Dr. Tendayi Viki, innovation expert, founder and principal consultant at Benneli Jacobs, a strategy and innovation consultancy, shares four key elements that corporate leaders must consider in order to stay innovative and stay relevant today.
To say the world around us is changing rapidly is to state the obvious. In a recent survey by Fortune Magazine, 73% of Fortune 500 CEOs indicated that the rapid pace of technological change was their single biggest challenge. Given the pace of change, companies can no longer grow by simply cutting costs or taking their old products to new markets in developing countries. Innovation has become an imperative. The ability to explore new opportunities while managing current advantages is now management 101.
Below are four key elements corporate leaders must consider for developing and sustaining innovation within their companies.
- Strategy: It is true that companies cannot innovate without great ideas. However, these ideas must be connected to the overall strategic goals of the company. This is the challenge that most innovation labs face. They are often working on wonderful ideas that end up getting little support from leadership because they are not aligned with the company’s strategic goals. As such, it is important for corporate leaders to work with their innovation teams to develop an innovation thesis. This is a clear point of view about how the world is changing, the trends that are impacting the business; and how they plan to respond with innovation. Such a clear thesis can then form the basis for ideation and the products that innovation teams will work on.
- Balanced Portfolio: In order to bring their innovation thesis to life, companies have to take a portfolio approach from within. Every company will have core products that are serving their current customers – these are the cash cows that have to be managed well. Beyond this, the portfolio must also have adjacent innovations where the company takes something it currently does well and applies it to new markets or to the development of new products and services for current markets. Finally, the portfolio must have transformational innovations which focus on creating new products for new markets. Such a balanced portfolio indicates that the company is working with both the present and the future in mind.
- Test then Scale: A key challenge most large companies face is how to manage the adjacent and transformational innovations in their portfolio. From a product development perspective, the way you develop and manage core products is different from the way you develop and manage new innovations. Unlike core products, there are usually a lot of unknowns around a new innovative product. We are often making assumptions about customer needs, the right solution and revenue models. These assumptions need to be tested by developing our product and business model iteratively based on market feedback. Such small beginnings are a challenge for large corporations who are used to operating at scale. However, it is more important that innovation teams do the right things at the right time. This stops teams from making the mistake of prematurely scaling.
- Make Small Bets: Doing the right thing at the right time also applies to how investment decisions are made and how resources are allocated to teams. Rather than making large bets based on business plans, small bets can be made, that allow teams to test their assumptions. Making small bets allows for more chances to succeed. First, we’re able to see what works and what doesn’t work before doubling-down on an investment. Second, because small investments are being made, we can spend money testing many more ideas, which gives you a chance to find the right idea to scale.
This is Corporate Innovation 101; and it should be clear that this requires us to transform how our companies work and run. It is not enough to simply have innovation labs with sticky notes and beanbags. We have to think deeply about the types of ideas we are working on and how we manage and invest in the development of those ideas. Ultimately, the role of innovation is to ensure the long term sustainability of the company.
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About the Author
Dr. Tendayi Viki is the founder and principal consultant at Benneli Jacobs, a UK based strategy and innovation consultancy firm that helps established companies develop internal ecosystems so they can innovate like startups. He holds a PhD in Psychology and an MBA; and is author of The Corporate Startup and The Lean Product Lifecycle. He has worked as a consultant for several companies including Pearson, Standard Bank, Egmont, The British Museum, The World Bank and Whirlpool. He is also a Contributor at Forbes Magazine. Dr. Viki co-designed and helped implement Pearson’s Product Lifecycle which is an innovation framework that won the Best Innovation Program 2015 at the Corporate Entrepreneurship Awards in New York.