There is a great balancing act that exists in the space of corporation innovation today.
The balancing act between delivering shareholder returns and therefore maximising profit, and the pursuit of a new competitive advantage that will position the company ahead of incumbents.
This is central to the current conundrums faced by would-be corporate innovators.
Although the balancing act is tough, conundrums of corporate innovation are no longer worth pondering. They are worth solving. And, to solve these conundrums, senior leadership and managers need to embrace a culture of continuous innovation.
A culture driven by long-term exploration and incubation needs to be introduced, and prioritised, along with quarterly earnings reports and stock price.
Understanding the need to deliver value through existing business models, to match or exceed market expectation, is essential for the corporate innovator, and as such, specific acknowledgement of the existing business model must be considered.
This means that the great balancing act is literally that, a balancing act between executing and optimising your current business model to align with fiscal expectations, and incubating and exploring business models around new ideas and highly valued problems in the eyes of your existing, or even potentially new and untapped, customer segments.
The focus on a new idea or problem requires commitments in resources and capital. However, these commitments should begin at a very small scale, and only once specific metrics are attained and a desired level of problem-solution or product-market fit is validated, should these efforts be executed at scale.
There are many risks associated with corporate innovation, with the risk of failure sitting close to or atop that list.
Some argue failure when trying something new is imminent.
But, it’s the context of that failure that really matters, as specific failures can be productive if they are experienced early, at low scale, and analysed to ensure learning is achieved.
The continuous feedback loop regular experimentation provides is one that will assist accelerated learning, and quickly deliver some insight around the validity of your initial hypothesis.
We’re not all Google, and can’t just scrap new initiatives after significant investment is made, and expect little backfire.
We therefore need to de-risk through experimentation, exploration, and the adoption of new tools and methodologies.
Innovation attempts need to be supported, and even driven by, senior leadership. And, there needs to be incentives to do so.
Each organisation must establish it’s own incentives, but continuous improvement, gaining a competitive advantage and keeping your finger constantly on the pulse should at least offer enough initial incentive to convince executives to pursue innovation.
An interesting perspective on this can be seen here from Eric Ries.
The great balancing act exists, and, it needs to be addressed by all large companies looking to execute innovation.
Tools such as the business model canvas will help, as will methodologies like Design Thinking, Customer Development and Design Doing.
These tools and methodologies are the support mechanisms that make the great balancing act possible. Without the ability to rapidly test the validity of ideas and business models, the risk of corporate innovation is too high and subsequently, innovation attempts will be non-existent.