What Innovation is for Large Enterprises
This article is written by Mohammad Eslim, a Contributor Author at Startup Istanbul.
Dan Toma comes from an entrepreneurial background. He has been involved with technology startups across the world and is an innovation community leader in Europe. Dan focuses now more on enterprise innovation management, specifically on the changes large organizations
need to make to allow for new ventures to be built in a corporate setting.
He is the author of " The Corporate Startup: How Established Companies Can Develop Successful Innovation Ecosystems " and has worked with companies like Deutsche Telekom, Bosch, Jaguar Land Rover, and Allianz. A big proponent of the ecosystem approach to innovation, Dan has also worked with various government bodies, in Asia and Europe, helping developing national innovation ecosystems and implement national innovation strategies.
If innovation is not about money, dress codes, R&D team’s size or how many inspirational trips to startups is made, then what IS actually about innovation?
It took a lot of paying attention and studying to come with a book stating what is innovation is about, especially to large enterprises.
Surprisingly, the first thing about being innovative for such enterprises is about your team having an innovation thesis. Cool, right?! So, what is this thesis? It basically is the corporate’s equivalent of investment thesis. It sets up the boundaries to what innovation should look like, where should the corporation invest, when should the corporation divest, it also put limits on what technology to possess, what trend to look up for, and what technology and trends the corporation should not care about.
Innovation thesis additionally justifies why a profitable business unit should contribute financially to the innovation department, which is also known as a cost center. Basically, answering the simple question: why moving the money in your pocket into a second pocket if the second pocket is not profitable?
The innovation team is supported financially by the executive’s decision and the corporate’s board’s approval, so there must be a study plan that ensures that the money spent is bringing profit.
The second point in order to be innovative is the management of the corporate’s portfolio. Before you decide to send your team to develop a particular product in a particular industry, you should take a minute to think if you really want to waste resources on this product if you
want to send your team working and focusing on improving some product where you can work the team’s effort on creating another product.
It is all about options, either you send the team to develop X or send it to develop Y. This input comes from analyzing your current portfolio, setting up the lines where you stand and marking where you want to be, in terms of portfolio. You will do so much studying to finally have your balanced portfolio drawn, but once you map it and follow your current portfolio to where you decide your product development teams to be.
Having a framework is essential because otherwise the corporate will be as a child in a candy store, in other words, clueless what to have is what is meant. A framework existence gives some sort of governance over the corporate’s general decisions. If there is no framework then there is no constitution to question the direction an enterprise is moving to.
How should it be acting? How to generate new ideas, products or lines? The framework does not really give you a tactic, it rather gives the enterprise an overall look at how innovation should look like in this certain enterprise.
Practice. We all know about practice make perfect, but does it actually work out for innovation? You would be surprised. Practice is the discipline of applying the process of innovation, meaning to continuously innovate. It might be a long journey to succeed but will eventually happen.
Last but not least, having an innovation accounting system is about changing the way you measure your product no matter how much it has developed. So, change your innovation KPIs and measure your product again every now and then.
It is not enough of an effort to be innovative if all the right ecosystem elements are adopted in synchronization supplied with the direction. This way is the only way a corporate could stay relevant in a technologically and socially changing environment.