The shift in how innovation is done: how companies evolve their strategy

The shift in how innovation is done: how companies evolve their strategy

Andries De Vos, Narine Daneghyan

Accelerating speed of change

The forces driving innovation are accelerating and compounding. Tomorrow’s speed of change will make today look like we’re crawling. In many ways, the future is faster than we think.

To stay relevant, companies are dramatically shifting the way they innovate from an “innovation by exception” to an “innovation by design” approach where constant experimentation is baked in.

Consider the example of Microsoft with its entrepreneurial roots as a pioneer of the software industry. In the past Microsoft built everything themselves, as famously outlined in Eric S. Raymond's popular book on open-source, “The Cathedral and the Bazaar”. Microsoft did run some successful sideline experiments, including skunkworks projects like Kinect that were then brought into the Microsoft Group.

But it’s only more recently that Microsoft innovation strategy embraced the broader innovation ecosystem and looked at building deep relations with the open-source community. In the last decade, Microsoft strategy has been to acquire “networked assets”. Between 2013-2018, Microsoft did 57+ M&A deals. In each deal it bought assets with strong communities that could help it grow into new markets and bring new products into its core offering (e.g GitHub, LinkedIn).

The Shift in Innovation Strategy

Your typical 20th century innovation and R&D departments in a large company, was often found orbiting around the mothership. Far enough to remain creative, but not too close to avoid being entangled in the impenetrable mass of rules, traditions and systems of the company.

Today, innovation is much more looking like building a Startup. Yes, R&D remains crucial. But the ability to quickly get your R&D out in the world and in the hands of users, becomes an integral part of the innovation scorecard. And in order to get your innovation adopted, you need to embrace the “Startup Way”, a broad toolkit of methods pioneered by startups.

An entire industry of new products and services is emerging to help companies make that shift at industrial scale. The startup way is being turned into corporate innovation playbooks with new frameworks for rapid experimentation, such as online corporate hackathons, competitions and corporate venturing.

For the last 3 years at Slash we have been offering rapid prototyping and coventuring services to corporates, using our startup playbooks. We will be exploring those topics in future posts.