Building an Innovation StrategyIn this unit, you will submit the Building an Innovation Strategy assignment.In a brief description, identify Tesla and the industry in which it operates, and explain yo

The unfortunate result of all this is what Bill Joy, a co-founder of Sun Microsystems and now a venture capital investor, calls the innovation gap in large companies. But there’s a smidgeon of good news. Savvy mEaSURINg UP Da SHBOa RDINg FOR INNOV aTORS “If you cannot measure it, you cannot improve it,” remarked Lord Kelvin in the 19th century.

Organisations and managers have been heeding his advice ever since.

But what does this mean for new ventures? John Mullins and Randy Komisar measure up. Launching a radically new product or a new venture — whether tucked away in a corner of a large company or in the garage of a spanking new start-up full of hope and enthusiasm — is never easy. But there’s a pair of problems that makes this new venture challenge especially daunting, wherever it is found. First, everybody knows what happens to most new ventures, their rosy forecasts and well-crafted business plans notwithstanding. They fail. Second, for those that do eventually succeed, most of the time the business that is ultimately successful bears modest — sometimes, little — resemblance to what was conceived at the outset. For the business we now know as PayPal, what ultimately worked was Max Levchin’s seventh idea for how to apply his cryptography expertise. Thus innovation is risky, and companies worried about their quarter to quarter stock market performance too often shy away from it. But without innovating, companies are — sooner or later — left in the dust. Cost cutting, perhaps essential during a downturn like the one we’re just experiencing, entrepreneurs, fully aware that Plan A, their initial idea, is unlikely to work out as planned, have borrowed a great tool for better managing their innovation efforts from big companies and, counter intuitively but wisely, turned it upside down. That tool, the dashboard, as used in large companies, brings together a set of key performance indicators (KPIs) that signal whenever the corporate ship For PayPal, what ultimately worked was Max Levchin’s seventh idea.

01 A sign for Internet payment transaction portal pay pal stands outside the eBay Germany headquarters.

02 Max Levchin, co-founder of p ay pal and current chief executive officer of Slide Inc.

01 02 Photo: gettyimages 7 www.london.edu/bsr BUSINESS STRATEGY RE VIE W DASHBOARDING FOR INNOVATORS There are many explanations why big companies don’t innovate:

culture, incentives, risk averse behaviour, and more. Arguably, the recent infatuation with “open innovation” is a reflection of this fact and an admission that they might as well just give up at innovating internally and buy their innovations outside, as companies like Cisco and, more recently, procter & Gamble, do so successfully. Our research suggests that big companies’ failure to innovate rests, at least in part, on inappropriate or misaligned expectations of their new ventures, as can be seen in the following table:

WHy BI g COmPaNIES DON ’T INNOV aTE REalITy plan A rarely works Management’s real job is to find a plan B that will actually work Effective use of a dashboard means empirically testing a few life-or-death assumptions so that course corrections are made quickly, before too much time and money are squandered The right kind of new venture leader is one skilled at experimentation and learning ExPECT aTION plan A will work Management’s job is to faithfully implement the plan they pitched Rigorous use of a dashboard will make sure the plan gets implemented and the ship remains on its intended course The right kind of new venture leader is one skilled at implementation and at achieving “the plan” 01 Cisco Systems: The world’s biggest start-up company, San Jose, California, U.S.

02 p&G: In innovation we trust.

03 ‘Everyday Low price’ signs are displayed at a Wal-Mart store in Secaucus, New Jersey, U.S. veers ever-so-slightly off course. Any deviations are quickly spotted so that adjustments — in people, processes, strategies and more — can be made to get the ship back on course.

