Unlocking corporate innovation
By Liz Derks
Change is happening faster than ever. From Schumpeter (1942) identifying “gales of creative destruction” lasting fifteen years to Clay Christensen (1995) describing disruptive innovation cycles of five to seven years; we are currently in an era where any innovation could impact existing markets in as little as a year. Needless to say, this leaves a rather small window of opportunity to get in on the action, especially for large, risk-averse corporations. In preparation for my new role as consultant at BlinkLane Consulting, now known as Highberg, I recently participated in its Continuous Innovation (COIN) training. Having supported startups and small businesses in their innovation efforts over the past years the jargon, rituals and mechanisms were far from unfamiliar to me. Having these placed in a comprehensive framework, designed to create a continuous flow of idea development in a corporate setting, however, was eye-opening. Find below some of my key take-aways.
Create a risk-averse organization that takes risks in a controlled manner
Some of the biggest hurdles in getting startups and corporates to collaborate are often the corporates’ rigid systems and lacking appetite for taking risks. However, this rigidity and risk-averse attitude are expected, and in fact very useful, mechanisms to shield and protect the significant amount of capital and resources invested to get these large organizations to where they are today. Nonetheless, it does not mean that developing “risky” innovative ideas is completely off the table. It is the balancing act of creating an ambidextrous organization, where ambidexterity describes the organizational capability of improving the core business (exploitation) while simultaneously creating new businesses (exploration) (Burgers & Jansen, 2008). It means creating an organization that is risk-averse but takes risks nevertheless in a controlled and predictable manner. The COIN Framework supports this by providing a process and structure that make innovation an integral part of the corporate engine.
Innovation is not about bright ideas and creativity; it is about freeing up capacity
Whereas in the past innovation was often thought of as an unstructured, creative process, there are now plenty of resources out there suggesting a more systematic approach. From Eric Ries’ Lean Startup (2011) to Alex Osterwalder’s Business Model Canvas (2010); we know we can methodically validate and test ideas by leveraging short build-measure-learn loops, often with much fewer financial resources than one would expect. One thing you do need, however, are PEOPLE putting in TIME. In a corporate setting where business-as-usual and operational demands are never-ending, finding the time to develop an idea is challenging. The COIN Framework allows a multidisciplinary team consisting of 5-7 people to commit to work on the innovation for at least one dedicated day a week, over the duration of three SWICHs (Six-Week Innovation CHallenge). During these SWICHs experiments are carried out to test the feasibility (can we build this?) and value (will it create value for the customer?) of the innovation, using Lean Startup principles. This creates short, result-driven development cycles of which the outcomes are presented to the Continuous Innovation Board (CIB) every six weeks, to decide whether further time and resources should be invested.
Shift the focus to non-financial metrics
In the early stages of innovation development upside financial potential is hard to estimate; a clear financial ROI might only be generated at a later stage, and could take years rather than months. In startups, it is common early-on to have non-financial metrics in place when the innovation is being tested for feasibility and value to establish product-market fit. Even in the so-called “scale-up stage” where often pricing is tested, the focus is on non-financial growth metrics indicating new and repeat usage of the innovation. However, in a large corporate organization where financial targets and ROI are the number one priority it might be hard to escape the push for revenue/profit, even in the early stages. It is important to realize that this short-term financial focus undermines the potential (much larger) long-term value of the innovation, by placing limits on the possibilities to explore different applications, business models, and customer segments. This, in turn, results in an innovation with limited revenue/profits. When deciding whether to invest additional time and resources either in the innovation or in efficiency-generating activities (usually with a known and bigger financial impact), the innovation will no doubt draw the short straw and likely die a slow death before realizing its full potential. Avoiding this requires a mindset shift from corporate management on an operational level when measuring the progress of individual innovations, and the COIN Framework encourages this shift on a more strategic level through use of lean budgeting.
The COIN Framework as a catalyst for change
Turning innovation into business-as-usual requires commitment and effort on all levels of an organization. The COIN Framework stipulates which action is required by whom, at what time, and with what outcomes on a strategic, portfolio and innovation team level. Providing this kind of process and predictability to a line of business that is generally perceived as unstructured and uncertain is one of the key benefits of the COIN Framework. However, even more so, involving all levels of an organization means that the impact of the COIN Framework goes beyond the teams developing the individual innovations. It instills an organization-wide culture of innovation; a culture where people come forward with their ideas, have a fair opportunity and the resources to test them, and where innovation learnings and experiences are shared back with the rest of the organization. And in an era where innovation cycles are only getting shorter, this might just be what you need.
Are you interested in learning how the COIN Framework could help your organization in creating a continuous flow of idea development? Visit www.continuousinnovation.net and join the conversation LinkedIn.
Burgers, Henri and Jansen, Justin J.P. (2008) "Organizational ambidexterity and corporate entrepreneurship: the different effects on venturing, innovation and renewal processes. Frontiers of Entrepreneurship Research: Vol 28: Iss. 19, Article 2.
Christensen, Clayton M.; Bower, Joseph L. (January–February 1995), "Disruptive technologies: catching the wave", Harvard Business Review.
Osterwalder, A., Pigneur, Y., In Clark, T., & Smith, A. (2010). Business model generation: A handbook for visionaries, game changers, and challengers.
Ries, E. (2011). The lean startup: How today's entrepreneurs use continuous innovation to create radically successful businesses. New York: Crown Business.
Schumpeter, J. (1942). Capitalism, socialism and democracy. New York: Harper & Bros.