An automotive company I was working with wanted to integrate more digital services into its vehicle range. The company could see more digital firms entering its market that understood the value of customer data, and how it can be collected and managed to create value. Concerned that it faced disintermediation, the company wanted to build its own digital service capability to strengthen its direct relationship with customers. Over several months the innovation unit worked intensively with a startup partner to build a new service and eventually produced a working prototype. So far, so good.
The problems occurred when the team took the prototype back into the business. Concentrating the development in the innovation unit had enabled the team to make rapid progress, but had left other divisions of the company on the periphery, or in some cases not involved at all. So when the innovation unit tried to make the case for the adoption of their idea, they met both practical blockers, related to aspects of product development and engineering challenges they hadn't anticipated, as well cultural barriers in the form of colleagues who didn't feel invested in the success of the project, having not been involved from the start.
I call this the Innovation Transfer Problem. It occurs when companies try to turn a concept for an innovation into commercial proposition they can take to market. At this point, the emphasis in the innovation process shifts from a focus on creative activities to the management of change. With this comes a range of operational and strategic factors that need to be thought about to get the new product or service off the ground. The challenge of launching an innovation in a large company certainly isn't insurmountable of course, but it does take a change in emphasis
Making the transfer work can be tricky. Having develop a concept with radical or disruptive potential, the business shouldn't simply channel their thinking into a conventional product development process, but it does need to consider how the organisation needs to adapt to make the idea work. This piece from the World Economic Forum Agenda does a great job of highlighting some of the challenges and strategies to overcome them.
The key to success is to avoid approaching the transfer as a linear activity. Instead, firms need to take a framework approach and identify the factors that will shape the successful commercialisation of the idea so they can be anticipated earlier and integrated more effectively into the project.
The process-led approach applied to many activities can be a further challenge here. Processes can be incredibly valuable in business. They enable speed, efficiency and scale. The trouble is that they are designed to be repeatable, so when the goal is innovation - to create something new - repeatability can be dangerous. Anything new gets squeezed out. For the organisation attempting to innovate, following a well-defined process can blind it to factors that are unique to the innovation project and will be crucial to its success.
A good example is procurement. Most large established companies have well-defined procurement processes. However, for companies attempting to collaborate with startups and scaleups to stimulate innovation, those processes can become a barrier to forming a business relationship, rather than an enabler. Often they are designed to facilitate relationships with much larger companies, or created to enable the provision of conventional services, rather than the creation of something new. By engaging the procurement team early in the project and treating it as a truly strategic component of the project, it becomes possible to shape framework that's appropriate for the goals the company wants to achieve and is workable for a corporate and startup alike.
To avoid barriers in other aspects of the transfer, businesses need to redesign processes that limit change. A first step is to map existing processes, then identify those that are restrictive to the strategic innovation the company wants to achieve. Incentivisation is crucial for change, so incentives need to be designed for managers and leaders that encourage process reduction and streamlining. Finally, greater accountability for innovation performance provides an added incentive to show initiative and find ways to overcome processes that are a barrier to change.
Making a change is rarely easy. It means a willingness to think and act differently. But by being open to a wider range of ideas, possibilities and ways of working, the effect can be transformative.