Over the past few weeks, I’ve been working with the CEO and leadership team of one of our NFP clients to help them design their strategic innovation portfolio and investment approach.
We’ve been very focused on the change journey for this work. That means engaging a range of stakeholders including the broader team and the board to genuinely co-design how this might look.
There’s major disruption, regulatory reform, and uncertainty in several parts of the sector we’re working in. Thanks to great leadership, a diversified strategy, and solid financial reserves, we’re in a great position to innovate.
The path forward is to strategically explore opportunities for diversified growth and scale, while keeping an eye on disruption to the core business.
This also means always ensuring alignment with the organisation’s purpose, vision, strategic priorities, theory of change, and strengths & assets.
Over the years I’ve been lucky to work with a lot of organisations who had a strong desire to innovate and create new products and services to create some earned income and diversify revenue streams. Unfortunately, this has usually been from a position of desperately needing it to work immediately.
Failure
Innovation isn’t efficient.
It’s about taking calculated risks. It’s about failing and learning from things that don’t go as hoped to increase the likelihood the next thing will succeed. Not all failures are equal though. How and when we fail matter.
Innovation means dealing with plenty of things that don’t go quite as we might hope… and requires perseverance and resilience. We also need to practice a growth mindset.
From Carol Dweck’s work and other positive neuroscience research, it’s clear that our mindset, including the way we view risk and failure, is critical to our happiness, creativity, and success.
As she says in her awesome book Mindset “in the growth mindset, failure can be a painful experience. But it doesn’t define you. It’s a problem to be faced, dealt with, and learned from”.
“Not only weren’t they discouraged by failure, they didn’t even think they were failing. They thought they were learning.”
Carol Dweck
I’m not into failure, but I’m very much into learning. I always play to win – in a collaborative way and have fun doing it. When the phrase “fail fast” is used, it often leaves out the important part… “to succeed sooner”.
If it’s not going to work out, we want it to happen early, and before we’ve wandered down a path of overinvesting time, money, and energy in the wrong thing. And burnt out in the attempt.
That means creating the conditions for success and taking the right approach.
Conditions for Success
As people doing this work, our own mindset is the first thing we need to work on to increase the chances of success. But we can’t do any of this work alone. Performance and contributing to real change happen through the collective action of teams.
Organisational readiness, the ability to invest, and risk profile all need to align for innovation to thrive. I’m a big believer in only investing what you can afford to lose, and if you desperately need the first thing you try to pay off, you’ve probably left it too late.
“It’s impossible to innovate if it has to work. Innovation must always be accompanied by the phrase ‘this might not work.'”
Seth Godin
It’s essential to create an environment with the psychological safety to experiment, learn, iterate, and build creative confidence. The innovation mindset.
Taking risks means having the courage to be vulnerable. To take on situations with “uncertainty, risk, and emotional exposure”, as Brené Brown says. I love her quote:
“No vulnerability, no creativity. No tolerance for failure, no innovation. It is that simple. If you’re not willing to fail, you can’t innovate.”
Brené Brown
None of this means ignoring reality, having a blank cheque, or working without pressure.
Constraints often drive real creativity – and most find the absence of constraints extremely daunting and paralysing. We need constraints to frame things and to push against. This means taking a strategic and planned approach to innovation with timeboxing and specific investment.
There’s a freedom through structure. We need enough structure to guide us and sustain momentum without it being rigid and getting in the way of progress.
Good governance with a rhythm of review and funding stage gates is a core part of the constraints and structure required for innovation to thrive.
Innovation Approach
At Dynamic4, we have a foundational philosophy, set of principles, and an overarching approach to innovation, but no two contexts are identical. It’s always about meeting people where they’re at and working alongside them on the journey.
Divergent
Within the frame of alignment with the organisation’s purpose, vision, strategic priorities, theory of change, and strengths & assets, we go through a divergent process to explore the possible.
With organisations who already have sharp clarity on these elements, I’m often testing to see where the boundaries are – and where the team have a shared view, and where there are nuanced differences. This is often about making the implicit explicit.
Other organisations I work with don’t yet have that clarity and things have been operating in a more informal way.
This usually means working with them to get at least some of these foundations in place. Ignoring it results in things taking longer and stakeholder conflicts arising at the most inconvenient times when you think you’ve already got agreement.
Emergent
Innovation is not a straight line.
It’s an emergent process.
After exploring and opening things up with the divergent phase – and before converging to narrow the focus – I find there’s a lot of value in creating space for the emergent. It’s important to resist the urge to converge too soon.
Sometimes the most valuable insights are the ones that emerge unexpectedly when you’re not driving to an outcome. A time to stay open, curious, and to not take things too literally.
We need to embrace the reality that we don’t have all the answers, but as we ask better questions, the themes and opportunity areas will reveal themselves.
Convergent
We can’t diverge forever… and the emergent process is often very uncomfortable. It’s full of uncertainty and apparent contradictions. It can also feel like you’re not making progress. There’s a tension.
The process of converging brings a release and resolution to that tension.
This is where we make sense and meaning of what we’ve heard – identifying the patterns, themes, and getting down to the key insights and opportunities. This is a process of making things more concrete with fewer options.
