I am a believer that constraint based innovation creates better ideas. It forces the team to throw out the old rule book and innovate a new approach. The same applies when you are forced to innovate under financial constraints.
While my staff doesn't always agree that constraints are good, in my experience a team that got everything they asked for rarely delivered an innovation that had significant impact. Too many resources allows us to get sloppy and lazy when it comes to the execution of ideas.
When it comes to innovation, there are three constraints; 1) time, 2) people and 3) money.
So how would you innovate the financial constraint? The way that has worked for me is to find creative ways to other peoples money.
Here are 4 options:
- University R&D: Participate in university research and development where others are providing a significant portion of the funding. The funding can come from any number of sources including government and other organizations. The key is to find a professor and program that aligns with your objectives.
- Pros: 1) Low cost to fund university research, 2) Long term commitments to these programs creates a pipeline of innovations and 3) Great source for new hires (students working on your program)
- Cons: 1) Takes a long time (patience), 2) High risk and 3) May have limited influence given funding levels and 4) IP/patent issues
- Co-Innovation: A joint effort between you and one other organization.
- Pros: 1) Less complex than other options and 2) Builds long term relationships that typically results in multiple projects
- Cons: 1) Make sure their is mutual dependency on the project, 2) take a long time to get the first project going and 3) IP and patent issues can delay the start
- Startup/Venture Capital (VC)
- Pros: 1) Faster than you think when you have motivated startup and 2) You can use your purchasing power to influence the startup
- Cons: 1) High risk – does the startup have staying power? and 2) Investors have control in direct proportion to their investment
- Ecosystem Innovation: Bringing together a larger group (more than two) to fund and support the innovation effort(s)
- Pros: 1) Shared cost across larger ecosystem and 2) Possible larger impact when a large ecosystem aligns the innovation effort and its use/deployment
- Cons: 1) Complex collaboration requiring strong program management capabilities and 2) Frustrating governance that requires a strong hand from the person in charge
The above are just four examples of how to use other peoples money so that you can innovate under financial constraints. There are many more I'm sure. The message — don't give up.
Listen to the show to hear real-world example of how each were applied that resulted in an innovation coming to market.