3 Most Common Innovation Challenges In Corporations

Innovation Challenges in corporations

As explained by Steve Blank in his article How to Make Innovation programs deliver more than a cup of coffee, one does not become successful just by establishing a “museum” with drones or gadgets and monitoring the number of visitors. Innovation is not achieved by simply creating a space with cool furniture, organizing hackathons, inviting startups to pitch their ideas and having teams fill the walls with sticky notes.

In recent years, we have witnessed how many companies started innovation labs, corporate accelerators, and launched change initiatives.

The trend now is to embrace new innovation methods but getting the desired results is not so easy to achieve. In fact, most companies encounter these 3 key innovation challenges when they try to change their innovation efforts:

1. Changing the status quo

Every single company in the world has a more or less structured approach to innovation, a more or less open model. What ultimately matters is not so much the innovation model but the results the company gets.

However, the first innovation challenge is to change the status quo. Many companies use traditional models based on in-house R&D teams and supporting universities, technological centers, and reliable suppliers. These models are not as effective as others based on open innovation, especially now, when technology is changing very fast and resources are more limited.

One mining company we met in Chile had a traditional innovation model but its Innovation Director was willing to test our open innovation approach. We had to explain to the in-house experts that, with crowdsourcing, innovation becomes a co-creation process with diverse contributions from outside.

A few months later, this mining company states that the new approach is 40% more cost-efficient and delivers solutions 3 times faster than traditional innovation methods.

To know more about this story, you can read this other article about open innovation in mining.

2. Find and attract the right innovation sources

Once a company has made the decision to innovate, the next step is to be able to generate innovative ideas or solutions. Even if there is no innovation without results, in order to get results, you need good ideas first.

Many companies have started to adopt more flexible models to attract new solutions. They have created corporate startups accelerators to identify technologies and attract entrepreneurs to either co-create or buy.

After having conversations with a construction company, we came to the conclusion that startups are usually more suitable to find digital innovation or business model innovation. Startups with ‘hard tech’ innovation (as opposed to software innovation) are more difficult to find since this type of innovation requires more investment and time.

This construction company tried our open innovation platform to reach out to a broader variety of innovation sources. This open initiative brought hard tech ideas/solutions with enormous potential in just 6 weeks.

Now, this company is planning to introduce crowdsourcing in other divisions. Another example of the importance of finding the right innovation source is the medium-size steel manufacturer that launched a startups program to innovate around energy storage.

Energy storage is a great approach to reduce the impact of energy costs in the manufacturing of metals but too big a challenge for a medium-sized company. In this case, a good option would be to become part of a vertical accelerator to attract the best startups in the world.

3. Getting results

Getting results for your business must be the main reason why you embark on an innovation process. Not having a solid business case from the beginning is one reason why a project fails and a second cause is related to the company’s ability to adopt innovation.

In this sense, the more rigid a sector or company and the less attractive the business case, the greater the chance of failure. A very straightforward example is the mining sector.

In this industry, safety is key, which is why it is not possible to adopt innovations that are not fully tested. As a matter of fact, the main innovation challenge for mining lies in performing the necessary tests on new technologies to validate them.

For this reason, pilot-testing centers are now emerging in many countries. Another example of corporate rigidity are the multinationals subject to strong regulatory controls. In these environments, it is hard to innovate with startups due to the complexity of the investment process or the difficulties associated with IP sharing.

This kind of innovation challenges in corporations slow down the innovation process in many companies and endanger the survival of startups whose resources are scarce and rely on faster deals.

As a consequence, many of them die prematurely. If you want to know more about how to overcome innovation challenges in corporations, read the information here or contact us.