The world’s largest corporations in virtually every industry recognize the threat posed by nimble and innovative software companies hungry for market share. No one wants to be the next Kodak or Blockbuster, but it isn’t always obvious how to avoid such a fate. That’s why I interviewed five corporate innovation leaders to learn about how they’re shifting strategies and processes to enable their organizations to continuously innovate in modern times.
Thanks to leaders at MasterCard, Ford, BBVA, Barclays, and Marriott, I was able to gain deep insight into innovation initiatives. You can listen to these full interviews in my new podcast called The Innovation Benchmark. Below are five of my most significant takeaways, including how innovation strategies evolve over time and what outcomes organizations can expect given their efforts.
1. Begin with a customer-focused mission.
Upstarts like Uber and Tesla are challenging existing business models in the automotive industry and redefining how consumers get from A to B. To stay ahead of the curve, the Ford Motor Company is embracing its roots.
Despite having spent the last century selling cars and trucks, the organization now thinks about its business more holistically. “It’s about providing personal mobility and really doing so in an affordable manner,” Venkatesh Prasad, Senior Technology Leader at Ford, told me.
Cars may have replaced the horse and buggy, but Ford innovates not by continuing to engineer cars but by enabling customers to travel. They’ve reframed their product narrative around the consumer’s entire travel experience. This enables the company to remain relevant even amidst rapidly-evolving market changes.
Similarly, John Sheldon, SVP and Group Head of Innovation Management at MasterCard, explained how his team’s goal is to “kill cash.” By shifting the mission from developing credit cards to facilitating payments, MasterCard, a company that’s put over 2.2 billion credit cards in people’s hands, has been able to innovate around the entire customer experience.
2. Innovation needs a safe space.
“Move fast and break things.” That’s been the mantra of Silicon Valley for quite some time. The reason why “breaking things” is encouraged is because while most ideas will turn out not to be viable, experimentation and the learning that comes from it is critical to ultimately achieving successes.
However, “breaking things” isn’t so easy inside of companies with brands that are synonymous with quality and reliability, and where employees are incentivized to keep things working rather than reinvent them altogether.
As Sheldon sensibly explained to me,
“Nobody wants their payments network to be doing some of the things that innovation is all about — moving fast, breaking things, taking things on the market, taking them off, pivoting.”
That’s why MasterCard gives their innovation initiatives some room to breathe. “That separation protects the ideas in their nascent stage from the 800 pound gorilla that is the wonderful business model that we have.”
Matthew Von Ertfelda, Vice President and Global Team Lead of Marriott’s Insight, Strategy, and Innovation Team, explained his organization’s approach to protecting potentially groundbreaking ideas. “The innovation lab is a physical space — it’s something we call The Underground,” he told me. “It’s on the 2nd floor subterranean areas of Marriott International, here in Bethesda. It’s a space where we can safely ideate, design, prototype and build out provocative, bold new innovations.”
3. Corporate innovation strategies evolve over time.
Every Fortune 500 company was once an innovative startup. However, over time, innovation becomes less of a priority and execution and profit maximization becomes the central focus. For multi-billion dollar companies, recovering their entrepreneurial roots is not so simple. In addition, the biggest opportunities to take time to be realized.
That’s why companies often take a long-term view — but get started with smaller experiments in the meantime.
Matthew Hooper, VP of Open Innovation at Barclays, matches internal stakeholders with external innovators who can partner to solve overlapping problems.
As corporations learn best practices and capture market data, the strategies evolve.
Scarlett Sieber, SVP of New Digital Businesses at BBVA, began by bringing the innovation community to her organization, but now focuses on incubating new ideas from within. BBVA has also started a corporate venture capital arm and a digital M&A team.
As the strategies evolve, the desired outcomes evolve in parallel — from aspirational research to actually impacting the bottom line.
Sheldon reflected on what MasterCard CEO, Ajay Banga, exclaimed when the company’s innovation lab started:
“If you don’t give me stuff to launch, I’ll fire you all.”
Sheldon emphasized his focus on balancing the exploration of cool new technologies with actually increasing MasterCard’s share price.
4. Culture is key.
One such longer-term goal that companies often have is to spread the culture of innovation from the safe space throughout the organization. That way, it’s not just an innovation team, but the organization as a whole that’s adapting to changing customer needs and iterating accordingly.
Von Ertfelda described his approach and the corresponding success he’s had.
“Our team is really an accelerator, incubator and a catalyst for change throughout the company,” he told me.
“When we started, we were the first discipline and really the only discipline that had innovation as its charge. And today, five years later, innovation is a shared charge throughout the organization. The spirit and philosophy, the processes, the tools and the tenants of innovation that underpin The Underground have been adopted and implemented globally.”
5. Experimentation is the not-so-secret weapon.
For Scarlett Sieber and BBVA, innovation methodologies begin with figuring out ways to creatively learn without putting the brand at risk. She acknowledged that experimentation is a foreign notion to many large organizations, which have long been focused on scale and execution, rewarding employees for being right rather than for learning.
She wasn’t the only guest who shared such sentiment. Large corporations are increasingly examining practices most commonly associated with scrappy startups — from customer interviews to minimum viable products. But instead of blindly adopting such practices, they’re focused on adapting them to fit within a corporate environment. Such methodologies have the potential to enable innovation teams to test their ideas in a time and cost effective manner and ultimately find the ideas most capable of putting their organizations at the peak of innovation in their industries.