In 2015, UN Secretary-General Ban Ki-Moon called on young people around the world to “Be a global citizen. Act with passion and compassion. Help us make this world safer and more sustainable today and for the generations that will follow us. That is our moral responsibility.” As a new generation rises into the enterprise workforce, they’re taking that mission to heart. What does the new emphasis on corporate social responsibility (CSR) mean to them, and what does it mean to the companies they’ll join? How can organizations maximize their triple bottom line (TBL) of people, planet, and profit?

In a new episode of The Savvy Innovators, a Voice of America podcast series sponsored by BMC, leaders in the global CSR movement explore its evolution as a collective purpose shared by employees, customers, partners, and their communities. Wendy Rentschler, Head of Global Corporate Social Responsibility & Inclusion at BMC, and Nathaniel Comer, Founder of Sun Screen IT Foundation Charity and CEO of Sun Screen IT Ltd, offered key insights for organizations seeking to do good while doing well. Highlights of their conversation follow.

Redefining the workforce

While concepts like CSR; TBL accounting; environmental, social, and governance (ESG); and diversity, equity, and inclusion (DEI) have been percolating for many years, they’ve only recently risen to prominence on the corporate agenda—and the priority list of both employees and consumers. “ESG has been on the radar for 20 years now, but only really innovative people saw that Millenials and Generation Z, the biggest buyers of products today, were really going to be purpose-driven,” says Wendy. Employees are also the largest investment for most businesses, making it especially important to align corporate culture with their values and expectations.

This isn’t just a matter of feel-good PR, emphasizes Nathaniel. “We say, ‘Let’s save the planet,’ but the planet’s going to be fine. We’re saving ourselves from an incredibly painful, fast set of changes.” The disproportionate effect of these changes highlights the growing intersectionality across all of these objectives.

“When you take a step back, historically excluded communities are the most adversely impacted from climate change,” Wendy points out. “What we’re trying to do is bring these communities to the table and have inclusive conversations and create belonging so we can prioritize inclusion to drive innovation.” In this sense, economic investment, empowerment, and upskilling need to go hand-in-hand. As Nathaniel says, “When you educate a woman, you educate the family.” Over time, a community can build the kind of IT skills that draw new investment, help it rise out of poverty, and achieve higher levels of prosperity, development, and autonomy.

From e-waste to urban mining and grassroots carbon reduction

The global economy already generates truly vast volumes of electronic and electrical waste each year—and it’s expected to double by mid-century. But it doesn’t have to be that way.

“In 1985, hardly anyone had a PC in their house,” says Nathaniel. “Now you’ve got a Bluetooth fridge that tells you when you’re low on milk. This over-engineered world we live in is marvelous, but it’s a little over the top.” With mines for copper, platinum, and other raw materials projected to be exhausted in the coming decades, we’ll need to turn our attention to the billions of dollars’ worth of mineral resources already lying dormant in landfills, attics, basements, and back offices.

“There’s already enough metal out there to have a completely sustainable circular economy,” says Nathaniel. “What we haven’t transitioned to is how to get those metals and identify them in the first place.” His organization is currently working with innovators who are developing ways to extract gold and other elements from discarded circuit boards. Even without such heroic measures, simply getting more use out of existing tech can have a tremendous impact. “A third of the IT Industry’s carbon footprint is end user computing. If you extend the life of a PC by just two years, it saves nearly 200 kilograms of carbon,” he adds.

The grassroots will have an essential role to play in the shift to a circular economy, says Wendy. “Empowering people to understand the power of their consumerism can help make these changes. We’re already seeing it in the ESG movement that’s happening now. This would not be a thing if the market wasn’t dictating it.”

Employees can play a similar forcing function in the workplace. “Our talent acquisition team and every hiring manager I talk to tell me that candidates are asking about DEI and sustainability in every interview,” reports Wendy. “They want to know if you are a purpose-driven organization.” Meeting that expectation is becoming critical to building an organization’s human capital. “Your ability to retain your team members is extremely important. If you have high turnover, you’re not able to engage your employees. That lowers your ESG score and puts you more at risk of being overtaken by a more innovative competitor.”

Sustainability drives, volunteer days, and other employee initiatives can pay dividends for both the community and the business. As Nathaniel puts it, “Your business will have an advantage if you’re getting your people to be inspired and work in ways that they would never normally do in a really human organic way.”

Accountability—not greenwashing

“Everyone’s heard the term ‘greenwashing’ now,” says Nathaniel. “There’s this massive startup industry of sustainability ratings. But reporting has to be transparent.” This includes a willingness to acknowledge where you’re falling short, not just hyping your successes. “No big company is ever going to have no issues. There are going to be mistakes made along the way, but on the whole, there’s a wonderful trend in actually being really accountable and disclosing complete transparency. It’s all out there, and it’s very quick to see which company is actually telling the truth with demonstrable statistics.”

Wendy points to tried-and-true best practices and frameworks such as EcoVadis, Sustainalytics, and The Carbon Disclosure Project (CDP) as the best way to approach ESG reporting. “The industry as a whole is going through a maturity model. Everyone’s always doing a new thing, but stick to the people that have been doing it for a very long time.”

To hear more of Wendy and Nathaniel’s conversation, including the role of employee resource groups (ERGs), the global benefits of increased access to education, and examples of companies and practices at the forefront of CSR, listen to the whole podcast here: “Changing the Game through Corporate Social Responsibility.”

Two things business leaders know: change is the only constant, and novel problems require novel solutions. The modern IT world is one built upon the successes of its predecessors—each new advancement comes on the back of innovation. Without innovation, organizations become stagnant. And stagnation is the death spiral to becoming obsolete.

In a world that moves as fast as the tech industry, standing still is like signing your own death warrant. Succeeding in the modern business world requires organizations to not only keep up, but set the tempo for the industry while making competitors fight to match them.

One of the key methods for achieving this kind of success is through fostering an innovation culture.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

What is innovation culture?