Dashboards in new ventures Keeping the ship on course, however, is probably the wrong thing to do in a nascent venture, where what is likely to work is not what was planned at the outset (never mind the original business plan, which probably argued it would!). Our research has shown us that dashboards are, indeed, powerful tools for navigating the uncharted waters in which new ventures sail. But their purpose in such settings isn’t to keep the venture on course. It’s to capture data from the marketplace and signal that mid-course corrections are urgently needed, because Plan A is not working as expected! Is this subtle but radical difference, together with the expectations that underlie big-company dashboards, one reason why most large companies don’t innovate well? (See Sidebar: Why Big Companies Don’t Innovate) And does it also hold a key to understanding why so many new ventures of any kind fail?

Might it even hold a key to moving the new venture failure rate needle down a few notches?

01 02 03 Photo: gettyimages BUSINESS 8 BUSINESS STRATEGY RE VIEW issue 1 – 2 011 Their efforts were deemed innovative and successful. Yet the results were disappointing and unsettling: Whittle and Kuraishi were not confident that the large amounts of money they were injecting into the country were having the impact they were seeking, nor that it had reached the people on the ground who needed the most help.

Let’s consider an example. Dennis Whittle was frustrated. He had just spent a year developing new processes that would help the World Bank, where he was a senior executive, fight poverty. He had at his disposal a $5 million budget and the services of a top consulting firm. He, his colleague Mari Kuraishi, and their team of development professionals were running a programme that had funneled billions of dollars to the Russian Federation for Economic Development.

glOBalgIVINg CaSE STUDy DaSHBO aRDS lI gHT THE W ay A woman pushes a baby stroller through a run-down housing development in Kamchatka peninsula, Russia. Theirs was a familiar problem:

funds targeted at urgent human needs didn’t always end up where they were intended to go. All too often, too many of the funds seemed to find their way into the personal Swiss bank accounts of government officials. In Whittle’s view, a radical new approach was needed. He asked Kuraishi to join him and help shake things up. Kuraishi quickly pulled together strategy staffers and personal friends from other parts of the bank for an all-day brainstorming session.

They divided a whiteboard into two sections. The left side was labeled “Existing World Bank Processes” and the right, “What Is the Opposite?” On the left, they wrote things like “top-down loans; $100 million grants; two-year processing time; 200 pages of documentation;” and on the right, “bottoms-up grants; $100,000 loans or grants; two-day processing time; two pages of documentation.” The outcome of this process looked nothing like what constituted business as usual at the World Bank.

A development marketplace sparks an idea In February 2000, 700 people crowded around 270 cramped booths in the usually pristine atrium of the World Bank in Washington. Each was intent on pitching an idea for alleviating poverty in the first-ever Development Marketplace. These finalists had been selected from 1,130 applications from more than 100 organisations based in more than 80 countries. The proposals were limited to four pages, and a 15-minute presentation. At the end of this two-day carnival of ideas, James Wolfensohn, the president of the World Bank, Their efforts were deemed innovative and successful. Yet the results were disappointing and unsettling. Photo: gettyimages 9 www.london.edu/bsr BUSINESS STRATEGY RE VIE W DASHBOARDS lIGHT THE WAY stood on the stage and made awards totalling $5 million to 44 teams.

The event was an overwhelming success. As Whittle explained, “The Development Marketplace not only surfaced exceptionally innovative ideas and projects, but it enabled funding decisions to get made in two days, lightning speed by World Bank standards. This was a radical and eye- opening innovation.”When the awards ended, a South African woman approached Whittle and Kuraishi. In a strong voice, she said, “I did not win.” Whittle replied, “Well I am sorry, but this is a competition, and not everyone can win.” She retorted, “I am telling you that my idea is a good one, and just because the World Bank did not finance it does not mean that there are not others out there who will finance it.” Whittle was haunted by the truth of the woman’s words. Several months later, he and Kuraishi walked away from successful careers in the development establishment. They were committed to building a marketplace for development project funding where there could be more winners than losers. It would prove to be a challenging journey.

