The Innovation Factory

The Innovation Factory
Game Changing Innovation at Scale

The Achilles’ heel of Corporate Innovation is the inability to productize enough ideas to create Innovation at Scale. Conventional wisdom says: Innovation is expensive, takes time and cannot be automated. In every aspect, innovation is an art and science that only humans can master. Conventional wisdom is half right.

Corporate Innovation is evolving. Take R&D, the traditional base for innovation in existing companies. R&D is under pressure to move from ideas to solutions. A truly magical feat as R&D is populated with people whose job it is to find new ideas, but not actually launch them into the marketplace. What is needed in today’s internet-speed environment is people who can turn ideas directly into customer-focused solutions. Solutions that fit within both the incremental improvement portfolio and the disruption innovations portfolio. This new reality requires a very different mindset.

It also requires a factory approach – but factories rely on replicable processes. Factories can’t handle art and science, right? That was then, but Artificial Intelligence/Machine Learning is now. This means you can automate some parts of the factory (like using AI to find new ideas in the Emerging Innovation Marketplace) and augment other parts of the process with the art & science of human experience and ingenuity. Behold the solution: The Innovation Factory!

An Innovation Factory creates a repeatable approach to identify, assess and utilize innovative & emerging technologies to build products, platforms and possibilities.

The Innovation Factory concept works because the balance of automation and augmentation are on a sliding scale. This changes the usual factory dynamic from static production to continuous innovation.

Why A Factory?

Consider the first factories. They developed new, large forms of business enterprise by using power-driven machinery to produce products and goods previously produced by hand or in a small shop. The machinery was grouped together to form factories. Samuel Slater built the first factory in America in 1790. Samuel was a cotton spinner who brought an understanding of a new textile machine from England. To make a factory he linked together 72 spindles, powered by nine children pushing foot treadles. Later, as technology improved he replaced the children with water power. Good thing! Technology takes the labor out of the equation as quickly as possible to continuously improve the factory output. Artificial Intelligence is the new ‘machine’ for innovation making it possible to do more idea exploration and market testing in less time. That’s what it’s going to take to win in today’s fast moving environment.

Innovation needs a factory. If you aren’t moving fast enough, you will lose the race. An Innosight study highlights how based on churn rates, 75% of the current S&P 500 will be replaced by 2027. Every business is affected. Today much of the ‘innovation’ work inside of companies is done ‘by hand’. Gathering ideas, scouting for solutions by attending events or networking. Then there is the process to build and test market ideas. If you are working at the ‘speed of humans’ you are going far too slow to keep pace with rapidly changing markets.

There is an answer. There are new ‘machines’ (technologies) that can take over parts of the innovation process to immediately create the necessary efficiencies of your innovation output. These new technologies open up the ability to source a much larger global data set of innovations (the raw materials) to create a deeper understanding of your possibilities. These big data analytics capabilities are part of the new innovation toolset that will help you to scout beyond your immediate network. Today, you can develop faster connections with prospective customers using market tools such as: crowdsourcing, social media and search marketing. Market tests can be done in hours not days, and at a much lower cost than the in-person test market of the ‘old days’.

Artificial Intelligence, big data and the use of pay stubs lend themselves to automating key parts of the Innovation Factory. They automate the process in ways not possible even a few years ago. What does this mean for your business? More , faster decision making and more possibilities of true innovations getting to market and delivering ROI.

Automation and Augmentation of human skills in the right mix, to create synergy is the key.


Innovation Factory: A Look Under the Hood

So, beyond the Automation/Augmentation concept for faster throughput, better learnings and scalable new products; there is the need to say – this isn’t a plug-&-play for existing companies. Hence, the text around conventional wisdom being ‘half-right’. In the words of Disney’s Genie (Robin Williams); there are some ‘caveats, addendums, quid-pro-quos’ –All can be overcome by focusing on the most important moving parts: Mindset, Product Management, Governance, Speed and Tools. As a savvy, innovation- minded executive, these will resonate with you.