Put simply, innovation culture is a business environment that promotes the generation of new ideas and methods. Innovation culture is about creating an atmosphere that:

• Encourages ingenuity
• Empowers creativity
• Understands the value of taking risks

Encouraging ingenuity

Encouraging ingenuity from your team will help you tap into a nearly limitless resource of new ideas. Ingenuity is any combination of being clever, inventive, or unique. In the workplace, ingenuity shows up when you ask questions like:

• Why do we do this process in this way?
• Would a process be better if we changed it?

But you can only utilize this resource to its fullest potential by establishing your organization as one that values input from all sources. Do you encourage people to ask these types of questions? How do you respond when they do?

Ingenuity is the foundation to creating a culture of innovation because you never know from where the next great idea may come. The concept here is that the more people who feel inspired to innovate, the greater the chance for finding that idea becomes.

Empowering creativity

Encouraging ingenuity is all about creating an environment where ideas are valued and everyone feels like their opinions are heard.

Empowering creativity is about taking the next step beyond ideation: moving forward with concrete plans for how those ideas can be put to action.

Innovation culture is about more than just posing what-if questions. It’s about taking those nascent ideas and forming them into actionable plans with realistic goals and timelines. It’s about:

• Building upon the ideas each person presents.
• Considering what the implementation of those concepts would look like.

(Explore strategies that can harness creativity, like design thinking or agility.)

Taking risks

For innovation culture to be truly successful, it’s imperative that the organization be willing to take new ideas and run with them. Not every idea will make it to this round, but some must. Of these, some will fail, and one or two might win.

Prototyping and testing new ideas is one of the best ways to get a practical handle on the viability of the new approach.

Taking risks and giving people room to fail is the only way to ensure that the people within your organization aren’t afraid of coming up with new ideas and putting them into action. Failure is an invaluable tool for learning, and this type of learning process is not one that should be ignored by organizations looking to maximize their potential.

Why is innovation culture important?

Our world has been changing at an ever-increasing rate. Stopping for even a moment runs the risk of being left miles behind everyone else.

Innovation is more than a buzzword—it’s the lifeblood of modern organizations. Companies like Amazon and Google are where they are today because of their near obsession with innovation.  All the work they do is structured entirely around the process of coming up with new ideas and methods for improving on the old ones. Alphabet, Google’s parent company, reportedly spent a staggering $26 billion on R&D in 2019 alone. These guys don’t rest on their laurels.

Even with the massive success of services like Netflix and Twitter, these products are by no means secure in their positions atop their sectors.

New streaming services and social media platforms are springing up all the time as the innovations that made Netflix and Twitter into giants have become baseline expectations for customers across the globe. Modern consumers expect a lot from companies these days because companies have shown what can be achieved when combining technology with novel ideas.

The relationship that customers have with companies is similar in ways to the relationship between two spouses. While the initial honeymoon period may seem a portent of wondrous days ahead, eventually the focus will turn towards the “what have you done for me lately” mentality. This is especially true in the SaaS business model where customers subscribe to a service and therefore rightfully expect those services to be constantly improving.

How to build an innovation culture

We talked about how successful innovation cultures encourage ingenuity, empower creativity, and take risks. But creating an innovation culture requires more than lip service. Much like DevOps is more than a way of structuring teams, creating an innovation culture requires organizations to change the way they think and the policies they maintain.

It’s not enough to send out a memo and install a few suggestion boxes. Fostering an innovation culture requires the participation of everyone within the organization. Innovation can come from anywhere, and the only way to create an atmosphere where that can happen is by making everyone feel truly heard.

The key to enacting any changes is communication. Transparency and the breaking down of traditional hierarchies will empower everyone within your organization to take an active role in forging the future of the company. Questions to ask yourself and your organization:

• Are you supporting innovation through research & development?
• How does digital transformation incorporate innovation?
• Do you explicitly call out innovation efforts, perhaps through an innovation lab or innovation outpost?
• Do any roles focus on innovation, such as the Chief Transformation Officer?

Creating an innovation culture cannot be achieved by simply establishing someone as an “Innovation Guru” or by forming an “Innovation Team.” Ideas should flow freely throughout your organization and everyone should feel like a valued member of the team with a personal stake in the success of the organization.

People need to be provided with structure that supports the formulation of ideas while still having the freedom necessary to put them into action. Challenging the status quo requires risks to be taken and everyone within your organization should feel encouraged to test their new ideas. Failure should be anticipated but not punished as change rarely comes easily. This, however, doesn’t mean people shouldn’t be held accountable for their actions.

Accountability and personal responsibility are key factors for inspiring people to invest themselves into the future of the organization. If people have no sense of ownership over their work, they will be far less likely to meaningfully invest themselves in their role.

Related reading

• BMC Business of IT Blog
• The Innovation Trigger: An Idea Begins
• Applying Lean Startup Concepts in The Workplace
• Lewin’s 3 Stage Model of Change Explained
• Digital Transformation Metrics for Measuring Success

An innovation stack is a powerful concept for startups, based on the idea that companies stacked with interlinking innovation as part of their infrastructure are more likely to succeed than startups that don’t stack. That’s because innovation stacking gives startup businesses a competitive foothold to compete against other highly innovative digital enterprises like Google and Amazon.

It isn’t just startups that benefit from this competitive advantage, however. The innovation stack, which was created by Jim McKelvey, the founder of Square, also works for large companies like American Airlines and IKEA, according to McKelvey’s research. So, what exactly is an innovation stack and how can it positively impact your business? Keep reading to learn all about how to build an innovation stack in your enterprise business or startup.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

What is an innovation stack?

The innovation stack consists of the intertwined tools, actions, and resources a company uses to innovate within their organization. In a startup setting, understanding your innovation stack is particularly important to staying ahead of the competition. In a large enterprise that isn’t stripped down to bare bones like most startups, an innovation stack may be more difficult to identify. In some cases, like with Square, this gives the startup the competitive advantage.

In the case of Square, a part of the company’s innovation stack was an emphasis on beautiful design, says McKelvey. Even before he knew how important Square’s design was to his innovative brand, McKelvey knew that he didn’t want to change it to something more practical as competitors entered the market with their own card readers, which in some cases worked better.

