When industrial innovation initiatives stall, the diagnosis is almost always cultural: risk aversion, silo thinking, lack of entrepreneurial mindset.
This diagnosis is not wrong, and companies respond predictably by launching training programs, incubators, intrapreneurships, innovation days et cetera et cetera et cetera. And yet the same patterns reappear where promising initiatives expand too early, weak ones linger, and transformational ones rarely scale.
If behavior does not change after repeated cultural interventions, the cause is probably structural rather than psychological. Managers optimize for what is rewarded - approval, budget adherence, and avoiding visible failure - and thus produce optimistic forecasts, broad roadmaps and incremental proof. Clearly this is rational behavior, and the organization punishes the alternative.
This governance creates a doom loop: An upfront business case plan is created with massive amounts of detail and the team commitments to such plan. But then the evidence contradicts the plan and the team is forced to defend rather than adapt. The funding continues to protect prior decisions, and terminations happen late and are expensive. It is the ultimate irony that nobody chose this insane path, but the governance enforced it.
There is a better way. Instead of asking people to think like entrepreneurs, the corporation should adopt a system with three mechanisms which reward and entrepreneurial behavior:
- Mile stone funding focused on progress
- Predefined kill criteria that make stopping a successful outcome
- An independent decision forum to separate continuation decisions from project sponsors
An organization will always behave rationally within the rules it is given.
The leaderships job is not selecting ideas, it is designing decision environments.
Most companies understand they need a portfolio logic, but few understand how to operationalize it without losing control.
Next article (4/6)
How to actually run a corporate venture portfolio
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