My previous article featured three dos and don’ts withcorresponding explanations for executives exploring innovation inthe insurance industry. As promised, here are three more.

(4) Do recognize that your innovation leader needs adifferent kind of support. Don’t evaluatehis/her success the same way you evaluate the success of yourbusiness unit managers and leaders.

Running an established business is very different from runninginnovation. Established businesses aremeasured by revenue, expenses, growth, etc. Additionally, they knowexactly what will happen when you raise commissions, lower pricesor add more distribution. Innovation disciplines do not have thesame levers of control.

That doesn’t mean everything is a crapshoot. Innovation leadersmust use different levers, de-risking what is naturally risky.Their levers are about navigating the future, not replicating thepast.

They need support in determining areas of market focus that aremost important. Then they can work to uncover new marketopportunities, quantify and choose the strongest unmet needs, andideate new ways of solving them. They must be given the researchtools and customer experience design support to prototype, test andlearn.

Your innovation leader is out to establish new business lines;therefore, success is first measured by what is learned and whatsignificant barriers are eliminated. Once the business becomesestablished, it can pull the same levers that existing businessesdo.

(5) Do adopt new decision-makingprocesses. Don’t apply the same process as youwould for “business as usual” items.

You can’t fund and resource every opportunity that comes along,so you establish a business case template that people can fill outwith both costs and benefits. And they can use the business case topresent to a funding committee so they can compare “apples toapples” and choose projects based on the best return oninvestment.

Funding innovation doesn’t fit neatly into that framework. Thereason is because innovation isn’t an apple. Revenuepredictions can be made with the right consumer research; however,a function of the demand will be awareness, which has a built-in,variable cost (e.g., advertising and distribution). Prediction ofall costs associated with a new idea is nearly impossible becausethere is a significant amount to be learned duringimplementation.

So the decision is not whether to fund a project; rather it isto fund or not fund the next decision point. If an idea tests wellbased on quantitative consumer research, then the next decision isto fund the work necessary to learn something important about theimplementation.

Perhaps the work is needed to determine the relative importanceof a key feature or a palatable price point. If you learn that theidea is still feasible, press on. If not, then stop funding it andmove to another idea.

Innovation requires more frequent, smaller funding decisionsthan typical initiative funding contemplates. So the best approachis to allocate an amount of funding toward a set of ideas andempower a small group to make decisions as frequently as needed.

(6) Do enable the space forcreativity. Don’t make it all about the physicalspace and décor.

Not that space is unimportant, but we have seen companiesemphasize it at the expense of talent, new processes, resourcingnew ideas and helping leaders understand their roles ininnovation.

If you visit new startups, you’ll see ugly space; but if theyhave the basics, they can function just fine until they can affordsomething “cooler.” Large insurance companies can afford coolout-of-the gate, so it can be intoxicating to believe that breakingthe cycle of complacency will happen if they repaint the walls, buyspecial furniture and insert Ping-Pong tables.

All of this helps, but they aren’t the core investment. Worse,if it is overemphasized, innovation becomes synonymous withfrivolous spending. (There is one caveat, and that is the beerfridge. It works miracles for collaboration but should be deployedresponsibly!)

If any of these dos and don’ts resonate, please feel free toreach out for more information or to share your experience.