In business, what does innovate mean? Does it mean hiring a more diverse employee base? Or does it simply mean getting creative at work? Because innovation isn’t always easy to define or measure, it can make or break the growth of even some of the largest and most seasoned corporations worldwide. No matter the industry, advancing technologies, climate change, life after a global pandemic, and many other phenomena are rapidly changing life as we know it, especially how we do business. This means to stay competitive, businesses need to be innovative when thinking about their products, services, and business models.

Some of the more popular demands corporations face nowadays is making business more ethical and sustainable due to the increasing effects of global warming and social justice movements. Whether it’s agribusiness, retail, supply chain, travel, or any other industry, now is more important than ever for companies to turn their new business ideas into thoroughly developed innovative strategies that can address these changing demands.

It's important to remember that the one thing you can count on is change. Our CEO and founder, Saeed Amidi, shares why it's important to innovate and how corporates and startups need to speak the same language. Learn more from Saeed Amidi about embracing innovation.

So, what is an innovation strategy and how do you start developing one?

According to McKinsey, 84% of CEOs believe innovation is necessary for growth, but less than 10% are actually satisfied with their innovation performance. This is because many companies aren’t always successful when creating and implementing their innovation strategies. Simply put, an innovation strategy is a plan, method, or series of strategic changes based on a new idea or different approach supporting future growth in business.

To start developing an effective innovation strategy, it’s essential to have the following:

A top-down mentality - Top-down processing in various contexts means taking previous knowledge, looking at the bigger picture, and working backward. In this context, it can be done to find innovative business solutions. Fostering a top-down mentality also means having a top-down approach in your chain of command. For example, your organization’s executive team should be one of the first stakeholders on board with pursuing an innovation strategy.

A sense of intrapreneurship - If you haven’t gotten your CEO to sign off on the big ideas just yet, intrapreneurship is another way to get innovation going in your organization. This system often fosters an environment for entrepreneurial behaviors within a larger organization rather than starting solo outside of one. Intrapreneurship usually influences people to be more self-motivated and action-oriented.

Structure and resources - Most innovative tactics fail miserably if your company lacks the structure and resources necessary to incubate new ideas. It’s important to set aside a specific budget or department to manage your innovation strategy. The right resources often include having the right people, the right training, and money. For example, hosting internal workshops to exercise your employees’ creativity or offering scholarships for employees to expand their educational backgrounds are some good starting points.

Whether you're starting your innovation journey with an innovation team, your executive team, or a combination of both, you’ll need to focus on ensuring your organization has the right environment for your innovation strategy to thrive. This is why it’s important you focus early on fostering an innovative culture among your employees.

How to tell if your work environment is ideal for an innovation culture

Every organization inevitably develops some type of culture. Some work cultures, however, aren’t always ideal for innovation to thrive. Here are a few signs your work culture might not currently be a fit for innovation:

Low standards for work ethic and tolerance for incompetence hurts innovation culture

A work environment that allows messy or incomplete work, missed deadlines, poor management, or mediocre thinking is often the least likely to foster a successful innovation strategy. This is because the work culture doesn’t hold high employee standards. Some of the most notable trailblazers in business, such as Apple or Amazon, have high expectations for their employee base and typically only hire the best of the best and the most creative of the creatives. High-quality work and out-of-the-box thinking are key drivers of an innovative culture.

Lack of structure and high pressure environments hinder an innovation team

When trying new ideas or pursuing an innovative solution, it’s important that there are certain parameters for experimentation. This might sound like an oxymoron because innovation often requires pushing boundaries, but in business, you can’t necessarily throw whatever idea at the wall and hope something sticks. Some of the best business ideas require just as much structure as they do creativity.

RELATED: Fostering an Innovation Culture That Thrives in Your Organization

Organizations that also pressure their employees to meet unrealistic expectations or have little to no tolerance for failure or honest mistakes are breeding grounds for innovation failures. People are imperfect by nature, so even the best and brightest on your team will still have flaws in their work. Leaving room for improvement allows people to continuously try new methods and be creative without feeling the need to make their ideas foolproof. An idea that is continuously improved upon will likely have a better chance of being successful rather than an idea stuck on the drawing board trying to make it perfect.

Green flags of innovation culture

Now that you know what doesn’t work in an innovative culture, here are some “green flags” to help you determine whether your workplace culture is currently innovative:

• Your organization recognizes that innovation is critical to growth
• New ideas are considered for current products or services
• Your organization doesn’t procrastinate on taking action
• Your organization has a balanced set of initiatives that are time and risk-based
• Your organization is open to external solutions to invite new ideas and approaches
• Your organization is open to changing traditional work practices and policies if necessary

For more insight about fostering an innovative culture, hear from our own corporate partners about how beneficial this type of corporate environment is to stay agile and relevant:

Fostering an innovative culture is a great way to prime your innovation strategy, but it’s still only the beginning. You must also weigh the pros and cons of promoting innovative business solutions within your organization.

