One in four of the world's largest companies have been actively cutting innovation budgets, because they couldn’t draw a straight line from innovation unit to bottom line impact.

If your innovation unit is still up and running today, that line either exists or it doesn't. And if it doesn't, someone will eventually notice.

The pressure isn't coming out of the blue. Since mid-2022, boards have expected growth to be delivered predictably. The implicit deal that once protected innovation — you explore, the core delivers— has quietly expired. What's replaced it is simpler and less forgiving: show us how you move the numbers.

The teams navigating this well aren't doing it by rebranding or restructuring. They're doing it by inserting themselves into the growth conversations already happening in their business units — finding the bets that carry hidden risk, and becoming the people who reduce that risk before it hits the revenue plan.

Demonstrating value to your core business in their language, on their terms, is what will safeguard your team in this year’s budget round.

This is a very different role from the one most innovation teams were built for. Frank Mattes, Growth Architect at Lean Scaleup, advises how to make the shift, starting with a single conversation in a BU this quarter.

Following the financial crisis of 2008-2009, interest rates went down to zero. Boards were asking for the “next big thing”, which eventually sprouted venture studios, incubators, accelerators and other initiatives which would fit the purpose of creating new, sizeable businesses.

However, in July 2022, things took a turn. The exceptional status of corporate innovation, as Frank puts it, ended abruptly. This was the month that corporate innovation life changed; since institutional investors can get 4-5% on bonds, boards changed their minds on what is important. Growth now needed to be delivered predictably; the loose, almost frantic experimentation that innovation teams were up to then performing was being discouraged, and increasingly, de-funded.

Most of the innovation leaders seeing their units being closed admit they didn’t see the warning signs.

How safe is your unit? Run through the signals below, ideally with your team. If three or more apply, your unit is drifting already:

Noticing some of these signals is not yet a crisis. The drift “whispers”.

Teams often miss the above as there are false comforts that “mask the drift”. These feel like signs of relevance, but they are not: your calendars are still full, activity increases, and you're still visible on the org chart. Yet being on the org chart is not the same as being in the conversation.

Realizing your unit may be drifting might feel uncomfortable at first, but it's crucial to self-diagnose early enough— because relevance (for your unit) and growth (for the company) are two sides of the same coin.

In a workshop Frank ran with 15 CXOs on growth, participants were asked to put their two or three most important growth initiatives on a post-it. 55 post-its were collected and placed on an Ansoff matrix. 49 were inside the box: known customers, known capabilities. But when discussed further, approximately a third of those initiatives actually had a level of uncertainty and unknowns that made them a bet— capabilities that weren't yet in place, adoption assumptions built on hope rather than evidence.

Through our experience navigating uncertainty, we can de-risk and accelerate the growth goals that matter most to the business.

So, before your next BU conversation, ask: which of your growth initiatives are actually bets in disguise? That's your entry point.

A company's growth initiatives sit like an iceberg. Above the waterline is what's visible and planned. Below the surface are three layers of hidden risk: assumptions (especially about customer adoption), misalignment (growth plans require departments to collaborate differently, but teams live in functional silos with their own goals), and unknowns (competitors entering from different industries, capability gaps, business model changes the existing engine can't handle).

The core business is not designed to close this gap; innovation teams are. We have the thinking, tools, curiosity and psychological dispositions to go and test assumptions and support evidence-based decisions.

There's a temptation, at this point, to start fresh. “Let’s create a new mission statement, a new positioning document, a new pitch to leadership”— innovation teams may say. This rarely works. What works is something quieter: showing up differently in one conversation, with one team, around one real problem they're already losing sleep over. Start small— with the BU that will listen.

The instinct is to start with the most innovation-friendly team— the one that already gets it, already uses the language. But that's not necessarily where the leverage is. The BU worth starting with is the one carrying a growth target that makes people slightly uncomfortable when you ask how confident they are about it.

Once you are in the conversation, lead it with structural observations. Ask them if they are open to share and exchange on their strategic initiatives.

A useful question to ask yourself before the talk: which BU leader, if I sat across from them and said "I think there are two or three assumptions in your growth plan that could quietly hurt you this year"— would lean in rather than brush me off?

That's your signal. Enough pressure to care, enough visibility that success will be noticed, enough uncertainty that your toolkit is genuinely useful.

Once you've found that conversation, the temptation is to pitch a program — something structured, with phases and deliverables. Resist it. A program asks for commitment before you've demonstrated value. What tends to work better is something much more contained: pick one funded initiative that stretches beyond their current operating model, and offer to take a close look at it.

Run a focused 2–3 week assessment— not a consulting engagement, just a disciplined look at what the initiative is actually standing on. This makes three things visible to the BU head:

The output is a single page. This arms the BU with a clear decision on whether to double down, de-risk, or reprioritize the initiative— before the hidden risks reach the revenue plan. This is your proof of concept.

Most innovation teams report on activity— projects launched, workshops run, ideas in the pipeline. These numbers are easy to produce, but hard for leadership to care about.

What tends to land higher in the organization is a different layer: portfolio economics. Things like revenue pulled forward, capital redeployed earlier, growth bets rescued before they escalated, revenue commitments protected. This is where true value lies; not in activity dashboards.

These aren't always easy to quantify in the early stages. But building the habit of naming them shifts the conversation from "what does innovation do?" to "what did we avoid, and what did we accelerate?" Through this small change, leaders are answering a fundamentally different question— already.

