Consultancy group Cap Gemini and research firm Altimeter have produced an excellent report on innovation, and the way in which companies use innovation centres to ensure their R&D remains leading edge.
It’s a global report, but Australia does not rate a mention. Missing In Action. There is a ‘heat map’ that shows innovation hubs in the traditional tech centres of North America, Europe and Asia, but the Asian chart doesn’t include Australia.
The map ends at about the Bali-Lombok straits, where the famous Wallace Line divides the fauna and flora of Asia from that of Oceania, signifying where the continental shelves clashed together. We are, quite literally, off the map, in an ancient continent not part of the modern world.
The report defines innovation centres as “physical spaces and/or teams set up by organisations in a global tech hub, with the goal of leveraging the startup, industry and academic ecosystem that these hubs provide.”
It’s not as if Australia doesn’t have tech hubs. One of the criteria for inclusion was that organisations had to have an R&D facility in one of a 20 designated cities, which included Sydney and Melbourne. It’s just that any such facilities we might have don’t quite cut it internationally. Telstra where are you?
The report can be downloaded here (PDF). It is excellent reading, despite its inability to find any innovation in the southern hemisphere (Singapore, which rates well, is 50km north of the equator). What can we learn from it (apart from the unfortunate fact that we don’t rate)?
The key message is that many companies have died because of a lack of innovation. “We live in an era of digital Darwinism. As technology and society evolves, it becomes imperative that organisations also evolve their business models.
“Companies that don’t invest in counter-disruptive measures will learn that evolution doesn’t wait. Fifty-two per cent of the Fortune 500 have merged, been acquired or have gone bankrupt since 2000.
“The threat of startups upending established sectors is greater than it has ever been. The Wall Street Journal now tracks over 100 startups globally valued at US$1 billion or more, over ten of which are valued at more than US$10 billion.
“These high-value companies are, in many cases, not creating entirely new markets, but rapidly eating into traditional sectors using a combination of superior technology and a compelling customer experience.”
The report gives many examples of those that have failed from their inability to keep innovating (like Kodak and BlackBerry) and those that are succeeding through innovation centres (like BMW and Walmart and AXA). It says most companies say they know the importance of innovation, but they are worried they are not doing it well.
“An alarming 90 per cent of companies believe that they are too slow to market and often over budget. As an executive at a leading global bank observed: ‘When we look at the pace at which digital-native companies operate and launch new capabilities, that’s something that doesn’t really happen in large enterprises.’
“According to the innovation lead at a Telecom major, innovation centres can help resolve this issue. ‘We accelerate the delivery of different strategic solutions,’ she explains.
‘We have cross-functional teams here that are able to pull from the outside world and reach into any part of the company and be more agile in order to bring new ideas to the table. That is why our innovation centre was originally started’.”
So it’s about putting the right people together in the right place. Innovation breeds innovation. The great prophet of innovation Joseph Schumpeter called it ‘creative destruction’ (if you want a good read, have a look at his excellent biography). Times change. New things break old things.
The examples given of innovation centres are mostly of large companies, but the principles remain the same no matter what the size:
• Define the right purpose and focus
• CEO support is a must
• Set up a governance model with stakeholders from across the business
• Ensure business units’ involvement
• Hire employees that thrive in both structured and unstructured environments
• Engage with diverse partners but use sound judgment in selecting them
• Prove value by demonstrating early wins and following through on the promise
• Sunset programs and ideas that are unfeasible … but at the right time
• Extend innovation across the enterprise
• Allocate independent budgets, but keep the reporting aligned to the business
• Establish suitable metrics to measure and monitor performance
All of which seems like common sense. But like they say, common sense isn’t all that common.
A useful report. An innovative approach to the subject. It’s just a shame Australia doesn’t rate a mention.