By making the element of beautiful design important to Square’s growth, McKelvey set himself apart from giant conglomerates like Amazon, that simply wanted to make a tool that works without much regard for visual appeal. That said, there are five major parts of an innovation stack. These are:

• Innovation at the individual level
• Tools and actions of innovation
• Collaborative innovation
• Innovation within operations
• Leadership and innovation

Innovation at the individual level

Within a company, individuals can be innovators that move the business forward with time and technology. After all, that’s why companies strive to hire the best and brightest professionals to their staff. Individual innovation may mean the creation of a custom resource, internally, or the start of a new business venture, backed by the parent company. Regardless, individual innovators are at the ground floor of driving business, playing an important role in the business ecosystem and in the innovation stack.

Tools and actions of innovation

Next, tools and actions are usually the end product of individual innovators. Concepts like marketing storytelling, buyer personas, data-driven business models, and user-oriented design are all examples of “tools” or actions that are a product of innovation. There are a number of things that can be talked about here, and they change based on the goals of your company as well as your specific products. That said, what is consistent is that tools and actions of innovation help to propel businesses forward into their market.

Collaborative innovation

When enterprise business teams get together to share ideas and come up with a single cohesive solution for a problem that requires innovation, collaborative innovation has occurred. Teams excel at using their resources and strategy to interview hundreds of stakeholders, record data, and ensure communication occurs while making small changes that lead to more perfect products.

Innovation within operations

Without innovation in operations, there is no infrastructure to support the systems of innovation that must link in order for the stack to work. Being an innovative, cutting edge company has to be more than conceptual. Instead, it should be baked into the very culture of the company. How do you do that? With operational leadership providing tools and resources that streamline collaboration, you can make it easier to come up with and share new ideas while tracking milestones and tasks. Investing in operational innovation presents an important cultural and mindset shift in enterprise organizations. The importance of this cannot be stressed enough.

Leadership and innovation

Finally, innovation takes top-down buy-in. All leadership, stakeholders, and the like should be on the same page regarding the importance of technology and innovation in their business.

Why build an innovation stack company?

If you’re a startup building an innovation stack, or in some cases, understanding your existing innovation stack provides the opportunity to grow securely if you have a new and exciting product that is likely to see competition to enter the market. For large businesses, understanding the innovation stack is essential to becoming more agile, as it allows you to better understand the flow of how innovation occurs in your company and to support it with resources and encouragement.

Advantages of building an innovation stack

There are several benefits of utilizing an innovation stack. They are as follows:

• Create a competitive advantage
• Establish a market foothold
• Upgrade company culture
• Increase business agility
• Demonstrate an understanding of innovation in branding

Create a competitive advantage

By interlinking innovation across a company’s infrastructure, culture, and employee base, you create an environment where businesses can be the most competitive. With knowledge of the most important facets of your product, you can set your company apart from competitors entering your market, no matter how big or small.

Establish a market foothold

By working from an innovation stack, you create a foothold in your market that’s almost untouchable. Armed with innovation, knowledge, and data, you can decide how to react to competitors, or if such competitive reaction is warranted, using a holistic view of the integration of innovation throughout your business model.

Upgrade company culture

When technology exists in every facet of company culture, the employees are more efficient, processes become streamlined, and overall improvements in business and morale can be achieved. This kind of overhaul of company culture helps set the framework for employee retention.

Increase business agility

Businesses using an innovation stack can react more quickly to new competitors and changes in the marketplace, making them more agile than other businesses that don’t deploy this method.

Demonstrate an understanding of innovation in branding

When you understand the innovation stack that your company has built, it helps you better understand the role of innovation in your brand. For instance, choosing a design choice over improved functionality is as much a branding decision as it is an innovation decision.

In today’s competitive marketplace for business growth, high-performing, innovative companies seek agility, resourcefulness and acquisition. Oftentimes, they use a spin-out philosophy to innovation, which is pretty straight forward. An innovation spin-out occurs when employees or individuals working on behalf of a company create a venture in which the company owns all outputs and resources. This is a common practice for growth.

However, some companies are modeling their approach to innovation and growth after a philosophy called spinning-in. Spin-in has several implications for a business, and it’s those assumptions, implications and processes we will be discussing in the article below. Stay tuned to learn all about the innovation spin-in and how it compares to a spin-out.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

What is an Innovation Spin-in?

A spin-in is a special kind of venture, usually a startup, that begins with the intellectual property of a company’s employees or affiliates. The startup that results from this intellectual property belongs to the employee or affiliate, but not to the company. The company, however, can choose to invest in the startup if they believe the idea is strong enough.

Ultimately, the goal of the company is to spin-in, or acquire an ownership share of, independent start-ups that make sense for their larger portfolio when deciding to invest in innovation. However, rather than providing resources and starting with ownership of the innovation before they know how it performs, as is the case with a spin-out, spin-in companies don’t have ownership of the innovation initially, but if the startup performs well, the company in question may eventually invest in it or acquire it, spinning it into the company’s portfolio.

Spin-ins and the importance of business agility

Spin-ins offer a company the ability to be more agile. That’s because rather than trying to invest in getting a startup off the ground when a company chooses to spin-in a startup they can pick and choose from fully formed innovations that already have independent resources allocated to them. This gives larger businesses startup-type agility in their technology and ability to maneuver in their markets. This is important for all enterprise businesses to remain competitive, scalable, and ready for waves of future technology.

Spin-in vs. Spin-out: What’s the difference?

Both spin-in companies and spin-out companies have to do with how parent companies interact with startups. So, what’s the difference?

The biggest difference between spinning-in and spinning-out is who has ownership of the company. In a spin-out, an employee or affiliated person has an idea for an innovation that could be its own tech startup, getting pitched to the parent company. If the parent company decides to spin-out the idea, they provide the ground resources and maintain ownership control over the innovation, while the project team that developed the innovation becomes the operational leadership for the new spin-out startup.

Conversely, in a spin-in situation, the ownership of the innovation lies with the team that created it. They take the concept, develop it into a startup, and if the startup meets the expectations of the parent company, the parent company buys into it, increasing the overall agility of the parent company by adding a fully-formed startup to their portfolio.

