Corporate Innovation an Oxymoron?

Two words that don’t fit well together.

Corporate.

Innovation.

Said inside of startup circles, you’d hear a bit of a cynical chuckle. Heh. Innovation doesn’t happen in corporates.

The story we’ve been telling for years:

Corporate, large, giant, public companies are hampered by:

  • Investor expectations to deliver the short term
  • Large hierarchical organizational structures of management that limit autonomy and speed
  • The law of large numbers: expectations for innovations that meet or beat the revenue size and margins of the current business
  • Fear of risking the core business, brand, regulatory advantage, and reputation, limiting the possibilities for experimentation

So how to explain the fact that the leading innovators of today are the largest companies?

The largest companies of today have the biggest budgets in R&D.

Source: Meeker, Mary, Internet Trends, Kleiner Perkins, 2018

The largest companies of today are investing in moonshot bets.

Amazon Prime Air Drones

Google Self-Driving Car

Facebook Spaces

Of the largest companies, all are business model innovators and are able to swerve quickly into your market space.

But wait, you say, those companies are different. They are not “corporate.” They are the new breed of tech giants. They are tech-first companies.

We can’t be like them. We are only in year 3 of our digital transformation efforts. We are still trying to figure out how to adopt agile methods. We still haven’t figured out how to protect our innovation budget from being siphoned off to fill a Q4 revenue gap.

So yes that might be true today.

But what has changed in the innovation narrative.

We can no longer support the“corporate innovation is impossible” story, because of what’s happening at the top of the S&P.

So start telling that story inside of your company.

It will help you protect not just the core and adjacent innovation projects, but your breakthrough bets.

Wall Street expectations set your company up for a focus on short-term value, but that is because Wall Street can’t figure out your long-term vision, and sees the scant progress of your ability to deliver. Study the business model moves of the biggest companies on the planet today. Start demonstrating that progress through experimental efforts. Be willing to kill early stage businesses that don’t meet your growth and margin expectations.

If you’re a senior leader who got a proper MBA and did not grow up in an engineering culture – then it’s time to understand the distributed organizational methods and structures that at first sound trivial and counter-intuitive – Lean, Agile, Scrum, Optionality. As one line manager of a $36 billion dollar business told me, recently:

“Don’t use the word lean around budget season – I might get less budget next year.”

But underneath all of these buzzwords is a rigorous commitment to deep customer centricity, ongoing learning, and the opportunity for a meritocracy-based high accountability culture. You will have to shift from the false comforts of planning through Powerpoint, and learn how to cultivate new business models. You’ll learn how to model, and deliver, on non-linear growth outcomes, building markets and demand. You’ll find less value in sideshows like CES, and more meaning in talking to customers. And I promise you’ll have much more fun.