How to Fund Innovation: Four Tactics to Increase Investment in Business-changing Ideas—Regardless of Your Budget
As an IT leader, you’re tasked with a perilous balancing act. Your team must regularly develop and adopt new ideas to grow revenue and increase agility in the face of constant changes. Yet too often, innovation budgets are among the first on the chopping block—especially during a crisis like COVID-19.
A report by Deloitte just before the onset of the pandemic found that the average IT department devoted more than half (55%) of its technology budget to maintaining operations and just 20% to innovative capabilities. That’s often not enough to fund new ideas that can have profound changes.
History tells us hard times are no time to shy away from pursuing changes or new opportunities. According to a recent McKinsey report, organizations that remained focused on innovation during the 2009 financial crisis came out stronger and outperformed the market average by over 30%.
Domino’s Pizza is a prime example. In 2008, with its stock value dropping to around $3 a share, the company invested in groundbreaking ideas like the Pizza Tracker, driverless delivery, and Hotspots—which uses geo-fencing to deliver pizzas to customers without street addresses. By revolutionizing their brand and business model, they claimed around 50% of the market share for online pizza orders. Recently, their stock price topped $400 per share.
So how can you fund innovation even without a major budget boost? Stratascale has a few ideas for getting big returns from relatively small investments.
- Develop incentives and processes that encourage new ideas
To inspire innovative thinking among your teams, look for ways to create the space (physical or virtual), time, and the culture. This could include giving your staff incentives for generating promising ideas.
New ideas need a channel to reach decision makers that can implement them or provide more feedback. The show Shark Tank might be a source of inspiration here. A similar model at your company offers employees a venue to pitch ideas to leaders, answer questions, and demonstrate their value potential.
- Reinvest your savings
Any time you come in under budget on a project or renegotiate contracts that leave you with a surplus, add these funds to a special account specifically for supporting innovation. Because the money is outside your budget, you’ll have more freedom to explore and a higher tolerance for failure.
You can spread the wealth around using these funds and others to make multiple small bets of say $3,000 to $5,000 to seed more ideas. Make your money go farther by taking advantage of a free tier in AWS or similar low- or no-cost environment for testing the viability of new cloud solutions. If you get the results you anticipated, you can allocate more funds in next year’s budget for scaling.
- Get creative with your training budget
In addition to—or possibly in place of—the theoretical knowledge provided by webinars, books, and classes, you should consider allocating training dollars to pursue new ways of learning and better ways of working.
A drone may not seem like a “training” expense, for example. However, an engineering team using it to explore ways to improve surveying and data collection could qualify as training. Trial, error, and experimentation are crucial elements of both continuing education and innovation. See where “hands-on” training with new tools takes you.
- Go outside your organization
Spur innovation by tapping into partners with strengths and resources you don’t have. A prime example: Stratascale’s Innovation Labs provides a safe environment to develop and test out new ideas before putting them into practice. The research arm of Innovation Labs can deliver customized insights on products and technologies specifically for your business goals—possibly even turning you toward solutions you weren’t aware of.
Feel free to experiment with automation, next-gen cloud infrastructure, Internet of Things, and much more. Innovation Labs allows you to build a working model of your solution within the cloud for testing and experimentation. When you’re ready to implement, Stratascale’s Transformational Services consulting team helps make your new ideas a reality in your organization.
As you consider new processes, keep in mind “the way you spend your innovation dollars is more important than how many of those dollars you spend,” according to a study by PwC. Stratascale’s Transformative Services team helps keep this idea at the forefront. Throughout the entire innovative process, they’ll work to ensure your investments help achieve your business goals.
Contact us to learn how Stratascale can help your company innovate faster and generate tangible results from new ideas and discover services designed to increase your digital agility.