Why so many companies spin-out

Many companies choose to spin-out instead of spinning-in. That’s because spinning-out also comes with a number of benefits that are different from spinning-in, having a different impact on internal performance. Here are the advantages many companies gain from spinning-out:

• Dissociation of risk
• Solidified infrastructure
• Tax incentives and cash-flow
• Cross-marketing and selling

Dissociation of risk

When a company has been successfully spun-in to another larger business, the larger company absorbs all liability and risk associated from the startup that was once independent. When companies spin-out, they set up the startup’s infrastructure and operations completely apart and aside from the original business, keeping it at arm’s length from a risk perspective, which benefits the business in the event the innovation fails.

Solidified infrastructure

By creating a smaller, independent start-up business unit from an employee’s idea, you can implement a more controlled infrastructure that is specific to the startup, eliminating unnecessary red tape, streamlining longer processes, and solidifying the roles of key team members in a way that is both practical and rewarding.

Tax incentives and cash-flow

By separating the innovation into its own business it has separate tax considerations and doesn’t impact the liquidity of the larger business. Spinning-off allows for more effective budgetary balance and maintenance while reaping important tax incentives.

Cross-marketing and selling

When companies have financial interest in one another’s success, there’s a large opportunity for cross-marketing and cross-selling across platforms. This can include bundling technology in ways that make sense for the client. Think about how Netflix has run cross platform promotion with Roku that benefited both the parent company, Netflix, and child company, Roku.

Advantages of spinning-in

There are several advantages of spinning-in that companies benefit from; these are:

Increased business agility

Primarily large companies benefit by adding innovations that increase their agility. Innovations that are fully-formed are easier for companies to apply quickly and scale to their use-case and needs. These kinds of technology allow businesses to make better more informed decisions quickly, and by spinning in a company that meets their specific needs, parent companies don’t have to wait for a startup to reach its full potential before making the most of the innovation.

Decreased risk

Because there is no obligation to buy-into a startup before it is spun-into the business, parent companies can decrease their risk of ending up with startup innovation that is costly and doesn’t perform to their needs or specifications. This allows spin-in to be a top choice for companies who aren’t looking to create custom innovations right away and have time to be discerning.

More choices of startup innovation

With time to be discerning comes more options. In a spin-off situation, if the startup fails, you’ve already invested resources into building it. However, with a spin-in, you don’t have to bring a startup into the fold until you know it can do what you need it to. This allows you a wide range of options to choose from with no pressure to select one while building it from the ground up.

Technology is the driving force powering the ever-shifting nature of the modern world. But world-altering technologies like the Internet, artificial intelligence (AI), and big data come with their own unique implications, challenges, and opportunities. Understanding the implications, overcoming the challenges, and taking advantage of the opportunities presented by new technologies in a competitive manner is only possible through innovation.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

What is Innovation?

Innovating is the act of creating new concepts or new approaches to existing concepts. But it’s not only about coming up with new ways of overcoming new obstacles; it’s also about anticipating issues that are yet to arise. With how quickly things change and how high the expectations of modern consumers are, failing to innovate can easily result in your organization crumbling into a heap of rubble.

It’s safe to say innovation isn’t just important in today’s world—it’s imperative. Without innovation, even managing to keep up with new technologies as they arise becomes virtually impossible and that’s saying nothing about getting ahead of the competition. What makes things even more difficult, especially for larger organizations, is the fact that contemporary technology and business practices have drastically lowered the barrier for entry into the competitive space.

Due to modern business conditions (relatively low cost of technology and access to funds through venture capitalist investments, to name a couple), smaller and newer organizations have the tools, resources, and agility to give even the most well-seasoned veteran companies a run for their money. The good news is that this low barrier to entry applies to organizations of all sizes that are willing to make the changes necessary to embrace innovation from within.

How Can Innovation Be Embraced?

It’s true that innovation can sometimes happen by accident. In fact, there are many products famous for being accidental inventions. However, innovating by accident isn’t a reliable model in a competitive environment. Furthermore, most of those accidental inventions were only possible because someone was actively trying to develop something new and innovative.

Specific innovations can be accidental, but they are almost always byproducts of a very intentional process of innovating. Much like with DevOps, embracing innovation requires a change in more than just policy and corporate structure. Innovation can be encouraged and empowered by establishing a culture of innovation within the organization that values creativity and encourages risk-taking.

Creating an atmosphere where innovations can be reliably manufactured is no simple task, but the rewards made possible through such an environment are vast. One way that organizations are empowering innovation is through the use of innovation outposts.

What is an Innovation Outpost?

An innovation outpost is a business location dedicated to fostering innovation where research and development (R&D) is the primary order of business. Innovation outposts are used as not only a hub for R&D, but also as a meeting place for collaboration and the sharing of new technologies and ideas. Hosting hackathon style events for collaborating with innovation teams from outside your organization is a great way to expose your team to even more ideas and methodologies.

Because of the many purposes that an innovation outpost can serve, the location of your outpost is incredibly important. Many organizations choose to place their innovation outposts in places like the Silicon Valley. This is done for numerous reasons:

• To make it easier to recruit experienced talent
• To increase the organization’s exposure to innovation techniques
• To provide the organization with access to an ecosystem of innovators
• To monitor for new technologies at the bleeding edge of development

Other organizations choose to plant their innovation outposts in countries that are separate from where their headquarters are located. This is done in part to provide more access to foreign talent and ideas. They can also be used as an in-road for further development, reaching into those regions of the world where the outposts are located. Improving your relations with communities outside your primary area of operations will make penetrating those markets much easier while also providing you with insight into how to best tailor your services or products for those demographics.

Diversity is important for all aspects of an organization but ensuring your innovation outpost hosts a diverse set of minds is key to generating new ideas and preventing groupthink from dampening their creative output. Combining diversity with a culture of innovation that values transparent communication and the free flow of ideas is a recipe for successful innovation outposts.

Long gone are the days when a suggestion box stationed near the water cooler would suffice as a means for generating innovation. An innovation outpost offers the ability for your organization to create a space dedicated to forward-thinking design where ideas can be hashed out and tested.

Innovation outposts can also serve as a testing pool for policies and procedures encouraging innovation that could later be applied to the organization at large. Innovation can come from any department or team member. This fact is why empowering innovation within the entire organization can be such a powerful engine for continued success.

