Does your game need to be changed !

In 2012, Kodak - a brand that, for the longest time, was a household name in photography - declared bankruptcy. Kodak’s competitors in digital cameras had successfully driven it’s old photography technology to extinction. In what seemed an instant, they went from being ‘the picture’ of success to the poster-child of obsolescence.

Kodak, like so many after it, had fallen victim to digital disruption.

Digital disruption is the process of transformation brought about by emerging digital technologies and innovative business models that change the value of current products and services, essentially forcing them to either evolve or go the way of the dinosaurs.

Kodak is not alone on the growing scrap heap of disrupted brands. VUCA is the new market reality and it's not a phase, it’s the backdrop to our lives and careers.

·    VUCA - Just another day at the office!

For many, VUCA creates fear and there is no more powerful mobiliser of action than fear and perceived risk.

Fear of digital disruption has been a catalyst for the proliferation of corporate innovation programs and their ongoing adoption by vulnerable and progressive brands.

That fear of disruption is real and it's a powerful fuel for change. There are other drivers too. In today's increasingly dynamic marketplace and despite the myriad of different specific reasons and models for innovation, there are often some very basic and generic business themes that capture and summarise all of them.

1-  We wish to acquire a new customer.

2-  We wish to protect and monetise our existing customers.

3-  We wish to enter a new market.

4-  We wish to make better decisions.

5-  We want to be more efficient / cost effective / productive.

6-  We want to understand, mitigate and avert risk/loss.

7-  We want to differentiate our offering and market positioning.

All of the above are ultimately about driving business growth.

Nearly all specific innovation initiatives produced by corporates can fall under at least 1 of those above headline business objectives. These business objectives help frame the more specific challenges which then shapes the selection process for the most appropriate innovation method.

Many recognised enterprises leverage the power of various innovation models to achieve accelerated growth. Often it’s a classic case of ‘not one size fits all’. Multiple models working simultaneously or hybrids can often drive the best outcomes.

From landscape discovery and ideation to rapid product prototyping, committing to a corporate innovation strategy offers boundless growth opportunities. Many of the models are founded on the basic principles and processes of Design Thinking which is not a new model at all. Start with a problem/challenge, develop solutions and commercialise. Whilst the detailed steps, principles and techniques are sophisticated, the headline flow of Design Thinking is common sense and it’s reflected in principle across pretty much all corporate innovation models.

Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.

—TIM BROWN, EXECUTIVE CHAIR OF IDEO

The majority of business professionals agree that innovation is critical to success. In a recent study, 90 percent of executives believe that the long-term success of their organisation is dependent on their ability to think strategically and develop new ideas. However, with so many corporate innovation models to choose from, how do you know which one is right for your business in terms of maximising business growth?

1. Internal Innovation

Some corporates start by building internal innovation teams and it's an obvious but often flawed approach. “Lets hire a Head of Innovation and get them to hopefully come up with all the bright ideas” – Big mistake !

There is also an internal obsession with “lets find the next technology”. It’s not about the technology !

Identify, describe and solve the true business challenge first and the technology can be sourced later.

 Internal Innovation teams are often dedicated to pursuing, deploying and optimising value-driven corporate innovation activities. This corporate innovation model allows businesses to keep a better pulse on innovation which helps appease their short term insecurity and anxiety that Executives can feel when breaking new ground and funding work that doesn’t sit within the business as usual spreadsheet and business case. Moreover, it keeps teams more aligned with corporate innovation goals and objectives. This model feels like a comfortable first step for corporates as things are kept relatively in-house and that feels more familiar. However, the outcomes will be most likely be poor and patience will be tested at the Executive table. This corporate innovation model may require businesses to hire new employees and run different internal processes and both of those are big challenges. Depending on the lifecycle and maturity of the business, hiring new members might be a bit unrealistic and, put simply, you can’t expect your internal team to possibly have all the best answers or the capacity to innovate at scale which is what’s required to really move the transformation dial.

Some internal teams will naturally turn to Management Consultants for the support with uncovering and developing the research, context, ideas and plans but the fact is many of the big consulting firms are battling with their own answers to innovation method and several are white labelling or partnering with more progressive and effective 3rd party solutions. From my experience, the big 4 have immature Innovation Solutions in market for corporates and are in a scramble to position, articulate, run and commercialise their Innovation Practices. 

Sometimes, corporates helping corporates to innovate can lead to a

1 + 1 = 0

Doug Hawkins

Clearly, I don’t believe these centralised internal models (as a stand-alone program), are the best but they can supplement other more scalable and open programs. The best models are the programs that tap into the wider global market and can facilitate ideation and commercialisation at scale. Uncovering the right ideas at the right time in your own backyard and within your limited local networks is unlikely to deliver ground-breaking innovation and unlikely to produce something truly disruptive. Getting your internal team to engage other organisations via sophisticated models that can bring scale is a better use of your limited internal resources. Going down the level 4 to proudly show your clients your new open plan innovation office filled with bean bags, 'Post it' notes, VR Headsets and employees sporting funky T-shirts and runners may make you look cool, but don’t hold your breath waiting for game changing and viable innovation to emerge any time soon.

