Putting Innovation into Perspective
The term ‘innovation’ means different things to different people. Corporate leaders, startups founders, customers, employees, and market analysts — they all look at innovation from a different angle.
The various forms and types of innovation allow multiple views and interpretations — depending on the perspective of the observer. Customers, employees, managers, and leaders understand innovation in their own context and probably have different expectations and definitions of success. For instance, a startup team perhaps perceives innovation very differently than the typical established company.
The Corporate Perspective
In our digital world, it is well understood and widely accepted that innovation is the only way to remain competitive and stay in business. In genuinely innovative organizations, leaders embrace innovation as a strategic capability, that empowers the organization to achieve its goals and to better serve its purpose.
Leaders who understand Innovation support the required programs, and they actively engage with related processes, acting both as innovation orchestrators and innovators.
In such cases, innovation is seen merely as a new mode of operation of the organization.
In many cases, though, corporate leaders appear to be skeptical regarding the value of innovation programs and hesitate to make long-term investments in innovation. Very often, leaders simply think of innovation on the surface — they consider it to be a luxury or just a more sophisticated form of a morale-boost or team-building activity. They do not always realize the potential of real innovation and how it can be injected into existing processes, teams, and products. Even when they do, they may still be concerned regarding the associated business cost.
Ironically, an overly ambitious innovation program may disrupt, not the market, but the organization itself — the established rhythm of business.
As a result, traditional leaders, who are focused on optimizing the organization for production and short-term profitability, may see such innovation initiatives as a source of ‘noise’ and disruption. Similarly, middle managers tend to avoid putting their critical deliverables and commitments at risk, and thus, they also see innovation with skepticism.
The Employee Perspective
Employees typically welcome innovation, and they tend to accept related challenges with enthusiasm. When real innovation is there, people usually appear open in sharing their ideas — through workshops and ideation events- and they see innovation not only as an opportunity to showcase their talents but also as a great way to contribute more towards the mission of the company.
Nevertheless, there are also concerns and misconceptions about innovation. In many cases, employees are skeptical about the value their ideas could bring to the company. They may have doubts regarding the transparency and consistency of the innovation process — the rules and decision-making mechanism — for example, on the prioritization or selection of ideas. In the absence of the right culture, people may be uncomfortable with failure, and they may feel discouraged or not confident enough to share their thoughts and ideas in public view. Based on experience and also on evidence from business literature, when it comes to innovation, employees across levels frequently feel disconnected or not supported by the leadership.
The Customer Perspective
End-users of a product or service are the final judges of the outcome of innovation. Regardless of the scope — incremental or radical — and the ambition of the company, it is the adoption by the userbase that confirms the success of innovation programs and initiatives.
Customers and end-users perceive innovation as new features or products that bring value; they do not necessarily follow the formal level of novelty of a specific innovation, and they probably don’t pay attention to technical differentiators and other internal aspects of a product. Innovation is perceived by end-users in a ‘selfish’ way — as new, better, and affordable means of covering their needs and achieving their goals. For most consumers, innovation is the output of a black-box — it ‘simply’ happens: in the digital world, consumers expect innovation to power seamless, intelligent experiences, that hide the complexity and automate trivial tasks and unnecessary steps.
The Startup Perspective
Startups are different. Unlike those typical, established companies, startups are inherently innovative. It is impressive that in many cases, startups innovate ‘naturally’, without a system or special methods in place. One way to explain this fundamental difference of startups versus established corporations of any size is by analyzing the reason for their existence: startups exist due to the novelty they are willing to bring to the market; they use change as their weapon. They believe in the opportunity they have identified and innovate organically in order to attack the ‘established’ and claim a share of the market.
Startups are usually relatively small and operate as flat organizations — with fewer layers of management in comparison to the typical corporation. As such, the links with the leadership are shorter — fewer middlemen — and stronger — more direct communication. This translates to better information flow and alignment with the strategy of the company. The vision is clear to all, and usually, there is a strong, purpose-driven culture.
Often, key-hires in a startup also take substantial risks when decide to join — they think and act more as partners and less than employees.
As a result, there is usually a core team that is possessed by the entrepreneurial spirit and has increased autonomy to make decisions and experiment with ideas — formally or not. The entire team understands deeply where the company is, where it should be, and they are ready to experiment and take risks in order to get there. Startups are purpose-driven, flexible organizations led by enthusiastic teams who are aiming for the ‘impossible’, and they know that offering new and significantly better solutions is the best plan of attack.
On the other hand, it is the scarcity of resources that makes startups lean and smart in their decisions. For example, given the limited resources of a startup, sensible prioritization of features during product development becomes even more critical. To make good decisions fast, startup teams focus on measurable impact and continuous improvement, by leveraging insights from customer feedback loops.
Startups are typically lean and agile organizations; by design and by necessity.
In contrast, established companies are more conservative as they are tuned to optimize their revenue streams and profitability; they do look for growth opportunities but on the safe side. Of course, there are big corporations out there that are genuinely innovative and adopt many of the dominant characteristics of the startup culture. But the typical corporation tends to avoid risks and disruptions — the primary focus is on serving its stakeholders, the safe way.
Different perspectives need solid definitions. When it comes to business, ‘Innovation’ and related terminology must be used accurately — with clarity and the right context — as it sets expectations and as a result can make or break the innovation culture. Especially when attempting to measure innovation, either at the corporate or the market level, the right strict definitions must be applied — to get meaningful and comparable figures. For Innovation definitions and glossary check this article.