Sounds dramatic. Innovate or perish. But, there is a virtual blood bath going on in the global economy and corporate world in the last 2 decades. Long-standing companies are fast going extinct. Global economic powers are changing hands. People around the world are simultaneously coming together and growing apart. Money is being created out of thin air. Yet billions are lost. Digital Technology is taking over everything.
Innovation. Disruption. These are the biggest buzzwords in the last few years. Early on, companies in the high technology domain used to talk about innovation. Today almost every large corporation prides itself in its innovation programs. Regardless of what field they are in. Hence we see an endless stream of new products and services hitting the market. In many cases, taking it to the extreme, with meaningless product/variant extensions. Because most large corporations ‘do’ innovation the traditional way. Leaving room for new-age organisations (startups) to nibble away at their lunch, bite by bite.
The result is, despite all the thrust on innovation by large corporations, the attention is entirely being taken away by startups and new-age companies. Many fledgling organisations without a doubt stand a lot more strongly for innovation than the cumulative might of corporate giants. So what made that happen?
When you ‘do’ innovation, only a small part of the organisation gets engaged in this program – namely, the product development and R&D teams. Every other team happily chugs along the old way. However, when you ’embrace’ innovation, every part of the organisation gets engaged in the innovation program. That is when real difference happens.
Let’s take a typical successful start-up. Take an example to your liking. There have been many remarkable companies that have become giants in the last two decades or so. Now, look at what is common among all of them. They started with zero resources. In money, manpower, machinery, technology, and licenses. Everything has been built from scratch with just an idea and dint of human endeavour of a handful of people. Thus they not only had to figure out a way of building products and services without money but also along the way had to figure out innovative ways of engaging employees, raising capital, developing technology and getting around licensing issues. They evolved not just new products or services, but entirely disrupted business models and organisations.
Consider the case of human resources. Corporations used to thrive on employee loyalty. Employees were happy receiving a small annual bonus and a watch for long service. That changed to more frequent employee pampering programs, to part ownership of the company, to a ‘do as you please’ culture. Today large organisations are built without many employees. What seems like employees are independent business partners, à la Uber, and Airbnb.
Can these different organisations follow similar HR policies? I highly doubt it. Imagine an established large corporate in transport or hospitality doing the same. Even if they keep innovating their service endlessly, can they ever compete with the individual enterprise of millions of small entrepreneurs working as one?
Large corporations love to build huge offices and tie up capital. Take out large bank loans and suffer to service them (we are all watching the NPA story unfold). Processes, logistics, communication, manufacturing, everything is being innovated or turned on its head.
What are the things to keep in mind while developing your Corporate Innovation Program?
Build a culture of Innovation with a purpose. Not just an activity or program. Innovation equips businesses with the tools with which to respond to disruption. But of course, not everyone has the time and resources to do this. It’s what’s known as ‘the innovator’s dilemma’, and many organisations struggle with it – where companies are maintaining their existing revenue streams and business models, while at the same time developing new ones in parallel.
Pick the right partners. It is not enough to ‘do’ innovation in end products. In today’s day and age, it is imperative to ’embrace’ innovation in every aspect of a business. And the best way to do it – don’t even dream of doing it yourself. Bring in the upstarts. Allow strangers to come in and break down your walls and build a new structure for your organisation. You will be amazed at the transformation of your organisation.
Balance innovation and risk. “Organisations that are successful at disruptive innovation are those that create a framework that meets their risk profile”. If you want to be good at innovation, be realistic about how much risk you can stomach, and how that relates to existing product lines – and then proceed in a way that recognises this framework.
Develop a framework for Innovation. Real innovation is hard. It is 99% perspiration and 1% inspiration. It is not about the first idea that comes your way. A good innovation process should start with hundreds of ideas and have a process to funnel down the most relevant ones and test them before embracing them. Implementing a successful innovative idea from another organisation is not innovation. It is merely copying. Every organisation has unique requirements and problems, which require unique solutions.
Spin out separate innovation units. It allows for distinct, innovative ideas to be tested without confusion around who owns the project, and without the risk that failure will contaminate other business lines.
Failure is an essential part of the learning process. Especially when it comes to practising disruptive digital innovation. Keeping struggling projects on life support can sap talent and resources from an organisation that could be better spent elsewhere.
Innovation is an insurance policy. Most companies view innovation and technology with cynicism. They are curious but not sure how it will grow their business. Investment in technology-led innovation is not just for business growth. It is an insurance policy for business survival. Every single industry is being turned upside down. Players doing well are the ones adopting innovation in technology, in business models and practices, in any and every aspect of their business. Take out your business insurance policy. Invest in Innovation for long-term health.