Corporate innovation is an essential concept that many businesses fail to focus on. The ability of a corporation to innovate may dictate whether or not they will continue to grow or exist in the next few years.
Many successful corporations who dominate the market now have strong corporate innovation capabilities. These corporations are able to successfully see where the market is going and innovate accordingly.
At the core of corporate innovation is the incorporation of innovation in a corporation’s business model to achieve their goals and build meaningful growth. This can be done by introducing new products, services, processes and business models or modifying existing offerings, processes and business models.
Corporate innovation vs. innovation
At this point, it is important to note that corporate innovation is not exactly the same as innovation. The concept of innovation may refer to any new idea or change that was made by anyone. The Merriam-Webster dictionary defines innovation as “a new idea, method, or device.” Corporate innovation, however, is much more specific than the general concept of innovation.
Corporate innovation is the application of innovation in a corporate environment. Its aim is to contribute to the continued growth of a corporation by innovating its products, services, processes and business model.
Another goal of corporate innovation is to incorporate innovation into a corporation’s business model in order to achieve a corporation’s growth targets and improve its organizational resilience. An organization can much easier respond to changes in the future if it has a focus on corporate innovation and has the capability to innovate.
Organizations may also set their own goals when they conceptualize their corporate innovation initiatives such as making their processes more efficient, and building the organization’s skillset.
Developing corporate innovation capabilities
The process of introducing and applying innovation in the corporate environment is different from doing the same in an entrepreneurial or startup environment.
One key difference is that established corporations are often less open to change than startups. This can be attributed to a corporation’s larger workforce, rigid structures, internal processes and traditional leadership. As such, the process of introducing innovation in a corporate setting must take into account all of these factors.
This process may take multiple steps and many months to complete. For example, a corporation may go through the following steps before they are fully capable of innovating:
- Enterprise Innovation Audit. This is often the first step in a corporation’s innovation journey. Innovation experts alongside the leaders of a corporation gauge a corporation’s current ability to innovate. It will assess how effective a corporation’s current innovation strategy is. The audit will identify opportunities the corporation can take advantage of and challenges that can be addressed.
- Innovation Strategy Sprint. Taking into account the results of the innovation audit, a corporation will now conceptualize and develop their innovation strategy. The new strategy will streamline a corporation’s innovation process and will address the pain points in their previous strategy.
- Innovation Transformation. In this final step, a corporation carries out the innovation strategy they conceptualized in the previous step. The corporation has to ensure that each part of their organization fully understands the new innovation strategy to ensure that the strategy will stand the test of time.
After completing this process, a corporation could have vastly improved their corporate innovation capabilities. They should now be adept at innovation and have a workforce and innovation teams that constantly generate new ideas for products and services. Through this process, a corporation can more confidently achieve the growth targets they set and improve their organizational resilience.
Corporate innovation strategies
There are many ways corporations can improve their innovation capabilities. This can be done through the many corporate innovation models or strategies that organizations employ. Corporations employ these to build their innovation capabilities and bring innovation into their organization.
Some of these models and strategies may be riskier and more capital intensive than others. A corporation interested in building their innovation capabilities just has to identify the model or strategy that best fits their capabilities, needs and goals.
Here are 5 of the many models based on our article on the models of corporate innovation:
- Corporate Venture Capital Investment. In this model, corporations invest in startups that they believe will perform and succeed in the future. The main risk under this model is the possibility of the startup underperforming or failing to meet expectations. However, this risk may be offset by the value and benefits it will bring if the investment succeeds.
- Acquisition. Often, corporations purchase startups and integrate them into their organization. Corporations who choose this model face a lot of risks, such as the failure of the startup they acquired. Also, a lot of capital is needed to pursue this model.
- Intrapreneurship Program. This program gives support to the organization’s workforce to innovate. It is a platform where employees can ideate new innovative ideas and implement their innovation initiatives. In a sense, corporations who have this program train their very own internal entrepreneurs or intrapreneurs.
- Dedicated Innovation Teams. Many innovative corporations have in-house dedicated innovation teams. These teams are solely focused on managing the corporation’s innovation initiatives. They also generate new disruptive ideas that their organization can take advantage of.
- Open innovation. Corporations can sometimes invite startups to partner with them and work together. Under this arrangement, the startups allow innovation to occur within a corporation while the corporation gives the startup support such as resources.
