how can companies develop their
capability to innovate?
Mart Kikas, Lecturer, Estonian Business School
This article was first published in 2020 in the Entrepreneurial Mindset Network eZINE Volume 3 no 3
Mart Kikas from Estonia is the Senior Innovation Coach and Managing Partner at the Academy of Innovation Coaching. In this article, Mart takes a focus on the second essential entrepreneurial behaviour from our MINDSET mnemonic, [I] Innovate, and considers the steps companies can take to generate more successful innovation…
Executives are typically doing a good job at managing existing business, but the omnipresent need for growth requires ever more from them. Growth opportunities by way of product development and tweaking the existing business models have usually already been realised. Companies know well that today’s products, services and business models are going to have a fixed lifespan and are ultimately going to fade. They know they need to continually change, reinvent and transform themselves by way of innovation.
Many companies have some form of innovation initiative in place, hoping these will lead to the next “big thing”. Some are pouring funding into R&D, others are training teams and setting up new innovation processes.
Image credit: Pixabay
However, for most companies the failure rates of even well-funded corporate innovation projects are above 80%. With all their resources, experience and talent, too many companies have failed spectacularly in their attempts at innovation. Some have then given up and declared that they’ve given innovation a go, but it doesn’t work.
Researchers have identified several causes for the failure of corporate innovation. The problem is not a lack of ideas, but vague and haphazard implementation. The root cause is the lack of proper innovation strategy, innovation culture, and innovation structure. This means there is a big gap between executives’ acknowledged need for innovation and the companies’ capabilities to actually do it. Also, if companies are overly protective of the core business, this will limit the pace of change.
Many companies engage in a sort of “innovation theatre” (e.g. massive company-wide calls for ideas, internal hackathons or pilgrimage-like trips to Silicon Valley) which creates little if any lasting impact.
So what is the way forward? Companies that are successful at innovation have a strong mandate for innovation, usually from the board of directors, and the CEO who acts as the innovation champion. They have innovation embedded in their strategy and have in place the right culture and structure to enable innovation.
To move forward, towards more successful levels of innovation, companies should:
>Recognise that innovation isn’t about pushing the existing business aside but building on it and expanding it into the future.
>Understand that innovation can be managed and innovation competence of employees can be developed.
>Take the reins of innovation, become innovation champions. If innovation is not fostered from the top, it’s not going to happen.
>Stop thinking of innovation as the outcome. Innovation should be seen as a capability of an organisation.◼️