How To Fail Fast (And Properly) In Corporate Innovation
Feb 16, 2021
For Tektronix innovation director Sam Strickling, the ability to fail fast is key to corporate innovation. Here's how he does it.
The startup world usually embraces the concept of “fail fast” to learn quickly. Traditional enterprises, on the other hand, aren’t eager to jump on the bandwagon. Many large enterprises can’t afford to try things, fail, and keep going because they have thousands of customers to consider - and potentially thousands of employees as well. Perhaps ironically though, that’s exactly what needs to happen. Sam Strickling saw this firsthand as the Director of Innovation at Tektronix, where he runs the company’s internal Growth Accelerator.
In a Forum Innovator Spotlight interview, Sam shared his views on corporate innovation, failing fast, and failing the right way. He explained not only how he built a safe ecosystem for learning through failure, but also how to measure corporate innovation when working outside of traditional revenue structures.
How to fail fast and fail properly
The first thing Sam realized when joining Tektronix was that innovation needed its own home and rules. The nature of experimentation, failure, and unique explorations meant that he couldn't host projects within the larger organization constraints - the things that make corporations successful in development are antibodies to innovation work. As a result, he and Fortive (Tektronix’s parent company) built Growth Accelerator, a sandbox style innovation environment where the team could try new ideas. By removing innovation experiments from the larger organization, Sam made it easier to fail fast. Not only could he work faster, teams could work without disrupting Tektronix’s existing business or customer base.
“We wanted to have a place for people to safely explore and fail, set aside from the business requirements of revenue and schedule,” said Sam.
Breaking out of the corporate structure also allowed him to break out of the traditional product development process. Instead of thinking about potential revenue, the Growth Accelerator first focuses on customer empathy. Sam takes this and instructs his team to “go find big customer problems to solve.”
To limit financial risk while ensuring people know failure is ok, projects are funded in tranches. When a problem is identified, teams are given some funding to test their theory out and interview customers. If the research uncovers that the idea was a dud, the project stops and the team moves on. If there’s an opportunity, they get the next tranche of funding to assess how big the opportunity could actually be and what types of solutions may be valued in this space.
Tranche funding, said Sam, allows the innovation team to kill bad ideas as early as possible. A traditional product creation process thinks about a market size analysis then develops a product. Sam’s team starts problem-first. This allows them to cheaply assess an idea’s merit without spending a lot of money or time on product development.
If an idea that makes it all the way through the validation funnel, it goes into commercialization. From there, the product/service is put into the corporation's traditional development process. That's when the company works through rigorous compliance, security, and user safety tests.
The benefits of an internal accelerator
While a safe space for innovation is valuable by itself, Sam identified three key benefits to building an internal accelerator.
The first benefit is how customer interaction changes. Sam said that in Growth Accelerator, team members approach customers as partners instead of simply consumers. While the goal is to build a successful commercial product, the first step in the process is to find customer problems worth solving. With that mentality, the innovation team explores with customers, getting to know them first as people. This, said Sam, helps build loyalty and produces better ideas, since customers are part of the solution.
The second benefit comes from tranche funding. It’s a much cheaper way to test ideas, said Sam. It works because you don’t have to commit to product development until you know there’s a viable opportunity. The first tranche is just time for the team to interview 50-100 potential customers on their problems. That's a much smaller expense than running an economic analysis and building a new product from scratch without validation and saves money in revision cost trying to fix a product post development.
Sam said the third major benefit is that the internal accelerator can tackle huge problems. While corporate teams think about incremental improvements and protecting their revenue base, the innovation team can take huge risks. The combination of tranche funding and a safe space to fail makes it much easier to ask bold questions or sniff out a potentially massive idea.
Sam said these benefits only work when the leadership team of the accelerator - himself included - don’t make any assumptions. While innovation needs some parameters like what it does for the organization, the team needs freedom to chase problems and get to know customers. The solution, said Sam, is up in the air and up for debate. True innovation starts by becoming obsessed with a problem and wondering how it can be solved.
Measuring success when speed matters more than dollars
Metrics are critical for measuring progress and success, but corporate innovation rarely follows the same structures as traditional product development. Over the years, Sam has seen multiple KPIs and metrics applied to innovation, whether at Tektronix or in his previous experiences at Nike.
Sam measures in two categories: ideation and development.
For ideation, Sam looks at two metrics:
1 - Velocity of ideas: the number of ideas tested and put through the funnel compared to previous time periods (and based on team capacity).
2 - Kill rate: Sam said research indicates about 1 in 12 ideas will be good, so he said the team “wants to maintain a healthy kill rate.” He analyzes this on a 1-2 year horizon, allowing for the possibility that you may have a few great ideas in a row - or 100 bad ideas in a row.
For development, Sam looks at three metrics:
1 - Revenue multiple: Sam tracks whether ideas that made it through the innovation funnel are doing 5-10x what a traditional product launch might bring in at a similar stage (launch, growth, etc.). This high bar ensures that ideas coming out of the innovation lab focus on big opportunities.
2 - Patents: a part of innovation at Tektronix is creating net-new technologies, something Sam measures via how many patents the team secures. This isn’t a metric he requires improvement on each quarter or year, though. It’s simply a quality metric that helps uncover if the team is creating new innovations versus recycling old methods. However, both can be viable, so he doesn’t lean on patents as a huge signal.
3 - Employee happiness and engagement: Sam wants his team to be happy and engaged in the problems they work on. His data suggests that is precisely what’s happening. Innovation team members love the process of talking to customers, failing fast, and working through new ideas constantly.
The secret to success with corporate innovation
When asked about his successes and parting words for corporate innovators, Sam had three pieces of advice: first, fall in love with the problem. Solutions may change over time. Second, be willing and able to kill your ideas often. This isn’t just something in principle - it happens all the time. That’s why it’s critical to not fall in love with your solution. Chances are, you’ll need to kill it. And third, he advises all corporate innovators to get ready for what he calls “solution storming.” Once you validate that an idea has merit and opportunity, Sam said you’ll need to come up with 200 ideas (or more) at the start. It’s a long process, but the more time you spend on solution storming within a tranche-funded accelerator, the better your innovations will be.
Interested in connecting with other Innovation and technology executives to share strategies, experiences and learnings? The Innovation Forum brings together Innovation execs across sectors to connect, share and support each other. Get exclusive resources, expert talks and first access to our growing community of B2B startups. Learn more by emailing me at Jon@forumvc.com.