Budget Free Innovation
How do you deal with the situation where you’re supposed to innovate but have no budget?
It is a scenario that arises often. Management, particularly those who are proponents of some nebulous concept of innovation culture, believe that all it takes to get innovative is throw people at the problem. In some organisations, it is much easier to find people than find money, so it seems like and easy way to get an innovation program started.
The problem, of course, is that making innovation happen is not just about people and ideas. Execution, which is the difference between having an idea that just sits around, and having an idea which can actually be converted into something useful, costs money.
Therefore innovators with no budget at all will almost always fail, and here is the reason.
Before anyone can make an investment decision in something new, there are three key questions which need to be answered. The first, which is “can we do this”, is really technical: are the technologies, production capabilities, management systems, and other artefacts needed to create the innovation available? If not, can they be created at a reasonable price? The second question is “Should we do this”, which is actually about the financials of the innovation. And the third question is “When?”, which has to do with market entry timing.
To answer these questions, the innovation team will likely have to pay for research, for prototypes, and for the time of analysts. It is a rare innovation group that has every skill it needs in house.
So for innovators with no money at all, there are few alternatives but to try to answer the key questions themselves. Usually, this results in very poor business cases, extremely unattractive to big budget holders on account of their paucity of detail. The innovators wind up tossing poorly formed propositions over the fence for funding, with little or no chance of being taken seriously.
Prior to starting your innovation effort, you need to work out funding. James Gardner’s free online innovation book has material you should review.
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