Major corporations: stop “start-up washing” and start industrializing innovation!
The last three to four years have witnessed major rivalry among CAC 40 companies in terms of innovation and digital initiatives, with the creation of labs, partnerships with accelerators, new investment funds, in-house innovation contests, start-up acquisitions, and more.
Yet it is striking how the leaders of these groups struggle to describe the return on investment of all these initiatives, especially in consolidated figures, apart from a boost in brand image.
Most of the time, innovation comes up against the “wall of industrialization” and fails to deliver measurable value.
First of all, innovation often remains at the stage of labs, without the proof of concept required to get an idea off the ground. The potential of these projects to disrupt businesses and make any real impact on value creation remains untapped. The main challenge now is to professionalize and industrialize innovation in organizations and IT systems.
Second, the resources allocated to innovation are often spread thin (in labs, incubators, investment funds and innovation teams) and managed in a way that does not enable overall performance to be measured, lacking indicators and/or consistency between them.
The age of maturity: the creation of an innovation business
Adopting a value-creation approach to innovation involves professionalizing and industrializing new ideas:
- Combining and professionalizing the resources allocated to initiating and selecting innovation projects: ideation, start-up sourcing, project evaluation, etc.
- Setting up an investment vehicle to fund both internal innovation and external growth projects, with a focus on the internal rate of return (IRR)
- Creating a steering committee for the end-to-end innovation value chain, involving IT and other departments, which will also act as the board of directors for the investment vehicle
- Introducing a limited number of simple indicators for monitoring the creation of value and the transformative impact of innovation (e.g. the number of projects sourced and then selected, the IRR of investments, the contribution to achieving strategic objectives, employee net promoter score, etc.)
Organizing an innovation value chain in this way to enable industrialization is the price corporations need to pay to truly compete with the new digital barbarians and giants, and be in a position to change the game on their markets.