Innovations are a crucial part of a company's progress in a changing and new world. Established firms face the challenge of maintaining or expanding their competitive advantage in fiercely competitive markets. While a few years ago it might have been sufficient to build a company using traditional management methods and continue development through incremental innovation, companies must now find new paths in innovation and future-proofing. This said, just blowing out more and more innovation is resulting only in innovation and inflation = innoflation.
Corporate Innovation and Innovation Labs
As a first step, some companies have set up innovation labs to develop new ideas and concepts. These labs are typically isolated from the core business and provide a space where new ideas can be fostered and tested. An increasingly popular approach is Co-Innovation, involving customers, suppliers, and partners as an ecosystem in the development of new ideas and products. This approach enables companies to quickly respond to new challenges, leverage the competencies and resources of external partners, and distribute innovation risks. Innovation teams play a vital role in this process, comprising individuals from different departments and disciplines collaborating to develop and test new ideas. This allows companies to consider various viewpoints and find solutions that are not based solely on traditional industry approaches. However, innovation projects can only succeed if the initiatives are supported by diverse leaders, a suitable framework exists for developing and implementing new ideas, and innovation teams act as entrepreneurs (intrapreneurs) by sharing the risks of the undertaking or benefiting from its success.
Evolution is essential but also leaves room for failures
Always more, always better, or just a big disappointment?
To successfully execute innovation projects, it is essential for companies to have competent and professional innovation management. Innovation teams are a critical part of innovation management, composed of a group of individuals with diverse skills and experiences, such as scientists, engineers, designers, and entrepreneurs. It is crucial that these intrapreneurs bear commercial responsibility for their "internal start-up," rapidly validate ideas in a methodical manner, search for new business models, and swiftly and cost-effectively reduce the entrepreneurial risk for the funder. In stark contrast, privately funded start-ups led by entrepreneurs often carry the full innovation risk and tend to pursue a single idea. Lack of responsibility in corporate start-ups leads to the survival of unnecessary projects or an ever-growing number of projects, resulting in the waste of innovation resources without generating any form of value for the funder. The disappointments arising from this situation can be observed in this current article about innovation activities in the financial industry.
Conclusion - Innovation and inflation = Innoflation
It is evident that companies aiming to drive innovation must put forth considerable effort, and many ideas may not succeed. A thoughtful innovation strategy that defines which initiatives to pursue and, more importantly, which ones not to, is a prerequisite. This prevents wild pursuits of every hyped technology or business model, thereby avoiding unnecessary disappointments. When the right framework is established, companies can develop new ideas that not only bring external value but also generate internal value. This approach allows companies to maximize the worth of their innovations, learn, and explore new revenue streams. It is essential to recognize that innovation is not solely a process of developing new ideas but also a process of learning, testing, and "giving birth to the children of tomorrow" within a transforming company. Only through a combination of optimizing existing businesses, cross-financing selective innovation initiatives, fostering a spirit of experimentation, and transferring knowledge back to the parent company can companies extract the best from their innovations and ensure that investments in innovations truly lead to greater value creation.
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