In his new book ' The 10x Growth Machine ' (aff.), start-up and innovation expert Misha de Sterke paints a picture of what can go wrong when corporates start innovating, or worse: when they don't. In essence, there are three areas where companies can focus their innovation.
Optimizing the core : limited adjustments to existing propositions, within existing markets.
Renew the core : adapted or new propositions, within existing markets.
Future growth : completely new propositions, within new markets.
All three variants are important, which means that the right balance must be found, with the necessary attention also being paid to disruptive innovations that can ensure future growth.
That finding the right balance does not always go well is shown by the recent history of Kraft Heinz . Since the merger between Kraft Foods Group and HJ Heinz Company in 2015, the new company Kraft Heinz focused far too one-sidedly on cost savings, and forgot to develop new products and markets. The result of this short-term strategy: record losses and a minimized stock price.
Innovation skepticism
In addition to wrong strategic choices, there are also other causes for the failure of innovation in corporates. Perhaps the biggest issue that can cause innovation in large companies to fail is that the innovation team does not receive sufficient attention, resources, budget and appreciation from the core business organization. In itself, the scepticism of the existing organization is not so strange. After all, the existing business is now generating money, while it is still questionable which of the innovation projects will ultimately be profitable.
In The 10x Growth Machine, De Sterke outlines a model that helps companies find the right balance between their core business and innovative projects.
What is immediately striking about De Sterke's uk telegram data model is that the innovation 'growth machine' is embedded in the existing organization, but can also function autonomously to a certain extent. The growth machine is responsible within the organization for initiating, validating and scaling up innovative initiatives. Successful projects can then be incorporated into the existing business or continue in an independent form ( spin out ).
How do corporates innovate like a start-up?
In addition to the above model, I will briefly give you 5 key innovation lessons from the book The 10x Growth Machine.
Also read: Map your business model with the Startup Canvas [handy download]
1. Build an innovation portfolio
As indicated above, every large company will have to divide its innovation investments into three segments: optimizing the core business, renewing the core business and future disruptive growth. In many traditional industries, the vast majority of the budget goes into supporting the existing business. And yet a more balanced ratio is necessary to secure future growth. For example, an investment ratio of 50% in optimization, 30% in innovation and 20% in disruption.
