Tag Archive for: corporate innovation

Rethinking innovation from the ground up.

Enterprises around the world have been challenged with becoming genuinely innovative, trying to elevate their effort from improvement to innovation. With over 90% of groundbreaking innovation coming from startups, enterprises are trying to understand what startups do differently. Turning an enterprise into a truly innovative business has been globally one of the biggest challenges across all industries. It is time to completely rethink the act of innovation from the ground up – starting at the very top. Innovation is a CEO mandate because only CEOs together with their board can make the important decisions about TIME, CAPITAL, and STRUCTURE.

Time

The time it takes to get to new innovation. This is a paradigm shift we all need to be aware of. With the new data and processes, we know that in five years from now, you will need to completely start from scratch again, referred to as the innovation continuum. Think of discovering the next innovation opportunity, and find again new ways to satisfy customers. It is a continuum for building one innovation after the other and becoming a Generation Project that is set forward for the next leadership generation. Each time it takes five years to achieve broad market acceptance. That means you have a maximum of five years to innovate and compete or be out. The new mantra: innovate fast or get out. Once that innovation hits the market, there is a five to ten-year timespan, from idea to recognized market leadership. Important long-term decisions to continue investing in those innovations and the innovation continuum require the CEO and their board.

Capital

The capital market has radically changed in the past ten years. Companies such as Apple, Facebook, Google, Microsoft, Tesla, and Uber were considered overhyped but then achieved global market domination. Competitors could not compete because they did not know why those companies took over their market share. It is becoming more and more difficult to catch up with the market. Conventional companies are trying to fight their competitors with legal attacks, just because they don’t know how to compete with their innovation. The old game was competing with new improvements, which no longer works. Capital markets, its savvy investors, analysts, and fund managers have long understood that fighting innovation, when not even knowing how innovation works and how much is required to invest, is a very bad position to be in. Hundreds of millions of investments are necessary to get an innovation from early concepts to success in a global market. Successful innovations consumed more than $100 Million in funding. Unicorns, per definition, consumed roughly a billion dollars, some reached into two-digit billion-dollar investments. Only the CEO together with the CFO and the board can make financial commitments of that magnitude.

Structure

The pressure to innovate has risen dramatically in the past 10 years. Managers look at startups and think they can learn how innovation works. Innovation centers ended up becoming kindergarten-like playgrounds, an esoteric group of “thinkers and tinkers’’, hunting for the inspiration they hoped would come their way. Random experimentation and hoping to find a great idea never leads to groundbreaking innovation. Innovation is an outcome – not a desire. Without exception, the most innovative solutions were created to solve a specific and very present problem. Innovation success is not about an idea creation team and taking it to market by the existing organization. It is about creating an innovation center independent of the corporate organization that is responsible for identifying a viable innovation opportunity and bringing it successfully to market. This independent innovation center requires a highly diverse team of exceptional innovation talents that will get the job done. The team and a decision to create a separate innovation center independent of the corporate organization can only be made by the C-Level.

 

In conclusion, the innovation mandate is the strategic decision from the CEO to become innovative with certain guidelines regarding the long-term goals and designated audience for the innovation. The mandate is typically addressing innovation management and other corporate management functions with time, capital, and structure all taken into consideration.

 

For more information and how to set innovation in motion, download the latest whitepaper, “Innovation is a CEO Mandate.”

Enterprises around the world are struggling to create groundbreaking innovations, watch the latest Innovative Minds Event from Thurs. Oct. 21 “Innovation is a CEO Mandate” and hear from leading organizations about their struggles and why they feel it requires a top-down approach to be successful. Available to watch here.

Corporate Innovation Labs – Counter-Intuitive

Ingenuity – The corporate innovation teams are typically composed of brilliant minds, top-notch experts. If they can’t solve a problem, nobody can. Is that wrong? Seriously would you expect a sales manager to sit down and innovates and finds a new algorithm? Certainly not. Or maybe a financial controller who may know how to deal with algorithms, should they come up with a new way of building the next generation rocket system? Not very likely. Or?

Experimentation – It is globally understood that it takes a huge amount of creativity to come up with truly groundbreaking ideas. And since creative outcomes cannot be ordered, innovators get a great deal of freedom to experiment with all kinds of ideas and try new ones whenever something seems to make no sense. In other words, experimentation is a key in innovation design. How else?

Competing Ideas – Of course, once an idea is born and needs to hit the road to the market we need them but first, we need an idea, a prototype, and so forth, maybe approvals,  certification, and so forth. And that is expensive. Therefore the decision needs to be made that only the best, most plausible, most viable, most promising idea gets chosen. Right?

