Moving forward
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Moving forward

Innovation by design. Corporate innovation strategies.

In a market that is becoming increasingly fast, complex and unpredictable, organizations are looking for valid strategies to make innovation a fundamental component of their own identity.

Article by Alex Cascarano, Executive Design Director

For some time now, conferences and the web have been swarming with business people who, in a severe and urgent tone, warn of how those big bad tech companies in Silicon Valley want nothing more than to step into the shoes of traditional companies. Sometimes they stop there; sometimes, they go on explaining how they would be able to avert this calamity by paying them a reasonable amount of money, of course.

These statements simplify reality: disruptors sweep the market and threaten more traditional and reluctant companies to change. But there is more. It’s not the ‘fault’ or ‘cause’ of the tech companies; it’s the context in which we live that has changed: faster, more uncertain, volatile, prone to suffer the repercussions of unexpected and often uncontrollable effects.

This new horizon requires different new approaches.

Organizations are struggling to stay relevant within and beyond their target market, often losing sight of new businesses and emerging opportunities.

Sustainability stands at the centre of each economic actor’s agenda — let’s stick here only to this category. How do we ensure that a company’s value lasts over time and guarantees durability and relevance?

Exploring the future, enhancing the present

Staying the same, without changing, was unrealistic before and impossible to consider today: remaining relevant calls for transformation or, said in the language of business, innovation.

Innovation, however, is a sort of demi-god already entered the modern mythological pantheon: no one knows what it is, how to do it, and the concept fades into a romantic all and nothing that is difficult to manage.

Indeed, innovation is not an innate, intangible condition or an unanticipated event in a company’s history, nor is it the result of the visions — or hallucinations — of inspired CEOs.

Business innovation is the creation of substantial new value for customers and the company.

Sawhney, Wolcott and Arroniz — 2006

Doing innovation in the company today means to be structured and equipped with specific skills to anticipate, experiment, test and implement new business models, products and services. It is a complex process, often stressful, and can bear fruit only if it strongly invests its cultural dimension. Hence the leadership, all the functions and business units can develop the right attitude to welcome, understand, and support it.

To understand what innovation means, it is also essential to focus on the strategy to be implemented. Each kind of those requires methods, processes and a distinctive inclination to accept risk.

The most competitive companies can explore the future and, at the same time, exploit the present. They give equal priority to maintaining business as usual and exploring new models to manage the continuum while developing a culture in which innovation and execution coexist in a virtuous and dynamic relationship.

If it sounds like a demanding approach, it’s because it is, very much so. The ability to manage exploration and exploitation together is not limited to large companies. Still, it extends to SMEs and startups, given the shortening lifespan of business models across sectors.

I will try to briefly describe the possible innovation strategies that companies can choose to undertake, basing this classification on my experience.

The innovation strategies companies can choose

Digital transformation

More and more often, companies have to protect their current business, digitize the experience they offer their customers and, at the same time, reduce waste.

The term “Digital Transformation” has now entered the basic lexicon of any company that finds itself having to deal with the modernization of its processes and services on the back of new technological potential. It invests the entire spectrum of business processes. It transforms them and, in so doing, modifies the structure of the company itself: culture, management, nature of the services. However, it does not radically change the company’s approach to the market but somewhat improves and simplifies it, making it suitable for the present’s challenges.

In recent years, several large and huge companies worldwide have started transformation processes by merging some functions from IT and others from business and creating their digital hubs, composed of multidisciplinary teams of business and IT experts to support the entire organization.

In this scenario, design plays the role of interpreter between the business’s needs and Product Owners and development teams. It interprets each’s needs and facilitates the emergence of a set of shared practices and languages that become a kind of collective good, a substrate of meaning that facilitates the transformation of the entire organization — but always keeping the point of view of the end-users, who often risk being forgotten.

Design processes set a baseline of shared practices and languages, as it happened in Enel.

Building internal capabilities:

Companies can expand their business line by investing in themselves and the skills available to them: they can internalize some external skills — design, digital, data management and analysis, etc. — that the company does not possess and make them available to improve the current business. — that the company does not have and thus make them available to improve the existing business.

This strategy brings innovation to some areas of the company, without disrupting the existing, but building specific areas of the organization delegated to create new visions.

The aim is obviously to create the conditions and capabilities to develop new products and services, serve the physical ones, and create new services. In other words, add elements to the existing offer and make the company take leaps, perhaps into adjacent markets as in Sky with its Wifi offer: a completion and integration of the entertainment giant’s main proposition.

In this context, design plays an essential role in supporting the experience that these new products and services must offer those who will use them and how these new capabilities merge into the pre-existing corporate fabric.

Cerved recognized design skills as a pivotal asset to the company and promoted the birth of an in-house design studio.

Innovation Labs

Sometimes, companies delegate new value processes to a few specific units, formally independent entities that insist on a mutually exclusive relationship.