The pros and cons of an innovative solution

New business ideas essentially become innovative solutions that promote your overall innovation strategy and business growth. However, it’s important that your business weighs the pros and cons of each idea before putting it into action. Every company and industry is different and will inevitably have different goals and Key Performance Indicators, or KPIs, so here are some general pros and cons to keep in mind when getting innovative. These can also help you determine the Return on Investment, or ROI, of your innovative business solutions.

Pros of innovative solutions

One of the main advantages of introducing innovative solutions into a business is that it can help to improve efficiency and productivity drastically. With the right technology, businesses can streamline processes, reduce manual labor, and increase data accuracy and reliability. By leveraging new technologies such as automation and artificial intelligence, businesses can boost their operational performance while also cutting costs associated with labor and other manual tasks. In addition to improved efficiency, an innovative solution can enhance the customer experience by offering more customizable services or products. This may include providing customers greater access to important data or customizing their desired product or service through a self-service solution or platform.

RELATED: Finding the Perfect Innovative Solution for Corporates

Innovative solutions can also promote better collaboration among employees within an organization. By allowing them to quickly share information and communicate across departments, teams, or even geographical boundaries, collaboration becomes more efficient and effective for any business. Utilizing new tools can enable employees to have better control over their workflows and access to relevant data, which helps them make informed decisions in a timely manner.

Cons of innovative solutions

Innovative solutions in business may initially appear to offer many benefits, but there are a variety of drawbacks as well. One of the most significant cons is the increased complexity that comes with new and innovative solutions. With any kind of major change comes the need to completely re-evaluate existing processes and systems, which can be an expensive proposition depending on the scope of the change. Additionally, it's often difficult to predict how any new system or technology may interact with existing ones – a problem that can be especially tricky if there are compatibility issues between them.

Finally, changes in business models and strategies often require additional resources, such as training and personnel costs, which can be costly. All these drawbacks should be carefully evaluated before investing in an innovative solution for your business.

Examples of successful innovation strategies

Our success stories with our corporate partners are great examples of corporations implementing their innovation strategies. Learn more about the story of Fraport, our corporate partner who we helped build strong connections with the startup ecosystem and harness the power of open innovation.

To discover more in depth how Plug and Play works with corporates and startups to foster the most game-changing innovation, check out some of our most impactful case studies:

• The Success Story of Lavazza & Wonderflow
• The Success Story of Ooredoo Smart Energy Initiation
• The Success Story of Suzuki & CommerceAI

Additionally, there is a lot to be learned from Big Tech in regards to innovation. They are the trailblazers in not only technology, but in numerous forms of business. According to the Board of Innovation, there are five big tech examples of successful innovation strategies to help you define yours:

Microsoft

Microsoft’s innovation strategy focuses on R&D with the aim of advancing its position in a range of markets. The company operates via four different types of innovation:

• Disruptive innovation, which is the process of transforming a costly or high quality product, offering, or service into one that is more affordable and accessible to a broader population according to Investopedia
• Architectural innovation, according to Virgina Tech, occurs when companies use existing technology to build new markets and consumers
• Incremental (Re)-Innovation is the concept of growing or improving a company by making a series of minor improvements to existing products, services, processes, and tools
• And, radical innovation is when a business introduces a new product or service that requires customers to change their behavior and potentially replaces or creates a new industry

Google

At Google, the company incorporates five innovation initiatives in their strategy:

• An innovation lab initiative
• A venture fund initiative. E.g. GV (formerly Google Ventures)
• An external incubator initiative
• A community of practice initiative
• And, a structural partnership initiative

Apple

At Apple, the company incorporates five innovation initiatives in their strategy:

• An external accelerator initiative
• A venture fund initiative
• A co-development track initiative
• A scouting initiative
• And, an internal accelerator initiative

Samsung

Samsung's operates its innovation activities in three ways:

• Focusing on six strategic innovation areas
• Acquiring promising startups
• And, accelerating 100+ new ventures to market

Amazon

Innovation is embedded in Amazon's culture and is what keeps their entrepreneurial spirit alive even as they continue to grow to be one of the largest companies in the world. The company spent a whopping total of $73bn on R&D in 2022 according to Macrotrends.net.

Resources for your innovation team

Innovation teams in a corporation are essential for staying ahead of the competition and ensuring the organization's success. To achieve success, innovation teams need access to certain resources that enable them to maximize their potential and make informed decisions.

One of the most important resources for an innovation team is access to data. Having access to accurate and up-to-date information allows the team to develop insightful strategies and make impactful decisions. This includes gathering data on customer behaviors, industry trends, competitor analysis, and other relevant information to help inform business strategy. Using data analytics tools like Tableau or Power BI can also be beneficial in understanding customer needs, assessing risks, and identifying opportunities for growth.

Another crucial resource is creative thinking. Innovation teams should be open-minded, and companies should invest in training programs such as Design Thinking workshops which teach team members how to think innovatively by providing them with frameworks for brainstorming new ideas, testing these ideas through prototypes, learning from customer feedback, and refining those ideas until they become successful products or services.

