Corporate innovation has always been a tough job.
It is now even tougher by budget cuts and working from home. At the same time, corporate innovators are asked to do new things from a smaller base: they are supposed to help navigate uncharted territories (the “New Normal”) and to set up the company for post-crisis growth.
It is easy to view these circumstances as overwhelming and disheartening, but there is a way to move forward and ensure post-crisis growth as Frank Mattes showed us during our recent Innov8rs Connect Unconference.
A snippet from Frank Mattes' session during the Innov8rs Connect Unconference, June-September 2020. To watch the full session recording, join Innov8rs Community with a Content or Premium Pass.
Companies Unprepared For Fundamental Shifts
A recent study by McKinsey with 200 global CEO’s provided some great insight into how corporate innovation’s key stakeholders view the state of innovation in the current situation.
90% agreed that the Covid19 crisis will fundamentally change clients’ needs and business operations over the next 5 years. 7 out of 10 CEO’s say that the situation provides opportunities for growth– but only 2 out of 10 see their companies prepared to seize them.
The Need For A Tangible Action Plan
Consequently, corporate innovators must take the initiative. Since in most companies, innovation budgets have been cut, it is of uttermost importance to have a clear, actionable and communicable plan. There is simply no budget, no time and no space for taking the wrong turns.
Step 1: Understand The New Normal
We all experience many changes in our lives. Some of these changes will stick and become the norm in a changed world, the “New Normal”. One aspect which is clearly emerging is a “low touch economy”. This describes a business environment in which customers will be hesitant to have physical contact with things and people (i.e. “high touch”) and prefer a low touch solution to their jobs-to-be-done.
Consequently, customers will have different decision criteria and prefer a different customer journey. Corporate innovators need to understand what this will mean in practice in their respective business environments so that they can catch New Normal customers where they want to be caught.
Step 2: Explore The Opportunities
Every crisis – also the current one – brings new opportunities. Some of them may come from understanding New Normal customer expectations deeper and/or faster than the competitors. Other opportunities lie in re-designing the channels to customers (e.g. omnichannel with a re-defined physical touch point) and the value proposition / offering.
The most interesting opportunities will be in new business models. As we have seen from the last crisis, changed fundamental assumptions provide a fertile ground for new business designs. For instance, after the last crisis the common view on asset ownership changed. This led to new, “Sharing Economy” business designs, such as e.g. Airbnb and Uber.
Corporate innovators need to understand which fundamental assumptions are changed by the Covid19 crisis, generate ideas and validate them to seize the opportunities.
Step 3: Aligning Innovation And Digital
In many companies, Corporate Innovation and Digital have been two separated, siloed units. Both are asked in the current situation to support the core and contribute short-term to the company’s top line.
This is now a good time to join forces. By doing so, the current offering to existing clients may be extended or existing solutions adapted to new target groups.
Corporate innovators should align with their colleagues from Digital, compare the agendas and identify short-term opportunities that may arise from joining forces.
Step 4: Select The Right Corporate Startups
Smaller innovation budgets require corporate innovators to be very selective about which adjacent or even disruptive innovation activities should be kept alive, accelerated and scaled. Cuts that are made free resources which could be directed at accelerating the innovation journey of the precious few, right corporate startups/ventures.
The first step is to spot and kill the “zombies”. These are initiatives that are alive but should not be. Some criteria to identify zombies are for example (a) slow speed in their innovation journey, (b) unfavorable relation between expected size and time of business impact or (c) missing alignment with the New Normal.
After the zombies have been killed, the portfolio should be pruned even more: Only the startups with a clear strategic alignment and with fit to the New Normal should be in the “bounce forward” portfolio.
Corporate innovators should be crystal-clear on what they focus on to make sure that precious resources are spent wisely and that the right startups ventures are accelerated as fast as possible.
Step 5: Accelerate And Scale Up The Right Corporate Startups
Historically, companies have not been good at achieving business impact from their corporate startups. Statistics show that 85-90% fail after the “Minimum Viable Product” stage.
The current situation does not allow failures. The odds for success must be increased. Improving the quality and speed of validation and scaling are key levers for achieving this goal.
This requires using the best thinking tools and frameworks. One of these is the Lean Scaleup, which has been co-created and is used at more than 20 leading companies already.Corporate innovators should familiarize themselves with this framework and upgrade their innovation management accordingly so that they can increase the odds for success.
Although these are challenging times for corporate innovators there are also opportunities to support the core business and to re-establish the value of corporate innovation.
This is a piece from The Innovator's Handbook 2021. If you're keen to dive into the best and latest on corporate innovation, request your copy here. To discuss anything Strategy, Leadership & Governance, join our upcoming Innov8rs Connect online event, 16-20 November.