Your project may be looking healthy, but is it really an example of the walking dead? If you are not doing a thorough Project/Company Fit analysis, then it very well could be. Here's why:
Many corporate innovation labs or new business incubation groups are chartered with the task of growing the company's business through diversification into new products, market segments, or transformative business model innovation beyond the company's core business. That's an inherently risky charter for a couple of reasons.
- Market Fit - The market demand, competition, and pricing of new products, businesses, business models or internal process innovations are uncertain. This dimension of uncertainty is the focus of most of the academic and consulting work on corporate innovation.
- Company Fit - An equally, if not more important dimension is the fit between the innovation project's operational requirements and those of the company's core business operational norms and culture.
Many large companies have started developing and deploying the skills and methods required to address the uncertainties around Market Fit, but the tools and methods for evaluating and proactively managing Company Fit are less well understood. Even though a project may be generating positive indicators on all fronts from a Market Fit perspective, if the Company Fit is poor, once the project tries to transition to scale deployment and operation, it will very likely fail. It's a zombie project!
But my Company Wants to Grow & Diversify. Why Would that Happen?
Large, mature companies face an oxymoronic dilemma. If their core business is fairly mature, they may need to grow and diversify beyond their core business in order to achieve the growth rates they or their shareholders want. However, both the risk of failure and the incremental growth potential increase exponentially the further they are from the company's core business. While the company management may allocate resources for transformation or diverse growth initiatives, the optimizations and layers of cultural incentives that have evolved in support of the core business may inadvertently strangle the innovative or disruptive projects.
Is there a Cure for Innovation Zombies?
Okay. You may be thinking; "We'll just focus on opportunities that are aligned closely enough with the core business to have an acceptable risk, but distant enough to represent significant new growth." That's a great strategy, but how do you measure and assess whether a project is "aligned closely enough" to the core business? If greater diversification is required to reach the desired incremental growth, how can you reduce the impact of misalignment and improve the project's probability of long-term survival?
The key lies in understanding the failure mechanisms that actually create the increased risk of failure as projects are more and more distant from the core. Unfortunately, there is no magic bullet. The failure risk is typically the cumulative result of many, many small points of friction that slow down or unduly shackle the innovation project, make it noncompetitive, or make it susceptible to termination in organizational restructuring or periods of financial stress. To make matters worse, those potential points of friction are different for every project/company pairing, so what works as a potential remedy for one innovation project, may not work for the next.
Early Detection is the Best Medicine
The best way to prevent Innovation Zombies is to triage and detect them early and treat them accordingly. That's exactly what our Company Fit Assessment Tool is designed to do. It helps you evaluate a project against your company's explicit and implicit priorities and processes across key corporate functions to try and highlight potential misalignment points and provides some recommendations for actions to consider based on the overall assessment.
