Innovation models for companies
Innovation is so trendy that we forget it is as old as the origin of everything we know.
The ability to innovate and do so successfully is what characterises the growth of companies.
Last week, @jonErlichman published the ranking for revenue generated in the last decade. The ranking was led by technological companies that had taken the throne, having previously occupied other categories.
This could lead us to think that only Tech-based companies take the top spots but, if we look closely, it is not just technology that characterises these companies. Above all it is their innovative culture, as many of these technologies are already simply commodities.
As stated at the beginning of this article, everything around us was born from innovation, so the argument is not whether to innovate or not, but the question is if we should keep innovating and how.
Most companies we know were born of serendipity, from a positive idea. Behind most companies, there is not a systematic innovation process. Nearly all of them were born from their founders’ ideas. From Apple to Coca Cola, Netflix, IKEA or any company we know.
In the past, this idea allowed the company to develop itself and, evolving the initial idea, a successful future was assured. Many of these companies did not really have an innovative culture apart from finding a market opportunity. The idea did not even have to be unique or original if the opportunity existed.
But now competition conditions have changed. The entrance barriers explained in Porter’s five forces analysis fell due to the almost universal access to technology. We do not compete against other known companies anymore; we now compete against anyone who has a new valuable proposition. In this way, we can consider that access to technology is one of the drivers of the most important paradigm shift we know and one that conspires against our companies.
The second is the speed of the changes. In the table below, we can see the short deadline that some companies needed to conquer a market, something that would have taken years in the past. The speed is definitely one of the results of technology but is also related to globalisation.
Companies that did not exist at the beginning of the decade:
In response to the question of whether we should keep on innovating, there is no other answer apart from a resounding YES. Without entrance barriers, the whole world aspires to eat your cake or even change it for a new one. And it will do so quickly without giving you time to react.
The real dilemma is “how” we innovate if we do not belong to an innovative culture.
Some of us think that innovation is cultural because culture determines both our attitude towards life and what we do systematically every day and every hour.
But it is also strategic as it determines how we decide to compete on the market and conditions the type of innovation we look for, from incremental innovation to the search for disruptive innovation.
Companies have devised different alternatives for this dilemma by implementing models and innovation processes. There are no good or bad models, but there are models that better adapt, or not, to the culture and strategies of companies. It is not on the cards that we cannot even try all of them at once.
Some of the models are shown in the figure below.
(Fig 1). We all innovate. Everybody in the company is part of the innovation processes. In this case, it is worth highlighting Google and its 80/20 model. But other processes exist to give shape to this model.
(Fig 2). Departmental innovation. We create an innovation department which is responsible for innovation within the company.
(Fig 3). Intra-enterprise. Talent searching within the company and consolidating this talent around a challenge or idea for a fixed period of time.
(Fig 4). Outsourcing of innovation. In this model, innovation is outsourced to specialised companies or initiatives are monitored (start-ups), in which investments are made without compromising the rest of the company.
(Fig 5). Open innovation. Henry Chesbrough coined this term for a model that searches for external agents to participate in innovation. Collaborative models undertaken with universities and companies are a good example, but not the only one.
(Fig 6). Stage or mission. Companies focus their efforts on profitability and obtaining profit from their activity. In many cases, they do not even have the relevant people and adequate training in innovation processes. Nor do they allocate resources to innovation, something that is uncertain and does not assure profit in the short term. In this model, companies carry out a short time stage (between five and seven days) which does not compromise the rest of the company and focuses their efforts on a week with the objective of coming up with a valid prototype at the end of this short period of time. This model is led by professionals that provide the methodology and processes. This type of process has been popularised with the name of Google Sprint.
So we have different ways of addressing innovation and multiple ways of failure, the first of which being not executing an innovation model.