions. So someone that when their name is dropped, people are like, "Ooh, okay, I better not touch this," or, "Oh, I better give them an ear." So that is sometimes a bit more important.

Good question.

Okay. You're dropping some good questions. Thank you very much.

"Who is responsible for innovation in a company if company doesn't have an innovation manager or department?"

Ooh, that's a very high potential question. I realize now that I used a lot of innovation manager. Truth to be told, and a lot of clients I engage with, they did not have innovation manager in a written-- Like, their title was not innovation manager.

Their title was always something else. My position is that in most cases, innovation, if you have a group, innovation should be together with your strategy department or whatever you have. Like someone who has a bird's-eye view of where the organization wants to go and how do they want to develop. So to me, it's naturally to have innovation there because innovation is not an end goal in itself.

In my opinion, corporate innovation is one of the tactics to achieve strategic objectives. Now, there is a push for having separate organizations, and I've seen it spun out, spun in, blah, blah, blah. Many different ways. What's important is to differentiate. If you decide to separate innovation functions is that there's innovation driver, those making the money with innovation, and the innovation enabler, those helping others make money.

So in organizational context, the drivers will have P&L responsibility. The enablers will be a cost centre. The enabler's job is to make everybody else successful. The driver's job is to make money from those innovative ideas. So, depending on the size of the organization, Abraham, you can reach out later if you want more specific for organization that you have in mind. But if the organization doesn't have any specific functions, where I would look for home for having real strategic innovation is whatever department there is that holds the strategy for the whole group, and then use that as orchestration.

Because every business unit or division, whatever that has P&L, will probably have different innovation ambition profile. Like, in some cases, maybe something is purely core business and they want continuous improvement. That's perfectly fine. Maybe something else is more into adjacency, so they would benefit more from more innovative approach. So that is what I would say.

One more, and then we wrap up.

"When sharing knowledge, I might have missed something. When sharing learning, you mentioned data and interpretation, but you left out method. Was that on purpose? Thinking about data, about behaviours and attitudes, or do you just include method into data?"

Maybe I phrased it funnily. So what I meant about method was when I said how you go about it, how you learned it. So that is where you would have the method. To make sure that you have a single page, if you're running out of space, I would focus purely on the learning goal, data insight, and conclusion, and then have extended.

Extended insight is basically the whole experiment. So whenever you're documenting the whole experiment, you need to have everything that I said. So learning goal, customer, like who did you learn it from, the data, how did you collect the data, how did you conduct the experiment, what was the intended experiment?

Everything should be there. But when you're sharing, you don't share all of it because it might be overwhelming in some cases when you have a three-page description of the experiment you did. But what's most important is, this was what we intended to learn, this was the data collected, this is the interpretation, this is the decision.

Because when you have that, if someone is doubting that or wants to learn more, then they can dig deeper. Pull, flow. Then it's because of their interest, they can go more. Because when we try to make reusable and shareable knowledge, if it's too complex, too big, too complicated, we judge fast.

You see something long and you're like, "Oh, man, I just want to know what they actually did and what happened." So it's better to chunk that into bite-size piece, and then if they want more, enable it in the sense that they know where to look for more. Very good question. Thank you for bringing that up.

Since you also asked about specifically doing this type of experiments, I wrote a big guide. It's almost 3,000 words in great detail, all 10 steps. It's completely free to use and disseminate in your organization. Everything is described there. If you want it, just email me or look at my website, and you will find it.

I see that we are five minutes over time. Some really, really great questions. Thank you very much. I'm so happy to receive such great questions because I'm happy to work with people that actually do care about innovation and want to get better at it. So great questions.

Please stay curious and integrate everything you can and make your organizations better and innovate more successfully, more profitably.

It's not a shame to say that corporate innovation is about increasing profits and creating better life for yourself, for the organization, and for the customers you're serving.

This was Nine Big Don'ts of Corporate Innovation. Thank you very much for joining, and I wish you a great day.

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