Having a breakthrough idea or technology alone does not assure business success. “If we build it, they will come” may have worked as a movie theme for Kevin Costner, but as an investor, I tell entrepreneurs a great solution is not enough. Successful businesses require innovative people, who have built an abundance of innovation capital, to win support and resources for their ideas.
Professional investors are adept at looking for innovation capital, beyond the passionate pitch. Of course, the best evidence is you have done it before, and succeeded more often than you failed. That’s why Elon Musk, and a few others you could name, don’t have any trouble getting investor attention – they have the reputation and networks to successfully commercialize creative ideas.
I saw this message illustrated well in a recent book, “Innovation Capital,” by Jeff Dyer, Nathan Furr, and Curtis Lefrandt, who all have excellent credentials in the real world of business, as well as the academic world, through their innovation consultancy and access to key business leaders. I like their summary of five key components of innovation capital that we should strive to maximize:
- Human capital: forward thinking, problem solving, persuasion. A key skill everyone looks for is your ability to engage in mental time travel to envision opportunities before others do. Then you need creative problem solving to come up with a solution, and the ability to persuade others of the viability and value, and to join you on the journey. You can enhance your human capital by constantly updating yourself on new trends, social movements, and new technologies, to get a sense of where things are headed. Commit time to thinking deeply about the future, focus on problem solving by first principles, and practice continuous learning in areas where you desire expertise.
- Social capital: influencers, leaders, investor relationships. Successful business innovators excel at networking, through both strong and weak social ties, to get the resources and support they need. They nurture connections to other innovators and entrepreneurs, financial benefactors, organizational leaders, and potential customers. Remember that in business, sometimes who you know is more important than what you know. You can always use more social connections, but to be effective, think through your networking objectives first, and categorize the contacts you already have. Use social media channels, as well as conferences, to develop and maintain relationships.
- Reputation capital: visible track record for innovation. What counts most here is that you have been a founder, rather than a contributor. You may have founded a new process, or built a reputation for innovation by taking on challenging and visible assignments, or by associating with prestigious individuals and getting their support. Reputation doesn’t come without favorable exposure. Many business owners I know are obsessed with countering any negative information, but don’t work on getting positive visibility and endorsements. They don’t highlight their scrappiness - their dogged spirit that allows them to get a lot done with a few resources – a great innovation reputation.
- Impression amplifiers: actions to get attention and credibility. Most impression amplifiers fall within one of these seven major categories: broadcasting, signaling, storytelling, materializing, committing, comparing, and creating scarcity. Successful innovators use these effectively for the power to influence the behavior of others. To amplify your impressions and win support for your ideas, you need to focus on a fundamental human need and make it personal. Elon Musk does this masterfully when he talks about SpaceX going to Mars to assure the future of mankind, and learn about the origins of life. Then he commits that he intends to be among the first to move to Mars.
- Innovation leadership: vision, inspiration, attracting talent. Investors and others look for evidence of the virtuous cycle of innovation leadership – a lofty vision attracts better talent, producing better products and memorable customer experiences, attracting key customers, building a stronger brand, which attracts the best talent. The cycle repeats. Jeff Weiner of LinkedIn has always talked about the company vision to connect everyone on the planet and to “create economic opportunity for the global workforce of three billion people.” As you create an innovative product, put an equal effort into a compelling vision.
It’s time for all you entrepreneurs and business professionals to take stock of your own situation and decide if you have the innovation capital to win the support you need from bosses, colleagues, partners, and investors, for your next breakthrough idea or invention. If not, now you know the places to start. We need you, and I’m convinced we all win when you win.