An automotive company I was working with wanted to integrate more digital services into its vehicle range. The company could see more digital firms entering its market that understood the value of customer data, and how it can be collected and managed to create value. Concerned that it faced disintermediation, the company wanted to build its own digital service capability to strengthen its direct relationship with customers. Over several months the innovation unit worked intensively with a startup partner to build a new service and eventually produced a working prototype. So far, so good.
The problems occurred when the team took the prototype back into the business. Concentrating the prototype development work in the innovation unit had helped the team make rapid progress, but had left other divisions of the business on the periphery of the project, or in some cases not involved at all. So when the innovation unit tried to make the case for the adoption of their idea, they met both practical challenges related to aspects of product development and engineering they hadn’t anticipated, as well cultural challenges from colleagues who didn’t feel invested in the success of the project having not been involved until now.
I call this the Innovation Transfer Problem. It occurs when companies attempt to turn a concept for an innovation into the strategic, commercially-viable product or service they want to take to market. At this point, the emphasis in the innovation process shifts from a focus on creative activities to the management of change within the business necessary to make the new product or service a success.
Making the transfer work can be tricky. This piece from the World Economic Forum Agenda highlights some of the challenges. The key to success is to avoid approaching the transfer as a linear activity. Instead, firms need to take a framework approach and identify the factors that will shape the successful commercialisation of the idea so they can be anticipated earlier and integrated more effectively into the project. The process-led approach applied to many activities can be a further challenge here. Processes can be incredibly valuable in business. They enable speed, efficiency and scale. The trouble is that they are designed to be repeatable, so when the goal is innovation – to create something new – repeatability can be dangerous. For the organisation attempting to innovate, following well-defined process can blind them to factors that are unique to the innovation project and will be crucial to its success.
A good example is procurement. Most large established companies have well-defined procurement processes. However, for companies attempting to collaborate with startups and scaleups to stimulate innovation, those processes can become a barrier to forming a business relationship, rather than an enabler. Often they are designed to facilitate relationships with much larger companies, or created to enable the provision of established, recognised services, rather than the creation of something new. With the Tech London Advocates I had the chance to explore the issue in a panel we held back in the summer. You can read a summary of the discussion here. By engaging the procurement team early in the project and treating it as a truly strategic component of the project, then it becomes possible to shape aframework that’s appropriate for the goals the company wants to achieve and is workable for a corporate and startup alike.
Making a change is rarely easy. It means being willing to think and act differently. But by being open to a wider range of inputs, the possibilities can be transformative.