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How Innovative Companies Make Time for Innovation: A Review of Best Practices

The #1 barrier to new product innovation according to most CEOs is a simple lack of time. In this post we will examine the three techniques that innovative small and medium-sized companies use to beat the clock without breaking the bank.

#1 - HACKATHONS

While the name comes from Silicon Valley, the technique is a straightforward, “get ‘er done” approach to innovation that can be applied to any business in any industry.

How It Works

  1. Precisely define an innovation challenge by answering the following questions:

    • Participants - Who is being invited to participate in the hackathon?
    • Context - What is the context / background of the challenge?
    • Deliverables - What deliverable(s) are you requesting? (E.g ideas for improving a particular process documented in a specific manner?. New product concepts documented on a business model canvas? Suggestions for design enhancements to a particular product documented in a particular way? Working prototypes of a software application? Etc.)
    • Timeframe - When does the hackathon begin and end?
    • Submission Process - Where and how are the deliverables to be delivered?
    • Evaluation Criteria - What are the criteria by which the deliverables will be evaluated?
    • Resources - What resources are being provided to support participants in meeting the challenge? (E.g. a certain number of work hours / days? Physical space? Food? Financial resources? Training resources? Technical resources? etc.)
    • Management Guidance - What guidance (if any) does Management have to offer regarding recommended priorities or approaches?
    • Relevance - Why should participants care about the success or failure of this project? (E.g. will it have a material impact on the success of the company? Are there opportunities for participant rewards and recognition? Etc.)
  2. Plan for the event
  3. Issue the challenge
  4. Collect and evaluate the ideas/innovations
  5. Close the loop with all participants by reporting back on the overall results of the challenge and delivering all rewards and recognition that were promised.

Pros

  1. Predictability - The schedule and costs are all known in advance and everyone in the organization can plan accordingly.
  2. Morale / Culture / PR - Hackathons are typically well publicized events (internally, but also sometimes externally) with lots of energy, recognition, and a general can-do spirit that is great for employee morale, building a culture of innovation, and attracting future employees, clients, partners, and investors that will build on your success.
  3. Top-of-Funnel Productivity - Hackathons are an extremely productive way to begin an innovation project in that you very rapidly get all of the best ideas out on the table.
  4. Low Cost - The hard costs of a hackathon are typically negligible (e.g. beer and pizza). And, if done properly, the soft costs of allocating a few hours of employees’ time to innovation are frequently offset by increased levels of engagement and productivity following the event.

Cons

  1. Superficial - While hackathons are great places to start an innovation project and/or harvest low-hanging fruit, they are by definition relatively superficial engagements in the work of innovation. Rome wasn’t built in a hackathon.
  2. Morale / Culture Backlash - If you don’t have a plan for following through on the best ideas generated during a hackathon, you run the risk of discouraging your employees and weakening the organization’s long-term innovation capability.

#2 - INNOVATION VACATIONS

No matter how busy and chaotic things get at your company, you still manage to make time for your employees to take a vacation. And even though it feels like you won’t be able to live without that star performer when they head out for their week in Tahoe, everyone ultimately survives. Building on that observation, some companies have begun to offer “innovation vacations” as a way of allocating time to innovation.

How It Works

  1. First establish your Innovation Vacation Policy by answering the following questions:

    • What is the maximum number of man days your company will allow per year for all employees combined? (E.g. 20.)
    • What is the maximum number of man days your company will allow per year for any given employee? (E.g. 10)
    • Are there any minimum criteria an employee must satisfy to even apply for an Innovation Vacation? (E.g. status, department, tenure, job performance, etc.)
    • What is the process for applying for an Innovation Vacation?
    • What is the process for reviewing and approving Innovation Vacation applications?
  2. Announce the Innovation Vacation policy to your team
  3. Award Innovation Vacations in accordance with your policy

