The Innovation Thesis and its Structure
- Posted by Dan Toma
- On 14/06/2023
President Kennedy’s address to the joint session of the US Congress on May 25th 1961 can be viewed as the start of the space race:
“… I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth …” – John F. Kennedy
But his words could have very well been NASA’s innovation thesis.
Innovation should be an integral part of any company’s growth strategy, for it ensures the company’s survivability in the face of change. But the problem most companies face is aligning innovation with core-business strategy.
> The Innovation Thesis will provide a comapny with guidance needed to start making deliberate investments in innovation; in essence preventing the comapny from investing at random.
> The Innovation Thesis is a tool that will inform decisions throughout the lifecycle of an idea, it’s not only a pass filter at the beginning of the innovation process.
> The structure of the Innovation Thesis follows the natural development of an idea.
Lacking one coherent narrative for growth, covering both the present and the future will always make innovation be regarded as a distraction, and it will prevent the company from using innovation as an effective tool for probing the future.
Just like venture capital investors have investment theses that specify the types of startups and markets they invest in, every corporation must have an innovation thesis. An innovation thesis clearly sets out a company’s view of the future and the strategic objectives of innovation.
Filling out the Innovation Thesis Worksheets from The Corporate Startup book is just the first step in having an actionable document – the process is more complex if the end result will have to be something that people will use. The Innovation Thesis shouldn’t end up becoming ‘office art’ – hanging on the wall gathering dust – for its purpose is to prevent the company for randomly investing in ideas no connected to corporate goals.
The Innovation Thesis needs to help take more deliberate investment decisions, both internally (own product development) and externally (investing in startups). The thesis will be used by more people than just the once that created it, thus clarity is a must.
The more ambiguous the thesis is the less likely is it to be used effectively or be used at all. Also, the thesis is going to be a decision companion across the entire product lifecycle while catering for the needs of every hierarchical level.
The structure of the Innovation Thesis
The synthesized thesis will be made up of three parts: statement, antithesis and thesis. Each part addressing the certain needs of specific target users.
The statement part of the thesis is centered around offering a bird’s eye view of the the company’s innovation ambitions. This part should communicate the big picture without going into too many details.
Following the statement, the next part is the antithesis. This should paint a clear picture of the things the company is not going to invest in. If the statement part was primarily useful for executives and stakeholders, the anti-thesis part is useful for top and middle management. For this group will take the vast majority of investment decisions.
A clear antithesis can also prevent innovators for coming up with ideas not in-sync with the company’s vision for the future.
As the thesis needs to be useful in the decision making process in every stage of a product’s lifecycle – and not just in ideation – it needs to cover: problem spaces, business models and technologies. The antithesis problem spaces will look at what are some areas the company is not interested in exploring. If an idea falls into any of the areas mentioned in this part, the company will most likely not invest in the exploration process.
As a product matures and it passes the problem-solution fit stage, the antithesis needs to set some clear rule on the type of business models the company is not motivated to pursuit. For example: business models that require the sale of customer data can be listed there.
As the product matures, the anti-thesis needs to stipulate the type technologies the company will not back. In this part the document should not name particular technologies. But be more broad, by mentioning characteristics of the technologies (eg.: requires on-premise infrastructure, enable company to scale without significant new investment etc.)
In the document, the antithesis will be followed by the thesis. The thesis specifies what the company will support. For consistency and ease of use, the structure of the thesis needs to follow the same rational as the structure of the antithesis. The people that will use the thesis are the same as the ones that will used the antithesis.
Here’s how an oversimplified example of an Innovation Thesis, for a logistics company, could potentially look:
We are aware of the changes in our competitive landscape enabled by digitalization and lowering barriers of entry. However we are still committed to offering best in class data driven services. We’re continually scouting for new technologies that will enable us to serve our global customer based with localized and customized solutions.
- We are not going to invest in problem spaces around:
- healthcare logistics and shipping (eg.: organs, live tissue, drugs)
- weapons logistics and
- shipping hazardous material logistics and shipping (eg. radioactive materials)
- We are not going to invest in business models:
- requiring selling of customer data to third parties
- requiring the development of ‘brick and mortar’ distribution channels
- We are not going to invest in technologies:
- requiring external expertise for development and maintenance
- which aren’t compatible with our security and privacy standards
- which are not easily scalable
- We are going to invest in problem space such as:
- fighting piracy
- fighting contraband and illegal trade
- logistics as a service
- green logistics
- peer-to-peer logistics
- We are going to invest in business models:
- with subscription based revenue streams
- that will allow us to capitalize on the data we possess in the interest of superior customer service
- We are going to invest in technologies:
- require only marginal investment for scaling which
- are complaint with our security and privacy standards
- which will allow faster and more efficient deliveries
- which will help us reduce or eliminate our carbon footprint
Be it in hackathons, idea challenges, ideation sessions, corporate venture capital or partnerships, the innovation thesis will prevent critical resources being wasted on non-critical endeavors.