Challenges of the Corporate Innovation
This is the first part of the Corporate Innovation blog. Here you can read the second part — Corporate Innovation as a System.
We all know what happens to companies that do not innovate. There are many examples of how big, established companies, with billion dollars of revenue, are being disrupted by a new coming startup of few people and an idea.
Ever since Clayton Christensen defined the disruption phenomena, the incumbents jumped into a race for innovation, scared that they might be the next example of a shortsighted company.
And with just a few exceptions, the Corporate Innovation still fails to deliver breakthrough products or services. And it will keep failing until we set the proper self-balancing systems in place.
I will not go through the successful examples of corporate innovation here, as they are promoted and studied in many articles. The goal of this post is to examine the challenges that tripped the failed projects and what we can learn from them.
In the next post, I will try to define the functions that are needed to keep the innovation system in balance, creating a repeatable process for successful innovation.
I’ve collected examples from different companies in the Silicon Valey, with bad experience in the innovation management. Let’s see what we can learn from them to avoid the traps.
The activities basically fall in the following categories:
1. Innovation Campaigns
The goal of innovation campaigns is to bring new ideas for products or services and to increase the employees’ engagement and creativeness. It is arranged once or twice a year, around some new technology.
There are examples of ideas coming from these campaigns that actually made a significant impact. But usually, these campaigns end up with a bunch of ideas with little value and very little impact. This, in turn, leads to very few ideas getting implemented. And leads to disappointment in the contributors.
The risks increase in the following cases:
- The expected outcome is not clearly defined
- The topics are set around the technology and not value
- No follow up with implementation
- Give small awards for participation
The end result is usually a disappointment in organizers and participants.
2. Continuous Improvement in local scale and idea boxes
Continuous improvement is a great way to keep business up to date. It’s being used for decades in the manufacturing industries following the Toyota principles. It brings visibility, awareness, and incremental progress in the value delivery.
It can also be implemented in a wrong way and fail to deliver the desired outcomes. Some of the pitfalls in the implementation are:
- Call for improvement ideas in specific sub-functions and silos
- Keeping the improvement projects separated
- No clear criteria for prioritization of ideas
- Measure and reward only the local impact
- Implementing very few of the improvement ideas
Implementing wrong processes for continuous improvement leads to waste of resources and frustration in the participants.
3. Pushing innovation onto the existing Business Units
Many companies create innovation function outside of the existing business units. The goal is to have a function dedicated to new technologies and creativity, separated from the old systems and culture.
The innovation function should act as an external sensor for emerging technologies, opportunities or potential disruption. The ideas and finding should be then filtered, prioritized and developed by the Business Units.
This setup works for few companies with the proper structure but usually gets stuck because of the following challenges.
The Business Units get flooded with new ideas and technologies, but very few of them match their requirements. The ideas get rejected for different reasons:
- Being too immature
- Being too complex
- Not fitting the process
- Already tried but didn’t work
- Already in our roadmap (for many years)
- Not possible
- Committed to other technology
- Too disruptive
This leads to misunderstanding and frustration on both sides. As a result, the boundaries between the departments grow bigger and the innovation concept gets compromised.
4. Innovation development
Another common pattern emerges when the Innovation department develops its own products.
All the innovation phases of Ideation, Incubation and Acceleration are performed in the Innovation function, to avoid the early rejection from the BUs.
After a project reaches some maturity status it is integrated back to the main BUs.
- The innovation topic competes with the scope of the BUs
- The innovation topics are far outside of the scope of the company
- The project is integrated too early into the BU
- No clear goals or metrics
- The sales team is not incentivized or trained to sell it
- There is a restriction to access “Best” customers
- No business development knowledge in the team
At the end, the projects turn into zombies that don’t grow but is hard to be stopped.
This pattern is an example of “let’s try” approach to innovation. It is shooting in the dark without the proper functions and know-how, and with a small commitment.
The next pattern is the opposite of the small commitment.
5. Full-blown innovation product
Go big or go home.
The competition for innovativeness leads to the phase where a company decides to invest in the Next Big Thing.
They pick a new technology. Put together a promising business plan. Define a project plan with stage gate controls, assigns the budget and resources, and the development begins.
There are many things that can go wrong with investing in an unknown business. Just a few of them:
- Milestones set to internal objectives — like the number of developed features, and the number of installed servers.
- Vanity or no metrics for external validation
- Bias toward success — no incentives to prove wrong
- Scope creep — more features are added to the plan
- Slow development
The product hits the market. And the customers don’t care about it.
These are just a few examples of wrong implementations. It generally goes through the following phases:
- Enthusiasm to start a new thing
- Excitement of “doing the right thing”
- Confusion from the results
- Focusing on the core competencies
Please let me know in the comments if you’ve seen those patterns and let’s try to find a better, systematic way to do innovation.
Here you can read the second part — Corporate Innovation as a System.