As corporations strive for more innovation to stay in the game, many innovation managers struggled to describe what type of innovation methodology they should follow and why a particular method can work better than others. They tried investing in innovation hubs, hackathons, agile training, and design thinking workshops to learn to innovate, become more agile, customer-centered, purpose-driven, profitable, efficient or disruptive.
The different manifestations of corporate innovation initiatives lie in the focus area (internal vs external) and innovation creation (problem-focused vs opportunity-driven). It’ll be the basic principle on how corporations manage innovation initiatives and how they allocate funding. There are various methodologies added up to confusion over choosing one particular, better-suited framework. Some of the following are to help sharpen the value proposition also further serve as an approach to innovation.
External vs Internal
As the organization focuses on internal matters, it typically aims at increasing efficiency by optimising processes and internal operations.Though, the optimization focus has shifted over the last ten years towards digital transformation which gives spots for artificial intelligence and automation to take roles. While organizations with an external innovation focus aim at improving either the customer experience, or they try to create new products/services that increase revenue.
In fact, creating original product, service or business model innovation is obviously harder than making improvements for the current products and services. Especially, in the dynamic world where everything changes rapidly while innovation takes time and risk with an uncertain and often distant payoff.
Problem-focused vs Opportunity-driven
Are you solving problems or are you creating something new? That is the question. The previous figure of the horizontal axis shows how an organization creates innovation. Most corporations focus their improvements by solving problems either internal or external. The right issue can generate focus and high chances for customers or employees to discover a solution. It’s possible to use Design Thinking, the most prominent Human-Centred Design method (HCD), as an approach towards creative problem-solving.
Otherwise, when you decide to have an opportunity-driven approach, just create something new. It is said to be a radical method for some reasons – no problem to solve and the issue might come from Risk and ROI factors. However, the opportunity-driven approach combined with an internal focus can uncover questions affecting the very core of the organizations. It’s something that problem-solving and customer-focused design methods can’t answer.
An approach towards better-suited framework
Based on the previous figure, there are four methods you can apply to drive innovation initiatives.
Optimise, when the problem is determined. Some methods you can use including Six Sigma, Lean Management, and Process Improvement can have positive impact. Improve, the experience for your customer. Focus on the most common pain points and find the solution using HCD approach.
Create, value for customers and the organization. Though it may not have pain points or customer problems to guide you. There are Foresight and Futures Thinking, Hacking Cultural Beliefs and Innovation of Meaning to help at this stage. Furthermore, Re-Invent, to improve your organization in uncomfortable, challenging and disruptive ways. You might find barriers with the dominant industry logic and things everyone takes for granted. Find some methods on Build Your Own Enemy, Wargaming, and Business Model Innovation.
Will Geiger, VC investor at Touchdown Ventures, proposes four frameworks for Corporate Innovation by blending academic models with practical experience. The objective is to provide practical, real-world exposure to corporate entrepreneurship practices at some of the largest companies in the world.
- Horizon of Growth, whose objective is to balance near-term execution with long-term goals. It consists of three stages: (1) ongoing business; (2) new business, scaling rapidly; (3) new business, pre-market. This paradigm is used by corporations to evaluate opportunities for near-term or long-term mutually beneficial relationships.
- Four Models of Corporate Entrepreneurship, it’s a quadrant based on financial commitment and organizational structure by Wolcott and Lippitz. It consists of four main types of uncertainty facing corporations: market, technical, resource, and organizational. Dedicated resources generally indicate a higher level of commitment than ad hoc resources while focused organizational ownership generally indicates a higher level of commitment than diffused ownership. As many companies start from being “Opportunist” without a deliberate approach, some experienced success and become serious about innovation strategy as “Producer”.
- Innovation Radar, as an academic framework, provides a mechanism to understand twelve different aspects of business impacted by innovation efforts. Those are addressed under three dimensions, Offerings (by funding new products and food categories), Brand (by developing an identity tied to health, sustainability, and better ingredients), and Customers (by accessing new consumer groups through novel products). This can be a tool to assess opportunities for competitive index. However, due to the difficulty of quantifying the magnitude of the radar’s dimensions, the framework suggested to fit only for an academic setting.
- Inside Out, is a framework that focuses on implementation. It categorizes different types of tasks according to whom taking control, either the corporation or the third parties.
While some frameworks are academic and others are experience based, each provides a lens for assessing innovation activities and requires specific team arrangements and ways of working. Success metrics, budgets et al need adapting and aligning with the organization’s characteristics and goals. It’s not a mystery to find a better-suited framework for your company.