Building a dashboard With not very much effort, Whittle and Kuraishi identified more than 1,000 compelling projects in developing countries that could make a significant impact with a small to moderate infusion of funding. It seemed logical that if projects like these could be made visible to a large community of potential funders, money would flow. But their business was far from proven, and it felt too early to establish a foundation to channel charitable contributions to their favourite projects.

So the pair established a partnership with the nonprofit Calvert Foundation, which had the necessary apparatus for accepting tax deductible donations under the U.S. tax system, an important incentive for American donors. But the crucial issue was whether Whittle and Kuraishi could harness the internet — an eBay for development projects, in a sense — to match philanthropic contributions with global development projects in an efficient and economically sustainable manner.

In particular, there were three key questions, leaps of faith, as we call them:

1 Will attractive, high quality, legitimate projects participate over the internet?

2 Will sufficient numbers of donors contribute directly over the internet?

3 How can we fund and structure the marketplace to achieve financial sustainability? In other words, is there a business model that will work?

Getting answers to these questions — the fundamental life- or-death issues that would determine whether their idea had real potential — meant launching a pilot site and experimentally testing some hypotheses. They built a dashboard to guide and track their experimental journey, as shown on the next page.

Disappointing data Happily, there was an immediate and positive response to the Development Space concept. Donations began to trickle in. The news media gave the venture positive coverage as well. But the challenges outweighed the good news. Development Space’s results showed that customers needed an assurance as to the quality — indeed, the legitimacy — of the projects listed on their website. Based on the eBay analogy, Whittle and Kuraishi envisioned the same kind of user rating system that was so powerful for eBay. Why couldn’t donors rely on the ratings of other donors to gain comfort about project quality?

But two things made this clearly unworkable. First, the recently enacted Patriot Act required significant vetting of charitable contributions to ensure that funds were not going to organisations with terrorist ties.

Second, before making a charitable contribution, donors wanted assurance from a credible third party that the project was sound. As Whittle explained, “People were comfortable buying things on the basis of the opinions of other consumers, but they wanted reliable expertise involved in helping them find legitimate projects to fund with their philanthropic dollars.” The model would have to be adapted to identify projects through credible sponsor organisations who could conduct due diligence on the ground. Another problematic hypothesis involved donors. Based on the eBay experience, the hypothesis was that if the marketplace existed, donors Photo: hoPe ofiriha Photo: shiNe humaNity BUSINESS 10 BUSINESS STRATEGY RE VIEW issue 1 – 2 011 contribute directly to international development projects. And even Heifer made no clear link between individual donors and specific recipients, as Development Space wanted to do.Finally, the team found that relying on the Calvert Foundation website to process donations created a disjointed customer experience. In fact, donors felt as if they didn’t know where their cash was going once they were sent to the Calvert website.

A funding drought To make matters worse, the dot-com bubble had long since burst. Financial investors weren’t lining up to put money into an internet marketplace for global development. And unfortunately, Whittle and Kuraishi needed a small infusion of cash to stay true to the pleas of the South African woman, as well as for many other worthy projects. It had been more than two years since her words had kick- started their entrepreneurial journey. Their difficulties might have caused them to give up. But Whittle and Kuraishi were determined to keep going. As Whittle recalled, “Even though the marketplace was not taking off as quickly as we had expected, we could see that the potential was there. 01 GlobalGiving project:

Rehabilitating healthcare facilities and services in areas of pakistan affected by the severe floods.

02 Dennis Whittle, CEO of GlobalGiving.

03 Hewlett- packard (H p) was interested in Development Space from the start.

04 GlobalGiving project: providing microloans, business training and technical support to struggling South Sudanese women refugees in Uganda. would come. But the marketplace for “used stuff ” that eBay brought to the Web already existed in the form of classified ads and garage sales. The same wasn’t true of the marketplace for global development projects. Total spending on foreign aid programmes was running close to $100 billion per year, with roughly one-quarter to one-third of the funds coming from private individuals, companies and foundations. But there were few vehicles other than Heifer International that allowed donors to We were learning at a rapid pace and needed to adapt our approach based on what we learned.” The data, as reflected in the initial dashboard, were speaking loudly and clearly. While their initial dream remained alive, the initial idea simply was not panning out as originally conceived. It was time for Plan B.

