'Innovation' as a corporate practice first gained traction around 10-years ago, primarily in US-based multinationals. Programs were often started as C-suite pet projects, to quickly create the transformation narratives demanded by external and internal stakeholders. This was often in response to a rising tide of disruptive (technology driven) competitors that began to appear in almost every industry sector.
While these programs started with grand goals of introducing disruptive change, they quickly hit resistance by the core organization and ideas were scaled back to focus on incremental product/process improvements. Taken further, objectives around tackling disruptive competitors were replaced by softer objectives (such as employee engagement, site hits, etc.). These programs kept everyone happy for a while, but as the range of activities expanded and sunken investments piled up there was increased scrutiny from stakeholders who questioned the lack of hard business results.
The resulting tension often led to changes in innovation program actions, focus, and leadership. These were often knee-jerk reactions, with little strategic foresight or building of connections to business units and their goals.
About 5-years ago the luster of corporate innovation programs began to fade as leadership’s attention shifted towards capturing value from digital channels. At this point the earlier emerging startups were growing and maturing, underpinned with slick digital platforms and effective marketing messages. Established companies were seeing direct impacts to market valuations, customer loyalty, new product development cycles, employee attraction/retention, etc. Note that profits from those startups are often scant, but given the new investor valuation approaches, that hardly mattered.
In response, established business leaders have invested heavily in digital transformation efforts, often at the expense of innovation programs. This has led to a change in innovation professional profiles, where an awareness of digital trends and ability to effectively create responses is now an essential requirement to personal career success.
As digital efforts mature and are viewed as standard distribution channels within corporates, there is an increased focus on profit generation and closer integration with business units. More importantly however, these efforts will need to take a more holistic approach to disrupting the organization if they are to successfully address the continued expansion of more nimble digital-native competitors.
So what’s next?
Disruption was previously something that happened to other industries, companies or leaders, but is now the norm across every industry sector. Further, the way businesses are valued has changed and business leaders are seeing that a true focus on radical disruption is now demanded by investors. Corporate leaders are looking at the new competitive landscape and realizing that they need more than a shiny digital channel to succeed.
In response, some progressive leaders are taking a thoughtful, strategically aligned approach to address disruptive forces. They are taking time to understand holistic approaches that address disruption, rather than piecemeal solutions. Books such as Exponential Organizations offer a more detailed, step-by-step analysis of the growth of digital disruptor businesses and a roadmap to address them for established corporate leaders. As full disclosure, my business partner is a co-author of the book. These leaders are looking to adjust their organizations to more effectively mirror those digital native competitors, by driving disruptive change both within their core organization, but also on the edge (avoiding immune system responses).
But this isn’t always the case. Many companies see their innovation programs and digital channels as effective ways to drive lasting disruptive change. And for some it may work, but generally I believe that thinking is long past. As more holistic approaches to developing disruptive, exponential innovation are implemented into mature corporates it will be interesting to see how they compete against companies that have been guided by these approaches from day one.
I am excited to see where this all goes!
Let me know in the comments section if you agree / disagree with any of the points that I have raised.
Note: This article was previously published at InnovationManagement.se.