Corporates need to understand that innovation is what makes a company unique. What is the difference between my assets value and the market value. For example tesla, the consumer associates innovation with success. Amit Harel, Deloitte Catalyst
Who doesn’t know Microsoft? A technology company that produces software, personal computers, electronics, and technology services, founded in 1975 in the United States. Bill Gates and Paul Allen’s company became the dominant player in personal computer operating systems, from the launch of MS-DOS in 1980, through Windows in 1985. In 2016 Microsoft acquired LinkedIn for USD$26bn, in 2011 Skype for USD$8.5bn and in 2013 for USD$7bn it acquired Nokia. However, Microsoft’s history has not always been one of success. Several of its products have had resounding failures such as Zune, which failed to compare with the iPod, Windows Me and Windows Vista that received criticism for privacy, security and performance, MSN Messenger that never took off, or even Internet Explorer and Bing that were surpassed by Google. Microsoft Band failed to compete with Fitbit and Apple Watch, TerraServer was left out by Google Earth, and Groove Music was ousted by iTunes.
However, despite these downturns, the company has not stopped innovating. The first changes arose in the innovation process, moving from a traditional top down to a collaborative process, where the challenges to be solved are no longer only internal, but are now shared with customers and partners. Later, the company’s leadership laid the foundations for Microsoft Garage, an innovation structure that allows all members of the organization, at any level, to participate in various projects. As part of these initiatives, an internal Hackathon is organized once a year. The objective of the event goes beyond engineering positions; in 2020 it achieved a participation of more than 70 thousand attendees, in 97 countries and 4 thousand projects developed in one week.
Today, one of the main elements for innovation is the fact that companies have lived or are in a process of digital transformation. For this purpose, organizations require a sensitive leadership with conviction to innovate and thus use technology in favor of the organization. In addition, a flexible, dynamic, and open innovation culture that promotes the generation of ideas and discussion among all members of the organization is required. The different areas show commitment, prepare themselves by understanding these elements and are a fundamental part of the digital transformation change. Companies need to invest in technology and accelerate their digital transformation.
In this sense, startups cannot be left behind and are an essential part of this transformation. Their global expansion and growth at a faster rate than they have been doing before, as Rodrigo Servitje, founder of B37, mentioned at INC Monterrey 2021, means that these companies are on the innovation bus. Some of the points to consider are:
- Having goals and accountability
- Top management support
- Aligned incentive schemes
- Rigorous evaluation of results
- Having strategic goals in mind
- The right team
It is not only companies like Microsoft that require innovation to face the drastic changes in consumer habits and the market in general. Innovation is required in companies of any size that will allow them to have elements to increase their competitive advantage and above all to maintain relevance with customers. That is why we suggest that they should:
- Learn and keep abreast of new emerging trends in new technologies and disruptive business models.
- Filling capability gaps.
- Move faster than your current capabilities allow.
- Grow new business internally.
- Guide the growth of new markets
- Expand M&A strategy
Some elements that promote innovation are technological development, changes in consumer habits and market dynamics. For example, the evolution of human communication at a distance. Initially it was done through letters, later the telegraph was developed, then the telephone, then smartphones, and the world is waiting for the next quantum leap. Therefore, organizations must be part of an innovation ecosystem, which is made up of startups, VC funds, accelerators, universities, among others, as mentioned by Amit Harel, Partner at Deloitte Catalyst, during his speech at INC Monterrey 2021.
For an organization to be truly innovative, it needs to be prepared for failure. This does not mean that it is complacent, does things poorly, or does not give its best effort. On the contrary, it means that the organization has a clear strategy, a broad perception of technological changes and new business models, and innovation processes that lead to taking measured risks in order to develop and optimize products, services, processes or businesses. For example, a startup may not achieve its KPIs, but when it runs a POC it cannot think about failure, since regardless of the result, it managed to convince a company to carry out the experiment and will have valuable lessons learned that will allow it to replicate it with other organizations, explained Amit Harel.
Another characteristic to generate a pure innovation process is to have a long-term vision and not to be carried away only by the quarterly performance of the organization. In addition, decision-making must be consistent and based on solid data that allows the organization to make the best decisions, not only for the budget or short-term EBITDA generation, but also for the transformational value that such innovation could have.
Organizations must recognize what is their core business and the activities to develop in order to maintain their main business idea. Otherwise, neglecting it just for the sake of innovation could lead to failure.
Innovation leads us to have a global mindset and a spirit of open collaboration:
- Psychological safety: Team members must feel safe to take risks and be vulnerable in front of others.
- Dependability: The team accomplishes tasks on time in an excellent manner.
- Structure and clarity: There are clear roles, plans and goals.
- Meaningfulness: The work is personally important to the team members.
- Impact: Team members feel that their work matters and generates change.
In summary, some indispensable elements for an organization to succeed in developing a continuous innovation strategy and culture are to empower teams, recognize needs, have a sense of urgency to innovate, establish an innovation budget and a sensitivity to execution time.
A culture of innovation also requires having consistency in the organization’s members so that they can assimilate the values and put them into practice over time. It also requires that the members of the organization are motivated and compensated appropriately for the competitive position the company wants to be in.
In innovation there’s no one right way to do it. Just get out and do something! Start with something! You can mix and match later. Just do something! Rodrigo Servitje, B37
ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.
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