We know… We know… – and we know that you know too: Corporate innovation is extremely important in these disruptive times. But what is the state of corporate innovation? What separates the good from the bad and the ugly? Following the Kraft Heinz release of the Mayochup, I’m sure this is something we all ask ourselves.

CB Insights published a report surveying 677 corporate strategy executives, with the aim of taking the temperature of their innovation This has resulted in 31 pages of interesting and thought-provoking insights.

Don’t have time to read the full 31-pages? You’re in luck – we’ve done the hard work for you, and below you’ll find the most important takeaways.

Because, as it turns out, corporate innovation is not as straightforward as it might seem…

Talking the talk – but walking the Walk?

Not so much..

Many companies fail in following up their talks of innovation with actual walking and doing

While the main separator of high performers (top 15% of companies based on revenue) and low performers (bottom 15% based on revenue) was found to be the degree of financing of disruptive innovation projects, it seemed that most companies simply discussed the issue rather than taking new ideas to action.

At least when it comes to talking about and investing in radical and disruptive innovations . With only 4% of the companies, stating to be in the clear of the forceful powers of disruption, it is obvious that most companies are aware of the importance of innovation and specifically disruptive innovations. However, by-and large it is the incremental innovations , i.e. productivity improvements, smaller improvements to existing product lines and cost-cutting that takes the lead in the race for funding and corporate attention. And while 78% of all innovation budgets are going to develop and implement incremental changes, the report found that it was the disruptive innovation that separated the high performers (top 15%) from the low performers (bottom 15%).

Why is this?

So why is it that while corporations are aware of the need for disruptive innovations, their primary focus remains on incremental innovations?

The report found that most corporate innovation was slow-moving and ad-hoc based with a general lack of urgency and process; this especially in regards to ideation and product development phases. For many companies this harms their ability to innovate, both in disruptive as well as incremental terms. This is paired with a short-term focus that favours fast incremental gains over the more long-term gains in developing a new product or business model.

The report finds that the lack of disruptive innovation stems from the fact that in many companies the main source of new ideas and initiatives comes from employees and customers, arguing that this contributes to the incremental innovations’ continued domination. To succeed in turning these sources of innovation into capable of also providing disruptive ideas, there’s a need for senior employees to direct and engage these powerful sources of innovation by asking more out-of-the box question, and challenging their innovative capabilities on a daily basis – if you are curious as to how this might be achieved be sure to check out this blog post.

The report points to a lack of direction, plan and processes for innovation. The majority of low-performing companies reported doing ad-hoc innovation, i.e. nobody really knows where, what, how, or more importantly, to what end innovation is being carried out, which results in innovation consisting mainly of easy-to-carry-out tasks – and as we all know, building a new revenue stream is not done in an afternoon.

So what do the Leaders do?

What is it exactly these company leaders do to secure their position?

They are brave. Betting hard on disruptive innovations takes a serious amount of gut. With disruptive innovations there are no guarantees that the project will go right. However, leading companies have one thing in common: the financial and organizational betting on disruptive innovations.

In this lies also the desire to be first to market with new products. First-mover advantages are considered more impactful by these companies than by others. This enables them to look past the higher risk levels and go for the bigger prizes. In fact, the report found these companies to be 2x more likely to be risk-seeking than their low-performing counterparts. With this came also increased levels of confidence in own performance and a feeling of being ahead of incumbents; not that this slowed down their appetite for novel innovations.

Moreover, the report found that high performing companies are 5x more likely to build a cross-collaborative innovation culture. Nurturing innovation in and across the entire company, effectively making innovative behaviour and thinking patterns part of their DNA. This way, these companies recognize that innovation doesn’t necessarily happen in innovation labs, but rather that they can happen wherever in the company and in fact are more likely to happen, when people and competencies are paired across. This includes the CEO, that must play a central role in not only implementing this culture, but also take an active part in it.

Ideanote thinks

This report evokes a plethora of considerations. Most interesting is the discussion of radical vs. disruptive innovations; sparking the debate on whether radical innovation is indeed the only true form of innovation in order for an organization to sustain and advance its competitive positions. According to other research, like this, it’s not always the case. Based on our experience, no form of innovation is more important than the other; it’s all about getting both to work for you in the right situations, knowing when to pursue what. Neglecting incremental innovation would cause you to miss low-hanging and easy to implement improvements, while only focusing on incremental innovations would ultimately cause you to miss out on great opportunities, causing you to lack behind and end amongst the low-performers.

Moreover, the report points toward the fact that the main source of innovation is customers and employees causing the focus on incremental innovation. Having worked with multiple companies and executives on their innovation activities, we have found that this is often due to failure of senior management to present participants with proper explanations of the hoped-for ideas.

E.g. If you ask for ways to optimize the number of trash cans in the office, this is what you are going to receive. The trick is to dare to open up and ask for employees and customers for novel and revolutionizing ideas on how we might keep the office clean.

However, inviting your employees once every year to think-out-of-the-box, and come up with new ideas, is going to be difficult. To many people it will be overwhelming to go from “do what you are hired to do” to “what does the domestic house look like in 2050?” within minutes. My point here being that to secure innovations from your employees and customers innovation, radical as well as incremental, must be part of your DNA and happen at all levels and functions of the business.