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Innovation&: Skin in the Game

Wichtigkeit des Innovationsmanagement

Picture: "Skin in the Game", a thick skin and a willingness to take controlled learning risks are part of modern intrapreneurship

Innovation is the lifeblood of today's business world. In an era of constantly evolving technologies and markets, companies need innovation to stay competitive and thrive. But the path to innovation is not always straightforward, and today's innovators need to contribute more than just their methods, ideas, and creativity. In this article, we will highlight the critical role of entrepreneurship and participation in creating innovation. The term came to prominence in the book "Risk and its Price – Skin in the Game" by Nassim Nicholas Taleb. Skin in the Game in innovation is not just about ideas, but also about the investment of time, skills, capital, and even wage foregoing to bring innovation to fruition.

In this article, we will look at what is required for successful innovation and how the combination of entrepreneurship and participation can lead to breakthrough results.

Wanted: innovateurs and not innovators

Often, innovators and entrepreneurs are mistakenly used synonymously. But there is a crucial difference between the two. Innovators are people who develop ideas and concepts. They are the creative minds behind new products and services. Instead, entrepreneurs are the ones who develop these ideas and turn them into reality. So they are taking economic responsibility as intrapreneurs. They are willing to take risks, invest resources, and take the steps necessary to bring innovations to market successfully.

Time invested

One of the most important resources that an entrepreneur must invest in promoting innovation is time. Developing and implementing new ideas requires a lot of time and patience. It is rare to achieve instant breakthroughs with solutions, and it takes time for a business model to be developed and validated with paying customers for its added value. The path is usually accompanied by major adjustments and setbacks. Without this amount of time, it is difficult to bring innovations from the idea stage to market.

As a [bootstrapping] start-up entrepreneur, I'm just paying enough wages to pay my living expenses... and they're low.
Anonymous start-up entrepreneur

If the innovation doesn't succeed? At most, I lose my project as an innovator.
Anonymous innovation manager in an industrial company

Skills invested

In addition to time, the right skills and qualifications are crucial in the innovation team. An entrepreneur must have the ability to build and manage teams, to effectively procure and manage resources, and to assess risks. The ability to transform innovative ideas into viable business models requires technical expertise as well as specific skills such as project management, marketing and sales, and strategic planning. Investing in the development of these skills is essential to drive innovation.

Capital invested

Innovation required financial resources. Developing new products or services, conducting market research, hiring qualified staff and launching marketing campaigns cost money. An entrepreneur must be prepared to invest capital in his innovations. This can come from own resources, loans or investors. Without sufficient capital, it is difficult to implement innovations successfully.

Wage foregone invested

Successful innovation sometimes requires the entrepreneur to forego wages. This may take the form of personal sacrifices such as a lower salary or less leisure time. Entrepreneurs must be prepared to accept short-term financial losses in order to encourage long-term innovation. This wage waiver may be necessary in order to channel resources into the development and implementation of innovations. In addition to the classic participation in the form of shares, classic instruments for this are ESOP (Employee Stock Option Plans) or PSOP (Phantom Stock Options Plans).

Conclusion - Skin in the game in innovation

Innovation is a key component of entrepreneurship. It requires more than just creative ideas; It requires a willingness to invest time, skills, capital and even wage foregoing. However, an entrepreneur's efforts to drive innovation are not possible in isolation. Participation, whether through collaboration with other entrepreneurs, employees or investors, plays a key role in promoting innovation.

As an entrepreneur, you should be aware that innovation is not just an idea, it requires a comprehensive effort. It requires skin in the game, a willingness to put personal resources and commitment into making innovations happen, and to push the project forward despite sometimes adverse circumstances. This is the only way for companies to succeed in today's highly competitive environment and achieve long-term success.

Yetvart Artinyan

P.S: Do you want to know more in-depth how you can anchor entrepreneurship in your company?

  1. Expand your time on a temporary or permanent basis: Contact me for a chat

  2. Sharing knowledge : Book one of the Innovation-Bootcamps

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