Empowering the creativity within your organization won’t happen overnight nor will it happen by accident. Much like with adopting DevOps and Agile practices, embracing innovation requires a sea change for the entire organization.

Opening up lines of communication and making everyone feel like their opinions are valued will help increase the rate of innovation and the quality of ideas that are generated. Furthermore, providing some degree of freedom and an allowance for failure will help to create an atmosphere that is conducive to not only ideation but also the actualization of those ideas. Providing everyone within your organization with a sense of personal ownership over their roles will improve their investment in the organization’s future success.

Understanding that ideas are a business resource that can be leveraged much like any other resource is vital for finding success during these tumultuous times of rapidly evolving technologies. Making the most of your organization’s potential for innovation is no small ask, but the possibility of immense rewards awaits those who accomplish it.

A relatively simple concept, no matter your organization’s size or industry, in order to achieve ongoing success, continuous innovation is needed. However, unfortunately, due to its inherently “no brainer” nature and lack of information due to it being a newer practice, many organizations actually fail to successfully understand, manage, or measure ROI.

Defined by Go Big Dictionary as “modest, gradational, ongoing upgrades or enhancements of existing technologies or products; continuous innovation generally does not fundamentally change the dynamics of an industry, nor does it typically require end-users to change behavior.” Essentially, continuous innovation is what constantly pushes an organization forward — one project, one change, one adaptation, or one idea at a time.

As technology as well as customer demand expands or changes, so should the operations of any organization. Any new implementation that keeps on occurring is continuous innovation. For example, if an organization that used to store its data in paper file format, then moved to digital CRM storage, and now keeps everything on the cloud for faster customer file retrieval, that is continuous innovation. And, it can be applied to almost anything.

For that reason, continuous innovation has become a hot topic in every industry as organizations scramble to manage it with ease and comfort. In the following article, we will take a deeper look into why companies need this practice and how to manage the development of it, along with some industry examples.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

Why continuous innovation is so important

No matter who you are or what company you run, you will always have competitors, demand, and changing times knocking. As stated in an article from Entrepreneur, “Having a good product at a fair price, and with great customer service, is no longer enough to succeed — it’s merely the cost of entry. And in today’s hyper-competitive environment, entrepreneurs must be innovative.” Truth is, survival in a turbulent competitive environment depends on constant adaptation and continuous improvement. From product turn out time to shorter lead times, delivery with quality and assurance requires the best innovations to make tasks run smoother while making your company stand out.

Also, as we live in a fast-paced world that is in constant flux, adapting to innovations is what will make an organization more flexible. Being flexible will ultimately lead to greater chances of overcoming competition and survival. If innovations are not continuously updated, they run the risk of no longer being relevant.

Therefore, in order to survive and stay relevant, a company must focus on continuous innovation. Just take Kodak for example. The choice of this technology company to not move to digital photography led to its bankruptcy in 2012. They placed too much faith in old innovations that were no longer relevant.

Maximizing continuous innovation examples

As explained by LearnStack, “Companies that learn fast, outlearn their competition and get to build what customers really want. By doing this continuously, they stay relevant to their customers and see their business models thrive and grow.”

Telephone industry example 

From the conception of the telephone, this industry began with gently continual innovation. For example, it went from rotary phones to touchpads and things like expanding long-distance plans or moving away from switchboard operators. Then, in the 1990s, innovation changed with a bang. Cellular phones were introduced, then smartphones, and now touch screens. With each jump in technology, companies scrambled to stay relevant and the ones like Apple
, who continuously innovated, lead the pack.

Computing industry example 

An industry that has been innovating for hundreds if not thousands of years, computing went from the use of an abacus to quantum with continuous adaptations. “Software also follows a similar path from the creation of Analog Hardwired circuit right up to the numerous SDK/IDE/Frameworks (Software Development Kits / Integrated Development Environment) that are used to create software for any Machine. Pure ongoing innovation.” Again, with each step forward, the companies that learned quickly survived. Just take a look at cloud leaders Microsoft, Google, and AWS. None of these organizations started out with a focus on cloud sharing.

Amazon

Speaking of AWS and Amazon, we can’t write a continuous innovation article without mentioning this powerhouse organization. “Over its nearly 22 years, Amazon has moved into one sector after another and gentrified it, even if that meant tearing down its own existing structures.” The founder’s continuous innovation mentality propelled the company to become a leader in not just the home delivery industry but the cloud, speaker, tv devices, streaming, and more. Adapting to what it’s customers want and need makes Amazon highly valuable and a brand that is easy for customers to remain loyal. Take the company’s success during the recent Covid-19 crisis. Their continuous innovation provided a flexible structure that allowed them to not just succeed but flourish.

Challenges of continuous innovation

While the focus of any business is to stay relevant and keep customers coming back while streamlining processes, the actual steps to constant implementation of innovation can often become lost in the shuffle.

LearnStack says it best, “Even though product development teams have moved ahead to an iterative or agile model, business planning is still stuck in old-world tools. A lot of companies still practice what we call: ‘Waterfall disguised as Agile’, which simply doesn’t work for Continuous Innovation.” With old methodologies, the process of pitching, testing, and managing innovation projects is slow. It loses momentum fast and is really hard to track with a continual mindset. And, if innovations are not tracked, they will not be at the forefront of any organization’s task list. It is this constant and seamless implementation that challenges organizations of all kinds. On top of that, some organizations aren’t even addressing continuous innovation because of the misconception that they are too small. It is time that this practice gets paid more attention on all levels.

Frameworks and Mindsets

Recently, as countless companies have identified the importance of continuous innovations, numerous people have developed frameworks or mindsets in hopes to make this process easier.

Used to streamline innovations, one of the most popular frameworks is known as COIN. Developed by Blinklane, the company describes it as “an open and transparent process to continuously develop, scale and embed innovations in any organization.” And, it was developed to overcome the challenges organizations face in monitoring and tracking innovation processes. The key elements of the framework include Ideation, Validation, Experimentation, Scaling Up, and Embedding along with identification of who is running the innovation and at what level it is happening.