Development Space becomes GlobalGiving Whittle and Kuraishi created a Plan B that was markedly different from their first set of ideas. On the project side, new emphasis was placed on building a sponsor network and relying on sponsors to identify and help position suitable projects for the marketplace.

Ashoka, a highly credible organisation that identifies and builds networks among promising social entrepreneurs in the developing world, signed up as the first project sponsor. With Ashoka came a chain of relationships, as well as trust, giving projects credibility.

But the venture was desperate for new donors. What good was it to have projects if there were no funders?

This was the area where the initial hypotheses were furthest from the reality that had unfolded to date.

Fortunately, Hewlett-Packard (HP) had been interested in Development Space from the start. As a technology company committed to innovation and social responsibility, HP was looking for ways that technology could accelerate economic development beyond the “bridging the digital divide” concept of giving everyone access to the internet. Excited by Whittle’s and Kuraishi’s idea to use the internet to transform global development funding, HP invited Development Space to be a part of its employee giving campaign. This was a big “Aha”, a way to aggregate donors in a potentially much more efficient fashion, without spending scarce resources on donor acquisition. In addition, the time was ripe for Development Space to establish a foundation of its own, to clear up the confusion created when donors were directed to the Calvert Foundation. At the same time, the company changed its name from Development Space to GlobalGiving, a name the new conTinued page 14 HP was looking for ways that technology could accelerate economic development. 01 02 03 04 Photo: Press associatioN Photo: robert Dubois 11 www.london.edu/bsr BUSINESS STRATEGY RE VIE W DASHBOARDS lIGHT THE WAY DEVE lOP mENT SPaCE ST aRT -UP DaSHBOaRD Source: GlobalGiving Will attractive, high- quality, legitimate projects participate in the marketplace?

Will sufficient numbers of donors participate in the marketplace?

How can the marketplace be funded and structured to achieve financial sustainability?

01 02 03 leap of faith questions Business plans will be a good proxy for project quality. Due diligence can be conducted after projects apply.

As with eBay, if the marketplace exists, donors will come.

Social and strategic investors will be the best sources of capital.

A for-profit structure paired with a foundation partner could work. Existence and quality of business plans.

Value of business plans to prospective donors.

Cost and reliability of due diligence.

Number of donors in first eight months. US$ raised Most projects had no business plans or needed extensive technical assistance to create them.

Donors didn’t care about business plans.

Due diligence after the fact was unaffordable and unreliable <100 US$3 million investment from Hp and World Bank’s IFC seemed almost certain, but fell through.

US$100,000 raised in relatively small increments.

Having an online marketplace branded “Development Space” and directing donors to a non-profit partner to make the contribution was a problem in terms of brand identity and credibility. Solid relationships with sponsor organisations and a “chain of trust” are needed to ensure project quality and legitimacy, particularly post patriot Act.

We need a plan B!

Marketing to prospective donors is required.

We need a plan B!

After the dot-com bubble burst, investment capital unavailable.

Are philanthropic grants the answer?

We need a plan B!

A structure is needed that would allow for a unified brand.

We need a plan B!

projects will self identify with minimal guidance. Number of projects submitted.

Size of projects.

Type of projects/ descriptions. 100 projects submitted; 25 qualified.

Size range: US$1,000– US$250,000.

Some too conceptual to appeal to donors (e.g., Argentina fiscal adjustment). Need to find projects by mining relationships in the field.

We need a plan B!

Smaller, community based projects most attractive to donors.

Compelling project descriptions key to marketplace success. Hypotheses metrics Findings Insight/response 12 BUSINESS STRATEGY RE VIEW issue 1 – 2 011 BUSINESS Donors can be aggregated through companies/corporate partnerships.

