“Corporate innovation is far more dependent on external collaboration and customer insight than having a ‘lab’.”
Andy Howard in a fabulous LinkedIn post.
Like so many other industries, OSS is ripe for disruption through innovation. Andy Howard’s post provides a number of sobering statistics for any large OSS vendors thinking of embarking on an Innovation Lab journey as a way of triggering innovation. Andy quotes the New York Times as follows, “The last three years have seen Nordstrom, Microsoft, Disney, Target, Coca-Cola, British Airways and The New York Times either close or dramatically downsize their innovation labs. 90% of innovation labs are failing.”
He also proposes five principles for corporate innovation success (Andy’s comments are in italics, mine follow):
- People. Will taking people out of the business and placing them into a new department change their thinking? No way. Those successful in corporate innovation are more entrepreneurial and more customer-centered, and usually come from outside of the organisation.
Are you identifying (and then leveraging) those with an entrepreneurial bent in your organisation?
- Commercial intent. Every innovation project requires a commercial forecast. To progress, a venture must demonstrate how it could ultimately generate at least €100 million in annual revenue from a market worth at least €1 billion, and promise higher profit margins than usual.
The numbers quoted above come from Daimler’s (wildly successful) Innovation Lab. Have you noticed that they’ve set the bar high for their innovation teams? They’re seeking the moonshots, not the incremental change.
- Organisational architecture. Whether it’s an innovation lab or simply an innovation department, separating the innovation team from the rest of the business is important. While the team may be bound by the same organisational policies, separation has cultural benefits. The most critical separation is not in terms of physical space, but in the team’s roles and responsibilities. Having employees attempt to function in both an ‘innovation’ role and ‘business as usual’ role is counterproductive and confusing. Innovation is an exclusive job.
I’m 50/50 on this one. Having a gemba / coal-face / BAU role provides a much better understanding of real customer challenges. However, having BAU responsibilities can detract from a focus on innovation. The question is how to find a balance that works.
- External collaboration. Working with consultants and customers from outside of the organisation has long been a contributor to corporate innovation success. Companies attempting a Silicon Valley-style ‘lone genius’ breakthrough are headed towards failure. P&G’s ‘Connect and Develop’ innovation model, designed to bring outside thinking together with P&G’s own teams, is attributed with helping to double the P&G share price within five years.
Where do you source your external collaboration on OSS innovation? Dirty or clean consultants? Contractors? Training of staff? Delegating to vendors?
- Customer insight. Innovations solve real customer problems. Staying close to customers and getting out of the building is how customer problems are discovered.
As indicated under point 3 above, how do you ensure your innovators are also deeply connected with the customer psyche? Getting the team out of the ivory tower and onto the customer site is a key here