It's the question we all ask ourselves: How do you stay young? Fit? Relevant?
That goes for you and me -- people everywhere. But it applies equally to companies: How do businesses founded 10, 20, or, in my workplace Schneider Electric's case, more than 180 years ago, keep adapting to the changing geopolitical, economic, social, even environmental circumstances around them? To the technological changes that can render entire product lines redundant in a matter of years? And how to counter the sheer organizational inertia that comes with size and age?
Corporate innovation in itself is nothing new. Companies have been innovating, re-positioning, and re-framing their business models for centuries. Just look at how Amazon morphed from an online bookstore into a multinational technology giant providing everything from e-commerce to cloud computing services.
But the urgency is now greater than ever. For one thing, the events of the past 15 months have shown how critical it is to be able to bring innovative processes, products and services to the table fast. Companies that were quick to react to Covid-19-induced lockdowns, supply chain disruptions, and changing consumer behaviors fared relatively well. Those that lumbered suffered.
For another, the pace of technological change is now faster than at any point in human history. Artificial intelligence, 3-D printing, digital imaging, Big Data analysis, the Internet of Things, bio-engineering, robotics, industrial automation, clean-energy solutions, and remote-everything -- most of these barely existed 20 or 30 years ago. And they've transformed how we live, work, and manufacture, source, deliver and design goods and services.
Take the car industry as an example. Manufacturers currently have to adapt to three massive shifts: electrification, connected driving, and car-sharing. All three have gained momentum over just the past decade. Similarly, the oil and gas sector is having to contend with the transition from fossil fuels to renewables. Innovation, for them, is a matter not just of competitiveness, but of life and death. Looking ahead, the pace of change will, if anything, accelerate.
For corporate innovation, look both inside and out
But how to bake innovation into a company's business strategy?
Home-grown, organic innovation should be a no-brainer -- the order of the day for all organizations. It's about in-house research and development (many, including Schneider Electric, allocate in the order of 5 percent of revenues to R&D). It should ideally also entail programs designed to identify in-house ideas and fostering "intrapreneurs" within a company's ranks.
External innovation involves bringing ideas from outside. It can range from partnerships with think tanks and academic institutions to taking stakes in established companies to providing venture-capital-style financing for promising startups -- all with the aim of co-developing new ideas, technologies, and business models within an established business.
The corporate innovation challenge
None of this is easy. Companies and organizations -- much like grown-up humans -- tend to shy away from trying new things. The natural tendency is to prefer predictability to the unknown, and not to rock the boat.
What's more, companies that want to stay cutting-edge have to make sure that innovation is embedded into the corporate mindset (not a bolt-on sideshow) and holistically pursued, via initiatives that complement each other (rather than existing side-by-side).
With that in mind, here's a tongue-in-cheek manifesto for chief innovation officers (like myself) and companies that want to stay ahead of the curve:
- Be curious: True innovators have the curiosity of a 4-year-old: that child-like excitement about the unknown, the desire to find out more and test what's possible. Sadly, the curiosity we're all born with fades over time. Don't let it.
- Be bold: If you want to innovate, you have to dare to disrupt established processes and assumptions. That means being comfortable with ambiguity, uncertainty, and failure.
- Be patient: Innovation takes time. Even successes that materialize -- and many never do -- easily take five to seven years to generate revenues or earnings. For stock-market-listed companies, which tend to think in quarterly earnings cycles, this can be especially hard. So it's critical to manage C-suite and investor expectations.
- Be experienced: Senior management has to buy in and facilitate innovation -- but also stay hands-off enough to avoid micro-managing or bear-hugging fledgling projects to death. This means accommodating two different mindsets under one roof -- a delicate balancing act that requires considerable corporate experience to navigate.
- Be humble: It takes a bit of humility to accept that a 20-something entrepreneur working in a spare room in California, Shenzhen, or Tel Aviv, may just know more about a novel trend than you do. Meet, listen, take them seriously -- even if they're half your age.
If you want to be an innovation leader rather than a laggard, you need child-like curiosity plus adult grit, and a good dose of thick skin. It's not an easy combination. But it's the recipe to delivering sustainable, long-term growth -- to staying young. In an era of dizzying change, sitting on your hands is simply not an option.