Realization – And once it is chosen we do what needs to be done to build and make the first small production batch to surprise the market. And since that is expensive. the other ideas that are too risky won’t make it. Correct?

Startup Mania – All the cases we see and hear about disruption, come from startups. Therefore we need to understand what they do, how they do, how they come up with those innovative ideas, and learn for our own innovation labs. So far no enterprise has put another out of business based on any disruptive idea. Buying or investing in startups looks like a good idea. Is it?

I’m sure you noticed that all the above is today’s normal, yet I was trying to provoke you and kind of question everything.

For more than 6 years, we ran a startup accelerator based on our experience of starting, growing, and successfully exiting companies. We also thought all the above is sort of a logical approach. But it is not. We came to the realization, that innovation and the rise of startups are loaded with counterintuitive steps and behavior.

  • Innovation lab packed with experts? The worst thing that can happen.
  • Experimentation? Once we understand how ideas are created, experimentations step back.
  • Competing ideas? Actually guarantees that innovation is not happening.
  • Parth of realization? Not even the richest enterprise can afford that path.
  • Not a single startup that was acquired or invested in bringing any kind of significant innovation

The Hidden Enterprise Innovation Power

Analyzing the main differences between a startup and an enterprise (I had the pleasure to be in both 2 enterprises than 4 startups) opened my eyes but it took 30 years. Enterprises have an inherited massive advantage over startups only that they don’t use those qualities in a way that makes them truly innovative. And when we are using the term “innovative” we mean groundbreaking innovation either as product innovation, and organizational innovation, or a business model innovation – ideally all three.

Talents
Large enterprises have many extraordinary people, superbly educated, top talented, well connected. However, the skills that are needed to become a top innovator. are never captured, never developed, and maybe oftentimes too understood.

Market Access
What startups need to explore in a painful process, enterprises have on a silver plate: customers with needs and dreams. The focus on efficiency, effectiveness, employee utilization, and more clogged the single most important access to innovation-relevant information.

Ideation Power
The top talents of any trait, diverse and far-reaching experiences, high level of qualification, and intellectual capacity are resources of an enterprise that dwarf any startup on the planet. How to leverage that power is completely unknown inside the enterprise organizations and only unfolds themselves by the sheer urge to survive in the better startups.

Realization Power
Laboratories to play and experiment in the final stage of the innovation journey map are a piece of cake in any corporate innovation environment. Startups build their MVPs with the most rudimentary tools. Sound really interesting and maybe is seen as the better solution. But only to the day when enterprise leaders get the idea to make a radical and strategic shift.

Financial Power
Almost needless to say that enterprises have no problem at all financing the first steps of an inner startup. Again a huge advantage over startups – but already in the next steps when first market tests and prototypes are complex and stretch the boundaries of physics, money runs out in enterprises. This is when VCs only begin and have no problem putting hundreds of millions in their startups. Yet a new car cost billions to develop.

What is the real problem?

When we look into the enterprise versus startup discussion, we simply look in the wrong direction. Every single successful enterprise has been an equally successful startup 20, 50, or 200 years ago. And even relatively young tech startups that have successfully completed their IPO and crossed the $5Billion revenue range almost forgot what happened when they were innovative year over year.

After four years of research, we realized: Enterprises had no other chance than fail. The way an enterprise is managed is structured in a way that the operation is optimized, employees best utilized, and every aspect of sales, marketing, production, logistics, engineering finance, and so forth is woven together in a way that leaves no room for anything else. And in the past, there was nothing else. But today there is: Every innovation triggers two new innovations, which trigger two new innovations. The innovation explosion – which only now is part of the competitive advantage – is simply not part of the enterprise management Carta.

How do you use all those discoveries?

You need to turn the counterintuitive situations with your current corporate innovation environment, on its head and redesign your thinking and innovation itself:

  1. Find ways to identify, develop, empower and stimulate the best available talents
  2. Leverage the market access to understand the needs and dreams of their customers
  3. Going far beyond brainstorming and leveraging “neuro ideation” getting to truly groundbreaking innovation
  4. Again leverage the market access to validate the extreme ideas that come out of the best possible ideation
  5. Trying to redesign business models based on all inputs to find their “disruptive moment”
  6. Create a long term “Staged Funding” plan before a penny was burned through experimentation
  7. Now build the MVP while going to market, creating “Market Born Products”
  8. Once the product is stable, scaling the operation as fast as possible.

And once done you start all over – never stop innovating, never stop producing, marketing servicing, and crafting a dominating corporate innovation strategy.  Enter into the “Innovation Continuum.”

For me, finding out how innovation is actually created and making it a repeatable process was the most exciting business journey in my life.

Let me know what you think.