The future of corporate innovation

Over the last few weeks, I've been speaking at engagements for our friends at Vodafone, InnoLead, and Innov8rs, and I've noticed a continuous theme emerging: almost every corporate strategy, innovation, and venture professional I talked with was worried about the future of their role, their teams, and their innovation function at large after more budget cuts, pressure for short-term results, and the breakneck pace of change in 2024.

On three occasions, the same question was asked: 'What do you think corporate innovation will look like in 2025?'. I didn't give a particularly good answer, so I wanted to share some thoughts on reflection to help you prepare for the year ahead in case you're feeling the same way.

Firstly, looking back over the past year, a few hard truths emerge:

1. Innovation has fragmented: The days of centralised, well-funded innovation labs are behind us. Economic pressures have forced companies to spread innovation efforts across the organisation, often closer to core business units.
2. Short-term thinking is squeezing out long-term projects: Shareholder demands for quick returns are clashing with the need for breakthrough innovations. This is pushing teams to focus on immediate wins at the expense of more ambitious, future-focused initiatives.
3. AI has revolutionised ideation but exposed gaps: While AI tools can now generate countless ideas quickly, they've also revealed a shortage of genuinely original thinking. This is forcing a reevaluation of how we approach creative problem-solving and decision-making in innovation.
4. Traditional innovation processes are too rigid: The pace of change in 2024 has outstripped our ability to plan and execute using conventional methods. Stage-gate processes and fixed project timelines are proving inadequate in the face of rapid market shifts.
5. Talent utilisation is inefficient: The specialised nature of many innovation teams is creating silos and preventing the cross-pollination of ideas. This is limiting organisations' ability to respond quickly to new opportunities and threats.

?While 2024 has been undeniably tough, the innovation gap within corporations remains:?

• 84% of executives consider innovation essential to their growth strategy (BCG)
• 65% of CEOs admit their companies can't exploit new opportunities fast enough (Accenture).
• Only 6% of corporate strategies hit their growth targets (McKinsey).

I still believe that while corporate innovation is changing, its importance is only growing. So, if you can adapt your culture, strategy, resourcing, structure, and process to some new realities, you'll be well-positioned in 2025 and beyond.?

What does corporate innovation look like in 2025 and beyond??

From Project-Based to Portfolio Thinking

In 2025, innovation teams will need to shift from focusing on individual projects to taking a portfolio approach. This will be the only way for them to balance their focus across incremental improvements, quick wins, and moonshots (with the latter most likely to take a backseat). You'll need to build your portfolio management skills and dynamically allocate resources based on changing organisational needs, shareholder support, and market conditions. This approach requires a broader perspective, weighing various initiatives against each other and adjusting priorities as circumstances evolve.

AI as a Cognitive Prosthetic?

Team culture will transition from human-only ideation and assessment to embracing AI as a cognitive prosthetic. You'll need to routinely use AI to generate concepts, scan market data, and prototype ideas more rapidly. Ideation will also be supercharged with AI agents, allowing for the exploration of vastly expanded idea spaces and immediate simulation of their impact. This shift represents a fundamental change in creative problem-solving, with AI augmenting human capabilities at every stage of the innovation process.

Continuous Foresight Integration

Traditional stage-gate-driven processes will evolve to incorporate continuous foresight. You'll need to embed trend analysis and scenario planning into every stage, constantly reassessing and adjusting your portfolio based on emerging change signals. This will require new tools for real-time data analysis and more flexible and adaptive planning methods. The result will be a more responsive process capable of pivoting quickly in response to market shifts and emerging opportunities.

Fluid Talent Pools

The concept of fixed innovation teams will become obsolete. Instead, you'll need to create fluid talent pools, assembling and disassembling teams based on the specific needs of different initiatives. This will help you use specialised skills more efficiently and enable cross-pollination of ideas across the organisation. It will require new management approaches, focusing on rapid team formation, clear objective setting, and practical knowledge transfer between shifting team configurations.

From Centralised Labs to Decentralised Networks

The innovation structure will shift from centralised labs to decentralised, company-wide networks. Standalone departments will dissolve as capabilities are embedded throughout organisations. Every employee will be expected to contribute, with cross-functional teams forming and disbanding dynamically. We'll also see innovation metrics and incentives woven into all roles, not just dedicated innovation functions. This represents a fundamental reimagining of how and where innovation happens within companies.

Assessing Your 2025 Innovation Readiness

To help you adjust to these changing realities and set you up for a better 2025, we're running a series of Readiness Assessment Days—an intensive diagnostic workshop designed to give you a clear picture of where you are now and what you need to do to be ready?

We'll thoroughly analyse your current innovation strategy, culture, processes, resources and structure to identify gaps and give you a roadmap for implementing some of these fundamental changes.

Spaces are limited to 10 to make sure we can provide detailed, individualised analysis.

If you want to join us, get in touch and we'll save you a spot. Here's to what's next!