What can Agile process provide to investors in innovation?

The idea of using an Agile approach to investing in innovation is nothing new. The BBC Innovation Labs have been doing this for many years through providing single iteration support to those with an interesting idea. The BBC invest in many companies producing a demonstrable first version of their idea before deciding to invest further. This approach massively reduces the BBC's risk as they are able to see both whether the idea has legs once it becomes demonstrable and if the development team are up to the job.

This use of single iteration development terms is used as a way of selling Agile development by providing massively reduced investment risk through only committing to a single iteration while delivering working code. This means that at the end of the iteration the buyer can take the code to another development team if they so wish. In the case of the Innovation Labs it is likely that the BBC would retain some degree of exploitation rights to the IP should they wish to take a good idea that was badly realised to another team.

The fact that Agile is so effective at marrying formalised project and product development management with creative and innovative process means that this is a no brainer for those that have worked in this way. Having talked to a number of investment organisations recently, it appears that Agile offers another potentially useful tool in addition to monitoring progress that can be tied to investment rounds as used by the BBC. This is effective communication.

The process of using stories and prioritisation enables the investor to see exactly what decisions are being made and to interrogate the rational behind prioritisation. If an investor takes part in the transition from iteration to iteration they have a clear picture of what is going on and are able to feel sure that their money is being spent realistically. The investor will also able to see the progress being made through the presentation of demonstrable tested development. This provides clear windows for investor communication while leaving the innovator free to get on with their work during actual iterations.

Therefore Agile's embracing and normalisation of constant change and risk (essential ingredients of innovation) combined with a process that effectively exposes this makes it a perfect process for allowing a better relationship between investors and innovators.