However there is one strategy that corporations definitely shouldn’t do if they are really interested in improving their capability to innovate. This is innovation theatre.
Not all ‘innovative’ companies actually innovate. The concept of branding an organization as innovative even if they’re just pretending to innovate is called innovation theater. These organizations want to make it appear to the public that they are innovative when in reality they are not.
One example of innovation theater listed in this article by Idea to Value, is having a Chief Innovation Officer (CIO) who has other roles alongside this position. Ideally, a CIO should be focused on managing and executing the innovation initiatives of their organization. However, if they have other roles alongside this, their focus is divided which does not deliver results.
Steve Blank wrote in this Harvard Business Review article that in innovation theater, corporations sometimes focus more on the process instead of the product it creates. This stifles innovation in a company.
Some signs of innovation theater are ‘innovation’ initiatives that do not have any significant contribution and impact to a business. The ‘innovation’ is all just for show. These initiatives don’t generate new disruptive ideas and don’t improve a company’s current products, services or business model.
If anything, these initiatives are a waste of time and resources that do not add any value to a company nor do anything to help a company achieve its growth targets.
When a corporation is open to the idea of innovating, it can be classified as a progressive organization. These organizations are already thinking about innovating. They may be planning to implement various innovation initiatives or they may just be exploring the concept of innovation.
There are a few key qualities that distinguish progressive organizations from the rest, besides being open to the concept of innovation. These qualities are the reason why these organizations succeed at innovating. According to Gary Hamel and Nancy Tennant in this article by Harvard Business Review, there are 5 requirements for a company to be considered innovative.
- A program or system to train employees to innovate and develop their innovation skills,
- A company-wide understanding of what innovation is, which allows companies to be on the same page as to what ‘real’ innovation is,
- A way to measure the progress of the company’s innovation initiatives,
- Innovation leaders who are accountable and capable of leading innovation initiatives,
- A management process that is innovation-friendly and doesn’t hamper innovation from taking place in the organization.
Beyond these requirements by HBR, there are other qualities that can be observed in progressive and innovative organizations.
In the world of innovation, failure is commonplace, thus these organizations should be open to failure. Jeffrey Baumgartner wrote in an article for Innovation Management that an openness to failure allows employees to have more courage to take on innovative projects, which are often risky.
Baumgartner also wrote that there should be an environment of trust in a corporation because innovation projects are risky. This environment encourages employees to share their innovative ideas with their organization.
All of these can help an organization foster innovation.
Outcomes of corporate innovation
Corporate innovation brings about a variety of products and outcomes. Unless an organization did innovation theater, innovation initiatives are often very fruitful and add value to an organization.
Corporations who are committed to corporate innovation and improving their innovation capabilities reap many benefits. Our innovation strategy programs provide many positive outcomes and benefits such as:
- Growth. Innovation initiatives contribute to an organization’s growth or success. New product and service offerings can bring new sources of revenue for a corporation who has been losing customers to new technology. Innovating a business model can unlock new growth and opportunities for an organization whose revenues have plateaued. There are many more ways that innovation can build meaningful growth.
- Adaptability. A truly innovative organization can adapt to both the opportunities it identifies and challenges it faces. On one hand, these organizations take full advantage of the opportunities that are presented to it in order to accelerate their growth and contribute to their success. On the other hand, these organizations can take on the challenges that threaten the business by innovating and adapting to the situation.
- Resilience. Innovative organizations can take on the challenges that the future throws at them. By having the capability to innovate, the corporation also has the capability to respond to these threats and challenges to ensure the continued growth and success of their business.
This is by no means an exhaustive list of the benefits an organization can get out of corporate innovation. There are many more depending on the innovation initiatives and focuses of each organization.
Your next steps
One takeaway to keep in mind is that corporate innovation has the goal of building meaningful growth for your organization by incorporating innovation into a corporation’s business model. Corporate innovation develops an organization’s ability to generate new ideas for the creation or modification of products, services, processes and business models.
It is a long process for an organization to build up its innovation capabilities but it is well worth it because of the value it brings to the organization.
Are you ready to start your organization’s corporate innovation journey? Embiggen offers a variety of corporate innovation services.
You can start at our Enterprise Innovation Audit, where we will help you gauge your organization’s current innovation capabilities. We also offer a variety of training programs to equip your innovation teams with the skills they need to successfully carry out their initiatives.
Get in touch with us to find out more about our services and how we can build meaningful growth together.