Successful organizations understand that today disruptive forces change industries with speed. Renewing and disrupting your own business through continuous innovation are the prerequisites to not just keep up with the competition but to succeed in the long term. Despite knowing the fact, a very small group of companies are driving continuous transformation of existing operations as a norm. Based on Accenture’s survey (2018) only 6 percent of C-level executives say they’ve successfully managed to embrace new business activities. This has paid off: 64 percent of these companies achieved double-digit growth in sales. 57 percent also saw the same growth in company EBITD.
For years, companies have focused on optimizing and scaling their core business with 0 mistakes. Therefore, it is not easy to adapt to an era that requires transforming businesses and adapting new technologies with speed. The life span of products and services is decreasing as is the average life span of large companies. Today the most innovative solutions are developed in startups where experimental culture, financial pressure, lean operations and agile pivoting enable faster product development and time-to-market. The emphasis on speed requires organizations to complement traditional renewal channels that R&D & M&A have previously represented, with more open innovation.
The question organizations should ask themselves is: “How to create a culture, organizational structure and innovation ecosystem that enables utilizing already existing emerging technologies with speed, instead of trying to build everything ourselves?”
The most innovative organizations have now established innovation units to more systematically explore the new world of new opportunities and disruptive risks that our digital era has opened. There are as many operation models and scales as there are innovation units but often the operations can be split into three phases: 1. discovering, 2. shaping and 3. scaling new businesses.
The discovery phase focuses on innovation scouting. In traditional organizations, this is often highly focused on university collaboration where it takes longer to gain business benefits. However, scouting the startup and scaleup landscape gives companies insights on what markets, technologies and business models have already made commercial breakthroughs and have been proven successful.
In the shaping phase, innovation units focus running small experimental pilots with external startups, or in internal ventures, to evaluate the potential of a new business venture. Within these short sprints there are decision points where it is continuously analysed weather the KPI’s have been reached or if the project should be “killed”. In this type of work, it is essential to understand that failing fast does not mean failing. Killing unsuccessful projects or pivoting fast is crucial in maximizing learning from new business opportunities and technologies. It also minimizes the risks in investing heavily on something not beneficial.
In the discovery and shaping phases quantity is the prerequisite for quality. First the most potential new markets and technologies need to be discovered in wide scale. These learnings may then be shaped to determine the optimal approaches, business models and partners. Finally, the organizations can focus on scaling validated and handpicked businesses to the markets with less time and money invested.
It is worth remembering that AirBnB, Spotify and Facebook have all been startups once, until they disrupted hotel, music and media industries and grew to some of the biggest companies in the world. Continuous innovation aims to identify early on what and who is transforming your business. The new technologies and solutions you are interested in, are someone’s core business. So why waste time and money into reinventing the wheel? Why wouldn’t you rather partner up with someone who already has an existing solution, millions of funding and the best talent to further develop the answers of tomorrow?