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The 5 Misconceptions in Corporate Innovation (and How to Overcome Them)

August 18, 2022
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After several decades working in the trenches as an entrepreneur and corporate innovator, I’ve collected — and rejected — plenty of conventional wisdom about how to cultivate important new ideas inside a large organization.

To be helpful, I wanted to lay out five of the biggest misconceptions from this canon of conventional wisdom, and how you can avoid being tripped up as you seek to deliver value.

1.    All innovation should be done through operational teams. Otherwise, it will be a failure.

Mohan Nair, CEO and Founder of Emerge Inc.

Operating leaders want to see themselves as high-performance innovators, and they do not enjoy anything out of their control or influence. A separate innovation team threatens everyone — from marketing, to engineering, to finance. Being functionally-oriented, operating leaders believe innovation is embedded in their toolkit. Hence, a separate team signifies failure to perform. 

Mitigations: Innovate with them, as a support to their operational needs. Give them some view into competencies that they do not have yet. Educate them on-the-job. Focus on pain points they have, and remove them. Work with the teams below these leaders, because they are often more willing to accept assistance.

2.    Innovators are only about exploring ideas; they’re dreamers who just never get stuff done.

Initiatives to spur more innovation are sometimes excessively glorified: innovators are positioned as elite and special. They get a lot of attention. They get the beanbag chairs and fancy rolling whiteboards. They “design think,” while the operational teams live in hellish cubicles and are pulled into meetings that go nowhere.

Mitigations: Innovation is an overused, but underutilized word. The language fails us. Do not emphasize the free-range aspects of innovation, but bring in operationally sensitive yet relevant players into the team. Also, add to your domain expertise with specialists. Bring operational players, in rotation, to spend time with innovation leaders daily. They are just people helping colleagues to develop their ideas. Invite them to see how you are disciplined in dreaming, evaluating, and testing — and show your execution skills.

3.    Separate “centers of excellence” are useless after a while, because they become cost centers.

Often, boards will ask new innovation leaders when they think they have accomplished their job. It’s a subtle way of reminding these leaders that they are not permanent. Many institutions add competency centers because they want that competency focused onto the operating teams, so that they can absorb learning (or because they just believe it never will be truly absorbed.) 

Mitigations: Innovation should be something everyone can attempt and accomplish, but to be the best in your industry, you need to get colleagues to appreciate this as an urgently needed and enduring competency. Many departments and business units are doing their best at incremental innovation. But there is no time for operating leaders to gather their creativity and define the future in big leaps. We cannot wait. We must find the future business model and connect it to present-day discussions, strategy, and funding decisions.

4.    Innovation teams seldom produce outcomes, but rather generate lot of unimplementable concepts that do not scale.

Generally, there is too much “innovation theater” rather than output going on in innovation teams. Many pursue different ways to generate ideas, but lack the ability to effectively launch things that generate revenue or save on costs. When operating teams are constantly constrained by cost and value decisions, it is difficult to watch innovation teams “getting away with it.”

Mitigations: Let’s be very clear about the charter of the innovation team. It is to identify, define, test, and prototype big leaps that challenge the current business models and products. This requires a longer runway than classical product development cycles. The innovation team must get funded to build proof of concepts, and after that, the decision about what comes next is up to our leaders and the CEO. The operating teams must suspend judgement, and be ready to assist — not resist. 

5.    It’s too expensive to fund a big idea, because we compete with venture capital-funded startups with committed investors and follow-through. Why build anything except our core products?

Traditional VCs (and some corporate VCs) will always argue that they are funding far more talented startups, and supporting them with greater funding resources, than internal corporate teams can access. That is based on the belief that corporate leaders manage portfolios of current offerings, rather than making stuff that sings to future markets and customers. So these corporate leaders perceive it best just to focus on current inside programs, and perhaps occasionally partner with, or be an early customer for, outside startups.

Mitigations: There are some grains of truth in this misconception. But the misconception is that it’s simple for internal leaders to identify and partner with outside makers of markets. If the internal teams are unable to experiment and build potentially transformative prototypes, how can they expect to partner well? Experts leading experts is what Apple believes in. Steve Jobs fired all his GMs rapidly after he returned. So in the future, a maker of markets will define and win the market. The leader of existing markets will hold onto today. Your goal: create makers and builders who will be able to partner intelligently when the need arises.

 

Mohan Nair, CEO of Emerge Inc., is regular guest columnist at IL. He is a three-time corporate executive, three-time startup CXO, seven-time corporate startup founder, and three-time author who has led innovation teams for over 10 years. Most recently, he was Chief Innovation Officer at Cambia Health Solutions.

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