Another concept is LearnStack’s mindset to constantly think like a scientist. “Scientists use models to better understand the problems they are tackling and extrapolate possible solutions from there. They use these models to make predictions which they then validate or invalidate using experiments. If the model is invalidated, they adjust the model.” Scientists are constantly monitoring, examining, and improving the problem in order to make them better. If a business were to adopt this mindset, it would have continuous innovation within a scientific formula.

The methodology you adopt for your organization will vary greatly from the company next to you. However, one thing is for sure, continuous innovation is a vital concept that needs to be implemented now in order to greatly impact success in the future.

How can companies provide their customers the services for which they are known—without losing business to smaller, more nimble companies that aim to disrupt the status quo? Many are turning to innovation labs to think outside the box and drive new concepts to maintain their relevance and competitive edge.

Innovation happens when you generate value from ideas. Innovation labs, then, are a framework for creatively exploring new ideas to achieve different outcomes—a necessary skill in today’s era of digital transformation.

In this article, we’ll look at innovation labs, including models, benefits, and best practices for establishing yours.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

Who uses an innovation lab?

Corporate innovation is critical for established companies looking to stay relevant in the face of disruption. Innovation labs have become so vital to business today that they are embedded in industry verticals from telecom and finance to health and insurance. These small creative teams can focus on anything from establishing new business models, creating new services or products, and improving internal processes or visions.

Almost every large company has an innovation lab these days, but it’s not only large companies who benefit from a focus on innovation and a safe place for creativity. Innovation labs are useful for any company because they can provide training, networks, and insights to help intrapreneurs succeed regardless where they work in the company. This can help alter the business-as-usual DNA of a company, creating pockets of innovation across an organization. Such labs also promote skills and concepts that everyone can learn, allowing them to contribute to the innovation process.

Paths to successful innovation

It seems like a tough ask for companies: how to balance business as usual while allowing the freedom to innovate. Importantly, for innovation to work, companies must recognize that innovation is as much a cultural attitude as it is a business process.

As you encourage and promote innovation across your company culture, you can take a generic approach to innovation. This approach may begin by defining the customer and uncovering their unmet need, formulating a hypothesis on what product or service the company can offer to meet that need, and validating the hypothesis by using customer feedback to rapidly experiment and iterate.

More specific innovation models do exist, but these are the three common paths to innovation:

Creating internal stakeholder-led labs

Many businesses look internally for well-aligned stakeholders to lead and strategize these labs. This is a popular strategy because it doesn’t require as much work to get started. But, this approach can be tricky. In-house groups might rely too heavily on existing business models and services, which might stymy creativity or introduce fear into the process.

Instead, these teams need enough separation from the business to develop their own culture and produce the necessary creativity to redefine the challenges they are charged with overcoming. A best practice for using this model is to establish the team leaders, source ideas from the entire company, and then narrow down to the top concepts for ideation and prototyping.

Acquiring innovative businesses

Another option is to acquire a smaller business with proven innovation abilities without squashing their unique expertise as they are integrated into the vision of the larger company. With a lot of work, resources, and money, this approach can work. But, all too often, this effort goes awry if core members of those innovative teams leave due to the deterioration or discouragement of their original culture.

Partnering with external innovators

Partnerships between internal and external innovation teams can be developed into mutually beneficial alliances. In these alliances, the smaller creative team brings new energy and ideas while the larger business team provides increased access to new markets. It’s in these partnerships and alliances where autonomy for both businesses can be sustained while taking advantage of each other’s own resources.

Creating a successful innovation lab

No matter the innovation model you choose, top innovation labs have specific characteristics and needs that make them successful. Capable innovation teams do a lot more than just think up cool new ideas. They actually manage the activities important to the initial concept phases as well as the many tasks, activities, and cost management necessary to develop the idea from its initial phases through implementation to launch. The best innovation labs:

• Learn, create, and change
• Consist of small, motivated teams able to create something new
• Have the trust and support of senior management
• Embrace customer centricity
• Work towards a clear, business-relevant goal
• Experiment relentlessly, with the desire to learn from failures
• Accelerate the build/measure/learn cycles
• Utilize an agile, iterative approach that encompasses Lean methodologies and the customer development method
• Leverage new technologies and business models
• Maintain their own diverse culture

Effective innovation teams, whether inside or outside of a lab, are purpose-driven and diverse.

Your purpose must be clear: perhaps you are focused on developing new business models or generating the next great product ideas. Or, your team can focus on business strategies like improving internal business systems, entering new markets, and improving company culture, employee performance, and client focus.

The composition of your team members is vital, too. Innovation team members should be diverse, with different backgrounds and experiences, work functions, and even cognitive styles. You might consider adding external personnel who bring an expanded skillset and expertise to your team. When paired with internal personal who have both a deep understanding of the company and a passion for innovation, this diversity and real-world experience can spark creativity.

Functions of an innovation lab

Once you’ve establishing the goal and team for your innovation lab, you’ll need to determine the activities and tasks the team will perform. Here are four activities essential to innovating:

Scanning for trends

Innovation labs should take on time- and resource-saving activities like trendspotting. This helps prevent your organization from merely chasing temporary hype and short-term fads.

Generating value from ideas

Innovation team members are tasked with generating value from ideas. Investing in an innovation accelerator or incubator can speed up the process of value creation. As you explore implementation processes, measure the value of these ideas to provide proof for additional funding if necessary.

Communicating with the organization

Communicate your progress to stakeholders and the organization at large. This helps prepare employees for cultural and procedural changes. Tell stories about ideas that have moved forward. Listen to stakeholders to understand areas where innovation is most needed or welcome.

Liaising with third-party partners

Engage with additional outside partners such as universities, trade groups, governments, and startups. These partnerships can offer vital experience and resources for accelerating ideas and innovations.