The work moves in three stages, and so does the relationship.

The feedback loops at each stage of the arc are not about product development. They are about reducing uncertainty. Remember this at every step of your journey.

What happens after the nine months varies by organization, but the pattern is consistent. In one logistics company, the relationship eventually became a formal strategy dialogue, twice a year, the operative business and the innovation team sit down to work through the two-to-three year problems worth putting on a shared agenda. The BU shares where their constraints are, while innovation shares what they see coming. Together they decide what deserves attention, before it becomes urgent.

That kind of relationship doesn't get negotiated into existence. It starts somewhere quite small— one BU, one initiative, one honest conversation about what a growth plan is really standing on.

It grows from a track record of showing up pro-actively, reducing uncertainty, and helping leaders see the assumptions and weigh the evidence, so they can make better decisions. Because in the end, executives don’t buy innovation methods, they buy protection.

Most executives will tell you they need more time— to think, to plan , to look further ahead than the next quarter. What they rarely say out loud is what sits underneath that.

Underneath sits the fear of being exposed for not understanding how innovation actually works, of committing resources to things that produce nothing, of making consequential calls in situations nobody has faced before.

This is the environment innovation professionals have been working in for years. Navigating ambiguity without complete information, making decisions under uncertainty, moving when the path isn't clear— these are not new challenges for your team. For most leaders however, they're becoming the daily reality for the first time.

Elvin Turner, Expert Innovation Advisor, outlines how to do this in practice— from finding the right leader to work with, through to changing how their team thinks.

Not every leader is ready for this kind of partnership with you, and starting with the wrong one wastes time and political capital. A leader worth recruiting has certain characteristics:

When you've found that person, the approach matters. Don't pitch innovation. Pitch usefulness. Something like: "I've got a toolkit that can help you and your team navigate uncertainty with as little risk as possible [for example, exploring AI]. I want to work with one team this year and have some capacity. Can we meet and discuss?

This framing — specific, low-commitment, clearly useful — tends to open doors that a broader innovation pitch won't.

Most leaders know change is coming. What they lack is a concrete picture of what it means for their team — and a clear line between that future and the decisions they need to make today. Your job in this step is to close that gap, with tools you use every day.

Three moves can make their future tangible rather than abstract:

The frameworks you use every day are largely unknown in leadership circles. Most leaders haven't encountered them, or have seen them once in a workshop and never applied them. Introducing a small number of these tools can shift how they see their situation entirely.

Three in particular tend to land well:

What you’re building towards is an informed point of view. When a leader works with this toolset, the ambiguity lifts and they have a renewed sense of motivation to explore in their area.

Ask most leadership teams what's in their innovation plan and they'll look at you blankly, since most don't have one. As a result, innovation becomes a line item in the ops plan that quietly gets moved to next quarter.

Your job is to help the leader build a simple two-level plan for their team:

The goal isn't a perfect document, but a shared understanding between you and the leader of what innovation requires in their specific context. The signal that this has landed? Innovation becomes a permanent agenda item in team meetings.

In most teams, when someone puts a bold idea on the table, most teams default to finding €500k and getting sign-off. That instinct — to scale before validating — is how organizations waste resources and lose confidence in innovation over time.

Instead of this, introduce something different: start with €500 and design a tiny experiment nobody gets fired for. Run it. Review what it taught you. Decide whether to invest more or kill it cleanly. Repeat.

The practical way to introduce this is to run a short brown-bag session on assumption mapping and experiment design — not as a training exercise, but as a direct response to an idea that's already on the table in that leader's team.

As a result, leaders learn to replace one bad decision-making habit with a better one, in a situation where it actually matters. The stakes are lower, the ideas are bolder and the resource stewardship is better.

Alberto Prado became Head of Strategy at Nokia at a time when iPhone and Android were in the process of launching. These new devices set to completely disrupt Nokia's business, dropping its global smartphone market share from 50% to single digits as consumers shifted to touchscreen app ecosystems. Nokia’s world was flipped upside-down.

Alberto made the case internally to focus more on software, and less on hardware. The argument was sound, the evidence was there. The board listened yet didn't move; not because they lacked the information, but because they had spent decades being right about something else entirely, and that kind of success builds its own gravity. There was too much at stake and too much history in the room.

Eventually, he lost the battle and left, before the situation became a disaster. This experience taught him to bring a permanent sense of urgency to his work, something which he carries to this day. What's stayed with him since isn't the vindication— it's the specific texture of that experience. Being the person in the room who can see the problem clearly, and discovering that clarity alone doesn't move organizations. Understanding that the real work isn't the analysis, but building the conditions— the protected spaces, the leadership buy-in, the trust— that give the insights somewhere to land.

Everything he's built since has been shaped by this experience. At Philips, and more recently at Unilever, he follows this principle: get the protected space in place before you need it, and get leadership on board of change you before the pressure arrives.

The window to act, he found, is always shorter than it looks from the inside. The board that ignored Alberto wasn't wrong— they were just too late.

How much time does your organization have before "too late" is all that's left to say?

For more insights about how the role of the innovation function and the nature of innovation management are changing, check these curated resources.

That’s it for today.

Hope you enjoyed this first edition of the Compass. Next time, we’ll explore what it takes to pull off the ultimate innovation heist as intrapreneur. Drumrolls please…..

Hans Balmaekers
Founder, the Compass and Chief @ Innov8rs

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