RELATED: How a Responsible Innovation Team Could Improve Your Business

Having skilled personnel is a third essential resource for an innovation team in a corporation. These personnel need to have both technical expertise in areas such as coding and software engineering as well as abstract skills such as problem-solving and communication ability. Companies should focus on creating a diverse mix of staff where each individual has their own set of unique talents, which can help contribute towards solving problems more effectively as part of the team's collective effort.

Finally, financial resources are also key when it comes to innovation teams in corporations. Without adequate funding, it’s difficult for innovative projects to take off since there won’t be enough capital available for development operations or marketing initiatives needed to promote products or services created by the team’s efforts. Organizations must ensure they have enough money set aside so that their innovation teams have the necessary funds available to pursue whatever project they deem fit without any limitations due to lack of budgeting or mismanagement of funds during execution stages.

Tips for creating the right innovation metrics in your strategy

Creating innovation metrics for an innovation strategy is a critical step in ensuring the success of any organization. By developing measurable and meaningful targets, organizations can track progress, measure success, and incentivize employees to reach their goals.

The first step in creating innovation metrics is to identify the key performance indicators (KPIs) that will be used to measure performance. This includes areas such as customer satisfaction, employee engagement, product development cycles, profitability, and other areas that are relevant to the organization’s mission. Once KPIs are identified and agreed upon by stakeholders, they should be tracked regularly against predetermined targets so progress can be monitored.

In addition to tracking KPIs, organizations should also consider building customer surveys and focus groups into their innovation strategy. These surveys provide valuable insight into customer needs and industry trends that can be used to inform future product development efforts. Additionally, customer feedback helps ensure customer satisfaction with existing products or services which is essential for building loyal customers over time.

Organizations should also build flexibility into their innovation metrics in order to account for external factors such as market changes or technology advancements. For example, if a new technology emerges that could improve an existing product or service but requires additional resources or investment, having flexible metrics allows organizations to evaluate the potential return on investment before allocating funds towards implementation.

Finally, organizations may want to consider leveraging data analytics tools to gain greater insight into their innovation strategy’s progress and success rate. By analyzing data such as website traffic patterns or user registration numbers, organizations can quickly identify areas of strengths or weaknesses within their innovation effort and adjust accordingly. This type of analysis is particularly valuable when it comes to understanding how customers interact with products or services in order to create more value-driven solutions in the future.

RELATED: 5 Innovation Metrics (KPIs) Every CEO Should Care About

Overall, creating innovative metrics for an organization’s innovation strategy involves a mix of qualitative and quantitative data sources as well as flexibility in order to stay ahead of changes in the marketplace. By taking the time to properly develop these metrics at the start of an initiative, organizations can better ensure long-term success with their innovative efforts by measuring progress towards desired outcomes in an ongoing fashion.

Analyzing and implementing your own innovation strategy

Open versus closed innovation strategies

To start innovating it's important to determine how you'll strategize. There are two common forms of innovation: open and closed. Both open and closed innovation strategies have their own advantages and disadvantages depending on the business context they are utilized in. Open innovation has been shown to create faster product cycles while closed innovation offers businesses greater control over their intellectual property, or IP, assets but often comes at a much higher cost due to limited resources and expertise within the organization itself.

Working with startups with a Proof of Concept, or PoC

What is a Proof of Concept? A proof of concept, or PoC, is how startups demonstrate to a corporation that their technology is financially viable. The startup essentially creates a prototype in a sandbox-environment to prove their technology is capable of handling real-world applications. The overall objective of a PoC is to find solutions or improvements to a corporation’s existing technologies and products.

For companies looking to develop an innovation strategy with startups, there are several initial steps that should be taken. First, it's important to assess the company’s current capabilities and needs. This means examining the company’s internal processes, its competitive landscape, and any gaps in knowledge or technology. Once these have been identified, companies can begin to identify potential partnerships with startups that could offer innovative solutions.

Once potential partners have been identified, companies need to evaluate each startup’s ability to meet their requirements and provide value-added services. Doing so will help ensure that successful partnerships are established between both parties. Companies should also consider partnering with multiple startups at once in order to diversify their options and get more out of their investments.

Companies should also take into account the legal implications of partnering with a startup before beginning any discussions. This includes understanding intellectual property rights, liability issues, and contractual obligations for both parties involved in the partnership.

Conclusion

NEXT: Fostering an Innovation Culture That Thrives in Your Organization

Building an effective innovation strategy can be a daunting task, but it's essential to staying competitive in the marketplace among startups. By leveraging customer insights, understanding market trends, and experimenting with new technologies, you can position your organization for success. Additionally, fostering a culture of creativity and collaboration will help create an environment where ideas are welcomed and encouraged. With these strategies in place, you'll have the tools needed to develop innovative solutions that meet customers' needs while also giving your business a competitive edge.

Want to learn more about mastering innovation? Explore our seriesInside the Corporate Mind today to continue to build your toolkit for successful corporate innovation.