Why are we making innovation so complex?

It always amazes me how we limit growth by not investing fully in innovation. While most large companies want to become more agile and innovative, many of them fail to...

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December 19, 2018
Strategy

Source: European Commission

In “Opportunity Now: Europe’s Mission to Innovate,” a 2016 European Commission report (a mere 360 pages long), the author makes this point:

“Innovation is also more complex than ever. Complexity, chaos, and non-linearity have been seen since the 1970s as the defining features of our age. But still, our advanced societies find it hard to make robust policy for a complex innovation system.”

We should always start by recognizing innovation as a complex system. As the report defines, a complex system is a place where:

  • no one can have a complete map of the actors and forces at play,
  • the system’s behavior is not simply the sum of the behavior of those parts,
  • feedback loops surprise us and change the behavior of the system,
  • the system is “autopoietic”: behaving in a self-driven way and not just in ways we have yet to understand.

The report also questions, quite rightly, that having a pipeline theory as too simple. The author suggests innovation is not like a Roman aqueduct, designed to allow water to flow; instead, it’s a “muddy pond,” rich but obscure.

That is not a comfortable view for business leaders determined to limit risk, maximize resources and be consistent to extract efficiency and be fully effective. Innovation flies in the direct opposite to this need of corporate design. So, we have become highly creative for innovation to be allowed to operate under the same roof as these efficiency and extraction rules and regimes.

We have come up with multiple ways to exploit innovation. It can contribute to the business model, explore the margins, undertake core renovation work, experiment, and prototype, and be completely new to the world. But it always seems to be divided up in different parts of the business. I often feel innovation activities within companies are a continuing set of experiments, needed but not systemized, fragmented in its potential energy by this underlying need to keep it under control and to minimize risk and feel exposure.

Are we dissipating innovation resources or recognizing that one-size does not fit all?

We are fragmenting much within innovation. Is this good or bad for the longer-term? “The Ten Types of Corporate Innovation Programs,” an article was written by Jeremiah Owyang, founder of Catalyst Companies, provides a terrific list of possible types of innovative programs to consider. But by adopting too many, you fragment and possibly dissipate your innovation resources. Owyang offers a good description and examples that make this a highly useful reference point. Which do you undertake or are actively considering?

Many others are emerging beyond these ten types, where “open” sets the tone for building creative spaces, in lab designs or investment by different avenues of VC funding, internally and externally.

To begin with, these ten types of corporate innovation programs form a good starting point to consider what works for you. Which strategies can push innovation further down or out of the company and help move the growth needle for your innovation program? Check out Owyang’s description below.

The Ten Types of Strategy for Corporate Innovation Programs

 1. Dedicated Innovation Team

Corporations often start with staffing an innovation team within the company of full-time employees dedicated to developing the strategy, managing, and activating innovation programs. These leaders are experts at internal communications and are change agents.Example: MasterCard, Hallmark, and BMW all have innovation teams dedicated to new business ideas, as does Nokia. Learn how Nokia’s innovation team works here.

2. Innovation Center of Excellence

Innovation can’t happen in a single group; without broader institutional digestion, new ideas will falter and fall. Some corporations are setting up cross-functional, multi-disciplinary groups to share knowledge throughout the company.Example: Various retailers and consumer packaged goods companies enable this. Read: Creating the Physical Space for Innovation

3. Intrapreneur Program

Rather than rely solely on external programs, internal employees – dubbed “intrapreneurs” – are given a platform and resources to innovate. These programs invest in employees’ ideas and passions to unlock everything from customer experience improvements to product enhancements and full-blown internal startups that are then launched from within the company.Example: Adobe’s Kickbox program is widely recognized as the leading program. Read: Exploring the Intrapreneurial Way in Large Organizations

4. Open Innovation: Hosted Accelerator or Corporate Incubator

Hosted inside a corporate office, large corporations invite startups to embed at their physical locations and provide them with funding, corporate support, and other perks. This brings innovative startups inside a large company for everything from overnight hackathons to long-term programs. Other variations include online open-innovation programs that request – and often reward –ideas from the crowd.Example: Allianz Digital Labs in Munich hosts startups, and GE Garages enables startups to partner.