Corporations and foundations are the best targets.

Need to create a foundation to collaborate with for-profit organisation under a coherent brand. Number of corporate relationships.

Number of donors achieved through relationships.

US$ in donations US$ raised Structure acceptable to funders?

Ability to accept private investment maintained?

Flexibility to reinvest earnings in foundation? 3–4 key corporate partnerships/ sponsorships to build credibility and momentum.

Less than the US$5 million in corporation and foundation money sought. All foundation funders OK with hybrid structure yES yES Good vehicle for getting started but expense of doing customisation and servicing relationships is too high for this to be a viable long-term strategy.

We need a plan C as a donor strategy!

The sale cycle is long.

Time to breakeven will be significantly longer than originally expected.

Major time and energy will have to be invested in raising money for an extended period of time.

plan C needed here, too.

Hybrid structure provides flexibility but governance is complex.

A network of trusted sponsor organisations will identify attractive, quality projects. Number of projects submitted.

Size of projects.

Type of projects/ descriptions. 300 qualified projects < US$100,000 in size.

Community-based projects. project sponsors (first was Ashoka) created credibility; floodgate opened.

Hypothesis confirmed!

Must limit number of projects to maintain balance with donor volumes. Revised hypotheses metrics Findings Insight/response g lOB algIVIN g REVISED DaSHBOa RD Ashoka signed on first, four others followed.

projects are donor- ready. Sponsorship is the way to go. No follow-on due diligence necessary.

Hypothesis confirmed! Number of trusted project sponsor organisations.

Cost and reliability of due diligence.

project sponsors will validate quality and legitimacy, create a chain of relationships and trust. EVOlUTION aRy ST ag ES OF glOB algIVINg FRUSTRa TION Dennis Whittle and Mari Kuraishi identify the need for a new approach by the World Bank to fight poverty more effectively.

BUSINESS aS UNUSUal Identify existing World Bank processes and contrast with the alternatives. Business as usual no longer acceptable.

DEVElOPmENT ma RKETPl aCE February 2000 sees the first ever Development Marketplace. $5 million awarded to 44 teams.

CREa TINg SPaCE Whittle and Kuraishi launch Development Space, an eBay for development projects.

Pla N B p rogress is slow, but kickstarted by new emphasis on sponsors and creating a sponsor network.

NEW DIRECTION, NEW NamE Development Space is re-christened GlobalGiving.

STIll gIVINg GlobalGiving has now funded thousands of projects. plan B is working. 13 www.london.edu/bsr BUSINESS STRATEGY RE VIE W DASHBOARDS lIGHT THE WAY foundation took as well. A separate board was set up for the foundation and appropriate mechanisms were put in place to provide the level of independence needed to ensure legal compliance. GlobalGiving had evolved a financial model that depended on many components, one of which was philanthropic support for the new foundation. Thus, at about the same time, Whittle and Kuraishi launched a major fundraising campaign, targeting foundations and high net worth individuals, and attracted enough money to take the next steps. Last, the original, barebones technology platform needed work.

Whittle and Kuraishi needed better tools for tracking and analysing traffic and user behaviour, and they needed a new-look website to improve usability and the overall donor experience.

With all of these changes, it was time for a new dashboard to affirm or refute their new leaps of faith. The three initial leaps of faith remained unchanged, as neither the company’s ability to attract enough good projects, enough donors, nor build a business model that would work had been proved in the first iteration. Based on the learning from the earlier dashboard, however, the hypotheses were updated to reflect the decisions that embodied GlobalGiving’s Plan B. When the new site was launched, things started to pop. With Ashoka as a project sponsor, the floodgates opened, in part due to the credibility that Ashoka lent. Three hundred projects came so fast and furiously that the team temporarily stopped adding projects to avoid an untenable imbalance between the number of projects listed and the volume of contributions coming in. Once HP’s employee giving campaign got under way, the almost immediate uptick in the number of donors and dollars provided an all-important psychological boost for the team.

