Corporate innovation is still possible and here’s why

By Alex Song, CEO and Founder at Innovation Department

In-house innovation labs have gotten a bad rap as of late. Whether focused on retail, consumer packaged goods, or technology, criticism of labs has ranged from being too siloed and insular to being slow to adapt. When the Neiman Marcus head of innovation, Scott Emmons, left the company at the start at 2019 he wrote in an op-ed on his departure: “Processes are broken, execution is too slow, politics stalls decision-making and resources are too scarce.” This is not to say that companies aren’t finding any success innovating. However, success may be occurring more at the periphery of the main innovation system than it is at the center, making it difficult to replicate and scale.

There’s no denying that legacy brands need innovation to survive and compete against new start-up brands, but it’s not an easy process. Nearly three-quarters of businesses admit that they’re not out-innovating their competitors, according to a PwC report. But those that consider themselves leaders in innovation are expecting considerable growth — 15% over the next five years.

So, what does the path to corporate innovation look like? First, legacy brands can learn a lot from what newer consumer-facing brands are doing to innovate. Brands like Halo Top and SkinnyPop didn’t start big, but focused on meeting a targeted and unmet consumer need that turned out to have broader reach. In addition, instead of making innovation happen from within, partnering with an outside innovation lab may provide an even shorter, more efficient route to innovation success. External labs have the benefit of sitting outside the brand and benefit from a more worldly, holistic view. As the old adage goes, “Sometimes you have to step back to see the bigger picture.”

Approaching innovation from “the outside in” can offer a number of tools and benefits that you can incorporate into your strategy. Here are three to consider:

1. Agility and added resources. It’s much easier for external partners to navigate the corporate ecosystem while keeping an agile and nimble mindset. If a new concept is not performing well, outside innovators can quickly move on to the next idea without being constrained by internal bureaucracy and without being seen as a threat to existing talent. They can provide an environment where it’s okay to fail because new ideas can quickly take their place. Partners can also consolidate the resources they have internally that may become cost-prohibitive for brands — everything from marketing to technology. Take Google, for example, which added an entire corporate structure focused on innovation with Alphabet. By restructuring to create Alphabet, a parent company that oversees the core Google Business in addition to transformational units like Google Ventures, Google X and Waymo, Google provided the freedom for their innovative ventures to make unencumbered bets on groundbreaking concepts and technologies with the potential to disrupt the norm.
2. Better access. When you’re on the outside, people within a company will always be more likely to share their perspective and ideas with you when you’re not directly affiliated with the established corporation. By the nature of your position, you are more objective in your thinking and approach, increasing the likelihood that you’ll get more honest intelligence into the areas that you’re trying to change and innovate.
3. Deeper talent pool. An innovation partner will have a deeper talent pool that can be laser-focused on what’s needed for the brand to get to the next level. Instead of recycling ideas internally, a dedicated team can offer fresh perspectives and cater to creativity. While the team may vary in make-up, from industry veterans and strategists to developers and creatives, there will be a core group of people who are consistently working collaboratively to yield the best results.

Corporate innovation is alive and well even if in-house labs are under the microscope. Thinking about innovation from “the outside in” may be just what legacy brands need to move the needle.