BMC Innovation Labs

BMC believes that if you anticipate market changes, then you can act on those changes. BMC Innovation Labs bring together customers, partners, and employees to accelerate the development of new and relevant solutions. It is truly a place to explore all ideas—from those that may fall outside the traditional enterprise IT box to the radical changes that support the future of work. BMC Innovation Labs work on tomorrow’s innovations today by:

• Creating a “fail fast” organizational culture by allowing our employees to experiment on ideas and to let them know it is OK to fail at first. Employees should take these initial failings and use them as learning opportunities, pushing the envelope towards the desired positive future state.
• Harnessing new ideas by creating experimentation spaces and advancing disrupting technologies
• Enabling intrapreneurship with expert counsel and support for fast development and prototyping
• Co-innovating with customers and partners to solve industry-specific challenges and shape the next generation of business technology

BMC has a history of delivering products to the market which help companies run their businesses more efficiently. By focusing on innovation that services customers better, we reimagine and reinvent how we use technology to unlock hidden potential. BMC Innovation Labs provide a place to create, nurture, and test ideas to find out if a promising concept could turn into a product or feature. It’s a safe place to fail fast and keep iterating, as we explore more of what’s possible.

Innovation allows organizations to sustain growth and business improvements over a continuous and consistent basis. Innovation may appear in the form of a new:

• Products
• Features
• Operational processes
• Business model

Many forms of innovation depend upon your company’s ability to execute creativity and optimize business processes. Product improvement often appears as a popular form of innovation.

But, new products tend to lose impact soon after mass adoption in the market, which is particularly fast-paced for products perceived as truly innovative. Why? All your competitors want in, too.

As a result, organizations need to resort upon alternative forms of innovation that can sustain market disruption over the long term.

For instance, business model innovation tend to solve key problems in the market for a prolonged time period and are readily adopted among leading enterprises to sustain growth. Consider the examples of AirBnB and Uber. Both organizations switched their business model to a crowd-sourced, platform-based service delivery model. Fostering this form of corporate innovation allowed these startups to emerge as the global enterprises they are today.

In this article, we’ll take a look at corporate innovation. Whether a small company, a government organization, or an international enterprise, corporate innovation is mandatory.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

What is corporate innovation?

Innovation can be hard to define. At its best, innovation is the process of transforming ideas and inventions for a new purpose or audience. Applied to any corporate setting or company, these new ideas will arrive in many forms—products, services, and process improvements—that deliver tangible benefits.

The goal of innovation is to design intentionally in order to satisfy a sustained need or specific time period.

Corporate innovation likely also transforms executing existing ideas and inventions to yield tangible improvements. It’s not just adding new features, but considering any product in a holistic way: perhaps it’s origin story which drove initial development is no longer a valid or worthy business case.

Can you innovate a product to enhance it, bring it forward, rethink it all together?

One of the most critical elements of innovation is the creativity behind this transformation. Of course, that creative potential is immediately hindered by inevitable challenges, which can stop any innovation conversation before you even utter the word “innovate”.

Different environment lead to different set of challenges. These challenges may be unique to a particular set of entities but not limit the same innovation to be executed by other entities that do not face the same challenges. This is exactly why small startups such as AirBnB and Uber were able to adopt a more agile new business model to deliver the same services as the housing and taxi industry without the obstacles facing their larger counterparts in pursuing the same markets.

How to foster corporate innovation

So, let’s define corporate innovation as any innovation process within a corporate environment. The goal of innovation is obvious: staying on top of your competition. But the execution is much trickier to get right.

Here’s how organizations can foster corporate innovation:

Identify the need for innovation

The first step toward corporate innovation is to acknowledge the continuous need for innovation.

While many business leaders may announce company vision and philosophy to innovate and disrupt the market, actual business resources may not reflect this idea. So, start with these activities:

1. Quantify and compare the resource investments on regular business operations versus innovation projects.
2. Evaluate the performance of innovation-based growth enablers and understand how any gap could be addressed with future business plans.

If a significant component of the business plan is not attributed to disruptive initiatives through business model, product or process based innovation strategies, it is likely that the workforce is still adopting a low-risk business strategy focused on stable growth instead of market disruption via innovation initiatives.

Create an innovation culture

Organizational culture defines the ability of the workforce to engage in initiatives that can lead toward corporate innovation. Business leaders and C-suite executives should be the first to embrace positivity and optimism toward innovative ideas. This is embodied in the term innovation culture.

That means that any organization demanding innovation must give its workforce the tools they need to work creatively and openly:

• Freedom
• Tangible resources, including budget, supplies, and even talent
• Encouragement, early and often

Failure should not prevent teams from testing new strategies and feature development. Instead, reward failures. Proudly recognize that new ideas can help bring the best out of the workforce and ultimately help execute ideas that can truly transform into disruptive corporate innovation—but not every single idea gets an A+ right out of the gate.

Large enterprises employing a diverse workforce have a better opportunity to develop cross-functional teams and change the work environment so that the ideas and skills are complemented toward execution. A culture that allows employees to challenge existing strategies, processes, and assumptions is likely to yield innovative ideas.

Unfortunately, it’s quite likely that, despite all the available talent and resources, your existing organizational culture stifles the innovation process by enforcing unnecessary limitations in the way employees can work, collaborate, or even think.

(One sign of this? If leadership is telling the organization to seek innovation in one specific product area or tool. Instead, promote innovation widely, so that ideas that aren’t immediately relevant can still offer potential.)

Hire right, hire fast

The workforce is inherently the most critical resource for corporate innovation. The talent gap in the industry is already at a sharp rise. The best performing organizations lure and retain the best talent.

For organizations pursuing corporate innovation, hiring the best innovators faster than their competition is vital to lead the race toward innovation. Specifically, individuals working in the various domains of research and development (R&D) at research, academic, or scientific institutions are apt at both:

• Identifying a problem
• Solving it by means of unprecedented ideas and inventions

Some of the most advanced technology innovations are based on aggressive recruitment of interdisciplinary, visionary and skillful talent from universities. Uber’s self-driving initiative is a popular example where the company poached 50 researchers of from the highest ranks of Carnegie Mellon University. The result? The company’s pioneering efforts rolled out self-driving projects at a pace higher than most competing autonomous transportation vendors and companies.

Scale, diversity & reach a global audience

For any initiative to transform into tangible business performance improvements, recognizing and scaling innovation is a critical step. True innovation should solve an actual customer problem in an innovative way, and should be acknowledged as such.

Secondly, make the solution available to a large and diversified audience faster than the competition can replicate and overturn the advantages of your pioneering.

