Random and unstructured innovation work can cost the company a lot of money, without necessarily creating any significant value. Lacking a clear framework or direction may also drain the team of energy and motivation. An innovation thesis can help to focus, prioritize, and allocate the necessary resources for innovation. We have developed such an innovation thesis as part of an ongoing strategic work in Kantega SSO (KSSO).
This article is part of a series where we share experiences from a learning project on innovation accounting and innovation systems. To learn more about the background for the learning project and the problem statement we recommend reading these articles first:
In our previous blog articles, we established that it’s important for KSSO to create a framework for developing new business models, and that implementing an innovation system will help us transform our business.
The innovation thesis and antithesis
An innovation system is based on an innovation thesis and the associated antithesis. The innovation thesis describes the company's picture of the future, the strategic goals for innovation and the existing opportunities. For example, a company might believe that autonomous driving will be important for the car market in the future, and decide that they want to position themselves to take a chunk of that market. The thesis also assists in determining the duration required for exploration and experimentation.
The strategy is about balancing continuous and effective improvements to existing products with exploration of new markets. Thus, the antithesis describes the areas where we should not do any investments, to avoid exploring ideas that are not in line with the vision of the company. As we mentioned in the previous article, we have already gained insights through a pilot study on which the thesis can be based.
Structure of the innovation thesis
Overall, the innovation thesis has three elements (see the details in this blog article by Dan Toma.):
- The thesis itself, which describes specifically the type of innovation that the company will invest in. This sets the direction for the team.
- The antithesis, which describes specifically which innovation areas that the company will not invest in. This reduces noise and limits the things that the team should focus on.
- A statement describing the overall context and level of ambition for innovation work.
The thesis should support decisions throughout the life cycle of the product. For this reason, both the thesis and the antithesis should also include the following elements:
Problem areas: Which opportunities and challenges should we look for and explore further. For example, the thesis can specify that we should only build products that make use of data collected though user interaction.
Business models: What characterizes solutions that can solve the identified problem areas and which business models are supported. For example, the antithesis can specify that we should not invest in business models that are based on the sale of customer data.
Technology: Which technologies will we use to realize the business model that supports the validated solutions, and which technologies should we abstain from using. For example, the thesis might say we should only build products that can be hosted in the cloud.
An innovation thesis for KSSO
One of the outcomes from our investigation of various opportunities for innovation were an innovation thesis for KSSO. This was a quite straightforward process for us, partly because we had already established a clear need for innovation, and partly because the company's small size and informal communication channels made it simple to involve the board in this endeavor.
A bit simplified, our innovation thesis looks like this:
- Explore new apps on the Atlassian Cloud and Atlassian Data Center platforms.
- Explore new ways to sell apps on the Atlassian Cloud platform.
- Explore new ways to collaborate with partners in the Atlassian Ecosystem.
Kantega SSO shall not:
- Build any new apps on the Atlassian Server or Atlassian Connect platform.
- Offer any SSO products or services outside the Atlassian ecosystem.
- Offer any apps outside the Atlassian marketplace.
The innovation thesis' strength comes from the clear boundaries set by the antithesis, allowing the KSSO team to prioritize and focus their exploration and resources. The explicit formulation of thesis and antithesis helped the CEO and board clarify their agreement on the allocation of resources for innovation.
Context and level of ambition (statement)
KSSO's statement declares the level of ambition, which in turn is based on an assessment of the context in which we operate and the expected future return of investments. The market expects that future growth for Atlassian will mainly take place on their cloud platform. For technical reasons, we are unable to migrate our existing products to the cloud. At the same time, we know that the competition for cloud apps is higher than for data center apps. If the company is to experience continued growth in the future, it is therefore essential to produce new and innovative products on the Atlassian Cloud platform. At the same time, the ambition level is limited by the budget that is set aside for innovation work by the board.
In other words: How much money are we willing to spend on innovation and what is the target revenue for new apps, within a given time perspective?
Next step: The innovation framework
The innovation thesis is a crucial component of KSSO's innovation system. It helps define the focus, boundaries, and priorities of their innovation efforts. Other elements of the innovation system include the innovation framework, portfolio, practice, and accounting.
The next step in the learning project is to adapt an innovation framework to fit our needs. This is necessary because further research much be conducted before we can set up the innovation portfolio. The innovation framework will also help identify the team's current approach to different product lifecycle phases, making it easier to improve and optimize KSSO's innovation process, which in turn is useful for defining and reshaping our innovation practices.
These aspects will be shared in upcoming articles.