Friday, March 28, 2014

Can Corporate Do Disruptive Innovation

Corporate innovation stagnation is more of an evolutionary process.

Fundamentally there are two types of innovations, incremental innovation, and disruptive innovation; on one side, many ambitious organizations have big plans to pursue disruptive innovation in creating exponential value for their businesses; on the other hand, it takes bigger risks to manage disruptive innovation, and therefore, it has very low success rate. Can corporate do disruptive innovation, and how?

Strike the right balance of innovation and standardization: Every time another execution process is added, corporate innovation suffers a little moreThe conundrum is that every policy and procedure makes a company functioning, but efficient execution machine stifles innovation. Innovation is chaotic, messy, and uncertain only if you try to interpret innovation with conventional models, but when you will be able to define a new socio-economy paradigm, the innovation doesn't seem so chaotic. It needs radically different tools for measurement and control.

Embed innovation management mechanism into the corporate DNA: While companies intellectually understand innovation, they don’t really know how to build innovation into their culture or how to measure its progress. The current business models put on different layers of strategy and execution, and use metrics like KPIs based on a theoretical framework and not on the tactical problem-solving. So businesses have to find models that give a right description of reality and you don't need to fit reality to the models.

A synergist's innovation leadership: The 'good news' is that under the current digital protocol, disruption is inevitable. It will take the "synergist," a business leader who can balance creativity with the order, change, and stability to restore vitality and ensure future growth. Unfortunately, synergists are often branded as weak leaders and pushed aside in favor of someone who makes a lot of noise. As disruptive innovation have, even more, obstacles in the corporate setting, specifically a culture developed on the basis of peer-based competition and the resistance to changes, or lack of support, the synergist's leadership has to be advocated in order to sustain innovation for the long term.

The shareholders' innovation appetite: It is not so much the notion of shareholders that is the problem, but what shareholders collectively value that is the issue. If shareholders valued innovation more, then, in theory, they would value companies that devote more resources toward future innovation more than those that optimize short term profits. Of course, the challenge is in knowing how to place some sort of value on innovation and that is hard to do in advance. The difficulty in figuring out how to assess that capability with any degree of certainty makes it easier to judge companies on short-term performance. Money spent on R&D is not necessarily a good indicator of future innovation performance, and there is not much else that is visible to the public other than past track record of the success of innovation.

Build an "Ambidextrous Organization": "Ambidextrous organization," is an organization that can handle innovation streams for different purposes and with different time frames. Obviously, there are organizations that are better at "ambidexterity" and those that are worse, but to say that corporations can't do disruptive innovation while executing is perhaps a bit exaggeration. What does it mean of achieving "innovative ambidexterity". From marketing perspective, the question then becomes - does this facilitate Disruptive Innovation - has or could organizations be able to create entirely new industries or products capable of (1) empowering an overwhelming number of those who were previously unserved and underserved, and on that basis (2) expand to displace the dominant incumbents of existing industries that were only able to cost-effectively serve a far smaller segment of the greater market? From a process perspective, these businesses may separate a disruptive idea-generation from implementing and sustaining innovation. Innovation explorers develop unconventional and disruptive solutions, then, when ideas were fully developed and a prototype built, other people – innovation builders or operations gurus - took over and worked on serial production and sustaining innovation to make products or services more reliable, easier to make, and cheaper. All those processes in combination favorably affected the outcome= true ambidexterity.

Corporate innovation stagnation is more of an evolutionary process as bigger companies focus more on value maintenance than innovation, current organizational structure, and internal metrics discourage long-term innovation as well. But surely the big corporate can do disruptive innovation through an embedding culture of innovation; building ambidextrous capabilities; advocating synergetic leadership and empowering fearless innovators and change agent.


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