In November, we hosted our flagship conference in Copenhagen. Over three days, experts from around the world came together to share insights on innovation management. Going through all of the presentations, labs, discussions, and attendee input, we have gathered 10 key recurring and novel insights across innovation topics.
1. Dealing with Disruption
In seeking to self-disrupt the organization, visionary leadership may be counterproductive. Innovative solutions that enable disruption are usually discovered, not envisioned. To be able to fend off incoming disruptors, the organizational design must be altered to enable scalability, agility, and profitability. In revamping the product offering, it is helpful to focus on leveraging existing capabilities, rather than undergoing a complete revamp. New innovations often come from novel combinations of existing technologies. To make the innovative offering appeal to customers, competition and customers’ needs must be considered, focusing on enhancing superior features and compensation for inferior ones.
“We are looking for an enterprise that scales without limit, an enterprise that is more profitable, and can grow faster. This is the conceptual idea we’re working toward with design for disruption.” — Mohanbir Sawhney, Kellogg School of Management
2. Digital Technologies
Digital threats should be seen as opportunities. Instead of following competitors, figure out where technologies can add value to customers. For nascent technologies, such as AI and blockchain, organizations must be cautious. By monitoring developments in such fields and looking for successful applications across industries, organizations can be better placed when an opportunity arises. Before deciding on a certain direction, the costs involved and where the value lies should be established. Organizations must also ensure that they have the required capabilities to be competitive in the new space. With the uncertainty of the digital domain, it’s helpful to consider where the organization should not innovate.
3. Locating New Initiatives
Locating innovation initiatives in relation to the core is a big challenge, and mostly context dependent. With an aim to improve and grow the organization, a deciding factor is how equipped the core business is to integrate the initiatives. Generally, external initiatives will move quicker, but struggle with scalability, whilst internal initiatives will be more aligned, but risk being killed by the core business. On balance, locating initiatives internally, close to the core, is likely the more sustainable approach given the importance of corporate alignment. To help overcome associated challenges, initiatives should start small, within single teams or units, and subsequently grow in size. Creating a platform for voluntary participation can also be effective, if only to spark internal enthusiasm. New initiatives that are a radical departure and directly compete with the core business should be spun out. Regardless, clear communication and aligning incentives are essential for innovation initiatives to flourish.
“Generating innovative ideas is not the issue with innovation not occurring in the organization. How to get them executed next to the ‘business-as-usual’ business activities is the dilemma recognized by all participants.” — Attendee input
4. Institutionalizing Innovation
Innovation should be institutionalized as a function, not merely left to proactive employees. Too often, new initiatives wither when the initiator they rely on leaves, to the detriment of sustained innovation. Innovation should instead follow a clear process, in which idea development has a distinct trajectory and individuals have narrowly defined roles. While innovation should be everyone’s responsibility, it should not be considered a fun side-project. It should be approached with rigor and discipline. To get buy-in for ideas, it’s helpful to apply the mindset of an investor, not an entrepreneur, and being able to showcase tangible proof of value for ideas. Innovators should seek out the first costless step toward making an idea reality.
5. Innovation Leadership
Enabling innovation requires leaders to grapple with the tension between unleashing employee potential and being able to harness the output. To bridge this gap, leaders must both encourage abrasive discussions to generate great ideas and be able to integrate opposing ideas into a unified solution. This requires navigating the social dynamics of the organization to balance tensions. Leaders must also recognize that employees differ. Some innovators seek to be constantly challenged in their work in order to contribute novel ideas. Such innovators must be supported regardless of the quality or success of their ideas. Ideas can be changed easily — innovators less so. In nurturing an innovative culture, leaders must act as role models in terms of encouraging transparency and openness to ideas.
6. Becoming Agile
“What autonomy needs to mean is go and do exactly the right thing. And we truly believe that [teams on the ground] know better than [management] what that is.” — Anders Ivarsson, Spotify
Adopting agile principles is essential to follow rapid industry changes. This starts with employee motivation. A strong focus on empowering employees with autonomy in their decision-making is essential. Yet, an organization must retain a unified sense of direction between autonomous units. Employee autonomy does not imply that everyone can do as they please. Employees should rather come together in a cohesive way to do the right thing for an organization. Creating the needed alignment starts with outlining a clear purpose statement and a minimum set of requirements employees can operate freely within. This enables top-down, intent-driven leadership to be combined with bottom-up ideation and decision-making.
7. Corporate Venturing
For corporate venturing, organizations should make minority-stake investments in multiple startups to diversify their efforts. This makes it possible to test the fit and see if investments should increase. To ensure alignment at a later stage, the relevant business units must be involved from day one. In corporate venturing, strategic return is often neglected, with financial return being a more tangible metric. The strategic aspect is nonetheless highly important, as it provides actual solutions to an organizational problem at hand.
8. Startup Collaboration
Corporate-startup collaborations can have a tremendous impact on both corporate culture and innovation capabilities and must be included in the organization’s innovation strategy. Regardless of the chosen setup for collaboration efforts, a defined plan for how external innovations can be applied and integrated into the business must be detailed. Collaborations are often straining on corporations, and many are unprepared to work with startups. A common trap is to expect startups to automatically be attracted to the corporation. Instead, it requires an active effort. Crucially, to benefit from collaboration, corporations must first unlearn before new insights can be successfully received. This may require bringing on external people to manage the collaboration.
“As many we have the ambition to grow beyond our current product offerings, one way is by working with startup companies, but the question we have is how to best organize yourself being a traditional (risk averse) organization.”— Attendee input
9. Customer Centricity
When applying design thinking, the mindset it brings should be emphasized, not necessarily the techniques it prescribes. This will help elevate decision-making to focus on customers. By doubling down on the promise a product makes to customers, organizations can provide greater value by surrounding the product with complementary innovations. The aim should be to go beyond a transactional relationship with customers. The focus should rather be engaging with them over the long-term. Instead of chasing after competition, organizations should attempt to empathize with customers and notice the problems they are experiencing. By solving these problems, customers will be liable to reward the organization.
Though experimentation should be embraced, encouraging failure can be dangerous. Unless failure is followed up with success, failing fast may only lead to more — not better — ideas. Yet, individual failure may be required for shared success. A high-level perspective must, therefore, be taken when evaluating new projects. Successful innovators do not have higher success rates — they simply experiment more.