The Ultimate Guide to Company Innovation: Programs, Models, and Examples
In today's rapidly changing business environment, innovation has become crucial for organizations to stay competitive and relevant. The pace of technological advancements, evolving consumer preferences, and the unpredictability of global markets have made innovation not just a luxury but a necessity for survival. With 2023 ending, business leaders are reevaluating the critical priorities and strategies to drive success in the next twelve months and beyond. Faced with several looming factors that threaten to derail operations—including labor shortages, inflation, and economic uncertainty—business innovation leaders must focus on their organizations' missions, refining current strengths and identifying ways to fortify weak points.
What is the importance of innovation in business?
Company innovation goes beyond using new devices or ideas and extends to finding new ways to do something. Management teams must shift focus to developing new business models or creating environments that foster novel ways of thinking.
Innovation helps build an adaptable organization well-positioned to grow and differentiate itself from competitors. Companies that master innovation can garner better performance with the potential to generate income 2.4 times higher than their peers, as reported by McKinsey. In 2023, the emphasis on innovation has become paramount for businesses navigating challenges such as labor shortages, economic uncertainties, and rapid technological shifts.
While many believe increasing budgets for innovation can lead to success, the reality starkly contrasts. Forbes estimates that over 90% of innovation projects fail. This failure can be attributed to underestimating the effort required and a lack of alignment between a company innovation strategy and on-the-ground activities to innovate. Dreaming up new ideas is as crucial as developing a solid action plan to embed those ideas into a company’s DNA.
Corporate innovation models and innovation examples
Open Innovation: This type of innovation emphasizes external collaborations with startups, researchers, or other entities to co-create solutions, bringing fresh perspectives and ideas from outside the organization. Procter & Gamble's (P&G) ‘Connect + Develop’ program is a prime example of open innovation. Through this program, P&G actively sought partnerships with external innovators to co-create products as they realized not all good ideas come from within. This approach successfully launched several products, including the Swiffer duster and Mr. Clean Magic Eraser.
Disruptive Innovation: Focusing on creating new markets or disrupting existing ones with radically different, often more affordable solutions is the central idea of this innovation model. Disruptive innovation can redefine industries and consumer expectations. For instance, the internet was not an evolution of previous technology but one that disrupted existing models and created new ways of making money.
Business Model Innovation: Instead of product or service changes, this model rethinks how a company creates, delivers, and captures value. Organizations embracing this concept find new revenue streams while maintaining a competitive advantage. A great example is when Netflix rethought its value proposition and delivery model of renting physical DVDs, leading to the rise of online streaming and the decline of traditional video rental stores.
Intrapreneurship: This model encourages employees to act as entrepreneurs within the company, giving them the autonomy and resources to develop and test new ideas, fostering a culture of internal innovation. Google's ‘20% time’ policy is a strategy to encourage intrapreneurship wherein employees were encouraged to spend a portion of their working hours on projects they were passionate about, even if it wasn't directly related to their jobs. This policy led to the creation of revolutionary products like Gmail and AdSense.
Corporate Accelerators and Incubators: Corporate accelerators and incubators provide teams with essential resources such as mentorship, training, funding, and access to the corporation's vast network to grow a potential venture or incubate disruptive ideas. Barclays Accelerator, powered by Techstars, is a startup accelerator program designed to nurture fintech startups by providing mentorship, office space, and funding in exchange for startup equity.
Innovation Labs: Corporate innovation labs are dedicated units within organizations, emphasizing creativity, experimentation, and the development of groundbreaking technologies and solutions. These labs serve as the epicenter for research and development, where novel ideas undergo rapid testing and transformation into viable prototypes, which are then integrated into the broader business framework. Google X, now known as X, is a research and development facility founded by Google. It aims to work on futuristic projects, often called ‘moonshots.’ Some of its notable projects include the self-driving car and Google Glass.
What is a corporate innovation program?
An innovation program is a holistic approach encompassing initiatives like innovation labs, accelerators, and incubators, along with the culture, processes, and structures enabling and fostering innovation within an organization. It's about creating an ecosystem where innovation is not an occasional event but an ingrained habit.
How do you create a corporate innovation program?
Ensure strategic alignment and stakeholder buy-in
Corporate innovation programs engage critical stakeholders, from top leadership to middle management, early in the process to guarantee support, resource allocation, and championing of the initiative throughout the organization. Ensuring that the innovation program aligns with stakeholder and company objectives is critical to setting the program's direction and garnering support.
The Balanced Scorecard is a strategic management tool ensuring innovation aligns with overarching goals. It translates the company's vision and strategy into a coherent set of performance measures, balancing financial measures with operational, customer, innovation, and growth perspectives. Business leaders can also use the Innovation Maturity Matrix alongside the Balanced Scorecard to evaluate the scale and maturity of current corporate innovation strategies and identify persisting gaps.
2. Set up the infrastructure and key performance indicators
Organizations must consider establishing a robust innovation infrastructure, resources, and key performance indicators to sustain and grow an innovation program. One crucial element is defining clear, quantifiable metrics to measure the program's success and the innovation’s improvement over existing or traditional methods, ensuring accountability and continuous iteration. Measuring a program’s financial performance too early can often disrupt the program itself, so strategically setting metrics to evaluate a program is essential to success, and choosing key performance indicators that correlate to activities that will eventually help the program turn financial gains is a good strategy. Organizations must also be equipped with tools and knowledge hubs to impart skills to employees on design thinking, agile methodologies, and lean startup principles to drive innovation.
3. Encourage diverse ideation & iterative prototyping
Encouraging idea generation from various sources, including cross-functional teams, external partners, and customers, is vital. Tools like Brightidea or IdeaPlace (formerly Spigit) can help crowdsource ideas from various stakeholders. Rapid prototyping can be achieved using tools like InVision or Figma for digital products and 3D printing for physical products. The Build-Measure-Learn feedback loop from the Lean Startup methodology can also help ensure the iterative development of innovations based on real-world feedback.
4. Build a culture of innovation and feedback loops
Cultivating an organizational culture that champions unconventional thinking, curiosity, risk-taking, and learning from failures is essential. Companies can do this by giving people accountability for the company’s goals, focus areas, capabilities, and commitments to stakeholders while giving them the discretion to conduct their work to the best of their ability. They must simultaneously establish robust feedback loops from end-users and internal cross-functional teams to continually refine and adapt the innovation process.
Conclusion
Innovation is the linchpin for organizational success and sustainability in an ever-evolving business landscape of technological advancements, shifting consumer preferences, and global market unpredictability. As we transition into 2024, businesses face multifaceted challenges, from labor shortages and economic volatility to the pressing need for digital transformation. Companies need a strategic, well-thought-out plan for innovation programs and projects to ensure impact.
Are you a corporate looking to drive innovation?
Futurize can foster collaborations between academic institutions, governments, corporations, and startups to help you build innovation programs to develop new ideas that create an impact. Get in touch with us at hello@futurize.studio!
