Discover the right approaches to internal innovation for business change in 2021 to establish future-proof and resilient organisations with Studio Zao.
Why Organisations Need to Change
As the world faces unprecedented times, the global landscape is changing and businesses must tackle a host of new challenges. Growing uncertainty, disrupted markets, and constant transformation requires organisations to champion off-the-wall thinking and adapt to a new era of work.
The broader landscape of transformation has been influenced by a number of factors, including the introduction of Artificial Intelligence and the automation of work, an impending climate emergency and most recently the COVID-19 outbreak. These elements form a perfect storm, where businesses must adapt to remain competitive.
Organisations Struggle with Innovation Investments
According to Accenture, leaders are responding to current challenges by increasing innovation investments to the tune of 1.8x over the next five years across their entire portfolio of businesses.
But is spending more on corporate innovation the way forward?
In fact, 57% of businesses that made significant investments in innovation have underperformed against industry peers when it comes to growth or market value (Accenture, 2018).
Approaches to Internal Innovation for Business Change
As a starting point, organisations should first align their strategic direction for transformation with their current capability levels and the opportunities identified on the market. Once this is achieved, business leaders can move more fluidly into the execution mindset for their chosen innovation programme.
Breaking the corporate innovation process into three individual options may help organisational leaders decide a way forward with more clarity. These three options include:
- Building innovation internally
- Buying another company to innovate through acquisition
- Partnering to facilitate corporate innovation.
Regardless of which approach is more suitable for your company, it’s important to recognise that each path has its own advantages and challenges. Read about the pros and cons of each option here.
Internal Capabilities for Successful Business Transformation
Very often, transformation and innovation investments are not leveraged wisely because organisations struggle to build the requisite internal capabilities and culture.
Creating the right environment is essential for innovation, but it doesn’t come without its obstacles. Even if you already have employees who know how to launch new ideas, there’s no automatic guarantee that they will have the opportunity to deploy these initiatives by systematically reducing risk through experimentation.
In fact, stifled experiments and failed innovation are often a direct result of the internal organisational structure, and the lack of capability to activate intrapreneurial talent to achieve the strategic outcomes your organisation desires.
Intrapreneurship as a Toolset
We believe that successful transformation comes from within, by building an in-house corporate innovation strategy for business change. This requires organisations to be able to identify, empower and unleash the potential of their internal talent within an enabling environment.
Not being able to create the workforce fit for the future spells doom on most innovation efforts.
Intrapreneurs are able to take the peculiar human capability of connecting the dots and mobilising energy to the next level, to help future proof the organisations they work for. Intrapreneurs deeply understand customers and stakeholders, see their frustrations, use insights to identify opportunities, creatively devise clever solutions and finally mobilise resources to make their vision a reality.
This is why empowering future leaders through intrapreneurship also helps to differentiate an organisation’s from the rest of the pack. More on the future of work here.
What is an Intrapreneur?
Intrapreneurs are employees who think and act like an entrepreneur within a business. They apply problem-solving, creativity, communication skills and critical thinking to deal with ambiguity and to become agents of change and growth for their employer.
Read more about the difference – and similarities – between entrepreneurship and intrapreneurship here.
How to put intrapreneurship into practice?
Our brand new Intrapreneurship Guide covers 6 lessons on intrapreneurship, including practical tips and tools, valuable both to Leaders and Intrapreneurs looking to deploy innovation effectively.
Finding The Right Intrapreneurial Talent
Knowing what to look for, with the help of frameworks, can help you step out of your current operational focus and onto the path to developing a team of “builders” for the future. While the challenges of today are amplified with a very real and ongoing pandemic crisis right now, those seeking competitive advantage must look forward to a post-COVID-19 world.
We usually recommend listening out for 5 signals in your talent to find the intrapreneurs who can help your organisation transform:
- Listen For The Endorsements — If someone searches for information relevant to growing a business (knowledge), accurately understands others (confidence) and acts as an active spokesperson (selling), then they’re also likely to identify and promote potential in others.
- Listen For The “Plusses” — If someone exhibits creativity (disruptor), constantly searches for information (knowledge) and does whatever is needed to be done (independence), they’re also likely to build on the contributions of others by regularly “plussing” ideas.
- Look For Intentional Practice — If someone perseveres through obstacles (determination), knows how to manage high-risk situations (risk) and advocates for the company (selling), then they’re also likely to take ownership of new projects.
- Look For Co-Creation — If someone accurately understands others (confidence), recognises that they can’t do it alone (delegator) and is able to build relationships (relationships), then they often engage with other people with entrepreneurial talent in their work.
- Find The Conversation Starters — If someone exhibits creativity (disruptor), constantly searches for information (knowledge) and regularly considers anticipated effects on profit (profitability), then their curiosity probably drives them to re-imagine how organisations can add value to customers and consumers of tomorrow.
A Practical Approach to Delivering Innovation Projects
Now comes putting your talent and vision into practice.
After having worked with hundreds of intrapreneurs at global brands, organisations and academic institutions, we analysed the most common patterns that lead to success, and we created a framework to guide intrapreneurs delivering innovation within large organisations.
The IMPACT Framework consists of six stages:
- I – INVESTIGATE key challenges and stakeholders
- M – (get a) MENTOR(S) who supports you at a senior level and helps you define a compelling proposition
- P – PITCH your idea to execs and peers, and show that you are not alone
- A – ASSESS whether your proposition is able to deliver value by executing experiments to secure quick wins
- C – (prepare a) CASE STUDY to sustain momentum and help you secure the resources you need to continue on your roadmap
- T – TAKE-OFF with the resources you have now secured to scale up your idea and institutionalise the transformation
Read more on the IMPACT framework here.
Measuring Internal Innovation Sustainably
One of the biggest challenges for established organisations is knowing how to measure success of innovation projects, and how to justify investment in projects that don’t naturally align with their business as usual operations.
Knowing which ventures to back, and which ones are stopping you from transforming, is difficult when your organisation steps out of its comfort zone. Successful transformation is all about knowing how to bring clarity to your innovation strategies for business change through measurable insights or Key Performance Indicators (KPIs) that align with your long-term objectives.
From a high-level perspective, we can organise innovation metrics into one of two categories:
- Input — Measuring the number of innovation enablers your business invests in. For example, input metrics can include the hours of employee time allocated to innovation exercises or the total value of investment into innovation projects.
- Output — Measuring whether your innovation investments have the desired effect. For example, two common output metrics are the number of new products released to the market in the past two-three years or the revenue generated from these products.
However, the most common error for established organisations is to apply the lenses of their current business to evaluate innovation projects. Innovation ventures are likely to be misunderstood or dwarfed by your existing business activity if you fail to adjust your performance metrics or align your approach with your core business objectives.
Read our in-depth look at measuring innovation capabilities for business change and choosing the right corporate innovation metrics for your organisation to fuel forward-thinking ventures.
About Studio Zao
We are a London-headquartered talent development and innovation studio. We work with global brands, organisations and academic institutions across a range of industries, such as Sony Music Entertainment, EY, NHS, Pentland Brands, Aptar Group, UK Civil Service, Target Corporation, Wellcome Trust and the Institute of Cancer Research, as well as the UK’s leading academic institutions like Imperial College London, University College London and the London School of Economics.