Start With “Hacking the Culture”

Every C-Level executive we interview, voices concern about their culture and its’ constraining impact on Innovation. The constraints span people, process and technologies. Their concern is well-founded, as existing companies were created for faster, better, cheaper competition against other existing companies. The world has changed. Existing companies now compete with Digital Giants, Start-ups and Existing Companies, all of whom are keenly aware of a marketplace where: incremental = better sameness, speed = survival and software has become the great hurdler of all constraints. See our recent article on Open Innovation to Leverage Entrepreneurial Minds for more.

But here is the really good news for CEOs contemplating an Innovation Factory: Culture can be hacked!

Mindset Hacks Culture

Every group of professionals have a way of thinking about their challenges and a language for dealing with them. Similarly, operating an Innovation Factory requires a way of thinking and speaking – here are some high-lights

A BCG study of 759 companies in 17 major markets, Gerard J. Tellis, Jaideep C. Prabhu and Rajesh K. Chandy found that corporate culture was a much more important driver of radical innovation than labor, capital, government or national culture. It has further been shown that adaptability seems to be the most critical characteristic of successful organization cultures and mindset shapes this adaptability.

Product Management Hacks Culture

You will recall from the Mindset segment above; ‘products are the new process’. In the Innovation Factory structure, Product Management replaces Project Management. This is an important moving part as Product Managers are absolutely pivotal for speed, agility and customer focus.
In McKinsey’s Top Ten articles for 2017, there is a solid article on the emerging new role of Product Managers. Describing the role as a mini-CEO for the product or offering; this leader ‘binds functions such as—engineering, design, sales, marketing, operations, finance, legal’; to customer success.

Quoting from a recent article on Moving From Projects to Products, colleague Andy Singleton, writes:

  • Define your work as a “product”—a service for customers, with metrics around usage and value
  • Get the measurements that you need to calculate those metrics
  • Assign a product manager to improve the product and improve the metrics
  • Give that product manager the raw material for rapid improvement, in the form of frequent or continuous delivery of changes.

Important Note: the reason Product Managers have such a wide range of functions under the Innovation Factory structure, is the concept of rapidly moving from ‘ideas to solutions’. With the advent of crowdsourcing and other market testing techniques, getting customer insight should be done by the same team. This ability to get from hypothesis to product is core to the Innovation Factory mentality.

Governance Hacks Culture

There needs to be a guiding body with the skill to Steer, Promote and Sustain through the slings and arrows of innovation in an existing company. More often than not, when we talk to existing corporations around the efforts to create open innovation, build innovation labs or host incubators, they express some level of disappointment with performance. When we look under the hood, it often involves a constraint within the Innovation Governance Group or sometimes, the lack of a Governance Group entirely.

Innovation Governance is a tough job. Even the best corporate leaders miss, what in hindsight should have been obvious. Am sure everyone remembers the former Blockbusters’ CEO comments on competitors: “Netflix ‘isn’t even on our radar screen”. Still, with a Council of the right people, you’ve got a shot of someone saying: ‘let’s take a closer look at this’.

The Innovation Governance Council is the Prioritizing body for The Innovation Factory. The purpose of the Governance Council is to provide oxygen for the Innovation Factory by:

  • Defining the strategic intent for Innovation
  • Shaping the Innovation Ventures Portfolio
  • Allocating Resources – including providing budget for innovation initiatives and extraordinary opportunities
  • Holding the Innovation Factory & Innovators accountable for Innovation Accounting and Metrics
  • Providing Guidance to the Teams – especially around ‘pivots for new products’
  • Overriding Constraints and Refereeing Disputes

For CEO’s contemplating an Innovation Factory; if you are not happy with the output of your Innovation efforts, start with the Governance Council. If you don’t have an Innovation Governance Council – it’s time to build one.

Speed Hacks Culture

“The battle between every start-up and incumbent comes down to whether the start-up gets distribution before the incumbent gets innovation.” – Alex Rampell, A16Z

It’s no secret; markets are moving faster than ever before. The combination of technology and data have created a climate where change appears with gradual impact; then suddenly accelerates, as customers adopt – at scale. All while aligning around a new way of getting the job done.

