Corporate Innovation: Hard to Define, But You Know It When You See It

Corporate innovation can be tricky to define. Merriam-Webster defines it as “a new method, idea or product,” but that seems to miss its true essence. According to McKinsey, “innovation is the ability to conceive, develop, deliver and scale new products, services, processes, and business models for customers.” This gets closer, but I disagree that it’s only about customers — innovation can happen on many different levels.

Part of the problem with finding the true definition of innovation is that it is hard to measure or even spot — and it can mean different things to different people. 

At its essence, however, I think it goes far beyond a “new” anything. Instead, we can understand it by the traits that innovators embody: an inability to accept the status quo, to constantly seek improvement, to be willing to take risks and to be a visionary at heart.

Why Innovation Is a Competitive Differentiator

Whatever that spark of innovation is, one thing is for sure: building a corporate innovation program — however formal or informal — is crucial to stay competitive and foster growth today. Companies must continuously innovate to attract new forms of revenue, upsell existing customers and onboard new ones. But it's also what enables them to attract the best talent, and keep current employees satisfied through new processes or ways of working. 

A McKinsey study found that companies that harness innovation see a substantial performance edge that separates them from others. The study revealed that “mastering innovation can generate economic profit that is 2.4 times higher than that of other players.” While structured innovation programs are becoming de rigueur with many enterprises today, embracing and executing innovation programs doesn’t have to be restricted to the largest of enterprises. Companies of all sizes can instill a culture of innovation.

Related Article: Innovation Can Be Taught. And Measured

How to Build an Innovation Mindset

What does it take to build a successful innovation mindset? Consider some of the following best practices.

• Establish a strong service design organization. Organizations that begin new technology initiatives with a service design focus often realize success with less risk faster than those that dive right in. Beginning with service design means identifying the business problem and involving all key stakeholders to imagine what the solution looks like. Even with a solid innovation team, collaboration with service design is essential in order to bring the innovation to life.
• Link innovation to strategy. Academic and author David Rogers believes that the root cause of a failure to innovate is a disconnect between strategy and innovation. He writes in a Harvard Business Review article, “companies must learn to link every innovation effort to two pillars of strategy: a clear set of growth priorities, and an understanding of the firm’s unique advantages.” 
• Secure executive buy-in. Successful innovation programs start from the top. Leadership commitment is essential to allocate resources and funding, set goals and create a culture that rewards experimentation and risk-taking. Innovation should become part of the corporate narrative and central to the company's overall strategic objectives.
• Remove the siloes of innovation. Innovation thrives when diverse perspectives come together. It’s important to enable collaboration between different line-of-business departments, as well as the Finance department, IT department, Marketing team and others.  
• Secure resources. Innovation programs need to be treated just like every other business function, with dedicated resources, in terms of a budget and team. This includes dedicated R&D funding, centers of excellence or professional staff whose primary focus is on innovation.
• Incentivize and reward innovation. Regardless of whether or not a formal innovation program is in place, it’s important to recognize and reward employees for their innovative endeavors. Incentives could range from financial rewards to public recognition or opportunities for career advancement. Celebrating successes fosters a culture of innovation.
• Keep up the momentum. The idea of focused innovation can often be placed on the sidelines when companies are involved in major product launches or striving to reach quarterly revenue goals. Yet, an effective innovation program requires continuous effort. Organizations should regularly review and refine the program based on feedback and results. An interesting point brought up in a Deloitte Innovation Study is that “innovation is not creating the next Post-it — it’s incremental changes." Organizations need to begin small and incrementally evolve the innovation.

Related Show: Andrew Lindsay, In Defense of Design Thinking

Corporate Accelerators Can Drive Innovation

For large monolithic companies, one way that innovation is thriving is through the concept of corporate accelerators, which enable them to foster innovation with a start-up. Corporate accelerator programs support a startup through access to funding, IP and operational resources, while bringing a spirit of innovation to the organization, helping them bring to fruition new technologies, solutions and services to drive their own innovation culture.

Corporate accelerators are becoming a key strategy for building a culture of innovation within established companies, yet they require that the two entities work together to define clear goals, key performance indicators and timelines, so that the collaboration is mutually beneficial.

Building a corporate innovation program is how today’s technology companies are ensuring that innovation becomes a key corporate mission upheld across the organization to drive growth and competitive advantage. Establishing a dedicated team, involving stakeholders across the company, but led by a chief innovation officer or service design team, is how innovation becomes a key corporate role — as important as Finance, IT, Marketing or other functions. 

Steve Jobs once said, “innovation distinguishes between a leader and a follower.” Companies that lead make true innovation not only their priority, but their secret to success. 

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