How and why to implement corporate innovation: 7 key principles
Wondering where innovation belongs in the structure of your company? Turns out so is everyone else. As corporates prepare to embark on innovation programs they inevitably ask themselves a series of questions that sound like this: Should we create a separate Innovation Unit (and should we call it a ‘hub’ or a ‘lab’?)? How do we make sure innovation is integrated across the business if we’ve assigned it to a separate unit? Where will we draw resources from for the innovation team? Won’t that just reduce our ability to deliver on core business?
At the heart of this line of inquiry is a deeper question. How do you create conditions within a large, established company that enable it to experiment, test, and validate new ideas and ventures that drive innovation? And a deeper question again - if we’re not succeeding at driving innovation, how likely are we to miss the next wave and render ourselves obsolete a la Kodak? These are central and challenging questions at the heart of corporate entrepreneurship.
In 2012, research by McKinsey surveyed nearly 3,000 executives on the subject of corporate innovation structures in an effort to uncover what internal mechanics best fostered innovation. Somewhat disappointingly, they concluded that there is no silver bullet corporate structure for innovation. Executives reported that they rely on multiple organizational structures to drive innovation and that these models all struggle to integrate into the business as a whole.
So, does this mean every company have to navigate an experimental course through corporate innovation to find a unique structural sweet spot? Yes. But perhaps the real take away is that starting with questions about structure is the wrong place to focus.
Corporate innovation was one of the core themes of last week’s Strategy and Innovation Forum in Sydney. Innovation leads from top-tier corporates spanning banking and finance, telecommunications, retail, construction, health and wellness, insurance and more, presented a collection of hard-earned lessons from implementing leading edge corporate innovation programs.
The good news? While there’s no one size fits all structural panacea for corporate innovation, there is a high level of agreement about fundamental principles that guide success. Here are the principles of successful corporate innovation with the highest degree of consensus:
1. C-suite support: Innovation programs work best when there is clearly articulated, resounding C-suite support. We hear this time and time again and for good reason. Corporate innovation might start in a ‘lab’ as an experiment, but scaling and sustaining it entails widespread organisational and cultural change that requires champions from the firm’s apex.
2. Say no to silos: Innovation labs or teams that are separate to the rest of the firm can be a successful way to structure your innovation program, albeit with one key caveat. The innovation team members should have reach back into as many different functional parts of the organization as possible to avoid silo-ing innovation.
3. Mindful recruitment: Much has been written about the role of the ‘intrapreneur’ and the kinds of attributes that thrive in innovation roles. Staff your innovation team with change-making, ‘can-do’, entrepreneurial, comfortable-with-risk-and-ambiguity types to give your innovation program the greatest chance of success
4. Plan for sustainability: Start with the end in mind and avoid crushing morale by making sure there is scope for successful experiments to be taken to scale within their relevant business unit. This means identifying internal sponsors for your new corporate ventures before the experiments commence.
5. Culture: Work on gradually transforming the culture of the entire organization towards greater openness and collaboration by investing in programs that enable whole of company engagement in the innovation process. Open innovation platforms, for example, are a great way to demonstrate to every staff member that their ideas are valued and have the potential to transform the company. It’s also a fantastic method for harvesting ideas and solutions from across all areas of the company that would otherwise have remained latent and untapped.
6. Show and tell: When you validate a new corporate venture – sing it from the rooftops. Demonstrating to all levels of your organization that the innovation team has run a successful experiment or validated the business model of a new corporate venture will elevate the credibility, trust and profile of the corporate innovation program.
7. Integrated innovation strategy: Innovation should be embedded firmly into corporate strategy. It needs to be relevant to core business and therefore deserving of a seat at the short and long term strategy table. This means building innovation into your routine corporate risk identification and mitigation processes and conducting ‘pre-mortems’ on your experiments. Make innovation business as usual.
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