The 5 most common mistakes in corporate innovation
Mistake 1: discouraging failure
For innovation to succeed, you need to learn how to fail. I know that sounds like a paradox, yet failure and innovation are closely connected.
Many companies have a culture that discourages any kind of failure. If you fail at something, that means no more promotions, no more raises and maybe even the end of your time at the company. Which is appropriate if the mistake was the result of gross negligence, but according to Harvard Business School professor Amy C. Edmondson that constitutes very little of the failures inside a company, in general only around 2-5% of the total. The rest are perfectly predictable failures, or even failures that can be harnessed for good.
Failure is key for innovation. For something new to work, a team needs to quickly test different approaches, and see which ones work, and which ones don’t. You need to experiment and communicate openly about what went right and wrong. But if even the smallest failure results in a blame game and lowered bonuses, that becomes impossible. People start to hide their failures, and all the learnings that come with them.
Or as David Kelley, the founder of the legendary design firm IDEO (the company that designed the computer mouse for Apple), once said: “fail often in order to succeed sooner.”
Mistake 2: lack of agility
Agile might be a buzzword in the innovation space, but it’s still key to running a successful corporate innovation program.
You will need interdisciplinary teams that can move fast and adapt accordingly. They need to be able to experiment quickly, to set up little tests, and based on the results quickly change the project and adapt it along the way. When a good fit is found between a new project and what customers need, it can be scaled up throughout the company.
Yet it’s easy for a company, particularly a large corporate, to let new projects be bogged down in endless meetings. Innovation is hard if you, for example, need to wait three months before IT solves a software issue for a new product, or if you need to ask for permission from three different managers whenever you want to launch a new experiment.
Which is why McKinsey, for example, called for a transformation of big organisations from their traditional model of hierarchy, bureaucracy and silos (or seeing an organisation as a “machine”) to an agile model where the focus is on action and flexibility (where the organisation works as an “organism”).
Mistake 3: no management buy-in
Innovation might need agile, bottom-up energy, but it also needs help from the top-down.
Any innovation project needs buy-in from management. If not, there’s very little possibility of innovations scaling up. You end up with pilot projects, where new technologies and innovations are tested out, but never scaled up throughout the organisation. It results in fun experiments with new technologies like AI that are nice to show off to the public, but produce very little value for the real business of the company. Eventually innovation projects flounder, produce little ROI and are cut off from funding.
KPMG for example showed in their Benchmarking Innovation Impact 2020 report that 45% of the respondents inside big businesses say that innovation and strategy are “only somewhat connected, or not at all connected or aligned” inside their companies. On top of that, 60% of the respondents noted that their innovation projects were “ad hoc or emerging” and had very little real integration with the rest of the business.
Mistake 4: too much focus on technology
Innovation is often equated with technology. Of course technology is important, and things like AI, 5G and blockchain might change our future in deep ways.
But that doesn’t mean that every innovation project needs to solely focus on one specific technology. Too much focus on technology over market might even kill innovation. Innovation often revolves around filling in customer needs, technology only comes second. If you put technology first, you might fall in love with the solution rather than the problem.
This is a well-known issue in the start-up world. It’s a common mistake that a founder gets caught up in the technical details of their product, and loses sight of what the market really wants. When CB Insights calculated why start-ups failed, they found that 14% did so because they ignored their customers. 17% also failed because their technology lacked a business model.
Mistake 5: strangling start-ups
Corporate innovation often means cooperation with start-ups, or sometimes even acquiring them.
But even though beautiful things can happen when start-ups and corporates join together, it can also result in friction. A corporate culture can strangle a start-up, with long meetings, risk-avoidance, a short-term revenue vision and sales cycles slowing down the fast pace of innovation.
A study by the innovation foundation Nesta, found that speed is the biggest obstacle for start-up-corporate collaboration. Around 50% of start-ups report issues in this area. Problems like coordination of projects, or a mismatch in culture, are also highly common.
A good cooperation with start-ups isn’t just about setting up fun projects or even an accelerator, it means aligning your strategy and culture with those of an external player, and finding a symbiosis that works for both parties.
There’s no magical recipe for corporate innovation, of course. It’s not about doing three specific things and then becoming the Apple or Alibaba of your industry. But there are definite some “don’ts” if you want to keep yourself relevant in The Day After Tomorrow and these were 5 of the most common ones. Let us know if we missed some important mistakes in our list!