5. Innovation Tours

Frequently inspiration comes from outside, not within. Corporate leaders tour innovative organizations, companies, and regions to discover trends in various industries, learn from speakers, meet partners, and be inspired as they immerse themselves in innovation culture.Example: European-based WDHB and nexxworks tour executives in Silicon Valley and beyond. See an example of an innovation lab tour from the University of California San Diego here.

6. Innovation Outpost

A dedicated physical office, such as in Silicon Valley or wherever innovation happens in their market, staffed with corporate innovation professionals whose job is to sense what’s occurring in a market, connect with local startups, and integrate programs back into the corporate HQ. Some of them host partners, events, and startups, thereby spreading the function to Internal Accelerator programs. An Innovation Outpost is typically managed by employees – unlike an External Accelerator, which is run by a third party.Example: Swisscom, Vodafone, and Nestle have opened Silicon Valley outposts. Read Evangelos Simoudis’ blog for insights.

7. External Accelerator

Corporations partner with third-party accelerators to provide sponsorship and/or funding in exchange for relationships with startups and integration opportunities. Corporate innovation professionals often embed themselves in Accelerator offices, fostering relationships with local startups. These External Accelerators are run by third parties – unlike Innovation Outposts, which are managed by employees.Example: Plug and Play, Singularity University, Rocketspace, Runway, 500 Startups, Betaworks, and more.

8. Technology Education, University Partnership

Corporations can tap into new graduates, early-stage projects and companies, and the network of an established educational institution. In addition to traditional universities, there are new private versions opening up that are dedicated solely to technology training, like Galvanize and General Assembly.Example: General Assembly, Galvanize, and most tech- or business-focused universities.

9. Investment

Many corporations place bets among the startup ecosystem, with both small amounts for early-stage startups and larger amounts of corporate funding that yields market data, creates opportunities for follow-on investments, and blocks competitors.Example: Intel Capital is a leader in direct corporate investments.

10. Acquisition

Rather than build innovation from the inside, many corporations acquire successful startups and then integrate. While often expensive, the startup is often already successful, and the acquisition can help the startup scale further.Example: As one example, Dollar Shave Club was purchased by Unilever for a reported $1B.

Source: Jeremiah Owyang. Some additional links also applied where relevant.

Are we fragmenting our innovation activities or applying a solution to a specific problem?

We do have to guard against “simply” adopting one type of innovation over another. It needs a deeper understanding of what we want to achieve, and then we seek out the tools, methodologies, and solutions. Diving in and experimenting has some value, but some clarity in what you want to build in innovation capacity makes sense first.

If we apply one approach, we are in danger of “shoehorning” innovation to fit a program. Maybe we are then not allowing the idea or innovation we had in mind to evolve in its own way – in its natural path. Perhaps we are only responding to a top-down pressure of fitting initiatives into that same pattern of seeking efficiencies that fit within an organizational design that will eventually choke innovation.

We need a new call for change based on a focused innovation mindset

For the majority today, we are at this countervailing point where innovation is in need of breaking the impasse. We need a different, more holistic set of solutions to manage innovation.

What I want to look at in a series of articles in the coming months is how we can manage risk from innovation differently. How can we build and accelerate different corporate innovation programs? How can we begin to re-equip our talent to build their capabilities and capacities and to recognize that we can design innovation differently to engage in innovation in more transparent, more structured, and more open ways? How can we design our programs more purposefully?

There is a call for finding more methods and approaches that are open and scale well. We need to reset the baseline of innovation through knowledge, collaborations, and building capabilities. We need to build networks and systems designed for this explicit innovation purpose. Let us finally separate “extraction” from “exploration” in the design of companies. We need to strip away complexity within the way we practice innovation today and connect “it” all up in a new innovative design.

This post was originally provided for Hype and has been republished here, via paul4innovating.com.

WRITTEN BY
Guest contributor Paul Hobcraft
Guest contributor Paul Hobcraft
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December 19, 2018
Strategy