We all talk about it, but how are we actually doing it? 

In attempt to find out how large mature companies are tackling innovation, Lean Ventures has recently completed surveys followed by in-depth interviews with innovation managers at large companies in telecom, utilities and consumer appliances.

Innovation leaders face lots of challenges on their roads to capture opportunities. So, we tried to understand- how are these being being prioritized and managed?

  1. Many definitions of innovation

Most innovations managers that we spoke to have a definition of innovation. Yet no one could say if that definition is shared across the organization. When we use keywords that carry different meanings to people, communication breaks down.

Don’t build a Tower of Babel, start building a shared language of innovation.

  1. Innovation is important

Despite understanding the importance of the situation, many top executives still find “walking the talk” a major challenge. For example, 83% said that they think innovation is “very important” to the long-term survival in their industry, but only 42% have an innovation strategy that is aligned with the overall business strategy, and less than 50% have an innovation training program in place.

The next point may provide some insights into why this is so.

  1. The challenges of innovation are more than most imagine

In our survey we listed 15 different challenges that may pose as a hurdle to innovation. We thought that we had covered the most common challenges, yet the option “Other” was chosen by a whopping 65% of our respondents.

People really wanted to express themselves in identifying the top three challenges blocking “from words to action”. We were of course reminded of the importance of identifying the core problem and letting everyone have their say, before choosing which tools and methods to apply.

  1. Innovation metrics are still an enigma

One-third of companies that we asked apply the same financial metrics that they use for their core business to also measure innovation projects. 35% said that they don’t measure innovation projects at all or that what they’re using are “inadequate measurement methods”.

Although the Balanced Scorecard is a favourite amongst several of the people that we have spoken to, BSC provides no clear guidelines on how to measure innovation.

Applying the same KPIs for innovation projects as you do for “business as usual” is like asking a five-year-old to carry a 50 pound backpack when you go hiking. The child has great potential but don’t expect it to perform like you do on day one.

Instead of applying rear-view mirror metrics such as revenue, ROI, IRR and NPV, measure initial user interest, user engagement and conversion rates.

  1. Incentive structures that support innovation are rare

Less than half of the respondents say that their company have an incentive structure in place that supports innovation.

Getting an incentive structure in place that supports innovation seems to be a big challenge. This harks back to the widespread lack of understanding, or misunderstanding, of how innovation can be measured. Unlocking the interplay between metrics and incentives holds the key to tremendous value creation.

Every high performing company that we have come in contact with excels at measuring a few actionable metrics rather than measuring everything just because they can. They also have an incentive structure in place that is tightly aligned with the few metrics that really matter.

  1. Innovation training programs are lacking

With half the respondents lacking an innovation training program, there seems to be a disconnect between what senior managers say and what they do when it comes to innovation.

Although innovation has evolved from being a “black art” to a discipline with a deep academic and practical rigour filled with proven methods, tools and use cases, there is still much to do to transfer this knowledge to large companies. It is our strong recommendation to stop wishing for miracles and instead start mastering innovation as a discipline.

  1. There is a widespread fear of hiring outside expertise

We are firm believers that the company has to learn to innovate on their own and not outsource “innovation” to consultants. Third parties can provide methods, tools, processes and coaching but the company should do the actual work. To practice innovation the company’s employees must stumble, fail and learn over and over again, or it will never become part of their DNA.

Here are some of the biggest doubts, constraints and challenges when it comes to hiring external expertise to support in the planning, development and implementation of the innovation strategy. 

“A fear that the consultant will provide only power points, and that it is hard or impossible to implement the recommendations.”

 “That external experts apply generic innovation models without taking into account which model would fit our culture and needs specifically. “

“Humanists teaching engineers – they don’t speak the same language and fail to understand each other.”

“External expertise is often a lot of talking and little action, concrete prototypes or processes. It often means a lot of money goes out of the company, and a lot of work comes into the company, without resulting in tangible benefits for the company or our customers.” 

The survey is still live!

Data collection for this survey is ongoing and is managed together with the open innovation platform Idea Hunt. 

Lean Ventures intend to regularly re-publish the results as more data points are collected. If you work with innovation in a large company and would like to participate in this study you’ll find the survey at http://bit.ly/innovation-survey-2016.


andy-cars-intrapreneurship-300x260This is a guest post by Andy Cars, the founder Lean Ventures and a serial entrepreneur turned advisor. Andy works with established companies to design and implement measurable innovation strategies and to build their innovation capabilities.

By drawing on the experience from mentoring hundreds of startup teams, Andy provides unique insights into what it takes to successfully innovate. Andy has also been involved in designing and running startup accelerator programs and advising on how to create and grow startup ecosystems both locally and internationally.

You’ll find him on LinkedIn and Twitter @andy_cars.