Pros

  1. Predictability - The schedule and costs are all known in advance and everyone in the organization can plan accordingly.
  2. Big Plays - While Hackathons are great for starting an innovation project, Innovation Vacations are ideal for getting a project over a major hurdle. For example, during a single Innovation Vacation, you might be able to complete a market validation study, develop a minimum viable product, create a minimum viable marketing platform and campaign, launch a Kickstarter campaign, or market your new product at a tradeshow.
  3. Cross-Functional Collaboration - If your Innovation Vacation Policy allows it, Innovation Vacations can be a great opportunity for cross-functional teams to work together for a few days to take an innovation project to the next level.
  4. Low Cost - Similar to Hackathons, Innovation Vacations can be squeezed into the cracks of your existing budget without having to increase headcount, and the positive impact on employee engagement typically offsets the costs.
  5. Morale / Culture / PR - Offering Innovation Vacations can make a very significant difference in your ability to recruit, engage, and manage great talent and will immediately differentiate your firm over many if not all of your competitors.

Cons

  1. Perceived Unfairness - If you don’t have a very clearly articulated vision for your overall innovation priorities, you run the risk of awarding Innovation Vacations in a haphazard manner that will have a negative impact on employee morale.

#3 - 20% TIME

Popularized by Google, “20% Time” allows employees to allocate a certain percentage of their time to innovation projects.

How It Works

  1. Establish your 20% Time policy by answering the following questions:

    • What percentage of an employee’s time may be allocated to approved projects? (E.g. 20%? 15%? 10%?)
    • How will that time be allocated? (E.g. All day Friday? 1.5 hours per day? Employee fits it in as opportunity allows? etc.)
    • Are there any minimum criteria an employee must satisfy to even apply for 20% Time? (E.g. status, department, tenure, job performance, etc.)
    • Is 20% Time awarded on a case-by-case basis via an application process? Or does everyone get it no matter what? (NOTE: We recommend the former.)
    • If an application is required, what is the end-to-end application submission and review process?
  2. Announce the 20% Time initiative to your team
  3. Award 20% Time in accordance with your policy

Pros

  1. Sustained Effort - While Hackathons are great for getting innovation projects out of the starting gate; and Innovation Vacations are ideal for getting a project over a key hurdle; 20% Time provides the steady, week-in-week-out nurturing and development that most innovations require before they achieve success. For example, if you have launched a new minimum viable product and are now going through the process (typically a long, slow process) of adapting your product to the market through a series of iterative market tests and product modifications, 20% Time is an ideal way to give the project the attention it needs over several weeks and months without having to commit to a full-time new hire.
  2. Morale / Culture / PR - Offering 20% Time positions your company as “Googlesque” and can make a very significant difference in your ability to recruit, engage, and manage great talent.

Cons

  1. Risk of Wasted Time & Distraction - If not disciplined by clearly articulated innovation policies and procedures, you run the risk of wasting significant time and money while inadvertently weakening your corporate culture.
  2. Hard to Manage - Unlike Hackathons and Innovation Vacations that operate within precisely defined and perfectly predictable timeframes, 20% Time can get away from you in a hurry. On the one hand, it can be hard to discern when employees are spending too much of their time on “20% Time;” on the other, it is very hard to follow through on your commitment to 20% Time week after week when buffeted by the constant stream of “crises” and “golden opportunities” that every business encounters.

PUTTING IT ALL TOGETHER

Rather than implementing only one of these techniques, we recommend that you draw on all three to allocate the appropriate amount of time for each stage of the project. Here's an example of what that might look like on an end-to-end new product innovation project:

  1. Use a Hackathon to generate a slate of new product ideas,
  2. Award a 3-Day Innovation Vacation to the originator of the best idea to further research and articulate the concept,
  3. If approved for market validation research, add another person or two to the budding "Startup Team" and allow them to use 20% Time to spend a few hours each week interviewing prospective customers about the overall viability of the concept.
  4. If the market validation research proves there is a viable market, give the Startup Team a 1 - 2 week Innovation Vacation to develop a minimum viable product and marketing platform.
  5. Once the product is launched, allow the Startup Team to continue using 20% Time to adapt the product to the market and get the business model working.
  6. Once the business model is working, integrate the new product line into your standard operations by expanding staffing and budgets as necessary to scale the new product.

Gray Somerville

Gray Somerville is a serial entrepreneur, innovation expert, and LaunchPath’s CEO. Besides LaunchPath, Gray has helped launch and lead three other successful startups including Telogical Systems and Adacus.

@graysomerville