Companies today are heavily engaged in non-incremental innovation.

To introduce and launch new technologies, approaches or practices to their company or industry, many are running Innovation Centers, Incubators, Accelerators, Digital Labs, or whatever fancy label they put on it.

But what’s the ROI, the Return On Innovation?

Statistics show that generating business impact is hard. Only 1 out of 8 corporate startups succeed, according to Bain&Company.

The scaling up phase, where validated innovation concepts are taken to a sizable business, turns out to be the ‘Death Valley’ for many innovation concepts.

A quick catch-up on the ‘Scaling Up’ problem

Working together in a Peer Group of leading companies, Frank Mattes and Dr. Ralph-Christian Ohr discovered that there is one phase in the end-to-end innovation process which causes problems in generating business impact.

It is the phase in-between ‘Validation’ and ‘Growing a sizable business’, which they call ‘Scaling-up’.

In this phase, two separate entities need to work together to create an ‘unfair advantage’ in the marketplace. These two entities have been designed for two different purposes and hence are built on two different paradigms:

a) The explorative innovation unit where the goal is to embrace the new, test, discover a sustainable business model, repeat – and

b) The core organization, which is designed to deliver on a proven business model; i.e. driving processes, predictability and hitting numbers for the next quarter.

The hand-off between the two has to be highly structured, precisely-orchestrated, and process-driven. It requires the Scaling-Up Framework.

If you’re new to the Scaling Up Framework, here’s Frank sharing it in full detail during a recent webinar:

Download the webinar slides

To read more about the Scaling Up Framework, check:

Scaling Up: The Foundation
Scaling Up: The Framework

Scaling Up: The Litmus Test

To improve, it helps to pause. Take stock. Remind ourselves of where we are, what challenges we face; and to assess how prepared we are to face them. This litmus test will show you if your company has a Scaling Up problem – or not.

Answer the following questions, and note down (or keep a mental check of) your response pattern: mostly A’s, mostly Bs or mostly C’s.

1) Validation of Innovation

Which statement best reflects something you might say?

A. We have an Innovation Center, Sandbox, Accelerator- Incubator, Digital Lab, or something similar. That’s where we validate innovations using Design Thinking, Lean Startup, etc.

B. We definitely have people who develop and validate innovations and I’m pretty sure they know how to validate them.

C. What’s an Innovation Center?

2) Customers

Thinking about the impact of non-incremental innovation on direct customer experience:

A. We walk in our customers’ shoes, assess what changes mean to them and what truly matters to them.

B. Customer orientation is a high value in our company and in the past, we had customers appreciating our innovation work.

C. We don’t hear too many complaints.

3) Innovation Returns

Choose which of these statements best describes your company.

A. We keep careful track of our investment in innovation and we have a good idea what returns we are getting on investments we made three to five years ago.

B. We know pretty well how much we invest in innovation, but we can’t easily answer what we get out of these investments.

C. Investment is investment. Returns are returns. We don’t trace the correlation between investments and returns.

4) Types of Innovation

Choose which of these statements best describes your company.

A. We distinguish clearly between incremental innovation (continuous improvement) and non-incremental innovation (step changes, new technologies, etc) and these are done differently – different people, different units, different methods.

B. We have people focused on innovation, but they don’t differentiate much between incremental and non-incremental change.

C. Innovation is everybody’s job. We leave innovation to everyone with a bright idea – unfortunately, many people are too busy.

5) The Three Playing Fields

Choose which of these statements best describes you and your company.

A. We have an extensive graveyard of innovations which should have been profitable but weren’t. Now we think hard about how to ramp up innovations to an industrial scale.

B. We think we share the problems being discussed, but our agile innovators and process-focused business management don’t always agree on how to tackle them.

C. We focus on proven ways of working and rely on our experience to tell us when change is needed.

6) The collaboration

Choose which of these statements describes you and your company.

A. We have a good idea of how the corporate startup and the core organization should work together to generate business impact and achieve an unfair advantage. However, it depends heavily on the people involved, and whether the collaboration works out.

B. We are aware that the innovation folks and the core organization should collaborate better, but they seem to miss a common language to discuss issues.

C. We have enough operational processes and should be in a good position to deliver business impact. Although, to be honest, implementing completely new products, services or business models often fails to work in practice.

7) The process

Choose which of these statements best describes you and your company.

A. On entering the scale-up phase, we have plans. However, these are on an individual level, and hence hard to communicate. It follows that many managerial roles, responsibilities, and hand-offs should be clarified – and funding is always an issue.

B. We are sure that scaling up a corporate startup requires some specific thinking but we haven’t yet figured out how we should approach this.

C. Scaling-Up an individual corporate start-up seems to be a project. So we assume that with proper project management we can set ourselves up for success.

Check your response pattern for your score…

Mostly A:

You clearly understand the issues, but need to discuss them in more depth. You need a Peer Group forum, to address the problem and the solution in more detail and to discuss what works and what doesn’t with your peers from other companies. The Peer Group prepares you for making a substantiated call for change within your company.

As a next step, get involved in the Scaling Up Peer Group.

Mostly B:

You understand the problems pretty clearly, and you may think you know the best solutions for your company. You just need to get it right, without betting the farm. The next step is a Masterclass forum. This is an intensive practical event which acknowledges the complexity of the topic: Two days spent not just working through the problem and how to solve it but also debating those solutions.

As a next step, sign up for the Scaling Up Masterclass

Mostly C:

Two possibilities: maybe you’re very lucky, with sympathetic customers and a supportive Board. Or your company is heading for extinction. Your competition is almost certainly ahead of you in delivering value via innovation, and sooner or later they’ll be ahead of you in other areas too. You need to think hard about how to define your core problems, validate solutions and approach the next steps.

A two-day Masterclass could give you a jump-start.