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Rethinking the Act of Innovation

Most innovation centers failed to genuinely innovate – Now let’s fix it

What worked for startups can now also work for enterprises. While the innovation process, purpose, and reasoning should be the same, the leadership structure is very different. Over the past four years, we learned so much about the difference between innovation in corporations and in startups that today realize: Enterprises had no realistic chance to be innovative – even when acquiring a startup. That difference requires an understanding of how innovative ideas are created, getting your c-level involved in crafting an innovation mandate, and redefining your innovation process to focus on your customer’s true needs and dreams. It’s time to rethink the act of innovation and pursue genuine groundbreaking innovation. 

How ideas get created

Neuroscience had the single biggest impact on our modern understanding of innovation. One key aspect is the realization that ideas don’t come randomly and there are no “magic ideas out of the blue”. The brain composes ideas from past experiences and those compositions represent the power and the limit of our creativity. We cannot have ideas about situations that we have never experienced. Every successful innovation started by observing and understanding an existing problem. If there is no problem to solve, there is no success to be gained. When we know how innovation is created, we can request certain results, we can request insights, and measure and manage the effort. Most importantly executives, now know what they can expect or request from an innovation effort. This understanding drives an entirely different ideation process and calls for a very different innovation process in general: it requires CEO and customers involvement.

Innovation is a CEO mandate

Genuine Innovation is a long-term engagement. It usually takes less than six months to create an innovative solution, but on average 5 to 10 years to be recognized as an innovation in the market. Innovation is the duality of brilliant ideation and relentless execution. Even the fastest startups took 7 to 10 years to become market leaders. Moreover, most of today’s innovations of significance consumed more than a billion dollars to become successful. Capital requirements of that size cannot be decided by an innovation department. With today’s knowledge of how innovative ideas can be stimulated and how those ideas could be brought to market, repeatability, the act of innovation is changing profoundly – even for startups. With that, another key consideration needs to be made: An innovation team that comes up with a new idea must also bring it successfully to market. The existing sales, marketing, production, and logistics departments do not offer any leverage – it’s the opposite; they cannot bring a highly innovative solution to market and sell conventional products to conventional buyers. It’s about Time, Capital, and Structure decisions that CEOs together with their boards can only make.

For more information and additional insights download the “Innovation is a CEO mandate” Whitepaper.

It’s all about the customer

By working with thousands of startups, we learned that innovation success stemmed from a deep understanding of the customer’s problems. This knowledge, combined with our understanding of how innovative ideas are composed, made us realize there was a need for completely rethinking innovation. While corporate innovation labs either spend lots of time finding ideas, experimenting or randomly ideating, the top unicorns developed brilliant ideas based on their research and moved on to relentless execution. Corporate innovation labs try to solve problems they believe exist. They follow the model of “wouldn’t it be cool if we could…” and they love to play all kinds of “thinking games”. They heard about “fail and fail fast”, “pivoting” and “experimenting” without ever questioning if that is actually delivering results.  They copy the 90% of startups that fail without even knowing. 

Successful entrepreneurs look intensely into what their designated audience is doing, what they like and dislike, what they think, and how they see their future. They may not build what their customers asked for, but develop and deliver a solution that is in their dreams. 

Stop looking at what others do

find out what your customers are dreaming about.

Solve the problems they have that others could not solve yet.

 

You can catch up with the market to survive by following what others do. But the financial market will recognize it accordingly. A follower won’t beat the innovator. Rethink the act of innovation – define the innovation culture at the top, listen to your customers and stop being a follower.

Authored by: Alyssa Wengi

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Main Innovation Challenges

The business world has gone through a drastic change in the past few years, boosted by the Covid-19 pandemic – a whole new world full of opportunities, changes, and challenges, especially innovation challenges. To be able to reach or to stay on top of the market one thing is key – groundbreaking and genuine innovation. The pressure to innovate has risen dramatically in the past 10 years. The term innovation itself is used in many ways, as a mantra, as working style, or simply as a marketing campaign. Bringing disruptive innovation to life has always been a challenge, but what exactly are the main hurdles you and your team must overcome to successfully innovate?

During the past 6 months, we were able to chat and interview influential innovation leaders from companies such as ROCHE, DB Schenker, Sony, LG Electronics, Siemens, Coca Cola, and many more. Obviously, every innovation team has different subjects and issues they are facing, but comparing the general conflict, each company has similar problems in the innovation space.

By being able to speak to these different innovation team members we concluded that the overall main “innovation blocker” is the so-called innovation culture, better said, the missing innovation culture.

Innovation Culture

When talking about innovation culture, we are talking about norms, values, ​​and attitudes, shaping the behavior of all employees, especially those who are involved in the innovation process. Since the innovation process is not limited to the core innovation team and this process is cross-sectional, the innovation culture as such can be described as a cross-dimensional culture.

Describing the key points of the culture is easier than establishing this value system. So,  when talking about innovation culture – what are the main challenges why innovation gets stuck? We defined four challenges:

(1) Top-down approach

Successful, groundbreaking innovation is determined by the ability of the team and their culture. To bring out the best you have to push and give room for these norms, values, and attitudes to grow and to become the standard. Therefore, Innovation is a CEO mandate. Only the CEO and their board can take the much-needed decision in time, capital, and structure.

“Innovation success is not about an idea creation team and taking it to market by the existing organization. Creating an innovation center independent of the corporate organization that is responsible for identifying a viable innovation opportunity and bringing it successfully to market can only be made by the C-Level.”

– Axel Schultze

(2) There is no time to innovate

In many cases, the cross-dimensional innovation team, from the CEO to the working student, is fully stuffed with finding new ways of improving current products or services. They are too busy to think of innovation in a way where opportunities are discovered, reviewed, developed, and validated. Unfortunately, innovation has even been outsourced quite a lot to universities or startups.

(3) Fail and fail fast

Obviously, the pressure to innovate and stay relevant in the market has risen in the past years. Managers tried different techniques, took closer looks at the startup world and how their management is innovative. This led to experimenting with playgrounds, where innovation team members are hunting for inspirations and the next big thing; pivoting, brainstorming, and massive prototyping. These newfound Innovation Hubs, which tend to go back and forth with ideas – prototyping, idea – prototyping, and so forth with every little long-term success. By changing the process into a more structured way, combining research and customer feedback before prototyping, the team is able to save a lot of time, money and is not limited to just “experiment”.

(4) The initial value of an idea is zero

Your idea or my idea?  We are living in a world where recognition for something is key. With this value in the back of your mind, people tend to keep ideas secret because they are scared that somebody is stealing their intellectual property. BUT in a successful and inspiring innovation culture, it should not matter who had the idea first.

“The innovation team must know that all ideas come from past experiences and are composed of millions of impressions, often co-produced by other people. […] Teammates should be rewarded for ideas but also equally rewarded for building new ideas based on previous ideas from other teammates or anybody else for that matter.”

– Axel Schultze

Groundbreaking innovation is not only about the original idea, it’s about what you and your team do with this idea. The value of the idea is created through relentless execution and open innovation by taking into consideration what your customer wants.

Despite these main challenges, genuine innovation can still be created with the right innovation culture and innovation mandate. Rethink innovation from the ground up and discover why innovation is a CEO mandate in our latest whitepaper, “Innovation is a CEO Mandate.”

Authored by: Anna Ranke

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