When it comes to R&D spending, corporate leaders often want to know what others are doing. How much are other companies in different industries spending on R&D? Leaders want to know the level of spending in absolute terms (i.e. total expenditure), and also as a percentage of revenue. The presumption is that R&D spending is somehow connected to increased innovation, revenue growth and profits. However, leaders may be asking the wrong questions here. Having a great R&D process and achieving market success with the technologies we invent are two different things.
Unlike startups who are usually just starting out in business, large companies tend to have trading histories and reputations to protect. Part of this reputational equity is captured in the company’s brand. At the same time, innovation involves experimenting with ideas and building minimal viable products. This tension between running innovation experiments and protecting the brand is an expression of the innovation paradox. How well this tension is resolved will determine a company’s ability to innovate successfully. This article presents eight ways innovators can test ideas without hurting their company’s brand.
Innovation is a team sport. Although creativity is a characteristic that is often used to describe individuals, the idea of the lone genius is a myth. Even famous inventors such as Thomas Edison where in reality representing the “work of many men.” Francis Jehl, a longtime assistant of Thomas Edison , used this phrase to describe the group of engineers who worked with Edison at his Menlo Park lab. On the journey from ideation to a successful product launch, innovation necessitates the interaction of multiple actors, across many departments, with different expertise and knowledge. In writing about the illustrious history of Bell Labs, James Gertner notes that, “…almost by definition, a single person or even a single group, could not alone create an innovation. The task [is] too variegated and involved.”
Large companies should view themselves as portfolios or ecosystems of products and services. The distinction between searching and executing provides a powerful lens for building that innovation portfolio. A company can use this lens to assess which of its products have validated business models and are mostly in execution mode; versus new products that are still searching for profitable business models. The aspiration is to have a balanced portfolio of products so that when a shift happens, the company is already engaged in a systematic process of searching for new advantages, while sustaining current its cash cows and winding down declining businesses. But how can a company actively build an innovation portfolio? There are frameworks that can help us put this idea on a more rigorous footing.
Most senior executives can relate. It usually starts with some startup types within the company telling them scary stories about how startups are coming to eat their lunch. Look at Facebook, Uber, Twitter and Airbnb! Oh, look what happened to Kodak , don’t let that happen here. Oh, look what happened to Blockbuster, don’t let that happen here. Look boss, we need to innovate like startups. Most senior executives agree. The trends are self-evident like a slap in the face. Only executives with their heads deep in the sand are ignoring such signals. But what should they do?
Much has been written about the changing landscape in the business of education. Christensen’s Disrupting Class is a great book, so is Kevin Carey’s The End of College: Creating the Future of Learning and the University of Everywhere. There is some debate as to whether the coming disruption of education is greatly exaggerated. This article will not wade into that debate. Instead, this piece is a cautionary note to the large incumbent companies in the education industry about what disruption might look like when it is happening. The theme here is to caution that it is not badly run companies that get disrupted, but well run companies that are making sensible management decisions, given their business and where they are.
The pace of change in the current business environment is staggering. It has become difficult for monolithic large organizations to keep pace with this change. At the same time, it appears that quick and nimble startups are emerging with breakthrough products, services backed by equally interesting business models. The quick emergence of a fast moving startup can catch a sleepy large organization, and quickly put it out of business. Blockbuster Inc. is a good case to illustrate this point.
Alex Osterwalder’s business model canvas is a powerful tool. Its power has been demonstrated in a variety of contexts including large organizations and charities working in Africa (e.g. BalloonKenya). The value of business models in general cannot be denied. Business models are important as way of describing how an organization creates, delivers and captures value. However, given what we know about the complexity of business in the real world, is the business model canvas too simplistic?
I’ll be honest, I’m a bit late to the party. I’ve only just completed Eric Ries book, ‘The Lean Startup’, that was published to much acclaim last year. I put off reading it, believing it would be another generic how-to-start-a-high-tech-business book. I already have a bookshelf full of these kinds of book, most of them unread beyond the initial chapter. But now I’ve read it I think that it should be obligatory reading for any UX person. What I like about the book is that it puts UX at the very heart of new product design — and does so in language that will make managers sit up and take notice.
“If I had 20 days to solve a problem,” …observed Albert Einstein, illuminating an approach to research that may come as a shock to some customer and user researchers in the corporate world… “I would take 19 days to define it.” In a culture somewhat preoccupied with solutions, the idea of deliberating over a research problem may seem heretical to some. Of course, logic and common sense tell us that you can’t arrive at a solution if you don’t understand the problem. And turning that thought around, one may conclude that customer-focused research that fails to get to grips with a meaningful problem is pretty much destined to arrive at no useful solution. And that’s a rather worrying thought because companies spend a lot of money on customer and user research and it would be nice to think it was solving something.
At Leancamp Stuttgart, we had a number of interesting sessions. One session in particular focused on corporate accelerators as a means to help large enterprises develop innovative new products. A corporate accelerator would be similar to other accelerator programmes such as Y-Combinator and Tech Stars. The difference would be that these programmes are run for internal innovation teams working on products or services, rather than standalone startup companies.