I stopped using the term ‘corporate innovation’ a while ago. Why? Because there’s so much ambiguity and ‘theatre’ around the term that it’s become synonymous with lots of activity and no real impact. This was replaced by ‘growth’ or ‘future business’ as corporates learnt from their experiences and tried to better distinguish between activities that generated hype versus those that created real and sustained impact.
Despite the boom and bust of corporate innovation, companies still need to grow, transform and find new talent. As research shows, the message ‘innovate and disrupt your own business or somebody else will’ is a harsh one — but a reality for many.
There are many strategies available for how to set up and run innovation/growth functions in established organisations. Here are a few practical ideas to consider.
To grow and innovate, you need to find great talent with the right mix of skills. These skills can vary depending on your organisation and initiatives and include: entrepreneurship (Lean Startup), human-centred design, technical knowledge and analytical/investment/business model design. Ensure you reflect diversity in all forms and create small, cross-functional teams. Approach the team set-up as if you are assembling a puzzle and hire for the gaps.
Next, set up a results-driven culture based on transparency and continuous feedback. And establish regular rituals to challenge, reflect and provide feedback. Make sure this is ingrained in the culture and your day-to-day operations.
Be very clear with your stakeholders about what you are trying to achieve and how you’ll measure success. Establish a shared understanding of what the mandate of the function is and how it will operate in collaboration with other parts of the business, and provide regular and quality updates on progress. Involve your relevant stakeholders in the process (at the right stage-gates) and invite feedback and challenge.
Build trust with your senior stakeholders, make them the sponsors of the relevant initiatives so they can own it as it scales, and make bold decisions when the time comes.
Start with the organisation’s strategy and write an innovation and growth function that aligns with the strategy. If it doesn’t align, challenge the strategy, but don’t go on a tangent. The thesis should outline key themes/areas of potential growth. This becomes your hunting ground for new business growth, products or services.
Set up the funnel as a lean machine. At the top, open it wide to engage and promote collaboration. However, quickly assess which opportunities should progress down the funnel. Those stages typically answer the following questions:
Be clinical about how you spend your team’s time. Focus on the biggest uncertainties in the business model and test those with a view to in/validate an opportunity as quickly as possible.
DVF (desirability, viability, feasibility) is a good frame to keep in mind as you go through the process. Always ask these questions: will customers want/desire it? Is the business model viable? Is the solution technically feasible?
The Lean Startup methodology can help with practical and lightweight tools to test ideas fast and effectively while keeping the focus on the customer problem you are trying to solve.
In his talk Love the problem and not the solution!, Ash Maurya gives examples on how to identify and focus on the riskiest assumptions, test ideas continuously and why building products nobody wants won’t lead to progress.
So, you found a customer problem worth solving and you have a solution in mind that can address the problem. Now what? How do you execute on it? This is where the options and decisions around building a solution, buying or partnering come in. When making a decision, consider the following:
Map out the various business models and build/buy/partner options and the implications of each. This will help you make a decision that best supports the desired outcome for the stage of development you’re in.
Yes, big things may take time to mature, but this kind of growth function can add value to the organisation, both today and into the future. Ensure you have a portfolio of businesses and initiatives that provide long-term growth (main focus), as well as initiatives/activities that generate some immediate benefits.
These could be things like winning B2B customers by collaborating/co-creating, solving a problem you’re facing as a business and then offering it as a product/service to other businesses, attracting and retaining talent, driving an innovative culture and a brand, etc. Remember, companies that innovate attract innovative people. It’s a virtuous cycle that needs to be nurtured.
Another way of thinking about it is by the type of innovation. The main focus of the function may be on disruptive and transformational innovation, but it may also support the organisation in building its incremental innovation capability. This is done by effectively partnering and collaborating with other parts of the business; sharing frameworks, tools and ways of working; secondment opportunities; innovation events; and more.
How you measure innovation and growth initiatives can be a large and sometimes controversial topic (and probably the subject for a separate post). A lot has been written about ‘innovation accounting’ (coined by Eric Ries), how it can be adapted to a corporate environment and the ways we can measure tactical progress on activities/ specific initiatives versus the strategic impact of a portfolio. Here are some considerations from recent experience:
On a more tactical level, choose the right leading indicators for progress and success and track those.
Engage your ecosystem in every stage of your growth and innovation journey, whether it is to fill the funnel with opportunities or validate/execute on initiatives through partnerships, investments or collaborations.
Define your ecosystem and who the main players are. These could be startups, customers, government organisations, tech providers/partners, investors, etc. Build a strategy and define an engagement plan. Remember, play fairly whether you’re big or small. There are no ‘good’, ‘bad’, ‘awesome’ or ‘evil’ players. It’s an ecosystem that requires multiple players to thrive. If done right, corporates can help startups accelerate by becoming customers, and investors/partners and startups can help corporates innovate and differentiate faster.
When building innovation and growth functions in your business, there’s no one-size-fits-all approach. It’s not a cookie-cutter framework you can just implement. Each organisation is different and will have different strategies, approaches and appetites for risk and growth, as well as different skills and cultures.
To be innovative, an organisation needs to implement a mix of elements such as tools, processes, leadership, culture and so on. It’s not about implementing a single factor, but rather creating an interconnected system that is fit for purpose.
If you want to build strong muscles, picking up weights once a month won’t do the trick. Similarly, if you want to build and strengthen the innovation and growth function in your organisation, you need persistence, a test-and-learn culture and entrepreneurial talent.
Ayala is an innovative leader specialising in creating growth leveraging technology, talent, new business models and go-to-market approaches. Ayala has previously worked with tech startups across technical and customer success roles in international markets and is still an active supporter and mentor in the startup community.