HP also helped promote this idea to other companies. Partnerships with several other companies, including Visa, Advanced Micro Devices, and the North Face soon followed, augmenting the original open marketplace model with customised sites for specific organisations.

Is GlobalGiving’s Plan B working?

As we write, GlobalGiving has funded thousands of projects and has established a strong sponsor network, as well as robust mechanisms to ensure project legitimacy. While these numbers are not entirely on track with early projections, momentum continues to accelerate and the team remains committed and optimistic. Whittle and Kuraishi now laugh about some of their early hypotheses and how much they have learned. Plan A did not stand a chance, but Plan B is working! What lies ahead for GlobalGiving?

Continuous learning to drive innovation lies at the very heart of the GlobalGiving culture. As Dennis Whittle says, “What matters most is not the quality of the initial business plan, but instead the ability of the team to iterate successive business plans as a means to finding what works.

The trick is to experiment quickly but intelligently, and with discipline.” “ The trick is to experiment quickly but intelligently, and with discipline.” conTinued from page 11 GlobalGiving project:

Haiti earthquake recovery programme helping survivors rebuild communities and get back on their feet. Photos: chf iNterNatioNal BUSINESS 14 BUSINESS STRATEGY RE VIEW issue 1 – 2 011 Four themes stand out in the GlobalGiving story:

1 The founders’ laser-like focus on the biggest risks on the table at each point in time 2 The changing nature of the dashboards as the nature of the unanswered leaps of faith changed over time 3 A considerable emphasis on quantitative measures 4 An experimental mindset that assumed from the get-go that plan A probably was not quite right. While dashboards nearly everywhere embody the third of these themes, it’s the others that set entrepreneurs’ use of dashboards apart from that of their big-company brethren.

New venture dashboards will differ, of course, from venture to venture, reflecting the prior experiences of the management team, the organisation’s culture, the nature of the current leaps of faith on the table, and the stage of the business. But their essence endures:

n Leap of faith questions are the drivers n These generate hypothesesn Which are tested with clear metricsn At a particular point or period in time n Yielding insights for decision making and, in all likelihood, for mid-course corrections, too.

Using dashboards to drive your innovation process Any dashboard is only as good as the unanswered questions or unverified assumptions — the leaps of faith — that drive it. How can you come up with the leaps of faith that really matter right now? Ask yourself any or all of the following questions:

n What assumptions underlying your venture make you feel uneasy, or keep you awake at night? n What would you like to know that you don’t?

n What information would lead you to a different conclusion than the one under which you are operating now?

n What crucial question, if answered affirmatively, would make you feel vastly more comfortable that your venture is on the right track?

n What crucial question, if answered negatively, would cause you to alter your course immediately?

What to tell your investors Almost every new venture requires at least some money from somewhere.

Whether your backers are your large company’s innovation unit or a start- ups three F’s (family, friends, or fools) or perhaps angel investors or Venture Capitalists, the reader might wonder how these perhaps controversial ideas — that the Plan A in which they invested probably isn’t going to work — will play out in the eyes of their investors. The good news is this. The best of such investors — those who have been down the entrepreneurial path many times before — know that changing the plan is simply part of the landscape. If you pitch properly up front — enticing investors to join you and fund your experimental and carefully disciplined (thanks to your well thought out dashboard) journey to a better Plan B, with all of the risk (your leaps of faith and more) which that journey entails — they will understand when you DaSHBOaRD lESSONS NEW VENTURE Da SHBOa RDS globalgiving: problem solving lEaP OF F a ITH qUESTIONS a RE THE DRIVERS T HESE gENER aTE HyPOTHESES W HICH aRE TESTED WITH ClEaR mETRICS aT a PaRTICU laR POINT OR PERIOD IN TImE yIE lDIN g INSI gHTS FOR DECISION maKINg Measures begin with questions.

