3 Most Common Innovation Challenges In Corporations

innovation challenges

To become innovative or just to improve the way a company innovates, a few innovation challenges must be faced and overcome.

In the recent years we have witnessed how several companies launched change initiatives, started innovation labs, corporate accelerators, etc. Everybody wants to join in but innovation is not so easy to achieve.

However, as explained by Steve Blank in his article How to Make Innovation programs deliver more that a cup of coffee, you are not successful just by establishing a “museum” with drones and different gadgets and monitoring the number of visitors. You are not doing innovation just by creating a space with cool furniture, organising hackathons, inviting startups to pitch their ideas and teams fill the walls with sticky notes.

After a few years of observing how different companies approach innovation, we have identified 3 main innovation challenges.

Changing the status quo

Almost every single company in the world has a way to innovate which can be more or less structured, and more or less open and modern. What is really important is not so much the innovation model but the results the company gets. However, one of the key innovation challenges is in fact to change is the model in place, the status quo.

For example, many companies use traditional innovation models based on in-house R&D teams with some support by universities, tech. centers, suppliers they know they can trust, etc. These models are not as competitive as others based on open innovation. There are many reasons for this, but the biggest one is that nowadays technology is changing very fast and resources are becoming increasingly more limited.

This was the situation in one mining company that we met in Chile two years ago. The good news is its Innovation Director, fortunately, was an open-minded person and immediately created the opportunity to test our open innovation approach through engineering crowdsourcing.

When introducing crowdsourcing as a new way of innovation, it is important to explain that ‘in-house’ experts need not feel insecure. They can adjust their role to assess a wider range of ideas than they would have come up with by themselves. Consequently their contribution is a bit further down the innovation pipeline: they now assess new opportunities for the company.

After testing crowdsourcing, this mining company says it is 40% more cost-efficient and delivers solutions 3 times faster than traditional innovation methods with its internal scientists and external support from universities, consultants, etc.

To know more, you can read this other article about open innovation in mining.

Find and attract the right innovation sources

Once a company has made the decision to innovate, the next step is to be able to generate innovative ideas or solutions. It is widely known that there is no innovation without results but the truth is that, in order to get results, you need good ideas or solutions with potential first.

For this purpose, many companies have started to adopt more flexible models to attract new solutions. Most of them have created corporate startups accelerators to identify technologies and attract entrepreneurs to either co-create or buy. But working with startups is not a perfect model since this innovation source can work for some technologies but not all of them.

During conversations with the corporate innovation team of a leading construction company, they recognized startups are more adequate to find digital innovation or business model innovation. However, it is not so easy to find startups with ‘hard tech’ innovation (as opposed to software innovation) that requires more investment and time. This construction company tried our open innovation platform to reach a broader variety of innovation sources. The open challenge brought hard tech ideas/solutions with enormous potential in just 6 weeks! Now, this company is planning to introduce crowdsourcing in other divisions.

Another example comes from a medium-size steel manufacturer, that launched a startups program to innovate around energy storage. As a matter of fact, energy storage is a good approach to reduce the impact of the energy cost in metals manufacturing. However, finding a disruptive energy storage solution is a huge challenge and, for this objective, a medium-size company might be less attractive to startups compared to world leaders. A good option might be to participate in a vertical accelerator to attract the best startups in the world.

Getting results

Getting results for your business must be the primary reason why you embark on an innovation process. Not having a solid business case at the beginning and a good selection of initiatives is another cause why any innovation project fails. The second cause is related to the company’s viability to adopt innovation. In this sense, the more rigid a sector or company and the less attractive business case, the greater the chance of failure.

A very straightforward example is the mining sector. In this industry, safety is key, which is why it is not possible to adopt innovations that are not fully tested. As a matter of fact, the innovation challenge lies on performing the necessary tests to validate the technologies and, for that reason, pilot-testing center are emerging in several countries.

Finally, another case can be found in global companies subject to strong regulatory controls. In these environments, it is hard to innovate with startups due to the complexity behind the investment issues or the IP right sharing difficulties.

These innovation challenges slow down innovation in many companies and endanger the survival of startups whose resources are scarce and need to work at a faster speed. As a consequence, many of them die prematurely.

If you want to know more about how to overcome innovation challenges, read the information here or contact us.

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