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4 Must-Haves to set up an Innovation Funnel

Certain companies keep coming at the top of the innovation race because they set up an innovation funnel that allows them to experiment with many ideas at once.An innovation funnel is similar to a factory line that produces a certain number of new products if the raw materials and energy are provided.Lean Startup is a term that is derived from Lean Thinking - a management mindset used in Toyota's factory production process.To win Bundesliga at the end of a season, you’d need to win many games at the end of the season. To win the innovation race, you’d need to experiment with many ideas every year.250 Experimentation/year! That’s THE KPI of innovation. So look around in your organization and ask everyone:How many different ideas do we test every year?So the million-dollar question is how you can set up an innovation funnel that allows you to experiment with ideas at scale? The must-haves to set up an innovation funnel are:

  1. An innovation pool
  2. A recipe-like process for innovation
  3. A culture of iteration and failure-is-a-gift
  4. Quality data: your own data

1. Innovation Pool

Innovation Fool

A company wanting to innovate without having an innovation pool is as weird as wanting to swim in an empty pool. An across-the-board recognition of an innovation pool in an organization sparks the necessary conversation about the required resources to keep the pool filled with ideas at all times.In an innovation pool, there’ll be ideas for radical (new initiatives and epics) and incremental innovation (user stories).

2. A Recipe-like Process for Innovation

Innovation Process

Your innovation funnel must be evangelized across your organization and needs to be easy and straightforward so everyone can follow.Every team needs to go through the process a few times with experts to master it and make it their own. Also, teams need to be encouraged by the leadership team to experiment with the process themselves and adjust it to fit their own purpose.From the start to finish your innovation funnel should last a month. A challenge many companies face is that their innovation team takes their sweet time to validate ideas. However, the process must be set in a way that produces results in a matter of weeks.

3. A Culture of Iteration and Failure-is-a-gift


If a failure is considered a competitive disadvantage in your organization, no one will step forward and risk trying new ideas. A culture that embraces mistakes and encourages individuals to take risks is pivotal to set up an innovation funnel.Failure = learning and most of your experiments won’t lead anywhere significant. To unlock the right door, you have to try many wrong doors first.You want to set incentives for those who toy with new ideas and get out of their comfort zones constantly. This would assure everyone that it’s OK to make mistakes and break things.An incentive could be a point system for the number of experiments you run monthly. Based on the gathered points, you’d receive a bonus on your paycheck.

4. Quality Data: Your Own Data

Quality Data

If you have all the previous ingredients in place but you can’t generate reliable, original, and unique-to-you data, then all your efforts would be for nothing.We’re not talking about historical data that you can find in reports. We are also not talking about what the competitors are doing and their numbers. You should be only making decisions based on the data that you extracted through the experiments that you designed.At Bonanza Design we mastered the science of lean testing and setting up innovation funnels. In case you’re interested to hear more about how we can help you, set up a free consultation with us.Learn more with our Lean Innovation: High-Velocity Validation & MVP Design Webinar or read further articles on our blog.