As an innovator, you could create new value in countless ways, from incremental process improvements, to enhancing innovation capabilities, to building entirely new pockets of innovation activity.
Corporates vs Startups
While corporates have traditionally dominated the market in terms of resources and reach, there are many lessons to be learnt from startups; particularly with respect to innovation and operating efficiency. As the startup trend continues to grow traction across the globe, a common question arises – how does a start-up reach scale and size so quickly? Take the hotel industry for example – in less than 10 years, Airbnb has eclipsed the market valuation of Hilton by around 1.5 times. Accordingly, business across multiple industries (including corporates) are recognising the value and gains realisable from innovating at the speed of a startup.
Startups use unique methods, platforms and ways of working to maximise the potential of (and return on) limited resources. These can help foster innovation, uplift capability, and accelerate go-to-market decisions. While these tactics have conventionally been associated with businesses in the start-up and early growth stages, there are many lessons which can be learnt and applied in the corporate domain.
“Starting a company is like throwing yourself off the cliff and assembling an airplane on the way down.” -- Reid Hoffman, Founder of LinkedIn
In order to innovate at speed, corporates can obtain overwhelming advantages from operating like a startup. This may require resource allocation, skill-building and a flexible mindset; but can result in positive and rapid diffusion of innovation throughout the firm. In a dynamic and complex business environment where “disruption” rules the market, corporates must be willing to embrace new ways of thinking to gain momentum and achieve a truly meaningful and sustainable path to innovation.
As Reid Hoffman (founder of LinkedIn) expressed, “starting a company is like throwing yourself off a cliff and assembling an airplane on the way down”. So why this comparison? Firstly, a leader is not falling off a cliff – they are leaping– the difference being the presence of conscious choice. A decision. They calculate the risks, and then they do it without hesitation. They have a vision and want to make something happen.
Inevitably, there may be some less-than-spectacular crash landings, however this is core to the process. As many successful entrepreneurs and business leaders have found, failure is an integral part of holistic learning. The important part is acknowledging that even with seemingly endless research and planning, unexpected challenges will arise and leaders must learn from them, deal with them and keep building.
The other crucial factor, noted by Richard Branson, is to remember that you can’t do it all alone. Even if you jump off that cliff alone, you will need plenty of support to get the plane built and flying smoothly. Whether it’s help with a start-up loan, finding partners, building a new product offering, gaining expertise in areas you lack it, or plain old moral support, an entrepreneur or business leader is only as strong as the people they surround themselves with.
Types of Innovation
To understand why corporates can and should innovate like startups, it is important to first understand what types of innovation exist and why they are relevant.
Disruptive innovation means to reinvent a technology, business model, or simply invent it all together.
Popularised by business like Uber and Airbnb, disruptive innovation generates new markets and value by disruptive old ones. These often lead to effects and outcomes not anticipated by the market, and can create new pools of values for customers to absorb. Disruptive innovation is not just driven by harnessing new technologies; it can also be achieved by developing new business models and exploiting old technologies in new ways.
Sustaining innovation seeks to improve existing products without creating new markets or values.
The “innovator’s dilemma” is the tough choice any company faces when it has to choose between holding onto an existing market by doing the same, yet slightly better (sustaining innovation), or capturing new markets by embracing new technologies and adopting new business models (disruptive innovation).
In order to achieve cutting-edge innovation within a company while creating a long-lasting business advantage, the latter should aspire to achieve both revolution and evolution. In other words, disruptive innovation and sustaining innovation do not necessarily need to be alternative to one another, but rather complementary measures.
In many industries, startups are outpacing corporates in creating new value for customers, shareholders, employees and other stakeholders. Having worked with startups and corporates around the world, we’ve developed a playbook drawing on the Lean Startup methodology, providing you with the principles, tools and methods that will enable you to innovate at the speed of a startup.
Remember that as a corporate innovator you have access to the resources, assets, channels, knowledge and people within your organisation. Leverage these assets and don’t do it alone, draw on the expertise, insights and support of your colleagues, and share your journey with others.
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