Innovation Insurance: How to Keep Innovation Programs from Being Shut Down

What does “innovation insurance” really mean, and what is it not?

Innovation insurance is often misunderstood as if it were a financial instrument, a new type of corporate coverage, or a risk-transfer product offered by insurance companies. In reality, it is a preventive management mindset, a way of building protection into your innovation program from day one so the program does not end in disappointment, shutdown, or internal skepticism. Firstly, it treats failure not as a random event, but as a predictable outcome of weak program design. Secondly, it assumes that innovation is not justified by activity (events, contests, speakers, press), but by value creation. As a result, “insurance” here means setting up the program so that it can withstand the moment when leadership asks, “We invested for years, what do we have to show for it?”

Why do innovation programs get questioned, and sometimes closed?

Companies do not usually shut down innovation programs because they dislike innovation, they shut them down because they cannot defend the investment. Over time, innovation departments spend real money on structures and activities, yet the program may still fail to generate profit or new revenue. In contrast, a program that creates measurable income (or a credible pipeline toward it) is easier to protect when budgets tighten. The common pattern is simple: programs built around operational improvement, increasing customer satisfaction, or vague “strategic benefit” eventually face scrutiny because the link to new turnover is unclear. Consequently, executives ask a fair question, “We listened, we funded it, what do we have?” If the answer is only “we ran competitions and invited speakers,” the program’s legitimacy erodes.

How does the OECD Oslo Manual frame innovation and profit?

When the OECD Oslo Manual defines innovation, it emphasizes that innovation is not just novelty, or creativity, or internal momentum, it is an activity that ultimately creates value in the market, including profit and revenue generation. That framing matters because it forces a practical standard: an innovation program should not be evaluated only by how innovative it “looks,” but by whether it produces outcomes that the business can monetize. However, this does not mean every initiative must pay back immediately, nor that early-stage exploration is useless. It means the program must be designed with an explicit commercial logic, even if the timeline is staged. In other words, innovation becomes credible when it is treated as a pipeline for new revenue streams, not a branding effort or an internal morale campaign.

How can you design a profit-driven innovation program without unrealistic expectations?

A profit-driven innovation program is not the same as demanding instant profit. Firstly, it is reasonable to accept that a new program will not generate major income in its first months. However, it is equally dangerous to run innovation as if profit does not matter at all. The “insurance” is to build a revenue architecture early, even if the numbers are small at the start. This can include defining what “new revenue” means for your business, deciding which innovation outputs should lead to monetization, and agreeing on what proof is acceptable before scale-up. As a result, you avoid two extremes: vanity innovation that cannot survive executive review, and short-term pressure that kills learning. The goal is a program that can answer leadership with evidence, not slogans.

What must innovation leaders communicate to executives and employees?

Even if you have highly innovative employees, you cannot expect sustainable results without a clear target. Innovation leaders need to communicate one core truth: innovation is not done to be trendy, it is done to generate new turnover through new products or offers. Secondly, this message cannot be hidden inside strategy decks, it must be explained openly to the entire organization, so teams understand what “success” means. Otherwise, people will optimize for visible activity (events, workshops, participation counts) rather than commercial outcomes. Finally, innovation leaders should prepare for the inevitable executive question by aligning early on what the program will deliver, when it will deliver it, and how progress will be measured. Without that shared contract, you risk joining the group of companies that eventually close their innovation programs.

Key Takeaways

• Innovation insurance is a preventive design      principle, not an insurance product.

• Innovation programs get shut down when they      cannot show profit or credible new revenue.

• Activity metrics (events, contests, visibility)      do not substitute for commercial outcomes.

• A profit-driven innovation program does not      require instant profit, but it must have revenue logic from the start.

• Clear internal communication is essential:      innovation exists to create new turnover through new offerings.

FAQ

Is innovation insurance a real insurance policy sold by insurers?
No, it is a management precaution, designing innovation so it does not collapse due to missing profit logic.

Why isn’t “operational improvement” enough to justify an innovation program?
Because programs become vulnerable when they cannot show profit or new turnover, even if operations improve.

Do innovation programs need to generate big revenue quickly?
No, but they must be built around a credible path to revenue, and that path must be measurable.

What is the most common mistake innovation leaders make when executives ask for results?
Answering with activity lists (events, speakers, press) instead of value and revenue evidence.

References

• OECD – Innovation & the Oslo Manual: https://www.oecd-ilibrary.org/search?value=Oslo%20Manual

• OECD – Innovation topics hub: https://www.oecd.org/innovation/

• Harvard Business Review – Innovation topic page: https://hbr.org/topic/innovation

• McKinsey – Innovation insights hub: https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights