How to Deliver BU Growth (and Stay Relevant)

BACK TO OVERVIEW PAGE

Frank Mattes, founder and CEO of Lean Scaleup, sees this playing out in a third to half of the companies he works with. The C-suite is now looking for growth delivery, measurable risk reduction, and short-term impact. Teams that miss this shift watch their budgets shrink and their relevance fade before they realize the ground beneath them has moved.

The path forward requires spotting four warning signals of declining relevance, understanding the economic forces driving the change, and taking specific steps to reposition as growth enablers.

The environment for corporate innovation has moved through distinct waves. In 2010, the focus was open innovation. By 2017, it shifted to corporate venture building. Now, we are in a new phase where the very relevance of the innovation function is being questioned.

This transformation happens without "breaking news." It is not a message sent to the all-hands town hall. Frank notes: "The rules changed quietly."

Previously, innovation units had clear org charts, mandates, and a general acceptance that innovation takes time. Frank captures the accepted wisdom: "You cannot bring an 18-year-old baby to the world." Because of this, reporting was based on activity metrics: the number of hackathons, the number of ideas moved from problem-solution fit to MVP.

Today, however, those metrics no longer showcase progress. Frank is direct: "None of these decide the relevance of corporate innovation units anymore. Relevance is measured differently."

The teams that are successfully riding this wave—rather than being crushed by it—are those that understand they are now"evaluated as the ones who enable growth. They are moving closer to the core business. They are being asked to deliver short-term results.

To understand if this shift is temporary or permanent, we must think about it from a macroeconomic context.

Frank is clear: "Money is not cheap anymore." After the financial crisis of 2008, interest rates dropped to near zero. In that environment, boards encouraged CEOs to find the "next big thing." If a company burned through $20 or $50 million along the way, it was acceptable because capital was inexpensive.

The situation today is starkly different. Institutional investors can get 4% or 5% returns on secure government bonds. Consequently, boards are telling CEOs: "You have to deliver that kind of growth predictably, no experiments."

Every dollar lost now hurts. Efficiency playbooks are back in style. The new requirement: "Predictability plus growth delivery is high on the agenda."

Because this shift happens quietly, innovation leaders often miss the signs until budgets are cut or units are dissolved. Frank identifies four "weak signals" that serve as early warnings that your relevance is fading.

The first signal is timing. Frank asks: "Are you being looped in later when decisions have been made?" If the innovation team is merely executing decisions rather than acting as a thought leader or sparring partner early in the process, relevance is declining.

While innovation leaders are not lazy—Frank notes "their calendars are super full"—the source of that work matters. The critical question becomes: "How much of that work is really pulled and how much... do you create on your own, proactively?" A decrease in demand from the business units, where the innovation team is desperately trying to sell new ideas to win organization support, indicates that "the need is slowing down."

In the past, outcomes were reported "upstairs" with curiosity and excitement. Now, in many companies, Frank notes: "the outcomes, the results, are not reported upstairs anymore." The engine of the company moves forward without the innovation team's input being a mandatory checkpoint for future decisions.

When the first three signals appear, the result is often that "budgets become negotiable." The innovation unit is no longer missed when it is absent.

Many peers "do not notice that the shift is happening... because their calendars are full, they actually increase activity, and they're still visible on the org chart, but the ground under them is shifting."

For teams that successfully adapt, the pivot involves a fundamental change in language and mindset. In some organizations, Frank notes that "innovation really already has a smell." Successful leaders identify that "growth" is their entry door.

Research into companies ranging from $500 million to Fortune 10 reveals a consistent pattern: A typical company with $1 billion in revenue has "12 to 30 growth initiatives" designed to deliver the growth promised to shareholders.

Crucially, "one-third to one-quarter of them are actually bets" with high levels of uncertainty. Yet, business units run them with an "exploitation logic," assuming success.

This leads to what Frank calls "watermelon dashboards." The projects "look green on the outside, red on the inside." Management proceeds with a "Management by Moses" style—"follow me into the floods"—assuming everything will work out without evidence.

Frank reframes the mandate: "Innovation is not so much about inventing growth anymore." Instead, "It's asked to make growth deliverable." The role switches from creating new things to helping the company deliver on promises already made.

The metaphor of an iceberg can describe these growth initiatives. The tip of the iceberg is the revenue goal in the red ocean. Below the waterline, however, lie massive assumptions that can sink the initiative.

Customer Adoption Assumptions

Companies often create value propositions without checking if competitors offer something comparable or if there is a genuine "pull effect." They fail to ask: "What keeps customers from adopting that new stuff?"

Internal Misalignment

Initiatives often assume that "customer care, sales, and our regional units need to work together differently." In practice, functional silos make this collaboration "easier said than done."

Market Unknowns

There are risks of competitors from different industries entering the target area—risks that traditional planning misses.

Frank shares an example of a chemical company where he and a team reviewed a subset of the growth initiatives. They found that one-quarter of them "had to be killed." The customers would not buy the new product, or would only buy it in three to five years. By killing these "zombie" initiatives, they "saved the company €12 million."

This is the new value proposition: helping business units surface assumptions early, enabling them to act under uncertainty, and ultimately "reducing nasty surprises for CXOs."

How do innovation leaders secure this new role? Frank advises against the traditional approach of "coming up with new mission statements" or sending out surveys asking, "What do you want from us?"

Frank is clear about why: "Because that doesn't create skin in the game."

The method must be proactive and hypothesis-driven and innovation leaders must treat their own role as an innovation project:

Innovators should form an educated hypothesis about where they can add value to the "12 to 30 growth initiatives." For example, a team might propose: "We are the strategic partner of choice inside the company when it comes to dealing with uncertainty outside the business as usual."

The next step is to find one business partner—an operative unit or central function—willing to test this hypothesis. This requires "political air cover" from the C-suite. The deal is explicit: "If we deliver business metrics... could we all agree that this is part of our new role?"

The focus must be on tangible business outcomes. "Did they help us to achieve our growth goals? Did they reduce uncertainty so that we can move at pace?" These are the questions business unit heads use to evaluate value.

The criteria for success have fundamentally changed. The trends of high interest rates and demand for predictable growth are unlikely to reverse in the near term. Innovation leaders must audit their current standing, look for warning signals—low pull, silent reporting, late involvement—and act before the ground shifts completely.

The opportunity lies in the "growth" conversation. By positioning ourselves as experts in reducing uncertainty and ensuring delivery of the company's growth promises, as innovators we can secure a vital, sustainable position.

Frank's conclusion captures the stakes: "This year will not test how innovative you are. It will rather test how relevant you are for the company."

BACK TO OVERVIEW PAGE