The leaders of a 25,000-person U.S. government organization had a serious problem. They were stuck with outdated hardware and software, sometimes dating back to the eighties. Their workforce did not seem capable of adapting, and frustrated younger employees were leaving for more promising opportunities. Their customers and partners were asking for increasingly complicated support using newer technologies that could not easily be purchased by their slow-moving procurement process. In short, everything seemed to be breaking all at once.
The first reaction was to hire management consultants. But after strategy sessions, executive interviews, and insightful presentations, the organization looked no different. The next step was bringing in innovation experts to speak at executive off-sites and during all-hands meetings. Again, there was no lasting change after the dust settled from these (admittedly inspirational) sessions. Finally they tried a few high-profile pilots with fast-growing technology companies. Despite some interesting early results, the potential improvements failed to materialize when it became clear how the full roll-out of these solutions would impact middle management.
Many organizations can tell a similar story. Underneath this picture of failed corporate innovation, however, a lot is changing. The initial popularity of innovation methodologies such as Design Thinking and The Lean Startup is waning. Also declining are the widespread use of hackathons, incubators, and accelerators by large corporates. Leaders are demanding more than “innovation theater.” They want to see consistent results, not grandiose visions. Outcomes, not ideas. In other words, corporate leaders have lost patience with innovators. They’re looking for a system on which they can rely for consistent results, time after time after time.
No one right now knows the exact innovation strategies that successful organizations will adopt to stay relevant. But there are clear trends that will inform the way that leaders adapt their organizations to a world of rapid and relentless change. In our work at BMNT, we’re seeing promising results when customers exploit these trends to their advantage.
Innovation will become the norm, rather than the exception.
Love it or hate it, Amazon epitomizes innovation. The company is a relentless engine, churning out new products in almost every possible category. Innovation is their default setting. Why? CEO Jeff Bezos explains the secret in his 2017 shareholder letter. He describes how customers are “divinely discontent” and that the key question for companies is “How do you stay ahead of ever-rising customer expectations?” To take advantage of endless needs, our customers learn to shift their focus from technologies to problems. They build internal capacity to diagnose and prioritize the critical problems that must be addressed, rather than pursuing “AI” or “Blockchain” along with the rest of the herd.
End-to-end systems will “eat” the innovation process, from ideation to sustainment.
Most innovation software is really Idea Management Software. While ideas are important, generating them is only a limited part of a company’s innovation process. Corporate leaders face much bigger challenges in the effective prioritization and resourcing of innovation projects, and in the transition from pilot to full-scale program. True end-to-end software options will soon emerge — powered by advances in data collection, storage and analysis — enabling the management of an entire innovation process. The first step toward this goal is rigorously assessing how resources are currently allocated, including which data are used to make decisions. Customers are often surprised to see how much they rely on intuition even when millions of dollars are being spent.
Technological innovation will be balanced by sociological innovation.
More experienced corporate innovators have learned the hard way that innovation depends on building teams with appropriate skills and incentives rather than the latest technologies. Gartner calculates that investing in people leads to “15 times more impact on the likelihood of success [than] changes in digital technologies.” With problem-centric innovation, identifying these key folks is crucial. There is a hidden coalition of users, partners, experts, and leaders that’s waiting to form around each important problem so they can validate and scale up solutions.
Business units will absorb activities that currently reside at the corporate level.
Corporate leaders are growing comfortable with empowering people spread across their organization. They will do this out of self-interest, though, rather than an abstract commitment to innovative principles. Each year technology gets cheaper, faster, and better. This means more innovations will fit into the criteria of near-term opportunities versus multi-year projects. Such opportunities are best pursued by the people who deal regularly with customers and operations. The key to working with personnel in business units is maximizing efficiency. Corporate innovation does not need to be a huge time commitment if the entire system is run well. In most roles, employees can integrate their innovation work — user interviews; short workshops; running small experiments; interpreting test data — with more traditional responsibilities.
Internal innovation will harmonize with external outreach.
Many large organizations have three broad pathways for pursuing innovation: internal projects; corporate venture capital; and mergers & acquisitions. These pathways are often run independent from one another, not as part of a strategy. The other four trends already mentioned — normalizing innovation, using end-to-end systems, having the right people, and activities driven by business units — align demand across the three channels by rigorously defining the problems that need to be solved. These clear signals enable each pathway to determine for themselves how they can best support the overall effort. For example, a problem can be validated with an internal project in coordination with corporate venture capital, generating additional investment criteria for an upcoming deal. The internal project team can then be tapped to mentor the startup that receives funding to ensure they get product feedback.
There are huge opportunities for corporate leaders to grow their businesses by harnessing innovation. The five trends discussed are driving the creation of new options for large organizations, and the strongest will stand the test of time. As a result, future corporate innovation will look very different than it does today, even though we don’t yet know who the winners will be. All we know is that there will be gigantic rewards for the people who figure it out first.
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