In the case of designing an innovation portfolio, this means assessing all the possible things that could be explored and making strategic decisions.
Strategic Innovation Portfolio Mix
There’s never enough time, money, and attention to do everything at once. We need to prioritise.
That’s where I find a simple scoring model to rate the potential rewards and risks of each idea is very powerful to make informed decisions. I have a standard way I approach this but the dimensions and weightings are always tailored to what’s relevant and matter to the organisation.
Good strategy means making deliberate choices about what to focus on – and what to say no to.
Then it’s time to explore.
Customer & Market Research
Most ideas don’t fail because the solution wasn’t good enough or because of the price. They fail because the problem isn’t a high enough priority to change behaviour and adopt a better or different solution – and/or not enough people know about it. And sometimes the target market just doesn’t have the money to pay.
Really understanding the market and our potential customers are key. This means focusing on the people and the problems as the experience them to build empathy. It also includes understanding how our ideal customers currently solve the problem.
It’s easy to over invest time, money, and energy. It’s critical to design for an innovation approach that reduces this risk.
Even with the best research, we’re always working with incomplete, inaccurate, and inconsistent information. But we need to take a position on the best available evidence to prototype like we’re right.
Then it’s important not to hold that position too tightly… but to test like we’re wrong. Testing our riskiest assumptions to learn, refine our thinking, follow the evidence, and manage the risk.
This means we prototype like we’re right, and test like we’re wrong. The scientific method.
I’m a big fan of selling before I build wherever possible. The ultimate evidence.
What I’ve Learnt
While I’ve been leading, designing, and delivering strategic change and innovation for 30+ years in global banks, startups/social enterprises, and NFPs – every context is different and there’s been many variations of the process to match.
Reflecting helps me with clarity, remembering hard-won lessons, and to build empathy with the many stakeholders who come to this with their own experience, perspectives, and pressures.
I’ve done over 20 startups over the past 30+ years and coached hundreds more. I’ve already reflected on a lot of my lessons, so I won’t duplicate them here.
I also need to wrap up reflecting and writing about it… and get back to doing the actual work.
There’s no one true path for innovation. There are always trade-offs, there’s always risk.
But there are ways to approach innovation to increase the chance of success and manage risk. A couple of other lessons I’ve learnt doing innovation in established organisations.
Dedicated Time & Headspace for Innovation
For innovation to be successful, it needs dedicated time and headspace. It needs space to breathe and time to think differently – to explore, experiment, and reflect.
When innovation is squeezed between business-as-usual tasks, it rarely gets the attention or energy it deserves. At the same time, innovation doesn’t happen in a vacuum or when it’s disconnected from reality.
Creating the right structure is challenging and there are always tradeoffs. I find the strategic–tactical–operational (STO) triangle model really useful when thinking about this and doing organisational design.
Strategy sets the direction, tactics chart the course, and operations make it happen. All three levels must work together – and together they form the backbone of effective organisational design.
Momentum only builds when you focus on two connected levels – strategic and tactical, or tactical and operational. Jumping between strategy and operations usually leads to confusion.
The harsh reality is the gravity of operations always wins. The urgent demands of business-as-usual will pull attention and resources back to the operational level, often at the expense of longer-term goals and innovation.
Balancing this to create a structure that stays connected with the real world, works within resource constraints, and still provides dedicated time and headspace for innovation is critical. It usually takes some experimentation.
Organisational Capability & Rhythm
Real innovation is a team sport… and a long game. It thrives on engagement, co-design, and diverse perspectives. Success depends on bringing people along for the journey, from the board and leadership to the broader team and customers.
When people feel heard and involved, they’re more likely to support and champion the change. This means creating genuine opportunities to contribute. The team are usually the people who know the most about the customers and business.
From my experience, this means building the internal organisational capability and rhythm for innovation. Creating the conditions and mindset for success. It takes time to ramp up and build momentum.
Innovation isn’t something you can outsource.
It might be a strange thing for me to say and against my self-interest. But it’s the reality.
External help is often critical to help set things up for success and guide the process, but it needs strong internal leadership. Without it, innovation rarely sticks, or it quickly becomes innovation theatre.
This is why the approach we take at Dynamic4 is to work alongside leaders and their teams to navigate complexity and solve problems that matter… rather than taking a traditional consulting approach.
Our goal is to help you build the capability and confidence to innovate long after we’re gone.
Let’s Collaborate
In this post I’ve been reflecting on leading innovation from the perspective of creating the conditions, building the mindset, and working out where to explore first.
But how do you actually get it done?
That’s exactly what I cover in my book Solve Problems That Matter.
It’s a playbook with actions and worksheets to help you take a human-centred design and living systems approach to design, build, and launch your idea.
Ideas that customers and teams love, make money, and do great things for people and our planet… all while increasing wellbeing.
At Dynamic4, we specialise in regenerative leadership, design, and innovation with a focus on purpose and wellbeing.
By being intentional about it, you can build internal regenerative leadership and innovation capability, while doing the work that needs to be done. A great way to get multiple returns on the same investment.
Co-designing project-based experiences based on learning through doing to innovate is core to what we do.
Ready to have fun collaborating to solve problems that matter?
