Why do large organizations struggle with innovation?
“We’re only at the very, very beginning of this next generation of computing and I think that every industry leader will be the ones that transforms first. I don’t care what industry you’re talking about.”
— KIM STEVENSON, CIO, INTEL
Innovation and Digital Technology are not new topics yet what we see around is just tip of the iceberg. I have seen that organizations realize the trend but are unable to catch up with the pace. What is holding them back?
1. More to lose
Large organizations have spent years building their brand and the trust of shareholders. Even innovation at a new product or service level could be massively wrong for an organization of this scale. Additionally, their system matrices are more complex. All these factors may lead to risk aversion - "why fix it if it ain't broken". They tend to focus on today's demands instead of envisioning future opportunities. Successful companies like Nokia and Kodak missed Organizations need to put Innovation R&D at the core of their strategy and financial planning.
Today's success can be tomorrow's failure.
2. Structural rethinking
Stepping into Digital Age is not about buying another IT software. It is specialized expertise that needs a fresh perspective leading to organizational and workflow remodeling. Companies are unable to develop the innovative mindset to build the right team who become the flag-bearers of innovation in the company. Only with the right people can you get the right results.
3. Leaders of the New Age
Just 13 of the 100 biggest companies in Europe were founded after 1950, compared to 40 of US. Larger companies tend to promote from within which has its own benefits. I mean, who knows the company better than their own people! But, the flip side of this practice is that -
who is challenging the status quo? It is natural human tendency to form practices and resist changes. Even if there are a few changemakers, they might feel stifled in a large organizational structure. This is one of the reasons why an external voice helps.
4. Innovation thrives in an Ecosystem:
Innovation thrives around an ecosystem that supports it. Forbes "The World's Most Innovative Companies 2016" lists just 2 from Europe in the Top 25. Publications such as the Times Higher Education Supplement and the Shanghai List don’t list a single University from continental Europe among the 25 best for research. Universities and policies have to join hands with the industry to promote thriving research.
So, how can large organizations solve the "innovation problem"?
A successful solution to the ‘innovation problem’ which many larger companies are opting for is to ‘contract out’ their innovation. Commonly these 2 ways have seen success:
collaboration with start-ups and entrepreneurs
recreating the structures of a start-up within the larger corporate framework
A recent Accenture survey of 1,000 G20 companies found that 9% of the revenues of such companies are now generated by collaborations with smaller concerns, a figure which was expected to rise to 12% in 3 years and 20% in 5 years.
“Change is the law of life and those who look only to the past or present are certain to miss the future.”
— JOHN F. KENNEDY
Author: Pranjali Apurva, Chief Innovation Druid, BLVCK PiXEL