Its takes a lot more than ‘mood and appearances’ to create globally scalable and commercially viable disruption.

Even the so called most innovative brands on the planet like Google, Unilever and myriad of others leverage expert 3rd party run programs to underpin their status as highly innovative brands. The biggest victim of these internal programs is the CFO as the ROI columns in their spreadsheets are always a bright red colour.

If your determined to stand up an internal innovation model, take some time to align with corporate stakeholders. Do you want to create corporate innovation from within? Are you able to dedicate the necessary resources needed to build, launch, and manage a Corporate Innovation or New Ventures program? Have you done it before? Will this program stifle other day-to-day operations? Can BAU and Innovation co-exist in the same office, under the same leadership and working within the same company governance frameworks? Unlikely!

Before committing to an internal corporate innovation team, think carefully about your business' internal culture, infrastructure, budgets, forecasts, and more. The other question that must be answered is how will you attract and retain top innovation talent? The endless days, weeks, months and years spent trying to build your team could be spent working with innovation models that are already established and run by experts. If you go with an internal model only, then the big questions is, does your business have the people to even lead and run a sustainable and productive internal innovation stand-alone program? Possibly. Will your teams have a Build, Buy or partner mentality? Perhaps all 3. The idea of building from within is becoming extinct. Slow, costly and cumbersome. Why build when someone, somewhere on the planet has most likely already built some or all of your technology solution but is perhaps focussing on a different market, sector and use case.

Most corporate leaders of major corporations forged their career in less dynamic times and don’t actually have the skills or experience in modern day innovation methodology. The veteran leaders of today bring incredible pedigree and experience which is still essential, but when it comes to contemporary innovation, that very traditional experience and bias can become a liability and risk. Many Corporate leaders today are being subconsciously or formally reverse mentored by younger, less experienced and more savvy digital natives. There is a reason why some more progressive corporations are modifying the skills profile and talent composition of their boards, advisory groups and executive teams. Many are now seeking to supplement their boards with digital experts, entrepreneurs, problem solvers, creatives and proven innovators.

Summary:

Do not be delusional and think you can appoint a Head of Innovation, hire a few bright millennials, update your office furniture, relax your dress code, run a few workshops, modernise your values brochures, call the consultants and suddenly produce game changers for your company.

It’s an ecosystem play and ‘the art of the possible’ is only truly uncovered by those who know how to unlock and navigate Open Innovation.

2. Innovation Expert Forums

Some corporates assemble mastermind groups as they know when it comes to collaboration and innovation you must ‘lean out, not it’. This type of corporate innovation model is made up of stakeholders from multiple businesses with diverse background. In this model, corporates benefit from the unique and different insights delivered by experienced innovators. Additionally, the networking and partnership opportunities that this corporate innovation model uncovers are boundless. Ideas can be elevated and commercialised through the networks that can be access through collaboration with your expert and eclectic team and the forums in which you allow them to operate.

"One thing that will always matter, regardless of what business or industry you're in, is who you're connected with," says Sarah Kathleen Peck, contributor at Forbes. According to Janine Garner, the diversity of a network is the tipping point between average connections and those that collaborate to create magic.  

“The most innovative businesses and organisations are finding that collaboration and effective and powerful networking are giving them the edge”

Janine Garner Author – From Me to We and the CEO LBDGroup who help senior leaders to build high performance teams.

Creating disruptive innovation is magic ! Pure exhilaration when you get it right but rest assured that wont be achieved without the extraordinary collaboration of many within a network.

 According to many innovation experts, before committing to this type corporate innovation model, you should know that these groups are largely rooted in theory and not practice. In most instances, implementation is still the responsibility of the business. For example, a mastermind group might be able to tell you how to build a new and innovative product, but it can't build the product for you and they have no accountability. If you need more actionable results, consider adopting a different model that creates higher accountability for all involved. People think more seriously about their ideas and advice if they are on the hook for the outcome. Very easy to walk into a session, throw in some opinions and leave others to do the hard work and endure the battle scars of under-performance which is how Innovation Programs work. Fail fast and often so you can quickly find the right solutions to double down on and scale. Plugging a diversely experienced mastermind group into a multifaceted program where these experts play a cameo role both in the ideation and commercialisation phases can be potent and will most certainly shape your thinking and output. Look beyond your own networks, geography, sector and comfort zone when it comes to engaging masterminds. You wont uncover the ‘art of the possible’ by staying in your lane !

3. Startup-Corporate Partnerships

For many businesses, startup-corporate partnerships offer the greatest opportunity for corporate innovation. These collaborative opportunities allow corporate leaders to work hand-in-hand with industry-leading startups. In most instances, startups run lean and are often faster and less constrained at exploiting new technologies that dramatically enhance or shift current business models. This allows businesses to speed up their innovation cycle and access key insights around emerging technologies.