The ability to stay abreast of this speed involves ensuring your team has a view of the Innovation Marketplace, the start-ups who are creating new possibilities for the customer and the ecosystems being formed around the new possibilities. Access to AI, big data sets and data analysis tools create a view of what’s happening, why it’s happening and what you can do about it.

Tools Hack Skills

For some time now, the customer focus elements of most companies have been tasked with more than just hawking products. It has become a game of enhancing the experience, shortening the customer journey to decision and shaping the marketing ecosystem so all paths led to your solution.

The essence of our Innovation factory is to get to smart decisions about ideas and solutions, faster. There is no more important aspect of our factory than connecting with prospective customers. We can all learn something about market testing from smart entrepreneurs. They develop a hypothesis, use inexpensive marketing channels to set up a series of experiments, get feedback, make adjustments and start again. Today’s digital marketing technologies provide the automation of these processes.

Crowdsourcing tools automate market testing of physical products while search marketing and social media marketing from this digital marketing agency will help deliver signals for a number of products and proposed services. The Innovation factory uses the wisdom of the crowds to help decide if a product is worthy. Our job is to come up with the hypothesis and implement a series of small tests to discover the ‘traction’ points for the product. These learnings move the decision making process faster, which is the point of an Innovation Factory.

Artificial Intelligence:

New Beginnings for Corporate Innovation

Artificial Intelligence solves problems in our every-day lives. From analyzing traffic speed in real time, to fraud protection and voice search. It has become ubiquitous. AI provides faster, less expensive drug discovery for pharmaceutical labs by augmenting the laborious tasks that used to take years for human researchers. It is inevitable that the best that AI can provide will also assist in your business strategy and innovation activities.

Data is ‘oxygen’ for AI. The tidal wave of data becoming available will feed your ability to make faster decisions about new products and services. The role of AI in the Innovation Factory bears repeating: An Innovation Factory creates a repeatable approach to identify, assess and utilize innovative and emerging technologies to build products, platforms and possibilities. The Innovation Scout use global research data, startups, and public company insights to find relevant connections to your business challenges. The application of AI with the Innovation Factory approach will give you insights not possible before with only human analysis.


This article started with: ‘the Achilles’ heel of Corporate Innovation is the inability to productize enough ideas to create Innovation at Scale’. The Innovation Factory solves this problem: helping identify ideas, find solutions, test and scale them like never before. Ideas are the raw material that are run through a repeatable and scalable process to build new products, platforms and possibilities. All the while, focusing on overcoming the constraints of existing companies with the on-going support of a Governance Council, a structure of Product Managers and tools such as: crowdsourcing, machine-learning and data analytics.

With an Innovation Factory approach; automation and augmentation create a platform for continuous, agile improvement and, delivery of the promise for Human/AI synergy.


About the Authors

Michael Glavich, Chief Business Accelerator & Change Catalyst for The Innovation Scout. Michael delivers a unique combination of digital strategy, marketing, and whole-product development that seeks to “change the playing field”, creating unique and unbeatable competitive advantage. His back- ground includes business acceleration consulting at Diamond Technology, Index and most recently; a combination start-up factory and global think-tank. He has spent a lifetime creating innovative new ways to grow successful businesses and representing thought-leadership service offerings from a number of the top fifty living business thinkers in the world.

Annette Tonti, CEO & Co-Founder, The Innovation Scout. She is an executive with over 30 years of corporate and entrepreneurial experience. As founder and CEO of 3 high-tech start- ups, she has developed early stage businesses and raised over $30M from Venture and Angel investors. Early in her career she delivered digital strategies to Fortune 1000 businesses, ran a global program for the MIT Media Labs and headed up operations for a global telecommunications consultancy.

About The Innovation Scout

The Innovation Scout provides artificial intelligence tools, big data and a strategic Innovation Factory program to help corporations deliver measurable value from their innovation initiatives. We provide a SaaS platform, powered by machine learning and natural language processing, to match and manage business solutions and partners. Our Fast Track program helps corporations to implement a scalable, lean Innovation Factory that will dramatically increase innovation efficacy – speeding decisions, new product development and market traction plans.

134 thoughts on “The Innovation Factory

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