A recent study by CB Insights found that about 85% of the surveyed 677 corporate strategy leaders find innovation very important – and yet almost 80% of the same respondents focus on incremental changes1. Surely innovation is the magic pill to corporate renewal, ensuring future competitive advantage, and simply keeping companies alive in an age of disruption like so many are saying? However, despite setting up separate innovation hubs (or labs, incubators, accelerators, whatever you want to call them) outside the immediate vicinity of the corporate parent, where innovators are supposedly given freedom to explore, many corporations are still struggling to see the concrete benefits of true innovation.
Is innovation really an enormous scary beast that all employees should be afraid to take on? After all, Eric Ries the Great (the author of Lean Startup), has brought the ever so complex tools and techniques of innovation into the hands of us common people. Based on his (and of course many others’) principles, everybody can innovate successfully. It’s all about the Build-Measure-Learn loop, where constant iteration based on real customer feedback develops an idea to an MVP and later to successfully scaled product or service2. This all sounds so very simple in theory, but what about in practice? The truth is not so rosy – many corporations run into challenges such as inappropriate corporate culture or processes and governance that seem to hinder innovation. But is there something that can be done to revert this situation and bring back the long ago dead spirit of innovation into established corporations?
Along our work we in BearingPoint have come across several different approaches how to foster innovation within established corporations. One common nominator seems to be independency: Innovations must not be exposed to corporate legacy, otherwise creativity will be suppressed and innovations won’t happen. This is rather generally considered as a best-practice. That is why many corporates have established separate innovation units and labs and why they are dating with cool startups. However, if exacerbated a bit, sometimes the biggest impact so far has been that senior executives have started to wear jeans and t-shirts during office hours.
Independency is a key success factor in innovations but at the same time it seems to be the most common source of challenges faced when driving innovations within corporations. It is easy to do experiments and other “harmful stuff” outside the “real money-making” business. But if there’s a risk that an experiment might lead to something bigger, challenges start to emerge. Scaling up innovations requires resources, typically money. What is the optimal allocation of investments between new innovative business and highly profitable cash cow? What is the right timing to invest in scaling up new innovative business? Independency may create also cultural tension and dualism in the organization. Who has the right to innovate? How to ensure internal collaboration and buy-in from existing business units?
Above we highlighted some examples of challenges related to corporate innovation that we are going to deep-dive in this coming series of blog posts. What kind of experiences do you have? Have you faced similar challenges within your organization? Or have you managed to overcome the challenges and found a silver bullet how to transform your corporation to an agile innovation factory? Please feel free to share your thoughts in comments. And stay tuned for the next episodes.