I had an interesting discussion recently in which I heard arguments why big companies are not good at innovation and why this will not change in the future, which belongs to the more nimble and adaptive startups.
I fully understand why many people do not believe in the innovation capabilities of big companies today and in the future, but I have faith in them. Things will change and we will see that big companies will improve significantly on their innovation efforts in the next 3-7 years.
There is a perfect storm brewing for this and here you get some of the elements that I see in this storm:
The transparency of knowledge will change innovation approaches: I see three megatrends that drive innovation today. The first two are openness and a more connected approach to business and innovation. The third one is a significantly increased level of transparency with regards to knowledge. New ideas and projects cannot be hidden for long anymore just as you can’t really hide successes and failures. This brings out a whole new level of business intelligence opportunities that everyone can act on and here I think big companies will be able to do well.
The acceptance of experimentation is increasing and this is not only about market-related offerings. We are now starting to see how companies innovate and experiment on their corporate structures and how they organize their resources and activities. The more we experiment in different areas the more we reduce the fear of failure, which creates a strong positive spiral effect for even more experimentation.
Disruption hits harder and faster. I am working with a concept I call the Slow / Quick Death scenario. Very few companies have a burning platform. Most companies do OK or better than that. However, given the smell of fast change and potential disruption that hangs heavily in the air they do sense that something is not right, but since this is not deemed critical little happens. They don’t start to change things and prepare their organization and people for different times. Hence, they face a scenario where corporate death is barely visible and approaching slowly at first, but when disruption hits – and it will do so harder and faster than ever before – they either die fast or become irrelevant because they do not have an adaptive organization in place.
The good thing is that some big companies are catching up this and more will follow.
A new generation of executives is coming. Most top executives today are 50+, male and white. This will change in the coming years and as a new and more diverse generation settles in, we will also have many more executives with a solid understanding of what we can call modern or contemporary corporate innovation management.
Innovation is being separated from R&D. There is a growing understanding – at last – that innovation is not necessarily the same as R&D. It goes beyond the important – but not almighty – R&D function as we also look into processes, services and business models. This is also important because it moves the center of attention and responsibility away from the CTO office, which can help bring the innovation efforts closer to other important business functions.
There is less talk about building an innovation culture. Many companies have learned the hard way that it is very difficult to develop a “culture of innovation”. One key reason is that very few people know what this looks like as the term innovation itself is so vague. How can you create a culture of innovation if you don’t know what it should look like?
At the same time, we see that the front end of innovation (getting ideas and moving them through the early phases) is getting to be the easier part of innovation and thus more attention is placed on the back end – the execution – of innovation. When more and more companies get into this mode, they start to develop organizations that focus on four key capabilities; they listen better (building on the transparency issues), they adapt better, they experiment – and learn from this – better and they get better at execution. They are building a different culture within their organization, but it is not called a culture of innovation. It is much more directed getting things done.
I will add more on this topic in the coming months, but here you got my starters. Your perspectives are appreciated.
As a closing remark: Many people will counter my arguments and provide reasons why big companies will never become agile innovators. Bring on your arguments and let’s have a good exchange on this.
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