Innovating, a challenge

While meaningful innovation is crucial for companies to ensure their long-term survival, there are also many challenges associated with innovation. These challenges are largely caused by the lack of expertise of those in charge, which consequently causes innovation to fail. For example, a McKinsey Global Innovation survey found that only 6% of all business leaders are satisfied with their own innovation performance. Two of the biggest pain points are:

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1. Executives lack the right skills

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Innovate almost literally means 'to renew'. And let that be exactly what executives and managers of a large, entrenched company have a hard time with. In addition, they also often lack the right expertise to process and roll out certain innovations constructively. This is according to a survey by BCG Global Innovation. From this, it can be understood that the most prominent obstacles are directly related to developing an entrepreneurial, responsive, accountable and results-oriented business organization. Something in which an external party can provide guidance in a strategic and unburdening way, so that a careful transition to a new way of working is possible.

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2. Innovating requires investment

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A second reason why innovating proves challenging is both the financial investment and the time people have to invest to make the switch to a new way of working clear and smooth. This also makes risk - temporarily - more difficult to identify and thus mitigate. Here, too, an external expert party can offer peace of mind. 

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An external innovation partner offers solace

Several studies by Deloitte Global Board, SpencerStuart 2016 Global Board of Directors and Accenture, among others, show that executive organisms have the hardest time with talent management and innovation or R&D strategies. In addition, the same studies show that organisations also approach innovation as any other project to be implemented; namely, in the same way they approach the roll-out of other, less radical trajectories. As a result, some 70% of executives miss out on crucial growth opportunities. 

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Rolling out innovation projects involves a lot more than just applying the usual procedures and close monitoring. Innovating means coming up with new ideas and evaluating and eventually choosing them, developing and commercialising them into new products and services, determining and creating their value and monitoring their risks. 

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Innovating becomes all the more challenging if, for instance, a company is still in the process of establishing its corporate culture, has yet to develop its own (technological) skills or has yet to define its own (corporate or product) strategy. If a company has no one with the capacity to develop these skills in-house, external innovation partners are needed. Moreover, in the case of appointing an external innovation partner they trust enough, the internal organisation can remain fully focused on the execution of day-to-day tasks. 

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7 tips that allow innovation to bring big successes

Besides challenges, innovation - when executed successfully - mainly brings successes. Especially in the long term, innovation proves to have positive effects on the (continued) growth potential of companies. We list them:

1. Measure innovation holistically, with a preference for action 

Those who are best at the innovation profession are those who highlight results using relevant and demonstrable (numerical) information. In addition, the use of meaningful incentives, an ability to learn quickly and improve oneself, and the two-handed grasping and proactive processing of feedback can also be compelling factors for confidence in innovation projects. In short: solidify your results and actively engage with them.

2. Align your business strategy with a pro-innovative culture

A study by Booz & Co. found that a business strategy aligned with a pro-innovative culture has a positive effect on enterprise value growth. Such companies can typically enjoy 30% higher growth in enterprise value. Thus, those who adopt an innovation-minded business strategy are best equipped for positive long-term results.

3. Make eager use of your entrepreneurial mindset

You are only an entrepreneur if you are tirelessly working on your product or service. This also means that you care about the end users of what you offer the market. Their opinion is therefore crucial, which means you had better engage them. Besides this approach, also called the 'Need Seeker' mentality, there are also two other, slightly less successful, archetypes with which innovators are identified: the 'market readers' and the 'technology drivers'. They are both more focused on external factors, such as trends within the market. Because they are less concerned with the direct stakeholders of the product or service in question, they also appear to take a less effective approach.

4. Adopt a portfolio approach

Those who prevail in innovation are those who measure and chart the entire process and results of every project within their innovation portfolios. To measure is to know, and in this case, accurately tracking results provides the right information needed to set business goals, strategies and risk tolerances. 

Note, however, that measuring innovation and its results is not self-evident. Similarly, Alexander Osterwalder, the inspirer of the Business Model Canvas, wrote: "Companies need to learn that in innovation, it is usually impossible to distinguish the big winners from the losers at an early stage.” Knowing that only a few of new initiatives survive and also effectively generate positive results, this means that in order to achieve significant long-term growth, a company will have to launch a large number of new initiatives before tangible effects can be seen from them. Not insignificant information that can contribute to good overall ROI and meaningful impact on business results.

5. Opt for open collaboration

Besides applying an Ambidextrous structure, there is another factor that can accelerate the path to success of innovation projects: open collaboration. 'Open' in this case does not necessarily mean 'open communication', but it does indicate being 'open to collaborations with internal stakeholders as well as external partners'. If you want to innovate meaningfully, it is best to align yourself with this structure and the corresponding strategy.

6. Align your business structure with an Ambidextrous structure

Organisations that adopt an Ambidextrous structure are those that structurally have different teams to engage with both existing, and emerging businesses linked to the current management hierarchy. 

According to a study conducted by HBS professor Michael Tushman, 90% of innovation projects rolled out by ambidextrous organisations succeed, while an organisation with a different structure only just achieves 25%. Structure is a key addition to successful disruptive innovation in business and is therefore crucial to winning.

7. Set guidelines for approving innovative initiatives

While we are the first to encourage innovation projects, it is also important to write out an 'innovation policy'. This accurately states the requirements innovation projects must meet before you take them on as an organisation.

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Since innovation often leads to a new company, a new branch or a new collaboration, ideally you also want to make it a sustainable and, above all, profitable activity. By defining a list of requirements, that renewed body has the best chance of successfully entering new markets.

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Successful and meaningful innovation is done by letting go and with a hands-on mentality

It is safe to say that improving your business results through innovation, provided you apply certain processes and measure (interim) results accurately, is achievable. And although meaningful innovation is a challenge for most companies, the need for structure and a strong interest in entrepreneurship prove to be important convincing factors to take up the challenge after all. Conditions for embarking on this adventure are: being able and willing to look ahead, imagining the future for yourself and being open to integrating and accepting change. 

Are you struggling to adapt or do you, as a company, not have the right profiles on board to pull off an innovation project? Then engage an external partner with in-depth expertise in innovation, who joins forces with an internal team that in turn knows the company inside out. This way, you gather the necessary expertise in terms of business operations, venture capital investments and technology. Stretch Innovation can assist you, from ideation to execution.

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Need guidance in rolling out a meaningful innovation project? Contact us!

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