Most startup-corporate collaboration programs when both parties engage directly follow a targeted curriculum and process. Corporate collaborators and startups work together to create individual pilots and prototypes and validate products before they commit to full scale commercialisation and market entry. In most instances, startup-corporate partnerships result in go-to-market partnerships and acquisitions. In my opinion, these models can work but again they lack scale due to the limited number of small organisations a corporate can engage with in a meaningful way. True innovation requires ideation and failure at scale to uncover the truly transformational change most corporates seek. Corporates typically underestimate the effort, skills and culture required to uncover game changers. Failure at scale is not in the corporate handbook. Corporates are typically risk averse, cumbersome, political and over-governed so it’s a big leap for a large organisation to truly adapt to the models required to ideate and commercialise at scale. Trying to do this by managing your own partnerships directly with start ups will most likely lead to opportunity and also fundamental business misalignment problems. Companies need to go in with their eyes open and do their research as they need to be careful what they wish for. It’s a great program but like all of the options, it has its challenges and risks. I would propose companies get expert advice and engage potential partners to assist with the facilitation and delivery of this type of model and the other initiatives that sit around it.

4. Corporate Accelerators

The programs are on the rise as some enterprises own corporate accelerators designed to fulfill their own business challenges and objectives. The benefit for these corporations is that they can find and work with startups that tie directly to what they need.

Of the 163 accelerator programs in the United Kingdom, over half are now funded or sponsored by corporates, up from just 26 in 2014. These types of programs support between 3,450 and 3,660 new businesses per year and represent a large and important component of the startup-corporate ecosystem.

Open Innovation Programs are also popular and effective although many global programs professing to offer access to global networks of start-ups are unable to deliver what they claim. Beware of those promising to tap the globe but actually only ever tap their established networks and only fish from the same lake. This is the inherent challenge with accelerators whether they are corporate owned or an organisation that works closely with a 3rd party accelerator, is they also have trouble with scale.

Corporates have started to wake up to the benefits of engaging small organisations but they don’t understand the complexities and imminent misalignment when a whale and sardine attempt to collaborate in a mutually beneficial way.

Speed, risk profile, financial capacity, agility, culture, decision making process, goals, control, operational capacity and scalability are only some of the issues that drive corporate and startup misalignment. Maybe throw ego in there too !!

5. M&A

Sometimes, acquisitions are a good way to address corporate innovation as it bypasses the need for an innovation program but it can be time consuming and very 'hit and miss'. Finding the right target, at the right time, on the right terms is a challenge and sometims the best acquisitions are those that are introduced via an Innovation or Accelerator Program.

The benefits to corporates are obvious:

• Speed
• Penetrate new markets
• Acquire new customers
• Cross sell core products and services
• Claim intellectual property rights and trademarks
• Enhanced product development opportunities
• Acquire key executive personnel and talent
• Enhanced financial power and resources

M&A is a good way to address innovation but that very driver can be compromised when a large corporate gets its hands on some new innovation and tries to run it ‘like we run our own business’.

Acquisitions left as stand-alone ventures and run by existing teams often are more likely to succeed rather than those who are rapidly integrated and often subsequently compromised. However, synergy realisation usually includes operational efficiency, so many corporates look to integrate and that’s when the challenges often start and initial ROI deteriorates.

M&A of small business is an art and science and unfortunately, it often falls apart at the integration stages based on poor integration planning during the pre acquisition phase. Too many corporates are fixated on the terms and future PR and don’t pay enough attention to operational matters downstream. See earlier comments about the poor old CFO.

There is no doubt that M&A for many corporates is their ticket to the Innovation dance, but it doesn’t actually make them innovative in my opinion.

What should your approach be?

That’s a great question and you will only know which methodology is best suited by putting them to the test and learning what works best for your company. Hybrids and combinations are usually the best answer.

Failure is essential, stress is certain and the lessons learned is like drinking from a fire hose, but it's exciting, exhilarating and will invigorate all those who participate.

Doug Hawkins

There is no doubt these high-powered and results-driven innovation models are the best ways to create corporate innovation excellence for your business. Like any major business decision, it's important to do your research and properly vet the corporate innovation model and determine whether or not it aligns with your unique business model, internal infrastructure, culture and many other factors. It’s usually not a one-size-fits-all and some models just wont be able to be entertained for many reasons.

Try to engage your internal teams as much as possible in the model(s) you select and, in my opinion, you should immediately engage corporate innovation experts to guide your thinking and also help facilitate your program.

The models that engage internal stakeholders but leverage global talent are more likely to produce the best result.

Regardless of the model, it's an exciting path that is no longer a luxury, good idea, or something just those big tech companies do.

It’s now considered must have capability and your insurance policy for future market relevance.

Author

Doug Hawkins

Business Transformation Specialist