5 Traits of Great Corporate Innovation Programs
Startups are the next corporates, and corporates know it.
The average company lifespan on the S&P 500 Index is less than 20 years, less than a third of what it was 50 years ago. That’s the reality behind corporations’ drive to innovate. The corporation that fails to adapt constantly will not survive.
But how to build that culture of innovation? That’s the challenge that corporations face.
Rev1’s investor startup studio engages with corporate innovation partners and hundreds of entrepreneurs every year. Through this work, we’ve identified five characteristics and a collection of tips to help corporations innovate with better results.
1. Executive Buy-in Is a Must.
The greatest roadblock to innovation is inertia. CEOs and C-level executives set the pace and tone for innovation across the organization.
On any given day, managers and employees face competing priorities. Without deliberate executive guidance, the pressure to achieve near-term objectives can readily outweigh the motivation to invest in innovation projects. It takes executive leadership to create the flexibility or the mandate for employees to try an approach, a new process, or a new technology that they may not otherwise try.
CEOs and their direct reports who demonstrate that thinking about how to do things differently is important and it send a strong message to the rest of the organization. Almost by default, managers and employees begin to think about their day-to-day work differently, too.
2. Match Innovation Focus and Outcomes to Business Priorities.
It is common practice for corporations to attempt innovation with skunkworks, sending dozens or hundreds of employees to work off the main campus, unfettered and unrestricted on new ideas. Often missing in this approach, is enough ongoing engagement between the business and the “skunks” to define the problem being solved and to verify that the new approach will be something the business unit actually needs.
A company’s innovation team achieves better results when they dig in to validate the needs of their business units, whether the objective is to solve a problem for an internal department, serve a particular customer, or expand share in an existing or emerging market.
What are problem areas, use cases, or growth opportunities? Which challenges are the most pressing and will most impact the business if they are addressed TODAY? Where will the company best innovate internally? Where can external innovation (whether through partnerships, investments, or acquisitions) help?
3. Build Process and Infrastructure, Not Pomp and Circumstance.
Innovation is exciting and energizing. Opportunities abound to inspire employees and industry peers in rousing keynotes and townhalls—but presentations and discussions do not innovation make.
There is a time and place to promote a corporation’s innovation initiatives, but hype and activity cannot replace the systems, processes, and networks that truly drive innovation efforts. We have learned that developing an innovation process and structure that permeates the whole organization is the most effective and efficient way for a corporation to develop innovation as a core competency. The innovation process must involve the business units, with agreed-upon metrics and goals, measured and reported at every phase.
4. Engage and Innovate 52 Weeks a Year.
Innovation is not a spigot to be turned off and on. Innovation, like any other core business competency, is year-round. A corporation doesn’t develop products only in the wintertime or measure customer satisfaction just in July. Accounting processes aren’t relegated to tax season or hiring to the spring.
An innovation platform should be just as inviting to an opportunity in September as it is in March.
5. Build the Right Partnerships.
Leading innovation teams use a variety of tactics and structures. None perform at a high level by keeping everything internal. The right partner helps build process and programs that fit the company’s strategy and culture. From joint development to a joint venture, from investment to an acquisition, there is no one-size-fits-all.
External partners help corporations see around the corners. A development partner can bring focus to growth opportunities. A research institution can spinout technology with the potential to open new markets. An equity investment in the right startup can shift an entire industry.
Impactful corporate innovation is hard work, and it may be work that corporations don’t know how to do. Almost by default, corporations scale by hiring employees to specialize in a narrow set of activities with incredible efficiency. They build processes so they can build widgets, sell insurance, or distribute millions of pallets of consumer goods, but that also limits the skills and capacity required to be an innovation-driven company.
Rev1’s investor startup studio injects an entrepreneurial approach into the enterprise DNA. We are helping our corporate partners build lasting innovation infrastructure that leads to new technology, invest in startups that are creating entirely new industries, and acquire companies that are changing corporations’ bottom lines.