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A business writer has claimed that good innovators should act like venture capitalists.

Paul Sloane, author of ‘Innovative Leader’, also said that companies that are trying to innovate should try out different ideas and monitor their progress closely.

"The most innovative leaders have a mindset like that of a venture capitalist (VC). They take a portfolio view of innovation projects,” said Sloane.

“The VC will invest in a basket of different start-up companies, fully knowing that most will fail. A few might break even and one or two might be successes. But one big success can pay back the costs of all the failures.”

A VC will not be sure when he/she begins these companies which will succeed and which will fail. However, as time goes on it will become obvious which businesses are doing well and which aren’t so he/she withdraws funding to failing firms and invests more in the promising ones.

Sloane has revealed that these principles also apply to innovation and said: “It is the same with prototypes in business. The leading innovators run many different pilots and measure progress carefully. They chop the losers but pour more resource into the successful trials. That way they are first to market with the real winners.”

For this approach to be a success innovators have to be comfortable with the fact that many of the ideas that they pilot will fail. Only then will they be fully able to reap the rewards of successful pilots. You should try out ideas no matter how ludicrous they may seem – you could revolutionize your industry.

According to Sloane VC-style innovators should remember the following points - quantity is the name of the game (create and pilot lots of ideas), reconsider rejected ideas, select the promising ideas after considering your company’s main objectives, many ideas will fail, look for the return on your innovation, and focus your firms resources on the successful ideas and ditch the rubbish ones.