Tools for Managing Early-Stage Business Model Innovation

Abstract

OVERVIEW:Standard financial metrics do not provide useful or meaningful evaluations of the potential of early-stage ideas that require business model shifts. Lockheed Martin has developed a two-stage approach that combines a modified risk-return framework with a new concept, Innovation Readiness Levels (IRLs). Using a structure analogous to technology readiness levels (TRLs), IRLs offer a quantitative assessment of the organization's state of readiness to implement a specific business model and a measure of the amount of stress an idea is likely to create for the organization. This evaluation provides a surrogate metric for both required investment and the risk associated with the investment.