Innoleaps has experienced great success over the last ten years - all thanks to our loyal clients who've placed their trust in us from the very beginning. I'd like to give something back by sharing some of the most important lessons I’ve learnt throughout my time working with them, to hopefully help more corporate innovators succeed in their mission.
1. True innovation must be top of the shareholders’ (even before the management’s) agenda
The insight: True innovation flourishes in large corporates only if it’s at the top of the agenda - part of the culture and broader mindset. This applies not only to the executive team but especially to the shareholders or board of directors. A long-term perspective must be adopted.
The evidence: Less than 25% of Boards of Directors - that, differently from management that have a "shelf life" of few years, should take a long-term view on corporates - think that innovation and technology trends are one of the top 3 priorities. No surprise that most companies cannot be truly innovative
2. More than strategy and methodologies, corporate innovation requires true intrapreneurs
The insight: Entrepreneurship is an attitude, not a skill. And few corporates measure it. Corporates should identify the entrepreneurs that work within their company - “their intrapreneurs” - and get them to drive innovation initiatives.
The evidence: Being disciplined, creative, self-motivated, and a risk-taker are some of the most commonly cited traits of successful entrepreneurs. But they are not necessarily easy to find. Behavioural science has mapped 17 attitudinal "archetypes". By profiling thousands of entrepreneurs, we found that 3 profiles correlate highly with successful business building.
3. Build something your consumers want - not what your R&D or marketers want
The insight: Google Glass is one of the most expensive innovation failures in history. More market research could have told the tech giant that, although consumers were ready for wearable tech, smart glasses with clunky UX were a step too far. At Innoleaps, our way of working involves cycles of rapid experimentation to validate business ideas fast and in-context (no focus groups!). We don’t blindly pursue innovation without first sourcing evidence that it will play well in the market.
The evidence: One of the main reasons for innovation failures (45%) is “building something nobody wants.” This is particularly true of corporates, who push tech innovation from R&D departments rather than “pulling” it from customers
4. Don’t measure innovation with financial accounting
The insight: Financial accounting and innovation “budgets” kill corporate innovation in its infancy. A dedicated set of “Innovation Accounting” metrics is required to assess the learning and traction of early-stage innovation.
The evidence: Almost 50% of corporate innovation projects are killed after the pilot phase even if they show promising “innovation metrics” (usage, Lifetime Customer Value, etc.), because the Finance Department judges them “margin dilutive”. Profitability comes only after revenues, which come only after customer-related metrics.
5. 1 out of 10 win: the importance of a portfolio strategy
The insight: Given the high failure rate of innovative projects, a portfolio strategy is required. Like venture capital firms, for which 1% of ventures are responsible for 90% of the return, corporates should invest in a broad range of “bets,” doubling down on the most promising ones to maximize the innovation ROI.
The evidence: Bosch is a high-profile example of an innovative firm that takes a portfolio approach to investment. Over the past years, the company worked on 214 ideas, stopping two-thirds at the first stage and then three-quarters on the following stage, ending up with 19 new business lines worth hundreds of Millions. They wouldn’t have been able to have such impact if they started with just a few ideas.
6. Rapid validation is more important than ideation
The insight: Even more than ideation, a crucial capability to build is rapid experimentation, iteration and validation of ideas. Validating your ideas by gathering in-context customer feedback about all your assumptions is key.
The evidence: Amazon runs thousands of experiments every month. In fact, founder Jeff Bezos has admitted, “Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day.”
7. Balance core and beyond the core innovation
The insight: Corporates invest more than 95% of their resources on innovating their “core”, and we all know that the core processes pay corporate salaries, but most successful companies invest at least 25% on innovation beyond the core - this is what pays for corporate pensions.
The evidence: Recent research by Forbes found that venture capital funds spread their investments across core, adjacent, and disruptive opportunities. This approach promises long-term returns without abandoning short-term resilience entirely.
Successful corporate innovators - i.e. companies that outperform market growth and return to shareholders - invest up to 25% of their budget in initiatives “beyond the core” - i.e. “Horizon 2” and “Horizon 3”
8. Play both the incubation and the excubation game
The insight: Core innovation has, of course, to be “incubated” by corporates - to leverage all their assets - but innovation “beyond the core” requires a different “excubation” approach, nurturing more “venturous” initiatives in a more agile setting with dedicated entrepreneurs.
The evidence: Corporate Venture Studios - i.e. external units backed by corporates and in charge of validating and spinning-off new business lines - have a higher return on innovation investment even compared to average Venture Capital funds
9. Open ecosystems create more value than closed ones
The insight: The potential of innovation is enhanced when corporates exploit the power of an open ecosystem, collaborating with startups/scaleups to complement their capabilities - leveraging their talent, technology and VC investments - enriching their solutions and greatly accelerating their time to market.
The evidence: A survey by Match-maker ventures found that 79% of corporates have already collaborated with start-ups in some way, and 85% of those who haven’t yet are interested in doing so. There are many great examples of corporate/start-up collaboration to be found across different sectors: Coca Cola, Cisco, Unilever and KraftHeinz just to name a few.
10. Make sustainability a sustainable business model
The insight: Sustainability has become the most important driver of corporate innovation. Not only to satisfy growing consumer demands but also for investors, business leaders and governments. Given the growing pressure its no surprise that most corporate innovations are centered around the ESG/SDGs. Impactful sustainability comes from initiatives that are at the same time sustainable for the environment, sustainable financially and sustainable over time.
The evidence: ESG business services spend is predicted to reach $158 billion in 2025, and ⅓ of all global financial assets (35 Trillion $) are deployed in sustainable investments. Return on such investments will be crucial to ensure that they will be reiterated.
Building on a decade of innovation
We’ve been supporting businesses for ten years now, but there is still much more to learn - and many more exciting innovations to discover. The lessons I’ve shared above are just a sample of the those I’ve picked up whilst working with a range of exciting global businesses. They’re sure to change and evolve as time goes by - as with everything in the business world. Here’s to the next decade!
If your interested in hearing more about how I can help you achieve your innovation goals, Schedule a short introduction call using the button below or get in touch.