Successful Business Models for Innovation Adoption

The adoption and scaling up of any innovation is key to accessing the value within it. It is also the hardest part of the innovation process, hence why there are statistics showing 90% of innovations fail to scale.?We also have the terms valley of death and the need to cross the chasm specifically about this challenge. In this post I look at five common models of innovation adoption and scaling. Each has its benefits and challenges and finding the right one for your idea or organisation is key. I look at each of them for their repeatability and sustainability.

The innovation field is starting to coalesce around the best ways of sifting, filtering and testing ideas quickly and cheaply so that the most viable ones make to the next round of funding - The Lean Startup has spun off numerous variations and optimisations:?Running Lean, Kickbox and Strategyzer approaches of how to define and de-risk an innovation efficiently.

Every innovation is unique, the customer or user set and inherently the gap it fills is also unique. There is no, one size fits all approach to scaling up an innovation.?I have recently written a post on how I think a Chief Adoption Officer can help organisations improve their success rate for implementing innovation. The CAO role fits into some of the models below, and where it does, there is a better chance of long term success. (Source: B.Mellor, 2014)

A few of the models that have been used to scale up and keep new innovations developing in mature organisations are easily repeatable, but others are less so. Some of the companies I’ve looked at are famous for being innovative and wear it as a badge of honour, others are more discrete, but no less successful.?There are probably hundreds of approaches that I could have picked, but I’ve chosen five models that hopefully capture the main types. If you want to hear more about how many successful companies found and scaled their big idea, I would highly recommend the Masters of Scale podcast hosted by Reid Hoffman, founder of LinkedIn.

How do organisations currently get their ideas adopted?

1. Through the commitment of the ‘heroic founder’

There are many famous founders from the tech industry, who have built business empires on new innovations. We all know their names, Elon Musk, Mark Zuckerburg and Jeff Bezos to name but a few. Some of the successful ones have built companies that have outlived their control: e.g. Bill Gates and Steve Jobs. But there are many others whose stars have risen quickly, and just as fast fallen back to earth.

Through modern history there are many examples of founders who have gone ‘all in’ many times and proven their skills, only for one more roll of the dice to bring their empire’s crashing down. I’m grateful to the book Loonshots for providing the following example.

We probably all know Polaroid, either for their sunglasses or their instant developing pictures. When both were invented they were transformational innovations that made the company founder Edwin H Land a household name in the mid 20th Century. He unfortunately rolled the dice one too many times with the invention of, and investment in Polavision which was a commercial flop, and forced him out of the company.?There are potential parallels today with Mark Zuckerburg investing heavily in the metaverse. Only time will tell if it will be another visionary move or the beginning of the end of the Facebook/Meta empire.

The heroic founder also exists within the corporate innovation arena. They might not be at the C-Suite level. At organisations I have worked at they have operated at a variety of levels. These are the people that deliver innovations through force of personality and ability to navigate the internal politics to beg, steal or borrow resources to keep an idea moving forward.

This model only works if the founder/leader is this type of person, which makes it hard to repeat, and potentially not very sustainable.

2. Throwing money at the challenge

For consumer based innovations, one of the most famous approaches in recent years is the blitzscaling model first defined by Reid Hoffman. At the core of blitzscaling is the goal of maximising your first mover advantage by spending lots of effort in growing your user base as fast as you can, often globally.?There are a lot of famous examples, such as Uber, AirBnB and WeWork. Softbank’s Masayoshi Son has taken this to the most extreme with his Vision fund that pumped billions of dollars into startups at the start of the scaling journey to massively accelerate the process.?Sometimes it has worked, e.g. Uber and Bytedance, sometimes not so well, WeWork.

The downside of this approach was seen with the explosion of city bike rental companies that didn’t have first mover advantage but had lots of money spent on bikes, so we ended up with sights like this in China:

Source

If you have access to Venture Capital money, then this is a potential route to success, and it has been demonstrated to be repeatable, with record funding levels being deployed in 2021. The significant downsides are being able to effectively use the money to grow in a sustainable way – there are lots of blitzscaled startups now listed on the stockmarkets around the world, that have never shown a profit.

3. A culture of continual innovation

Being heroic, or spending vast sums is not the only way to be successful at innovation, there are some companies that reinvent themselves and evolve over time to continue achieving their goals.?Two of my favourite examples in this space are 3M and Adobe. As anyone in the innovation space knows, the 3M PostIt? Note is both a great tool for in person workshops and a casestudy of innovation development. One of the real drivers for continual innovation in 3M is a simple metric that business units are measured on: 35% of revenues should come from products developed in the last four years. If you want to read more about how 3M innovates read this article.

At Adobe, it has quietly moved from being synonymous with desktop publishing to being a cloud and data focussed company. To do this the CEO, Shantanu Narayen sets some clear goals for each of the three main divisions and then allows the engineers free rein on how to achieve them. Read more about Adobe’s approach here. ?One of their most interesting methods of corporate innovating is the self-serve innovation tool – now shared openly as kickbox. If you have an idea in your organisation you get sent a box with material and enough support to test the validity of your idea, before you pitch it to get a formal innovation project launched.

This model does rely on the organisation having sufficient innovation maturity to understand which ideas to bet on, having the long term view and commitment to follow an innovation to its conclusion. Having a CAO role would help in these types of organisations.

4. You don't. Be a fast follower

Many of the most successful companies – Google, Apple, Facebook we think of as being very innovative – and often they are. But if you look more closely, they are frequently adapting and applying an innovation by others more effectively. Google followed Ask Jeeves and other search engines and is now synonymous with internet search. Apple bolted together inventions by others into a very beautiful package for the first iphone. Facebook built on the path started by myspace and other pioneer online social pages. Instagram stories overtook Snap stories, and is now being passed again by TikTok.

(Associated Press)

There are downsides to being a fast follower – you have to move faster AND better than the first mover, and if they’ve gone for a blitzscaling approach, you might never catch up.

This model can work well, but its hard to do well. It is hard to apply from a standing start, your organisation needs to be accepting to change/ambidextrous in order to move fast enough.

5. Bootstrap your way to success

Bootstrapping is where you build your innovation with no external funding, relying on early sales to fund further developments of your idea. There are a few examples of companies that have managed to do this, MailChimp, Shutterstock and Mojang (Minecraft) are three of the more well known examples. Its likely that the path to scale will take longer without external investment, but you will keep control of all aspects of how your idea develops.

Final Thoughts

There is no right way to access the value in an innovation, the right approach will vary depending on the idea, market and the size of the opportunity. For several of the companies I’ve used I’ve been very selective about how they innovate, and I could have quite easily painted a different picture – e.g. Elon Musk has built a culture of rapid, low cost (relatively) experimentation at SpaceX.

One thing I have seen from all the companies I have mentioned here and others I’ve read about is that they all focussed all their energies at the beginning of the journey on the customer and getting the experience right to allow them to scale. This applies to corporate innovators just as much as entrepreneurs.