The biggest hurdle to innovation is the corporate longing for certainty about costs, market size, revenues, profits, and other quantities, all of which can’t be known when an idea is new. Ironically, there seems to be no hurdle to investing in dying businesses, decaying strategies, and shrinking markets, all of which can be seen without a crystal ball. It seems we prefer the devil we know.

1. STEAL THIS IDEA
The Innovation
Funnel
BY MARTY NEUMEIER

2. The biggest hurdle to innovation is the corporate longing for certainty about
costs, market size, revenues, profits, and other quantities, all of which can’t be
known when an idea is new. Ironically, there seems to be no hurdle to investing
in dying businesses, decaying strategies, and shrinking markets, all of which
can be seen without a crystal ball. It seems we prefer the devil we know.
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER

3. The best way to get around the devil—and all his advocates—is to allow the
company to crank up its confidence stage by stage. Luckily, there’s already a
workable model for this process: stage-gate investing. It was pioneered by oil
entrepreneurs who lacked certainty about which wells would produce black
gold and which would fizzle. It was further developed by venture capitalists
who lacked certainty about how trends, markets, and people would combine to
produce profits. There are four funding stages in this process:
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER

4. S TAG E - G AT E I N N OVAT I O N
S TA G E 1
SEED MONEY
TO D E V E LO P
CONCEPT
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER

5. S TAG E - G AT E I N N OVAT I O N
S TA G E 2
SMALL BET
TO D E V E LO P
S T R AT EGY
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER

6. S TAG E - G AT E I N N OVAT I O N
S TA G E 3
MEDIUM BET
TO M O D E L
A N D T ES T
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER

7. S TAG E - G AT E I N N OVAT I O N
S TA G E 4
L ARGE BET
TO L AU N C H
IN MARKET
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER

8. S TAG E - G AT E I N N OVAT I O N
S TA G E 1
S TA G E 2
S TA G E 3
S TA G E 4
SEED MONEY
SMALL BET
MEDIUM BET
L ARGE BET
S T R AT EGY
A N D T ES T
TO D E V E LO P
CONCEPT
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER
TO D E V E LO P
TO M O D E L
TO L AU N C H
IN MARKET

9. With stage-gate investing, an idea is vetted stage by stage using a kind of
natural selection, so that big bets are only made after the idea has been
largely de-risked. Stage-gate investing works best when you have a portfolio
of innovations in the pipeline. The vetting process then acts a filtration system
that separates the great ideas from those that are underpowered, shortsighted, unstrategic, or off-brand. It creates an innovation funnel that lets you
vet new concepts step by step, reducing the fear of failure at each step.
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER

10. Find more Marty Neumeier ideas to steal at
liquidagency.com/blog
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SOURCE: THE DESIGNFUL COMPAN Y BY MA RT Y NEUMEIER