Most businesses are based around a core product, a core customer segment, and a set of strategic assets. The management team develops growth goals and organizes the team around achieving those goals above all else.

Unfortunately, this approach often stifles innovation. The CEO tells the team, "Focus on the goal," which translates to, "Don't think outside the box."

In our recent article How to Capitalize on Your Lack of Focus, we discussed the unconventional approach we take at Avondale. We view the firm not as a single business, with a core set of products/solutions, customers and assets, but as a platform for building and growing businesses. We build businesses for our clients, our investors, and for ourselves. This requires us to be relatively unfocused as a firm, which encourages innovation in new businesses. But we also have to ensure that each business is focused on achieving its goals, with a profitable result.

In order to strike this balance, we are building a team that is both driven to create results and driven to incubate new businesses. This platform will serve as an ecosystem of businesses that can benefit from each other, and of course benefits our clients and investors.

As in all businesses, we learn by doing, and we are still learning, but here are a few things we have instilled in our team to create an innovation incubator:

  • Experiment

    If you don't try, you don't succeed. Talk to customers, investors, and do your research with the goal of getting some real world experience. The results from our experiments are the best indicator of whether a product, solution, or business will succeed.
  • Fail Fast

    We like to put a short leash on our experiments-usually three to six weeks. That doesn't mean we are going to declare failure after that short amount of time, but it does mean that after giving it a meaningful try, we need to assess what has worked, what has not, and what is likely not to work in the future. After the initial trial, we either tweak our experiment or end it.
  • Provide Air Cover

    Make it clear that at any time, anyone can bring a well-conceived business plan to the leadership team for consideration. If it's a good idea and has a chance (but not a certainty) to succeed, that individual can temporarily drop their "day job" to pursue the new business, assuming we have the ability to backfill for their job.
  • Don't Penalize Failure

    Innovation requires experimentation, and when experimenting, one will inevitably experience failure. If you ensure that each experiment has a well-conceived plan before it gets the go ahead, you eventually experience success. When you penalize failure, you encourage your team not to try. Create a culture where smart experimentation is rewarded and failure is viewed as a worthwhile learning experience.
  • Create a Blameless Feedback Conversation

    At every point in the innovation process, encourage a discussion about what to continue, what to change, and what to do differently the next time around. Stay away from personal blame and focus on the future. The feedback loop will become your innovation engine by creating more ideas and improving your chances of success.

Any business can benefit by turning its team into more of an innovation incubator rather than following a single static business model. A culture focused on experimentation and learning can eventually deliver a rewarding and profitable set of business models.

Share your thoughts on creating an innovation culture with us at