THE ESSENCE OF NEW VENTURE DaSHBOaRDS 15 www.london.edu/bsr BUSINESS STRATEGY RE VIE W dashboard lessons NEW VENTURE DASHBOARDS THE aUTHORS JOHN MULLINS [email protected] Mullins is Associate professor of Management practice in Marketing and Entrepreneurship at London Business School.

RANDy KOMISAR Komisar is a partner at Kleiner perkins Caufield & Byers. They are co-authors of Getting to Plan B: Breaking Through to a Better Business Model. come back and tell them the data have spoken, and that it’s time to change to Plan B or Plan C.

You may have to do a bit of educating of your investors — if they are not very seasoned or are too corporate in their thinking — about the realities of these journeys. For this purpose, it might help to remind them about the story of PayPal. Even a journey that gets to Plan G can have a very happy ending.

No panacea Dashboards offer no panacea to innovators, of course, whether in companies large or small, old or new.

The rampant uncertainties inherent in any real innovation effort will not go away. But well-chosen dashboards offer several key benefits that entrepreneurs in any setting should not overlook:

n They help management focus on resolving the most critical uncertainties at the current point in time.

n They help management kill projects quickly when killing is what’s called for, given the evidence at hand.

n Their output is, for the most part, numbers, not words. Numbers speak volumes about what is really happening in a new venture. Words, all too often, simply obfuscate the truth.

n Good dashboards redirect attention from what are often pie-in-the-sky forecasts toward the factors that actually determine whether, when, and at what cost revenues will actually ensue. Sadly, forecasting revenues for truly innovative new ventures is folly, despite the fact that investors or top management want to see such forecasts.

n They align managers’ mindsets with the reality that their job in leading an entrepreneurial start-up or another kind of innovation project is not to flawlessly implement the plan proposed at the outset. Rather, it is to learn — as quickly and inexpensively as possible — which parts (if any at all) of that plan are pretty much on target and which parts are wrong. And then change course to a better Plan B.

So take off those rose-coloured glasses. Ditch the straightjacket that is Plan A. And get started on a learning journey that just might take you and your backers to a much more viable and vibrant Plan B. Effective dashboarding can create accountability and metrics, based on explicit leaps of faith, where the classic R&D process does not.

Intuit has a long track record of innovation with products like QuickBooks, TurboTax and Quicken, but keeping its innovation vibrant takes vigilance. Angus Thomson, the General Manager of Intuit’s new “Grow Your Business Divison at Intuit” division, shared the ideas in this article with his team. They embraced it, leading to quicker cycles — and some surprising outcomes — on innovation. Specifically:

n They created hypothesis statements for each of the division’s R&D projects n The project teams and leadership jointly agreed up-front on specific, quantitative criteria and deadlines for the next funding round n Funding rounds were three months or shorter n User growth, funnel conversion and net promoter data were prioritised over revenue growth as criteria for early stage projects n These criteria and progress against them were published company- wide in an Innovation Dashboard, reinforcing transparency n In two cases, teams advocated that they cease work on their own projects as the data came back n After six months, half of the projects were still funded n Teams were energised by the clarity, challenge and ownership in the process n User and revenue growth sharply increased as the teams have doubled down on what is working best An important learning was the heightened importance of career coaching. “What happens to me if my project gets cut?” was a commonly and understandably expressed fear. The division significantly increased career guidance and coaching to ensure that great contributors succeeded at Intuit, even if their particular project did not make the hypothesis-based cut.

INTUIT CaSE STUDy INNOV aTION BUSINESS 16 BUSINESS STRATEGY RE VIEW issue 1 – 2 011 Copyright ofBusiness StrategyReviewisthe property ofWiley- Blackwell anditscontent may notbecopied oremailed tomultiple sitesorposted toalistserv without thecopyright holder's expresswrittenpermission. However,usersmayprint, download, oremail articles for individual use.