Corporations are having to revise their innovation strategies within an increasingly disruptive business environment. Recognising the need for agility, and speed, they are creating innovation programmes to avoid disruption from companies such as Uber, Airbnb, Netflix, or Facebook, for example. Critics might well label such emerging start-ups as ruthless, callously sowing confusion into the corporate world. Supporters and analysts might note these new business models have unleashed a wave of innovation and productivity.
Readers on both sides of this debate will find plenty of food for thought in Crowd Companies’ The Corporate Innovation Imperative, a detailed investigation into the ways companies approach innovation and strengthen their ecosystems. It is a well-crafted account by Jeremiah Owyang, founder of Crowd Companies, and Jaimy Szymanski, research analyst, who interviewed 46 executives from Fortune 500 companies, innovation ecosystem partners, and educational institutions. The report highlights the critical components of innovation, as well as the opportunities and challenges for corporate growth. It also describes the tensions between the fresh attitude of change agents and the traditional business structures in which they often have to operate. “Corporate innovation leaders are go-getters. Their attitude is ‘Let’s make change, or let’s get out”, says Owyang.
In this interview, Owyang shares the study’s findings around the corporate practices that nurture a culture of innovation. He walks MARGINALIA through some of most popular innovation programmes that companies are adopting. He also offers his top advice for building an advanced innovation programme.
Gloria Lombardi: Before discussing The Corporate Innovation Imperative, what does ‘innovation’ mean to you?
Jeremiah Owyang: Ha! We interviewed individuals who had ‘innovation’ in their title, but, surprisingly, many of them could not even define innovation. In some respects, innovation is a term that like ‘digital’, could mean anything.
But here’s how I describe it: ‘Innovation is about doing new things that solve customer needs’. Sometimes innovation is in conflict with a company’s existing business model. Often, innovation leaders are expected to avoid disruption, protect existing business, and still deliver new revenue streams and ways of working.
All of which have important implications for the future of work.
GL: The internal culture seems to be the most critical challenge to corporate innovation. According to your findings, 56% of companies struggle to experiment. What is your take on that?
JO: Companies need to do things outside of their primary revenue engine. But, big corporates are often designed to stop risk – they have lawyers for example, product managers, and sales teams that sell the products and services that are already making a profit.
Start-ups on the other end of the scale, take on a lot of risk – their mission and their goal is to try to upset a market and win big. It’s OK for them to be fast and flexible. Facebook offices, for example, have posters on the walls that say, ‘Fail fast or fail forward, just fail’. They encourage a culture that takes risks. We see the same at other start-ups. We had a session with Uber and other tech companies where a Crowd Companies member asked them, ‘Do you have an innovation department?’ The start-ups were stunned. ‘What’s an innovation department?’ they asked. Everybody, every employee, was involved with innovation – so for them there was no need of having a dedicated department.
When it comes to the corporate culture however, organisations need to encourage intrapreneurship inside of the company. They need to foster a culture that accepts failure. Part of what makes innovators successful is experience in overcoming obstacles, failing fast and often, and coming up against adversity. Large enterprises can’t easily adopt this method. Whether it is the collaborative economy or the autonomous world, corporations need to radically change themselves.
GL: You found that many large companies have set up Dedicated Innovation Teams (78.9% of companies studied) and Innovation Centres of Excellence (61.4%). Could you tell me more?
JO: Dedicated Innovation Teams tend to run innovation projects like labs on behalf of the company. For example, Swiss Post’s 12 person team offers services to business units, each of which has dedicated innovation people, including an ‘ideas manager’. The innovation team has already launched a number of pilots including drone delivery and even autonomous robots to test the distribution of packages.
The innovation team is dedicated to developing strategy, managing, and activating innovation programmes. The centralised team deploy on behalf of the business units.
The Innovation Centre of Excellence, perhaps a more mature model, tries to standardise and scale innovation across the company. For example, WL Gore has a steering committee that brings lean start-up methodology into the organisation.
The Innovation Centre of Excellence (CoE) enables innovation across multiple departments, and are also responsible for senior leadership within various corporate groups. The goal of the CoE is to standardise and scale innovation across the company, providing guidance to efforts that do not yet have dedicated teams or leadership.
GL: Which corporate innovation programmes would be the most scalable for a company with few resources?
JO: Open Innovation. It’s about encouraging your ecosystem of partners and customers to build products with you. It’s a great way of scaling and getting the crowd involved. Johnson and Johnson, for example, open up their offices to outsiders who can rent the company’s lab, which is an expensive resource. They even welcome start-ups that compete with its products. When I interviewed the company I asked them why they share labs with potential competitors, and they said, ‘We want all the innovation start-ups to rise. If they rise, our brand goes with it’. And, of course the company can build relationships and hopefully partner, invest or maybe acquire them later on.
Another opportunity, although some resources are required, is the Intrapreneur Programme. It’s about investing in employees’ ideas and passions and teaching them to innovate. Adobe is a clear leader here. They created the Adobe Kickbox programme for employees from all over the company – not just the product team – who want to innovate. The Kickbox classes, which are run by one of the innovation leaders, teach staff a design methodology to improve features and services. Employees receive a prepaid credit card with $1,000 for project research and proof-of-concept. They are also taught how to go to their direct manager and pitch their ideas. It is an advanced way of looking at innovation, which is changing how the company gets work done. Since its start in 2012, over a thousand new ideas have been prototyped. Once Adobe realised the potential for Kickbox to support innovation, it began offering its resources free for download at Kickbox.Adobe.com. Thousands of organisations have already downloaded the kit in multiple languages.
We identified ten types of innovation programmes, and these two are standout endeavours.
GL: Your study explores the attributes and practices of innovation leaders. What set them apart?
JO: Many of the corporate innovation leaders that we surveyed don’t have an innovation background. But they may have been entrepreneurial in their prior life. In most cases, they were outside hires: the company put them in charge of shaking things up.
So, corporate innovation leaders may only have been in their current role for a few years, yet they know how to manoeuvre within the organisation.
They also tend to be highly educated. Many of them have advanced degrees, Masters or beyond. They are smart and have a deep knowledge of business, markets, and strategy.
They are go-getters and can become frustrated with the bureaucracy of the business. I heard a number of terms for the people they have to fight to make things happen – the ‘frozen tundra’, ‘permafrost’, and ‘the antibodies’.
Indeed, those change agents are willing to take risks – that’s part of their job. And if the company does not like it, they will say, ‘Fine; you can fire me. I will go out and find another job; that will not be hard’.
GL: What else can be done to support innovation? What’s your advice?
JO: Build multifaceted innovation teams and retain top talent. Encourage diversity too. Diversity is particularly important for intrapreneurship programmes: you get a wider range of ideas for product innovation when people from different backgrounds get involved. And, of course, the more ideas you get, the more opportunities emerge.
Ensure executive support. Many innovation programmes are born in a groundswell of bottom-up interest, but they cannot achieve critical mass until sponsored by executives.
Implement realistic measurement plans that focus on innovation KPIs, not immediate ROI. Mature corporations find that focusing on ROI over other growth KPIs is actually harmful to innovation.
View the public version of The Corporate Innovation Imperative on SlideShare.
The full report is available to Crowd Companies members. Please contact Jeremiah@crowdcompanies.com to find out how to become an innovation council member.
Picture of Swiss Post’s drone: Yoshiko Kusano