Whoever imagines that the top management of companies does not fail is wrong. Find out below some mistakes that CEOs and CFOs make and how to avoid them.
It is true that “to err is human”; after all, CEOs, CFOs, and leaders in general have not always had this function. It is almost certain that they need to improve and climb the professional career ladder with a lot of patience and supported by knowledge.
Furthermore, investing in innovation is different from making traditional investments. That’s because the same methodology and processes don’t work for both.
Therefore, if you are a CEO or CFO, know that on this journey, some mistakes are inevitable. But only “some,” as it is always possible to foresee specific slips. With this in mind, we have separated the 3 most common mistakes that CEOs and CFOs make when investing in innovation to help you avoid the same mistakes in your business.
First, it is essential to remember your company’s innovation maturity — which can be obtained through the Corporate Innovation Culture Diagnosis tool.
Ask teams to write business plans
It is still prevalent for company leaders to ask their early-stage innovation teams to write business plans. However, this is not a good idea.
This is because, at first, all ideas seem sound and promising, and this preliminary euphoria can disregard numerous factors that would lead to planning to complete failure.
Furthermore, the investment mechanisms and metrics used to measure innovation success differ significantly from those used in developing an established business.
Therefore, the solution to circumvent this error is to use tools that discuss, structure, and direct the scope of future actions and decisions related explicitly to innovation in the company, such as the Corporate Innovation Assessment.
Another methodology also indicated is the How Might We, which identifies the primary disorders present at different times in the corporation, such as when:
- the company is experiencing difficulties and cannot find ways to solve them;
- a product or service is not being requested and used as much by consumers, making a rebranding necessary;
- a work team is about to start a new project or action strategy.
This way, the team can think and develop theories and methods “outside the box” to overcome challenges. Check out!
They believe they can pick the winners
Making an investment decision based exclusively on a business plan means, in a way, that you know precisely which innovation projects will succeed and which will not. But we know well that no one knows how to choose a “winner” when the issue is innovation.
Let’s look at a practical example: VCs put together a portfolio of invested startups because they don’t know how to choose a winner. These are small bets with the expectation that one in ten will be successful.
So, it is clear that investing in a portfolio of innovation projects is necessary to increase the chances of success.
The ideal is to start with small bets and always follow them closely to discover what works and, over time, increase the size of the investment.
Don’t give up on projects that aren’t working
This is always a difficult decision to make. Giving up on a project no longer working requires wisdom and courage, but it is essential and must be done as soon as possible. After all, a large part of them will fail.
But, for that, it is necessary to create an environment in which it is safe to fail, and that does not punish those who are looking for intelligent solutions but that stimulates the testing of new ideas since tolerance is fundamental in a culture of innovation and helps to create teams each more agile and effective, increasing the project’s chances of success.
In addition, expecting positive results in all attempts can lead to frustration and demotivate those involved. After all, as already mentioned in this article, some mistakes are inevitable.
That’s why it’s essential to inspect projects periodically—quarterly, for example—to verify that actions and directions still make sense in an ever-changing business environment.
And the Business Model Canvas (BMC or simply Canvas) can help your team do this quickly and efficiently. It is a tool that facilitates mapping the main items of the business or project, accelerating the creation of strategies that can be adapted, visualized, and revised over time.
That is, you will have a tool that will help you idealize and refine models, correct problems, and simply communicate the result to other teams and stakeholders. To download it, click here.
Not involved in open innovation ecosystems
Who wants to rely on something other than the expertise of different players when investing in innovation?
That’s exactly what an open innovation ecosystem provides. Companies, startups, universities, research institutes, and many other institutions come together to co-create and collaborate.
In other words, it is your chance to improve your company’s innovation process while enjoying competitive advantages such as exchanging experiences, recognition, and networking.
At Venture Hub, we rely on TechStart, the country’s largest open innovation ecosystem. If you want to participate in this community whose purpose is to impact the world through well-articulated innovation, click here.
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To learn more about this subject, contact us. Our team is ready to clarify all the details of the innovation journey for you.