Again, look to Uber. The startup initially solved a major transportation problem. It then brought the solution to a wide customer base of car owners and travelers. In addition to scaling the business globally, Uber also diversified its offerings across the food delivery, freights and logistics, autonomous ground and aerial transportation, sustainable bikes, and even the healthcare industry. (Certainly some will perform better than others, and that is both expected and okay.)

Innovate for long-term business potential

Companies and organizations know this: current business practices will help sustain your market share only in the near future. How long is that future? Too short to sit back and wait for change.

Instead, seek the disruptive innovations and agility of a startup firm that will truly deliver sustainable business growth and performance over the long term.

Related reading

• BMC Business of IT Blog
• The Innovation Trigger: An Idea Begins
• What Is an Innovation Lab?
• Lewin’s 3 Stage Model of Change Explained
• The Chief Transformation Officer Role Explained
• Top IT Trends Today

Few terms have gripped business consciousness in the Silicon Valley as Disruptive Innovation. The term coined by the Harvard Business School professor Clayton M. Christensen in his 1997 book, The Innovator’s Dilemma demonstrates the ability of startup firms to succeed in underserved markets, ultimately challenging the dominance of incumbents in the high-end, profitable market segments. In recent years, the term has largely been associated with Silicon Valley unicorns making headlines with their highly scalable tech offerings. The likes of Uber, SpaceX and Tesla portrayed as the beacons of disruptive innovation in the modern era may not entirely qualify for definition of the theory proposed by Christensen. A clarification is in order, especially since many emerging startup firms are setting stage to disrupt the industry, solving real problems with business models in accordance with the original Disruptive Innovation Theory.

(This article is part of our Innovation in The Enterprise series. Use the right-hand menu to navigate.)

Disruptive Innovation Explained

The theory suggests that a small organization with fewer resources has the ability to challenge their larger counterparts by focusing innovative products and services toward the low end of the market, which is often ignored by incumbents as they grow profitable. The new entrants are gradually able to improve their innovation performance to attract the high end of the market, without compromising their original qualities – such as low cost, convenience, access or security, among others – that allowed them to succeed in the underserved market segment. When incumbents fail to identify the market void and realize a small company competing for their mainstream market-share, the damage is already done and disruption has occurred through the small company’s innovation.

1. Incumbents sustain their innovation trajectory as they introduce new products or feature improvements. This trend is used as a reference for new innovations, their purpose and to determine the disruption potential of new innovations. Consider the case example of Amazon.com in its early years. Established enterprises such as Barnes & Noble had a strong foothold in the bookselling market. The company expanded its brick and mortar business rapidly during the 90’s and early 2000’s, largely focusing on customers willing to visit the store in person to purchase the literature. With this business model, incumbents in the bookselling industry failed to address the key element of convenience in the customer buying journey.
2. Incumbents overlook basic customer needs of the future as they sustain their existing innovation trajectory. Continuing with the earlier example, end-user convenience and ease of access to information, products and services was set to emerge as a priority in the age of the Internet and ecommerce. With increasing adoption of the Internet among mainstream customers in the bookselling market, the ability to purchase a book on the Internet without having to leave the couch was highly regarded as a key value proposition by ecommerce startups such as Amazon.com. At present however, ecommerce and Internet technologies were developing faster than the real-world market demand. A majority of the book purchases occurred at book stores, while ecommerce businesses appeared to underperform for large incumbents to counteract in advance.
3. Incumbents acknowledge the innovation and possess the ability to respond but fail to exploit the opportunity with their priority to sustain existing innovation trajectory. Disruptive innovations are typically aimed to scale rapidly in a growing market, with a strong focus on growth instead of immediate profitability. Incumbents see disruptive innovation products as simple, cheap and aimed for insignificant markets. They continue to value their best customers who may not be willing to adopt new innovations immediately. Therefore, the case to pursue disruptive innovation remains weak for incumbents as they fail to make a rational financial decision on shifting their well-performing existing innovation trajectory. This is precisely how the likes of brick and mortar retail giants including Barnes & Nobles behaved while Amazon.com focused on the low profit but highly scalable ecommerce market of literature and media products.
4. The final element involves the growth of innovations to a point where mass markets take notice and embrace adoption, paralyzing large incumbents who fail to drive down the cost in attempts to take advantage of the economies of scale. Companies like Amazon.com with their disruptive innovation potential are built specifically to maximize the potential of massive scale economies that exist on the Internet. Amazon had the key advantage of operating a centralized large distribution system, making it easy to ship sales in large volumes across the country. On the other hand, retailers such as Barnes & Noble operated individual shops involving significant legacy costs in adopting the online sale and distribution model. Today, most if not all of the leading tech companies have demonstrated elements of Christensen’s Disruptive Innovation theory in their pursuit to multi-billion dollar valuations. Not every large organization started off with disruptive innovations, but eventually adopted innovation strategies to identify new and underserved markets, or scale business in existing market segments with high growth potential.

A Shifting Perspective on Disruptive Innovation

Returning to the arguments against promising unicorns such as SpaceX and Uber not falling under Christensen’s definition of disruptive innovations, we have to analyze their growth and innovation trajectory. Both companies didn’t necessarily create new markets that were previously underserved. Uber’s taxi industry is already considered as a high-end of public transportation system. In fact, San Francisco had a well-established taxi market. National space agencies carrying satellites and astronauts into outer space don’t belong to a low-end or massively scalable industry either. Secondly, both companies were being considered as high-tech and innovative before they had to scale and make their mark in competition with existing alternatives.

Disruption through innovative technologies is as much a process, as it is an attribute associated with a business offering. The likes of Google, Microsoft and Amazon maintain their position as industry leaders in a growing number underserved markets. They do so by operating separate and isolated divisions that begin as small-scale experiments and are scaled out with business models vastly different from their own mainstream alternatives. For instance, cloud networking was already a thing, decades before the launch of Amazon Web Services. However, Amazon rolled out its own data center solutions as low-cost subscription-based offerings to SMBs that lacked the resources to deploy and run their own infrastructure. Eventually, this disruptive innovation helped Amazon shift its growth trajectory impacting the global IT infrastructure industry, eventually making Amazon as one of the highest valued company in the stock markets today.