21 Nov Corporate Innovation: Consider These Three Things
1) Sustained Innovation = Sustained Relevance
This may seem like an incredibly obvious point: If you’re a company, you should be defining an innovation strategy.
Most startups understand this concept all too well; it’s the older companies that have more reason for concern. Perhaps your business has enjoyed relevance for some period of time, but ask yourself this: Will you still be equally relevant in 5 years? How about in 10 years? If you think the answer to both questions is an unequivocal “yes,” but you aren’t aggressively innovating, you either work in a monopoly-like climate or (more likely) you aren’t worried enough.
Apple bought an increment of future relevance with its invention of the iPod in 2002, but how much time did that buy them? Sales of iPods, as a percentage of Apple’s total revenue, grew from 2% to a peak of 40% by 2006. In the years following, the decline was steep, dropping beneath 10% by 2011. Apple anticipated the cycle, and the birth of a new one, with the advent of the iPhone — and perfectly timed catching the smartphone wave in 2007. Now here the company is, 10 years later, having likely sold more than 1.2 billion iPhones and recently released its latest flagship, the iPhone X.
The need to innovate is not unique to tech companies. Most, if not all, companies should be thinking about an innovation strategy. Whether it’s adopting artificial intelligence and machine learning to create operational efficiencies as a way to scale, tapping into the “gig economy” (like our portfolio company OneSpace), or hitting the next product wave, innovation should be a perennial boardroom topic. To be clear, my view for operational improvements is not to eliminate jobs, but to leverage technology to allow your workforce to focus on the most meaningful, highest-level initiatives possible.
However, it’s far easier to declare an intent versus spearhead successful execution—and execution can get pretty complicated. So, you should:
2) Identify a Champion
In order for a successful innovation strategy to form and prevail, prioritize a need and identify a champion. In larger enterprises, the “champion” role is sometimes defined as a dedicated Chief Innovation Officer. In other instances, it is a portion of someone’s responsibilities and more of a side project, which begs the question of how empowered the champion actually is with financial and organizational resources. It doesn’t matter what this role is called, so long as the individual possesses the latitude to capture innovation and the determination to create meaningful change in the organization.
Find someone who’s passionate about innovation and deeply understands the business and competitive environment. If you have this person in your current workforce, he or she may be the most natural candidate. Going external to find the right steward can be beneficial if you’re looking for someone with fresh perspectives to challenge existing culture and company politics, which leads us to:
3) Internal Innovation vs. External Innovation?
The decision here is whether it makes more sense for a company to maximize its chances of generating innovation from within its workforce, or to capture innovation that has occurred outside company boundaries. Things to consider include 1) financial resources and 2) company culture.
Does your company have the financial means to invest in ongoing operational expenses to fund an innovation team that may not pay dividends for a number of years? Some companies can find a way to make it work, starting small and expanding budget as the team shows vision and progress. Other companies may prefer to pursue more of an acquisition strategy, purchasing innovation and hoping that the new organ is peacefully accepted.
Is there the appropriate culture to foster innovation from within? Are there 10+ layers of middle management that will step on every green shoot that comes out of the ground? I’ve found that if innovation teams do not have direct access to senior decision makers, any meaningful attempts at innovation are destined for failure. There’s inherently too much risk and too many directions to pursue to solicit dozens of opinions every time a line of code is written. It would slow the process to a halt and ruin the magic of creativity. Companies are at high risk of crushing innovation beneath their own weight and must clear the way for highly iterative and agile initiatives. If this describes your company culture, consider a new approach to culture that encourages creativity to manifest and flourish, unencumbered by corporate politics. Your own workforce may contain a wealth of imaginative ideas and opportunity, only needing a nudge of encouragement and a clear and supportive process.