Almost every other day, startups emerge and disrupt established companies because of their innovative ideas and business models. This disruption is, primarily, due to the reluctance of big companies to implement a series of strategic and organizational practices required to organize and inspire creativity.
Large firms are, generally, better at implementation rather than innovation due to their long-established ways of doing business and other cultural elements. Their success is owing to optimization of existing business instead of due to ingenuity. However, several large corporations are successfully innovating, by adopting certain unique attributes and approaches.
To uncover those attributes and approaches, McKinsey & Company conducted a multi-year study—encompassing detailed interviews, workshops, and surveys—of over 2,500 executives in over 300 companies. The study revealed 8 critical attributes that were present at each large enterprise found successful in innovation (product, process, or business model related).
Now, let's take a look into the first 5 pillars:
In the corporate world, the CEO’s inspiring words are far from adequate to encourage innovation. It is the individuals’ aspirations that drive them to innovate. A realistic, long-term vision and strategic plan that triggers action is a facilitator to aspire. High level aspirations (vision) should be defined, made a part of the strategic plans, and linked with estimates of value (financial targets) that innovation should generate. These financial targets should be apportioned to all business stakeholders through performance targets.
New ideas are priceless. Many organizations, however, get into trouble not from the scarcity of innovative insights but from irrational decisions in ascertaining the right ideas to nurture and scale.
Identifying and scoping these potential opportunities involves insightful visioning of the future and meticulous strategic analyses. Companies should choose promising opportunities to explore concomitantly, carefully plan and execute the most viable options, and drop the ones deemed impractical.
The insights discovery attribute is the essence of innovation. It is one of the chief concerns for the organizations to know how they can develop new ideas and insights. Analytical assessment of 3 crucial elements—a valuable problem to solve, the technology that enables a solution, and the business model that generates money from it—is of great help in generating valuable insights and ideas.
Organizations need to consistently evolve their businesses before they are overthrown by technology driven startups. However, they are often reluctant to pursue Business Model Innovation (BMI) due to the various complexities involved—such as optimizing the value chain, expanding profit centers, or changing delivery models. Leading companies fight this trend by improving their market intelligence, establish separate budgets for new businesses, relentlessly assess their value chain, and deliberate on improved delivery mechanisms. They are always eager to test new offerings and operating models against environmental threats and competitors’ responses.
Organizations often inhibit innovation from flourishing in their culture, unintentionally. Several factors discourage innovation, such as, restricted governance processes, stifling bureaucracies, slow approval process, and lack of teamwork.
To accelerate innovation, it is important for organizations to investigate the validity of a promising idea by running it through end users early on during the development phase to gather valuable customer feedback. They also need to work on deploying empowered cross-functional project teams, curbing bureaucracies, and outlining well-defined decision making processes.
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