It has become fashionable for pundits, consultants, and startups to decry the ills of “Corporate Innovation Theater.” Some opine that corporate Innovations Labs don’t work, and never will. Others suggest corporation innovation is an oxymoron and big companies shouldn’t even try to innovate, period.
But if you’re on the corporate side, doing nothing is not an option. The megatrends of today are ratcheting up the pressure to reinvent, reimagine, and reinvigorate your business. Whether it’s the Internet of Things (IoT), autonomous vehicles, distributed ledger technologies, various applications of big data, etc.—our rapidly digitizing world is awash in threats and opportunities.
The problem is that startups are seizing these opportunities too quickly for plodding corporations to keep up. In a world where change is now fast, fluid, and multi-dimensional, large enterprises must become fast, nimble, and decentralized enough to pivot like a startup, without squandering the powerful execution levers and economies-of-scale they already enjoy.
Sadly, too many of today’s well-intentioned Digital- and Innovation-oriented change initiatives fall flat, doomed by subtle, yet deep-seated, cultural resistance. It’s not that Innovation Theater or Corporate Innovation Labs are “wrong” or a bad idea. It’s that they don’t go far enough.
Not ‘Theater’—But Also ‘Not Enough’
Not long ago, a company I know was in the early stages of a major innovation push. They were the worldwide leader in a B2B product category with a market size of $2-3B. They had the strategic foresight to recognize their space would soon undergo a massive shift—from making “dumb” devices to selling smart solutions enabled by IoT and big data.
Led by the CEO, with direct support from the board, the company formed a product innovation team to engineer a prototype from the ground up. They knew would change their business model from selling products to delivering services. For this, they needed to rework the financial, sales, and support models. When everything was in place, they launched a private beta with their most trusted customers. It was a smash success as customers were tripping over each other to be first to the full rollout.
That’s when the problems started.
The core product innovation team was about 20 people. Plenty enough to prototype a new product line, but not nearly enough to build and scale a new business. The plan was to prove the viability of their new approach, and then partner with mainline business functions—manufacturing, marketing, sales, support—to launch and scale the new business model in the marketplace.
In the course of the internal transition, delays crept in. Production was behind and timelines kept pushing back. Engineers said the company had lost its way by straying from its strengths. The support organization struggled to adapt, professing an inability to understand the new solution, much less support it capably.
The only team with enthusiasm for the new solution was sales. Every day, customers would ask when their rollout would happen. Account managers were forced to offer one excuse after another. Eventually, customers defected. Word leaked to competitors about the revolutionary new solution. The No. 2 company in the space saw an opportunity, rushed a knockoff version into production, and beat the original innovator to market.
What started as a smart, inspired growth strategy, and continued with excellent work from the product innovation team, went off the rails. Two years into the journey, the company had not only failed to reap any benefits from their strategy, but had also gifted the innovator’s pole position to their competition.
Why Continuous Reinvention matters
The haters out there will use this story to flog their preferred narrative: Corporations can’t innovate. Better leave the innovating to the startups.
This is a dangerous idea. Not so much because it’s disingenuous and intellectually lazy—which it is—but because it’s incorrect.
We’ve seen plenty of companies avoid these pitfalls. They share a common realization that chartering an Innovation team or launching an Innovation Lab is not enough—nor is creating an Idea Management process, instituting a Design Thinking curriculum, or introducing HR incentives for innovation. None of these surpass the threshold required for an organization to work more collaboratively together, to embrace new ideas and fresh approaches together, or to take calculated risks more often together.
What’s required is a coordinated innovation program focused on instilling an ethic of Continuous Reinvention into your organization.
“Continuous reinvention” is different than a normal “change or transformation” initiative. It’s not based on the latest fads, nor is it designed to fade into the background over time. It’s the ongoing ability for your organization to innovate constantly – at any time, in any part of the business, at any level of scale, for any reason—and often in parallel. It does not require CEO approval, and it is not a special initiative or skunkworks project. It is woven into the fabric of the organization just as much as Marketing, Sales, and Finance.
Along with strong and consistent leadership support, there are two ingredients that you need.
First, you need to build a full-fledged corporate innovation program. Organizations don’t start innovating just because the CEO asked nicely, nor because the board forced them to do it. They innovate because there was an explicit, empowered, concerted effort to accomplish specific innovation goals not likely achievable through existing levers or processes. Over time, this innovation program tends to evolve into a new internal function, or an additional piece of an existing unit like technology, strategy, or marketing. Its role is to champion and incubate innovative projects and initiatives – i.e., efforts which are clearly important for the company’s future, but which don’t fit neatly into any other group’s responsibilities or incentives.
Second, you will need an innovation platform—both the collaboration software, and the supporting “business system” of processes it enables. A major aspect of success for nearly any long-term innovation program is a platform of engagement to liaise effectively with other divisions and departments—by collecting and developing ideas, driving innovation development projects, and coordinating scale and launch of the most promising prototypes. As we saw in the story above, if the innovation group is too disconnected from the rest of the organization, it will be seen as a foreign body to be rejected. R&D, Engineering, Marketing, Sales, Finance, Operations, Production, Support, HR – all of these groups deserve to be important innovation stakeholders and collaborators. If the innovation group can find common cause with their colleagues by driving engagement and partnership in a broader set of innovation objectives, they are likely to succeed. If they fail to do so, their ultimate failure is all but assured.
That may sound like a lot—and it is. But it’s what actually works. The alternative is to make a half-hearted attempt at “innovation,” wait two to three years until you know it’s failed, then try to deflect blame. At best, you’ll be labeled as Corporate Innovation Theater and we’ll all have a good laugh at your expense. Worst case, you’ll be out a job, your company will be out of business, and you will be the next cautionary tale alongside Kodak, Borders, Blockbuster, and the like.
The choice is yours.
Chris Townsend is the Chief Marketing Officer of Imaginatik. Innovation Leader regularly publishes Thought Leadership pieces written by our Strategic Partner firms.