When it comes to innovation units, there is no blueprint. You have to find what works for your company, writes Jürgen Stetter for MIT Sloan Management Review.
Innovation is the king of all buzzwords, and rightly so. Innovation is vital to the survival and success of your business.
Nevertheless, of the approximately $1 trillion that global companies spend on innovation per year, approximately $100bn is wasted. That is a not insignificant 10% of their investment.
How do you ensure you don’t join those companies? You could attempt to replicate whatever it is the likes of Amazon, Google and SpaceX are doing, but, according to Stetter, “imitation rarely works”.
“The real key to success is to find the tools and structure that fit your company’s needs, strategies and culture,” he writes.
MAKE A CHANGE
If you want to successfully find, develop and implement new ideas and stop wasting money, Stetter suggests taking the following four steps.
1) Identify the kind of innovation you need. Different types of innovation require different approaches.
For example, if you’re looking for technical innovation, such as automating processes, the best solution might be an internal innovation unit with a clear strategic plan and support from senior management.
If you’re looking for market-facing innovation, such as a new product or new ways of relating to customers, a model that allows more freedom to come up with creative solutions might be required.
2) Find the best source of new ideas. The ideas you’re looking for might come from within your office walls, but don’t just put a team of people in a room andhope for the best. Try an internal competition or motivate employees with the offer of funding for new companies.
It’s also important to look beyond your employees. Consider partnering with academic institutions, acquiring tech startups, establishing a sponsored innovation hub or exploring a region that specialises in the kind of innovation you are looking for, e.g. Singapore for financial technology.
3) Determine how much of the innovation you need to own. Do you need to own an innovation in order to retain competitive advantage? Or will it benefit your company to enable others to innovate?
Apple patented its App Store but, instead of populating it with its own apps, it allowed other developers to use it as a platform for their own innovations. German automobile manufacturers BMW, Audi and Daimler share data to benefit the development of their driverless cars.
4) Create a process. Your innovation unit does not exist in a vacuum. It has to fit into the wider company structure.
“When addressing potential solutions, it is vital for companies to stay aware of both their current internal dynamics and those of the often more nimble and creative innovation unit,” writes Stetter.
Consider involving key managers from different divisions of your company from the start.
BUILD A STRONG INNOVATION CULTURE
Having identified the weaknesses in your company’s innovation capabilities and integrated your innovation unit into the wider company structure, you’ll be well on your way to building a flourishing innovation culture.