What is business innovation and how to make it flourish in mature companies

Is possible to talk about innovation in a range of fronts as societies, militaries, and others, but here I will focus on business innovation in the corporate companies. Curiously but not coincidently, I have been asked many times in the last months: what is business innovation? The effervescence of the theme actually is a reflection of the issue be on the edge of the business world and, as a consequence, affecting the lives of many people around the globe.

To sustain growth, companies need consistently streams new products, services, processes, and business models however it is not a secret that innovation is difficult for well-established companies. By far, corporations are better executors than innovators, and most succeed less through game-changing creativity than by optimizing their existing businesses.

This article claims to dissect the argument on a way to demystify the topic and understand what is innovation on corporates and how can companies systematically allow innovation to flourish.

But what actually is innovation

Every businessperson agrees that innovation is important, but it is hard to see an agreement on what it actually is or what does it means on practice. Well, definitions matter! It is hard to have effective discussions and build on concepts without them. Moreover, the best definitions offer utility.

Let’s bring a wise definition here. Getting a business dictionary, the standard description will be something as “the process of translating an idea or invention into a good or service that creates value or for which customers will pay”.

Reinforcing the concept, into the business environments, innovation is a process that involves the deliberate application of information, technology, imagination and initiative in deriving greater or different values from resources. It includes all processes by which new ideas are generated and converted into useful products or services.

The pillars of innovation inside corporations

Startups and innovative small businesses have at least two overarching benefits that come from their essence: normally, for survive, they build valuable new ways of solving longstanding problems, and they continuously provide cost-effective alternatives. As budgetary constraints continue to reduce available resources, new and innovative solutions are constantly created to reduce the complexity and cost of doing business. Big companies instead do not easily reinvent themselves as leading innovators. Too many fixed routines and cultural factors can get in the way.

Since innovation is a complex, company-wide endeavor, it requires a set of crosscutting practices and processes to structure, organize, and encourage it. For those that do make the attempt, innovation excellence is often built in a multiyear effort that touches most, if not all, parts of the organization. Focusing only on technology and creativity is a mistake and emphasizing both over how they enable better doctrine is a recipe for failure. However, introducing new architectures, cultures, and procedures – after careful consideration and live experimentation – can help the adaptation of new standards and endeavors, and provide innovations that can deliver strategic advantages.

To be innovative, corporates must be tactical, strategic, creative and, especially, be organized to innovate repeatedly over time and with enough value to contribute meaningfully to the overall business performance.

Bringing to practice

There is no proven formula for success particularly when it comes to innovation. Especially in the digital age, the pace of change has gone into hyper speed, so companies that want to keep their relevance must have the strategic, creative, executional, and organizational factors right on a way to innovate successfully. It is important to highlight that innovate unsuccessfully is possible – there’s plenty of fail’s evidence.

Everything related to innovation starts with people and mindset – companies that want to innovate need to assimilate and incorporate this concept. Once it is done corporates must create some boundary conditions for the opportunity spaces they want to explore (to name few although it is not restricted to these: strategies, processes, business models, organization, products/services, marketing, technologies, supply chain). The process of identifying and bounding these spaces can run the gamut from intuitive visions of the future to carefully scrutinized strategic analyses. Thoughtfully prioritizing these spaces also allows companies to be more efficient in access to valuable opportunities.

After these spaces become clear and shared inside the company, the corporates looking to make the innovation journey will maximize its probability of success by closely studying and appropriately assimilating some innovation practices. Taken together, these forms become an operating system for innovation:

• Strategic alignment - Have a strong alignment between business strategy and the innovation strategy. Companies that aim to success on flourish innovation must be framing the challenges correctly and be able to unite two apparently opposing attributes: discipline and operational excellence in what they already do while bringing new ideas
• Human resources strategy - Everything starts by hiring smart people who can collaborate cross-functionally. Companies need to seek wicked smart people who appreciate different points of view and that are not political. Then become vital to keep these talents in the company as long as possible
• Executive involvement - This means have senior leaders engaging in transparent conversations and dialogues, encouraging empowerment and delegation. There is a balance to be struck. It has to be studied case by case but, in general, the ideal are hands-on and delegating leaders who coach, challenge, and inspire their reports. These leaders are there to help those who need help. This behavioral-strategy journey requires heavy efforts and the commitment of senior leadership, but the payoff – better decisions, more engaged managers – is vital on the way to innovate

Hands-on and delegating leaders who coach, challenge, and inspire their reports. These leaders are there to help those who need help

• Stakeholders insights - Engage customers directly to generate new ideas, then develop original products and services and get them to market very quickly. At the same time, generate ideas by closely monitoring markets and competitors, focusing largely on creating value through incremental innovations to current products. These are all very important activities to identify emerging technologies or trends that could be relevant
• Opportunities selection - Key issues emerge when companies run into difficulty less from a scarcity of new ideas than from the struggle to determine which one to support and scale. It is particularly problematic during market discontinuities, when supporting the next wave of growth may seem too risky, at least until competitive dynamics force painful changes. Even great operational capabilities and business management cannot overcome poor decisions about which ideas to move into development and production. A good strategy for corporations is to make sure that they have a problem-solution fit. It can be done by answering a few questions:

1. Does really exist a problem worth solving?
2. Does the company have a solution that can solve this problem?
3. Is there is a business appetite so that the company knows there are enough clients willing to pay for the solution proposed?

• Cultural support - On the base of all it, culture plays a key role. Culture is the main competitive advantage in the era of innovation. Make sense stop for a second to go dipper in key aspects (my thanks to Scott Cook from Intuit):

Experiment – quickly and cheaply. In the culture of innovation, the job of the bosses is not to make decisions. It is the experiment that makes the decisions

1. Empowerment in the right way, what mean involves creating an environment where employees can “fail safely”. Corporates that want to innovate must empower employees. Who wants to innovate needs to allow, support and invest in discord
2. Experiment, experiment, and experiment – quickly and cheaply. In the culture of innovation, the job of the bosses is not to make decisions. It is the experiment that makes the decisions. If the boss has an idea, it needs to undergo experiments, like all the rest of the employees. They need to create a framework for junior executives to have ideas and test them. New standards must be developed for activities such as managing meetings (taking the bias out of meetings), gathering data, discussing analogies, and stimulating debate that together can diminish the impact of cognitive biases on critical decisions and allow people to “try” more and take risks
3. A simple language is needed for recognizing and discussing biases, one language that is grounded in the reality of the people’s lives, as opposed to the sometimes-arcane corporate language. Seems simples but it represents a very significant commitment and a profound cultural change

Eyes on the future - manage it and keep it alive

Let’s have it clear: innovation is inherently risky. Once that is accepted, to get the most from innovation initiatives, corporates need to understand that it is more about managing risk than eliminating it. Make sense also points out that – innovation is a process. It’s not the result itself per se, but the path to get there.

Very simply put, innovation is about staying relevant. It is a time of unprecedented changes. As a result, what may have helped an organization be successful in the past could potentially be the cause of their failure in the future. Companies need to adapt and evolve to meet the ever-changing needs of their constituents. There are still many companies stuck in past times – with unhappy people and negative cultures – but if they do not change, with time they will more and more exist only in the history books.

It is important that society can understand that through business innovation companies can deliver better solutions and spark more efficiency, wealth and improve the quality of life around the world – it is important to make innovation flourish.