19 Aug 2013
Even in times of crisis, innovation remains a top priority. In PwC’s annual CEO survey, 25% of business leaders identified developing new products and services as the main opportunity for business growth in the next 12 months. A further 17% expect growth to come from new alliances or businesses and 8% from new operations in foreign markets. This means that half of the 1,330 business leaders surveyed are relying on some form of innovation to develop their company.
The problem is, internal resources are no longer adequate to create this innovation. Research and development (R&D) budgets are strained in times of crisis, and at any rate, observation suggests that pouring money into R&D isn’t the answer – boosting funding isn’t directly correlated with boosting either ideas or profit.
So how do you increase innovation without spending on R&D? The answer lies in decompartmentalisation – or collaborative behaviour. Don’t assign innovation to a special group, draw on all the functions within the company and customers, suppliers and others externally. The traditional hierarchy in organisations is evolving towards a network-based structure that calls for more intelligent, flatter distribution of roles and responsibilities. These changes completely remodel work habits and interpersonal relationships.
Flattening the hierarchy and encouraging collaboration doesn’t mean setting your strategy adrift, or destabilising the company by taking huge risks and challenging structures beyond their capacity – but it’s essential that governance plays a conducive and controlling role for innovation to be both successful and safe.
Companies can’t just decide to innovate – they have to create the right climate and structures to bring about development. At times of economic difficulty, innovation does not come naturally, so preparing the organisation for collaboration is key. Some of the most important corporate governance strategies to support innovation are:
So how do you innovate like a start-up organisation? You can create the right conditions in large organisations by:
Many companies regard innovation as a way of developing their market and setting themselves apart from the competition. Collaborative innovation is an important and growing trend – a response to increased budget constraints and ‘time to market’ pressures in a global economy.
Companies can no longer rely on their own resources to stay ahead of their competitors. Habits and relationships within companies have to transform to foster collaborative innovation. You may not be able to just ‘decide’ that innovation will happen – but you can prepare for it and increase the chances of new ideas creating tangible value.