Scaling innovation: you need to do more than talk a good game

A couple of decades ago, business guru Peter Drucker defined innovation as “change that creates a new dimension of performance.” McKinsey then introduced its Three Horizons model to the world, which many companies still use as the basis for their innovation strategy. But a lot has changed: innovation is now fundamental to digital transformation and central to sustainable business success.

My definition of innovation is that which happens when ideas create value. There are many examples of companies working intelligently, often with partners, and using innovation to transform entire industries. But business is also littered with lots of bad examples, where companies get innovation fundamentally wrong from the start. Innovation works best and drives results when it is focused on a desired outcome and you have a plan to scale your innovation.

What to do with all that data?

It is not enough to uncover a potential solution to a problem, attach some digital technology to it and call it innovation. Many companies find that they collect lots of data from many sources, Internet of Things (IoT) connected objects for example, but they don’t necessarily know what to do with that data. Innovation is about the use case, how you use that data, and having that target outcome in place.

This is why so many companies still get innovation wrong. Any company can develop a product or a service and then brainstorm how they might sell it. It is better to start from a position of “this is why I know my customer will buy this product” and work backwards. The wrong approach also risks innovation becoming a negative on your company. Ideas need to be researched and presented correctly, with a viable use case, tangible target results and scalability built into your plan. Lots of companies talk a good innovation game, they have ideas, think they can innovate them, don’t properly understand what innovation means and how or why to scale it, and so get innovation wrong from the start.

The importance of the ecosystem

The Orange Internet of Enterprises strategy centers around the importance of ecosystems and using co-innovation and data as the route to business value. Companies talk about ecosystems a lot, but many still do not get them right.

For example, a company might feel that to create innovation and grow its business it needs to work with one of the world’s leading software companies. They then find that the software vendor is really only interested in selling them software licenses. Similarly, big digital consulting firms are popular choices for ecosystem projects, but their business driver is selling consulting hours. They are motivated to get you to spend as much time as possible on your innovation project, whether it delivers results or not. Neither of these examples is a real ecosystem.

The right ecosystem is essential. MIT Sloan has previously outlined this need and compared the benefits of centralized versus adaptive ecosystems. The centralized approach places the company at the center, as a hub in the ecosystem. This tends to be the most common ecosystem approach. The more fluid nature of business today, though, perhaps means that the adaptive ecosystem is better suited – one where an orchestrator seeks out connections among different partners often from different industries and connects them to work together on innovation projects. In this model, partners are encouraged to combine their diverse resources to create value for all companies quickly and flexibly, and at relatively low cost.

The adaptive ecosystem approach relies on companies choosing partners to innovate with who can help them create value. You have to ask yourself what that potential partner might bring to the project, where you differ and where you complement each other. Samsung, for example, began working with companies in different sectors to innovate new revenue streams: Samsung wanted to develop a personal-health monitoring business, so reached out to more than 20 start-ups and academic researchers in the health area. It also built a close working relationship with Nestlé around personal nutrition. The result was the “Voice of the Body” platform that lets users and doctors monitor health and medical issues using the latest digital technology.

Many companies feel that ecosystems require them to team up with the biggest names in the industry. That can mean successful outcomes and innovative ideas, but for many companies, joining an ecosystem to create innovation purely by working with big names can backfire. The best ecosystems are founded on defined business drivers.

Successful ecosystems support scalable and sustainable innovation. At Orange, as a vendor-neutral systems integrator, our motivation is to scale innovation no matter what the project. We are technology-agnostic, and we consider innovation as a scalable thing that benefits all members of the ecosystem on an ongoing basis. Companies that only want to sell licenses or build up billable hours have not understood what an ecosystem is or is for.

Differentiation can help: according to BCG research, 83% of thriving digital ecosystems involve partners from four or more industries, and 53% involve partners from six or more industries. If you limit yourself to the big name you believe you are intended to partner with, your innovation will be stifled and not scalable.

Barriers to scaling innovation

Scaling innovation can be hindered by cultural and organizational barriers, skills gaps, business processes and more. Organizational barriers exist if your company leaders are old-fashioned: if you have a close-minded CEO, innovation struggles. A visionary leader who looks to the future encourages innovation and is comfortable with the idea of it. A cultural barrier could be companies obsessing over buzzwords, such as agility. So many companies become fixated on something like agility without understanding its real purpose, and it influences decision-making. This creates a vicious cycle, with executives reaching out to an ecosystem that isn’t really an ecosystem and making decisions that cannot scale. Because they have tried to do things in a hurry, to show shareholders return-on-investment, any innovation is short-term and not scalable.

Your scaling innovation checklist

To do innovation properly and be able to scale it, follow these steps:
  1. Ecosystems need drivers, purpose: start with a top-down approach. Work with the right partners, not just the biggest names
  2. Leadership: to scale, you have to stop disrupting yourself. You have to allow information to flow freely and reliably within your organization to the people who need it
  3. Vision: you must create a vision, clarify the outcomes you’re aiming for, and give the people closest to the problem the authority to implement solutions
  4. Culture of innovation: organize your company around innovation-focused leadership and a structured innovation program

Your company culture needs to be right to help scale your innovation projects. You may have very smart employees doing low level innovation in their departments, but without the mechanisms for bringing it together, you can’t scale it to the benefit of the whole organization.

Orange can help you drive business value in your company by unleashing the potential of innovation. Read more about how Orange can help you use collaboration and digital ecosystems to foster scalable innovation, ideas and results.

Jonas Wallengren
Jonas Wallengren

Jonas Wallengren is a Senior Digital Business Consultant at Orange Business, leading business consulting and innovation teams to help multinational organizations find, enable and scale up growth through the data value chain. He has a passionate focus on mobility, sustainability and resource efficiency and believes that digitally empowered people who use data in smart ways in a hyperconnected society will be the great enablers. He is also a skateboard enthusiast.