These units’ task is solely to explore new contexts and new needs, create, experiment and prototype new ideas, approaches, visions, and identify which of these are worthy of being implemented within the mother company.

Separation from this is often the best way to think out of the box: abandoning habits of thought, customs and corporate culture and developing an independent vision.

However, this should not generate isolation from executive leadership. An Innovation Lab has long term business goals. It requires then strong internal sponsorship, budget and long term communication. A solid value proposition must fit with the company’s strategy, and there must be an efficient dialogue between stakeholders and decision-makers.

The innovation lab context can adopt many existing frameworks, from design thinking to Agile methodology and flexible tools that ensure internal operations effectiveness. In such a context, a design-driven approach sparks an enormous value. Design can help understand people and their needs with research activities; it has the sensitivity to identify emerging transformation trends and read reality with an ethnographer’s eye mixed with that of an engineer, allowing to discover new business opportunities. And to validate them just as quickly.

Working with startups

To innovate, you need ideas, technologies, talents, and this is not always available within the company. However, it is possible to create a network of discrete and decentralized competencies. Companies may outsource their innovation processes by involving in an open innovation process, some startups that have both the agility and the attitude to change.

Adopting this approach mitigates some of the “disadvantages” of developing innovation in-house:

  • High costs
  • The need for vertical competencies
  • Sometimes lengthy time-to-market risks.

Relating with and, possibly, integrating external and trained realities allows adopting validated solutions ready to be used.

Collaboration, acceleration and, in many cases, the acquisition of the startups themselves by companies is the typical activity of Corporate Venture Capital. It serves corporations to diversify their investments, protect themselves from possible disruptive competitors, improve the core business.

A kind of love match supports this type of activity: innovative startups need to grow, while large corporations, through Corporate Venture Capital, need to continue to be innovative.

Samsun pay bought LoopPay’s technology and experience to create Samsung Pay.

The integration process is by no means an easy task and is often the cause of inertia and friction. The brand must integrate protocols, platforms and procedures. Likewise, product or service experiences must be harmonized, and sometimes different cultures must coexist. In this case, design plays a key role: on the one hand, it enables collaboration between the parties, thanks to participatory and collaborative activities, while on the other hand, it fluidizes operations (even design operations themselves), increasing the value of design and delivery activities.

Creating New Ventures

Sometimes, however, it’s not enough to transform, build new competencies or outsource innovation to specific units inside or outside the company, but it’s necessary to create an entirely new business.

In recent years, increasingly, many companies, to remain competitive, adopt a strategy of rapidly building new businesses to capitalize on new markets, technologies and behaviours, diversifying purpose and offerings through the creation of true new-companies capable of setting new industry standards.

For companies looking to fend off “disruptors” and grow their organizations beyond business as usual, Venture Design is a structured approach to identifying and prioritizing scalable opportunities, then developing and validating them on a focused, fast and proven market path.

No good idea is one without considering the impacts on the company’s people, business and technology. It is required an incremental approach that reduces risk and transforms the idea from concept (with testable MVPs) to new business ready to scale. Doing new venturing well today means opening up to future opportunities that could radically change the course of a company’s history, making it responsive and durable over the medium to long term.

Flowe is the new venture of Banca Mediolanum, created to address the generational shift in personal finances management.

The role of the design firms

Sometimes, however, it’s not enough to transform, build new competencies or outsource innovation to specific units inside or outside the company, but it’s necessary to create an entirely new business.

In recent years, increasingly, many companies, to remain competitive, adopt a strategy of rapidly building new businesses to capitalize on new markets, technologies and behaviours, diversifying purpose and offerings through the creation of true new-companies capable of setting new industry standards.

For companies looking to fend off “disruptors” and grow their organizations beyond business as usual, Venture Design is a structured approach to identifying and prioritizing scalable opportunities, then developing and validating them on a focused, fast and proven market path.

Creating innovation requires a pluralistic approach, which is why I believe the best partners to facilitate this process are themselves those who can bring a multidisciplinary, cross-disciplinary and inclusive approach.

The innovation firms sometimes can’t understand the impacts of their actions within and outside themselves. With an approach that considers much more the business’s viability and too little the desirability, the same business consultancies often have difficulty realizing proper innovation initiatives.

In my opinion, design is the discipline that can generate value and impact on innovation issues, and more and more companies are combining strong design skills with management skills in uncertain contexts.

Design companies have a specific ability and natural predisposition to give shape to tangible, concrete, testable, streamlined artefacts that are useful for rapidly validating hypotheses and orientations. And a prototype, whether physical or digital, is a powerful tool for aligning people with a common horizon and testing opportunities.

This, combined with the ability to interpret weak signals, act as a crossroads between the needs of the business, on the one hand, and of people, on the other, puts design in the ideal position to develop mindsets and integrate practices and processes and thus ultimately generate innovation.

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Thoughts, insights and visions on future and design by @sketchin

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