Venture board - a catalyst for innovation work

Innovation requires experimentation. In our initial blog post on this subject, we emphasized the importance of granting a certain level of autonomy to the team for conducting experiments. However, it is equally important for the innovation team to keep the leadership informed and involved. The leadership must decide to invest in innovation, provide support and follow up on innovation work. The venture board plays a key role here.

Co-author Øyvind Lillerødvann, Business Developer for Data-driven Innovation at Kantega.

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: 

• Creating a framework for innovation 
• Establishing the need for an innovation system in Kantega SSO
• The Innovation Thesis: Setting a direction for innovation
• How to reduce innovation risk?
• Good innovation practices are vital

In our article on innovation practices, we highlighted how a hypothesis-driven and experiment-based approach helps reduce uncertainty in the business model. This exploratory work can help mitigate the risk of spending a lot of time and money on ideas that are not viable. However, without the active involvement of leadership, innovation may not receive the necessary attention and priority. Moreover, without proper structure, the innovation work can result in excessive costs outweighing the returns.

Be prepared to fail

The book "Innovation Accounting" exemplifies this with a venture company stating that 65 percent of investment projects never yield returns. Very few investments yield the great returns many individuals envision.

From this, two points are derived:

• You won't always succeed, so you must be prepared to fail.
• You can't pick the winners up front. Therefore, many small investments are better than a few large ones.

Leadership is practiced through the venture board

There are limits to how much control we can have when leading innovation work. At least when we talk about the type of control that involves demanding a plan for when the idea is fully developed, what the solution looks like, and what it will cost. However, leadership must still decide how to invest in innovation, how to stimulate innovation, and how to manage the innovation portfolio in a sustainable manner.

Because innovation involves significant risk, we need to learn as much we can, in as quickly and cheaply way as possible while also seeking the best possible data to base our decisions on. The venture board helps enable rapid and data-driven decision-making in collaboration with the team.

What does a venture board do?

In short, the venture board in Kantega SSO has the following functions:

• Ensures that the team has a good flow in the innovation process, making sure the team has the capacity and skills required to validate or reject ideas in a good and efficient manner.
• Stop ideas that have little chance of success, ensuring that time and resources are invested in the most promising ideas.

In Kantega SSO, the venture board meets every other week. The board's main task is to ask the right questions:

• What have you learned?
• How have you learned it?
• What is the next step?

Focus on learning, not delivery

The leaders neither dictate the team's actions nor inquire about the team's progress since the previous meeting or when they think the product will be finished. The team's performance is assessed based on their learning pace rather than their speed of delivery. It is crucial to consider the basis of learning to prevent bias and uphold the data-driven approach we aim to adopt. It's a different way of leading and measuring than many leaders are accustomed to. This also creates space for (and requires) the team to work hypothesis-driven and acquire knowledge through small and rapid experiments.

The venture board makes decisions

During each one-hour meeting, we discuss and explore minimum two and maximum four ideas. An important principle is that the venture board should always make a decision. After the team has conveyed what they have learned since the last meeting and the experiments and data that underpin it, the venture board makes an overall assessment: Do the team provide evidence that they are making progress, i.e., reduce the business risk? Based on the provided evidence, or lack of evidence, the venture board decides whether to reject the idea, continue experimenting or move forward toward the next step in the product life cycle. In the latter case, it means that the venture board is convinced that the problem has been sufficiently explored, enabling the team to progress to the next stage in the lifecycle and explore potential solutions for the problem.

Success criteria

These assessments are based on several key success criteria, in the form of questions to be answered by the team for each phase in the lifecycle. The questions are answered as assumptions about what is true, and the critical assumptions are tested through experiments. For example, the team may have an idea on how to best solve the customer's problems. However, the starting point must be that one does not know, therefore the solution needs to be tested, preferably with real customers, in a way that maximizes learning while minimizing resource expenditure.

Some examples of experiments we conduct are surveys, user testing, market analysis, technical proof-of-concept, and MVP (Minimum Viable Product).

