Generating ideas like a pro: Corporate innovation instead of coincidence
An overview of corporate innovation for established companies
So regardless of whether it is a medium-sized business or a large corporation: every company that already has an established business must ask itself what new solutions it offers for new customer needs and technologies. Efficient ‘corporate innovation’ can help!
Blockchain? 10 years ago, it was just a gray theory. Apps? didn’t even exist yet. Tesla? Uber? AirBnB? Were all still unknown start-ups or not even launched yet.
Thinking about what has changed in just 10 years shows how many changes companies have to deal with today. Ever faster innovation cycles and competition from convergent and new industries accordingly ensure that the life expectancy of the 500 largest publicly listed companies is now only 18 years – instead of 60 years as in the mid-20th century. And even smaller companies and SMEs are noticing how digitization is pushing into every niche.
And so by now, almost every company has (hopefully) realized that it’s no longer enough to just stick to tried-and-tested solutions. The only way to meet the numerous new challenges is to find new answers. So it is hardly surprising that in a global innovation study by PWC, 80% of the companies surveyed described “innovation” as important or very important for innovation success.
So regardless of whether it’s a medium-sized business or a large corporation: every company that already has an established business must ask itself what new solutions it offers for new customer needs, and technologies. The innovation is always a new (for the company), implemented solution that adds value. But hasn’t that always been the case?
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In the beginning was the invention
In principle, every company was born from an innovation or invention. Think, for example, of Carl Benz, Werner von Siemens, Thomas Edison or the numerous SMEs that are often still family-owned today. But with the advent of mass production, “inventing” soon became institutionalized, with research and development units becoming quasi-patent factories. At the same time, companies became larger and larger, processes more complex, business more optimized – and it became more and more difficult to come up with new, useful solutions, i.e. innovations. Instead, the existing was often only optimized further and further.
This worked well for a long time, because the core business could be secured by means of patents. But with the advent of digital technologies, this was no longer enough. Competitive advantages, and thus the focus of innovation, were suddenly no longer just technologies, patents and products, but in particular new, customer-oriented business model innovations. Worldwide growth of financial resources made talents and ideas instead of technologies & patents the dominant currency for companies. R&D departments alone no longer helped here: suddenly, most established companies were too far away from the customer, had the wrong expertise and were too slow.
Not so, however, the new competitors in the form of customer-centric, agile, digital startups: these seemed to have all the aces up their sleeves thanks to clever ideas and agile, customer-centric methods such as Lean Startup and Design Thinking: Suddenly, it seemed possible to build new businesses with minimal resources and test them close to the customer without taking on large investments and risks.
Start-up methods as a solution for large companies?
The established companies looked at this for a while, and then set about the obvious solution: they copied the startups’ methods in order to innovate just as successfully in a customer-centric & agile manner.
Even companies that had already introduced classic innovation processes such as Stage Gate or Idea Management now quickly switched to iterative, customer-centric methods such as Design Thinking & Co. But unfortunately, not always very successfully.
SAP, for example, conducted its first Design Thinking project 10 years ago. Supported by the CEO, a product innovation was developed that satisfied all new customer needs. But to this day, it has not been successfully implemented. The situation is similar for many established companies that work with start-up methods: The ideas fail in the end because of the existing structures, processes, decision makers, implementers, etc.
This is not surprising, because in contrast to the start-ups, these companies are much more complex, and cannot simply implement ideas freely “on the greenfield” entirely according to customer requirements.
Harvard Professor Christensen also recognized this “innovation dilemma” and published the “Innovators Solution” in his bestseller of the same name: Instead of freely developing ideas that then fail due to the restrictions of the company, the ideas should simply be implemented outside the company – just like start-ups.
And so today, countless Innovation Hubs, Labs & Co of large companies can be found in Berlin, London, TelAviv & Silicon Valley to finally innovate successfully here.
But a recent study by Capital magazine shows that not a single one of the Innovation Hubs examined there was able to achieve business success. And in fact, this is also very difficult to achieve when you move in the dimensions of large companies: A study by Bain showed that the chance of achieving a value contribution of USD 100 million with a start-up is only 1:500, and for a value contribution of USD 600 million even only 1:17,000.
Instead, the solution seems to lie more in the company after all: The same study showed that the chance of a value contribution of 500 million increases 2000-fold to 1:8 if the strengths of the core business can be used for innovations.
Corporate innovation is still in its infancy
And this is precisely the task of “corporate innovation. Even if it does not always run smoothly from a methodological and strategic point of view, it has at least been recognized that innovation cannot be neglected, but must be approached systematically and anchored in the organization. Any efforts to achieve this are then referred to as “corporate innovation”. And even if the holy grail has not yet been found here: It is worth searching for it, because only then can companies not only survive future changes, but perhaps even use them profitably.
It helps not only to be guided by the start-ups, but also to look at new approaches that try to systematically bring together the successful core business on the one hand, and the new customer needs & trends in the market on the other:
Under the keyword ambidextrous organization this challenge is approached by deliberately separating topics for optimizing the core business from explorative topics in order to give them space – either with individual units or by separating the tasks at the individual employee.
A continuation of this approach is “efficient innovation”: here, procedural ambidextry is achieved by systematically bringing together the company and customer perspectives in each step of the innovation process in order to find the most suitable solution with the highest chance of success, ergo achieving high customer fit and traction.
But no matter where a company stands: Awareness that innovation is not done with a simple brainstorming session, but, as Edison says, needs 99% sweat and only 1% inspiration, is the first step on the road to successful corporate innovation.
Additional read: 5 important elements for corporate innovation
Sources:
Sauberschwarz/Weiss: Das Comeback der Konzerne
PWC Innovation Benchmark 2017
Bain/HBR: When Large Companies are better in entrepreneurship then startups
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