Thoughts on corporate innovation

“Always be innovatin”.

This perversion of “Always be closing” was a joke Mike and I shared as we walked down the streets of New York last January and got me thinking about the topic ever since. As the months trickled by and after working with some pretty big clients, having friends leave some of their jobs in big corporations, and attending last week’s R&D Society event on the topic of Space and R&D things started to crystallise further and I thought I’d share some quick thoughts.

1. Defining innovation is pointless

A theory of mine is that it’s easier to define when innovation is ABSENT rather than defining it ad nauseum.

“Following Schumpeter (1934), contributors to the scholarly literature on innovation typically distinguish between invention, an idea made manifest, and innovation, ideas applied successfully in practice. In many fields, such as the arts, economics and government policy, something new must be substantially different to be innovative. In economics the change must increase value, customer value, or producer value. The goal of innovation is positive change, to make someone or something better. Innovation leading to increased productivity is the fundamental source of increasing wealth in an economy. – says Wikipedia”

Innovation is something new and useful. That’s kindof it. Not a one-liner. Not something fluffy and useless. New. Useful.

The real challenge is exploiting that and fostering it. When it happens, you see it and you recognise it. When you can’t find it, it’s obvious (points to newspaper, publishing, music industry).

2. Corporate innovation is hard.
Start-ups are exciting. Even the EU Commission wants to be more like them according to Luis Rodriguez-Rosello, Acting Director of Directorate. In that spirit, they set up the Public-Private partnerships program (as exciting as it sounds trust me). How to become innovative is a big business, or at least look like you are. The ways in which this is actually done seems to vary according to how big your business is and your industry.

– The R&D Model.
Start an R&D department (Philips R&D is a good example or the now defunct Nokia Insight & Foresight) which is something you have to keep pushing for, ignore ROI for a while and try not to cut when the going gets tough. In the past year or so though, everyone cut R&D. Yahoo! ‘s Brick House is another example that comes to mind. The challenge with this model is in valuing the work everyone else does equally even if they are not part of the “department”.

– The half-baked R&D Model
Companies who don’t officially have a space for innovation but have one or 2 people who are creative and want to do r&d. So they make them do r&d mostly but brush it aside the second client work comes in. Really dangerous as a model as the level of frustration of those people escalates rather rapidly. You’re either dedicated to the idea that people can do good new and useful things in specific conditions where they are isolated from the everyday, or not. Don’t pretend.

– The OSMOSIS Model
Buy the right people through company acquisition (Nokia bought Dopplr and the product hasn’t moved since. They wanted the team, not the product.) and try not to bore them, or make them leave when their “golden handcuffs” are off and basically strive to make the internal culture map the start-up culture they left. Really hard. No easy answers here. Can’t think of examples of that model being a successful way to change the company culture.

– The ALPHA-PERSON Model
Hire the right people (JP at BT, Adam at Nokia and Ben at SIX come to mind.). These are people who will make waves and the point is, I guess, to allow them to rock the boat, because that’s kindof why you go them there in the first place. Does that work. I suppose, only time will tell.

– The START-UP & FLIP Model
So not quite corporate but becomes corporate very quickly. Small groups with lots of ambition and a lot of coffee and some VC backing. Add salt and pepper and wait 20 minutes and whatever it is they came up with will flourish, under specific circumstances, in the right economic climate, with the right backer, etc. Hard stuff but obviously a successful model of “innovation” that places like TechHub in London are attempting to support. If, as the E-myth goes, 80% of SMEs fail in the first 2 years, and 80% of that 20% fail in the subsequent years, you do the numbers. Saul Klein’s presentation on this topic from back in 2008 is very good.

3. So what?
It’s hard to be innovative and I personally think that the innovative stuff I see around me come from small companies with financial independence, lots of personalities and tons of ideas they bother to write about, blog about and express through their work. To build up innovation as a core value of your organisation is hard but worth doing. Apparently when Steve Jobs came back to Apple, he killed all R&D. If it was new and useless, why spend the money right? New. Useful. That’s it.

PS: I might expand on the win conditions in small businesses next time, as this will do for a Saturday in the office :)