Corporates and Enterprises, we challenge you to take a look at your approach to innovation. What is your game plan in the future? How will you keep up with your leaner, more flexible, competitors? We challenge you to justify your position at the top of your industry, and justify why you deserve to stay there.
40% of the companies that are at the top of the Fortune 500 will not exist in next 10 years. Technology is reducing the time fresh, nimble startups are taking to topple the giants. Blockbuster, Kodak and Nokia are all examples of large, successful companies that grew complacent in their success, and failed to keep up with their industries.
Why are impressive, successful companies not able to keep up with innovation?
Nokia, Kodak and Blockbuster all recognised that innovation was needed, and they spent a lot of efforts trying to innovate, but their efforts were misplaced, their focus was too narrow, and they ended up eventually crumbling.
How are corporates meant to avoid the pressures of innovation?
The simple answer: they need to learn from startups. Startups all over the world are now using lean thinking and are able to identify how to quickly test a product, determine its profitability, and pivot when necessary. This is a junction between art and science that has proven hard to master, but incredibly powerful in all settings when used well.
So how do corporates innovate? Many modes have been tried:
● Invest – Some corporates, such as Intel and Samsung have opted to actively invest in various startups at seed stage, in the hopes that these will eventually grow rapidly and provide adequate compensation. The problem is that a vast majority of startups will fail, and hence there is an enormous risk involved, while it is very hard to predict whether a startup has what it takes to be successful.
● Incubate – Others, such as John Lewis and P&G, try to solve the high failure rate by focusing on incubation strategies. This means they train and provide essential business services to certain startups they believe show promise, which ideally results in a stake in a successful startup. Unfortunately the time and institutional cost is high, and success is still very unreliable, which suggests that inadequate training is not the largest driver of startup failures, and a different approach is needed.
● Internal – Many companies, such as Google and HP, have resorted to establishing internal innovation departments in order to better manage and invest in new ideas. This has proven to be more successful than simple investment and incubation, but still results in inefficiencies largely due to incentives. It is hard to maintain cutting edge, innovative atmosphere when survival is guaranteed by the parent company.
The biggest issue with all these options is the conflicting priorities of the corporates and their innovation teams, resulting in a lot of great ideas not realised or are executed half-heartedly.
We think there is a better approach to Corporate Innovation.
The best approach is to grow an innovation directly through an external innovation agent. Depending on your needs, this agent can provide the mentoring, expertise, and technological skills required to produce an MVP, test it, and scale it up. Then you can reap all the benefits provided by having an internal innovation department without the institutional costs, and with significantly lower risk in investment.
We think that the following roadmap to success could be a route for corporates to achieve better results:
1. Formulate an idea that not only solves the most pressing issue but also has a potential to disrupt the market.
2. Partner with an innovation agency, like Innovify, to execute this idea as an external venture with a mutually aligned KPIs that rewards risk & performance.
3. Fund this Venture like a VC, or with a VC.
4. Determine key performance indicators (KPI) solely for the Venture and are independent of the Corporate’s own KPIs, even if those are conflicting.
5. Actively monitor the progress, according to KPIs, as the venture scales, and renew the ideas.
6. If successful, determine the best option to either bring the Venture in-house or leave it to run independently.
7. Generate higher rewards by having both the new revenue streams as well as an equity upside.
Voila, you now have a successful new corporate startup. And you have full control over how you want to structure the costs and balance the risks.
So again, we at Innovify would like to challenge you to look at your approach to Innovation. Do you have a proper roadmap to success? If you are not satisfied with the innovations efforts at your corporation, take the initiative and contact us at firstname.lastname@example.org.
Innovify is a fast growing digital innovation & product management company.
Offering a wide range of expertise, Innovify helps clients to develop innovative products that enable them to focus on key business drivers using a collaborative work model that functions on an Agile & Lean philosophy. Innovify has become a trusted partner to its clients by going beyond the typical scope of application development through a range of digital products such as websites, apps, and software.
Innovify is the right partner for your digital ambitions.