All companies need to innovate to survive and thrive in today’s business landscape.
A study by McKinsey & Company revealed that companies that invest in innovation during times of crisis have outperformed their competitors during the crisis and post-crisis.
It is easy to see why this is the case. Innovation typically makes a company more resilient to change, allowing a business to weather a crisis, or even take advantage of opportunities that have presented themselves during the crisis.
However, it is not easy to begin innovating successfully, especially when a company is new to a concept.
To illustrate the possibilities of innovation and to correct any misconceptions, here are 6 essential concepts and ideas that you need to know to successfully innovate:
1. True innovation adds new value to your organization.
When a company really innovates, isn’t just a gimmick. True innovation isn’t just done for branding and publicity, or else a company falls into the trap of innovation theater.
Take the case of Theranos. The company positioned itself publicly as one of the most innovative healthcare companies in Silicon Valley, which was set to revolutionize the way blood testing was done.
Yet, years after its creation the company was dissolved. Why? Its innovation, the Edison blood testing device, did not work. Ultimately the company’s ‘innovation’ did not add new value to the organization.
True innovation happens when a company creates new value for its organization. These may be in the form of minor or radical changes in a company, with the end goal of incorporating innovation in a corporation’s business model.
An innovative corporation typically enjoys significant growth rates, increased adaptability to the rapidly changing world, and strong resilience to disruptions and crises.
What limits most companies is the idea that inventing new technology is the only way to innovate. This is not the case.
2. Building new technology is not the only way to innovate.
While many well-known innovations revolve around revolutionary new technologies, innovations can come in many other forms.
Global innovation firm Doblin identified 10 types of innovation. These tackle three general aspects of a business namely:
- The offerings of a business such as its products and services. Newly invented technologies often fall under this.
- The internal and external configuration of a business such as its processes and systems. This may include incorporating an innovative mindset in service delivery teams, and restructuring the leadership structure to be more effective
- The customer experience when they interact and transact with a business. Innovations here may come in the form of automated chatbots and identifying novel ways of delivering a product to the customer.
Companies, however, must keep in mind that any innovation initiative must always add new value to an organization. This goes for all the 10 types of innovation.
For example, restructuring the departments of an organization may lessen costs, and finding a new way to brand a product may increase revenues. Finding these opportunities may be difficult if you do not have the right systems, tools, and talent.
3. The opportunity to innovate is everywhere. You just need the right tools.
Often, great opportunities to innovate are not easy to spot. Sometimes, innovators need to make connections between certain factors before an idea pops up.
These opportunities are lying around, waiting for a business to spot them. Businesses can spot these opportunities to innovate easier by using tools that allow them to systematically explore the environment and identify potential opportunities to innovate.
One of these tools is the Business Opportunity Map, where companies list down various factors affecting the different aspects of a business. These include its value chain, products, competitors, and more.
The factors are then plotted onto a map, in a way that shows connections between each factor. Sometimes it helps to visually paint the business landscape to get a full picture of how everything works and is affected by each other.
The end product will ideally give an organization an idea of where an opportunity to innovate may lie. For example, they may find a problem that a company can solve, which was only illustrated and made known by the connections drawn out on the map.
There are many other tools an organization can use to identify these opportunities. Often innovators learn how to use these to their fullest potential through innovation learning programs like the innovation certification programs of the Global Innovation Management Insitute.
Once an organization can find quality opportunities to innovate, it can start building its innovation portfolio.
4. There are two things you need to start building a successful innovation portfolio.
In order to start building a successful innovation portfolio, a corporation needs to provide an environment that is conducive to innovation and impart an entrepreneurial mindset to its teams.
Having an entrepreneurial mindset means that one is constantly looking for and identifying quality opportunities to innovate.
To be able to do this, innovators need to also have the ability to identify opportunities to innovate. This means equipping them with the tools, skills, and knowledge they need to innovate. But providing them with these is not enough.
The workplace must also have an environment that is conducive to innovation. A company’s leadership is crucial to nurturing this environment by developing the right company culture that motivates and supports innovators.
Beyond providing resources, mentorship, and financial support, the leadership must also embrace failure. Innovation is iterative, and as such, failure is bound to happen. Failure, however, is crucial to improving an innovation. No one gets it perfect on the first try.
Corporate venture building (CVB) is one of the riskiest innovation strategies that is full of failure, but great ventures have been built through CVB’s process of repeated iteration and improvement.
5. Corporate venture building (CVB) is one way to innovate that will create a new avenue for growth for your organization.
Many corporations have leveraged CVB as an innovation strategy. CVB is the process of creating a new venture, often with an experienced partner such as Embiggen Digital Ventures. The venture acts as a business independent of an organization’s current core business.
Early on, this venture will rely on the support of the venturing organization, but the goal is to scale this venture into its own independent business that will rely on its own resources to operate.
It is a resource-intensive process which is why you might be asking: why do I need to invest resources to create another brand new ‘core business’ for my organization?
The ventures built through CVB allow your organization to diversify into other markets and industries, making it more resilient to change, disruptions and crises.
If an organization only has one ‘core business,’ it is putting its eggs all in one basket. And if the pandemic has taught businesses anything, it’s that relying on one stream of revenue or one type of business is extremely risky to change and disruption.
There is also another way to make an organization more resilient to unforeseen challenges: Venture Capital-as-a-Service (VCaaS).
6. Venture capital-as-a-service (VCaaS) can help you grow by investing in up-and-coming startups.
Venture capital (VC) is an innovation strategy wherein a corporation invests resources in another company in exchange for equity. VC activities are typically managed by a corporation’s in-house investment team.
VCaaS, on the other hand, happens when a corporation’s VC investments are managed or co-managed by an external partner like Embiggen Capital.
As VC investments are often risky, corporations may not necessarily have the right systems and talent to enter the space. This is why companies that have little or no VC experience often tap these innovation firms as partners to enter the space.
The innovation firms that offer VCaaS already have the right expertise, processes, systems, and talent in place to invest a client’s resources in the right investment opportunities.
Similar to VC, VCaaS helps organizations diversify their organization by investing in startups and companies in various industries.
It also has the potential to generate significant additional revenue for an investing corporation. Some of the most successful VC deals include the USD 60 million investment in WhatsApp by Sequoia Capital. A year later, the VC firm earned USD 3 billion when WhatsApp was sold to Facebook in 2014.
CVB and VCaaS are just two of the many ways a company can begin innovating.
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