Innovation has become imperative for companies, but the possibility of failure is high for reasons internal to the organisational structure. Limiting risks is possible, and let's see how.
The complexity of the world we live in is increasing day by day, and so are the markets in which companies operate. Continuous innovation is necessary to keep the offering relevant and seize the many opportunities behind each change.
There are three main reasons why innovation is essential for companies:
DATA: INNOSIGHT/Richard N. Foster / Standard & Poor’s
In recent years, many companies have adopted specific strategies to respond to constant innovation needs. Each strategy has strengths and weaknesses assessed according to objectives.
At a closer analysis, the first two are functional to improve the company's exploit in the short term but have little impact in creating genuine and lasting innovation. They respond to transformative and rejuvenating needs without exploring new possibilities or markets.
Despite the ability to generate concrete innovation, the third and fourth strategies remain limited outside the promoting organisations and struggle to contaminate the original corporate mentality, colliding with implementation difficulties and precluding market landing of the proposed solutions.
The fifth and most recent strategy, Venture Building, has gained appeal due to its inherent ability to maintain the strengths of all others while minimising their shortcomings. It allows practising innovation that integrates both the benefits of exploitation and exploration, proposing radical solutions that incorporate and spread within the starting corporate organisation.
Corporations can pivot their business beyond the traditional one, generating highly permeable innovation and supporting their core business with new vigour.
In light of these considerations, many forward-looking companies are capitalizing on new markets, technologies and behaviours, diversifying their purpose and offer, and creating new ventures capable of raising industry standards. A strategy that has proven to be both more challenging and profitable at the same time, able to contain risks and maximise results in the short and long term.
Among the main obstacles to the success of new ventures, we find appropriate identification of human and financial resources, navigation through complex legislations (especially in highly regulated sectors such as Finance and Healthcare), timely validation of the market through research, testing and competitive differentiation. However, imagining the direct relationship between benefits and risks is easy.
An analysis of the attempts made to date by many companies that have accepted the innovation challenge suggests that the three leading causes of failure are often internal and recurrent:
Awareness of the causes helps to identify the success factors limiting risk. Strategy alone is not enough. Applying fundamental principles beyond methodology is critical, and they transversally involve people, corporate structure and proposed value.
A design approach to Venture Building helps companies become hyper-focused on user needs through multi-stage agile innovation. Empathy, ideation, prototyping, iteration and collaboration increase the chances of success by satisfying users' needs and differentiating themselves in the market.
Making new ventures by design is the most effective approach to innovation for large organisations because it accelerates the go-to-market phase, reduces risks, increases operational flexibility (outsources and sows new principles within the company) and access to multidisciplinary resources and talent, and has a far greater potential return on investment than other choices.
Together with other Bip Group partners, we have defined an articulated and multidisciplinary end-to-end program to support companies in making innovation a constitutive part of their present and future identity.
Write to us to learn how to solve the most complex obstacles together and produce value by innovating.
