Entrepreneurs are those who look out into the world, see things in the world that aren't the way they should be, and build products and services that make the world the way it ought to be.

While many people relegate the idea of entrepreneurship to a small corner of society, what corporations need to do is ensure their leaders see themselves as entrepreneurs, as Sean Ammirati, Adjunct Professor of Entrepreneurship at Carnegie Mellon University's Tepper School of Business, suggested at a recent Innov8rs Connect event.

If you don’t see yourself as an entrepreneur, you’re unlikely to solve the problems closest to you. Adopting the mindset of a startup is key. Startups are projects that start small with the goal of growth and becoming big, and it's the potential scale these projects could reach that makes this crucial for large corporations. But how do you do this effectively, not just once but repeatedly, and not just in one place, but across the business?

Make the Case for Innovation

The first step to creating more effective innovation groups is to ensure everyone in your business understands the need for innovation in the first place. If they don’t, many will simply think that innovation is a waste of time, money and resources.

But in fact, innovation is quite the opposite. Innovation is what allows companies to grow and survive in the turbulent economic environment. We are no longer in the 1950s, where a company could expect to survive for more than six decades.

Instead, new businesses struggle to make it to the two-decade mark, and more than half of the S&P 500 has disappeared in the last 15 years. The only ones that survive are the ones that successfully innovate.

Recessions appear on a regular basis, and these are what usually kill off poorly innovative companies. However, the ones that come out at the other side stronger than when they went into the recession are the ones that focus on and invest in innovation.

Clarify Your Scope

As with many aspects of business, clarifying what your scope is for innovation is key before you even begin any major processes or projects. You need to first find out what is actually in scope for your innovation teams, and what your golden ratio of resource assignment is across these groups.


You can look at it in terms of three broad categories. The first one is your core group, which involves optimizing your existing products for your existing customers. This sits at the bottom of the pile, and the kind of returns you can expect follow a normal distribution in terms of how many projects you run in this category.


Next up you have the adjacent group. This involves expanding from your existing products and customers into ones new to the company. The rate of returns here begins to change from a bell curve towards one reflecting the power law, but it really changes at the top group.


This is your transformational group, which develops breakthroughs and invents things for markets that don’t exist yet. This is a truly innovative group, creating value out of something that wasn’t there before. But that comes at a cost.

Most projects at the top of this system will fail, but some of them will be more meaningful to your business than all of those beneath it combined. This is why it’s key to take on a lot of projects, striking out a lot but also hitting a lot of home runs.

How you're successful at each stage is very different, and the processes aren’t always transposable. That’s why it’s important to spend some time thinking about how to spread your resources across all three stages.

Spending 70% on your core processes, 20% on adjacent and 10% on your transformational processes might be a good place to start. But over time your business will evolve, and so will this golden ratio. It also depends on your industry, and that’s why it’s important to clarify your scope for innovation at the beginning.

Differentiate Between Failure Types

Once you clarify your scope for innovation, you then need to differentiate between the different types of failure that you’ll inevitably come across. You need to distinguish between failures in process and failures in concept.

Conceptual Failures

As long as the processes you put in place to test the concepts are right, you can celebrate all of your failures. If you start off with the wrong concept, this is fine, as you just need to try a different one next time.

The Wrong Process

However, if you have the wrong processes in place, you need to find this out fast. These take time and money to change. So, you want to make sure you understand when a failure is due to an incorrect hypothesis and when it’s due to a faulty process.

Start by asking how the customer will interact with a given idea, and how much you will learn from the project regardless of the outcome. Then ask how much it’s going to cost, before finally asking yourself if you did the right work. If so, then do that work again, just using a different concept.

Think Network

The final piece of the puzzle to get the most out of your business’ innovation groups involves thinking about who’s actually involved in them. Ask who is involved in the innovation and see how the network of people involved looks from an outside perspective.

Startup Environment

In a traditional startup, it’s all about designing, making and selling things. Often, these jobs are split between the founders, with someone working full-time on each part. This creates a very well structured and connected network of thinking. But this looks very different in a corporate environment.

Corporate Environment

In a corporate innovation group, these three roles are usually filled by people working part time, often on various other key tasks within the project. This leads to a far more complex network of thinking, with many part-time members of the group not connected equally to everyone else.

It creates branches, and the underlying social network between all of the people involved in the innovation group becomes far more complex than in that of a startup. This is a natural byproduct of the corporate environment, with some people trying to wear too many hats and do too many jobs at once.

Creating a tight-knit, well-structured think network ensures everyone has a more direct connection with everyone else involved.

Securing Resources (and Avoiding Rejection)

One of the key differences when comparing the environment of startups and corporations in terms of innovation involves getting the resources to complete a project. While you can employ the above strategies to make the most of your innovation groups, you can’t do much without the resources you need.

Startups might approach dozens of venture capital firms for funding. They’ll receive a lot of rejections and only need a very small percentage of the ones they approach to say yes. This gives little weight to the rejections, and a lot of weight to the yeses.

In a corporation, you might approach your board or C-suite with your idea and convince most of them that it’s a good idea. But even just one or two rejections can either demoralize you with regard to that project, or completely kill it straight away. Sometimes, just one firm “No” is enough to derail an entire project in ideological terms, or eliminate the chance of getting the resources you need.

This puts a lot more weight on the rejections than if you exist in the startup world. So, how do you better prepare for approaching the C-suite, knowing the different weightings on rejections and approvals?

You simply need to prepare for the right questions from those in different disciplines. Those in HR have different priorities from those in IT, and both have different priorities from those in your finance department. So, they’re obviously going to ask different questions and throw different hypotheticals at you. If you want to ensure you get the yeses that you need to give a project the green light, you need to prepare in advance for the variety of questions you’re going to be asked. Don’t walk in trying to impress just one executive or one department.

Once you get the green light, you need to start thinking about your scope for innovation, how you’re going to approach failure when it comes, and who’s involved in the innovation group.

That way, you’ll be able to get the most out of your innovation group, increasing their impact and hopefully the project’s chance of success.