A safe space

The description above might give the impression that the venture board is a highly formal environment. However, the meetings are actually structured in a straightforward manner, and in addition to emphasizing learning and data, they are primarily driven by open dialogue. Members of the venture board who are not directly involved in daily innovation work can offer valuable insights and guidance on the path ahead. For instance, they may suggest, "We recommend further exploration of this aspect." However, the team itself determines the practical implementation. Furthermore, the decision to continue or halt is not solely in the hands of the venture board. For instance, the team may already have an opinion on the next steps prior to the venture board meeting.

Pitfalls

The venture board needs to meet frequently to give sufficient attention to the innovation work. One of the pitfalls to avoid is having sporadic meetings. However, given the busy schedules of leaders, it is essential to ensure that the meetings are efficient. Poor time management leads to less time available to delve into what the team has learned. Therefore, we allocate only about 15-20 minutes per idea, and the venture board can familiarize themselves with what the team has learned in advance by sharing links to the Jira ticket for each idea.

Other pitfalls include the venture board engaging in brainstorming and allowing for "pitching" or selling ideas instead of focusing on data and evidence. Prioritizing data also helps prevent the need for regular status meetings, where the team provides updates on their progress and future plans. The venture board is an arena for making decisions in a data-driven manner. It also requires leaders to create a safe environment where data and learning can be openly shared.

Sometimes the venture board may experience that the team is not learning at a satisfactory pace or struggling to obtain high-quality data for making informed decisions. In such cases, it is important for the venture board to provide support rather than exert pressure on the team. Perhaps there is a lack of capacity, or maybe the team needs an innovation coach? Or perhaps it is the leadership itself that is an obstacle in the innovation process?

Diversity is important

It is important that leaders are able to create a safe space while simultaneously embracing the uncertainty that comes with innovation work without exerting excessive control. The ability for critical reflection is crucial, both in understanding what the data reveals and considering how one's own contributions may either support or hinder the innovation process. The venture board requires such leaders, and the group should also represent a diversity of perspectives.

In Kantega SSO, the venture board is composed as follows:

• Leader of the board: Responsible for operationalizing the innovation strategy (innovation thesis). 
• External representative: Often has experience with entrepreneurship; can provide an extroverted perspective. Contributes insights and fresh ideas, while also making it easier to make difficult decisions, like killing an idea. 
• Innovation manager: Often has practical experience with startups and can help translate board decisions into practice.
• Domain expert: Not a fixed person, but a fixed role. Ensures that ideas can be developed and that the team is aware of important market aspects.
• Executive member: Can make investment decisions when required. 

Venture board - a part of the innovation accounting

We have been sharing experiences continuously from Kantega's learning project on the innovation system. Now that we have established the venture board, many pieces of the system are falling into place: We now have an innovation thesis, which set the direction, an innovation framework, which is closely tied with product lifecycle , and innovation practices, which describe our tools and processes. These are all important elements that need to be shaped for the system to create long-term value.

The venture board is a part of the innovation accounting, which is summarized in The Corporate Startup as three types of activities:

• Making decisions to invest in different products, depending on where they are in the innovation journey, and ensuring that investments are at an appropriate level.
• Monitoring and measuring each innovation path to make informed decisions about which products to continue investing in.
• Measuring the value or impact of innovation for the overall organization to understand if the goals set for innovation and the product portfolio are being achieved.

Next steps in the learning project

The innovation portfolio, which is another important element of the system, needs to be structured in the direction indicated by the innovation thesis and strategic goals. Now that the venture board is in place and the innovation work is gaining momentum and structure, it starts to make sense to assess whether the portfolio is structured in line with the innovation strategy (i.e., the innovation thesis). Additionally, we want to evaluate the effectiveness of the system.

For example: How quickly is the team learning? Do we have a good flow in exploring ideas? Does the team need support or capacity to achieve this? Are we discarding enough ideas? Or too many?

These are the aspects we want to explore as the next step in the learning project, and we will share our findings in the next article. We have also reached a point where we have planned a retrospective to evaluate the system. This will mark the conclusion of the learning project at Kantega while serving as a starting point for making improvements to the system, which will continue to be a part of Kantega SSO.