What your innovation strategy should include

The role of innovation and research & development vary within corporations. That role needs to be monitored and compared to those of competitors’ at both, business and consumer level. Put simply, a strategy for innovation expansion is vital in order for a company to survive and remain relevant in the constantly evolving markets. When building innovation strategy, experimentation and fast iteration are necessary.

One hindering that corporations often face when innovating, is the matter of how to move from the idea creation and innovation of a product, to the practice and concretion of an idea to a product. Corporations often have a mindset of thinking that large companies are stable by design and that it’s safer to follow the change than to lead it. A common strategy is to isolate the risks from innovations and experimenting. This is sometimes done by creating innovation labs or separate operational units that focus only on innovation processes. Although, If the culture of innovation isn’t promoted and created within the entire corporation, management buy-in and support can still be a challenge to achieve.

According to AlfaBank’s head of digital products, Alena Bocharova, large companies should realize their opportunities to innovate, that are created not by large budgets but by processes that have been tested and iterated to near perfection. This lowers the corporation’s risk of failure.

AlfaBank has dealt it’s innovation process into two main areas of focus:

1)    Building a culture that allows and encourages innovation and finally changes the company’s infrastructure to a more agile one.

2)    Setting a goal to provide the best products to the customers.

Of course, it is harder to build a culture of innovation in a well establish institution instead of starting from scratch, but often a separate innovation operating system can help! Corporate innovation labs are one way of establishing it. Innovation labs should have it’s own objectives, such as working and utilizing startups and developing digital products that answer the customer’s needs better. AlfaBank founded its own innovation lab and has been very successful with it. Here’s what they did:

AlfaBank showing an example:

Alfabank founded their own innovation lab called Alfalab, that aims to create new and innovative digital services and products for it’s customers in order to improve customer experience. Alfalab has innovation teams that work towards their goals. All the teams meet up once every three weeks to pitch their ideas to each other. When a team has an idea for a product, they introduce it at a review session, where they validate the idea. After the team has gotten validation for their idea, they get funding for the project from AlfaBank and have 3 months to prove the value of the product. After this they release a beta version of their product to the market and after a ”pilot” round, they either get the ok to go forward with the product, or the product is iterated or killed. This is a good example about how a separate product, stemming from an inner innovation process (or a startup) can help a big company to find a new client segment and test new concepts without hurting the core of the business.

Similar results can be achieved from the innovation lab through the utilization of startups. Using startups however, usually means less costs. Inner innovation projects require inner funding too, but a startup can provide a ready for market product, so you save on the development costs and testing, and only buy the ready-made product.

Finally, don’t forget that ”innovation” as a term doesn’t only cover for technological advancements but also spheres such as management, recruiting and operations.

 

Tips for creating an innovation strategy:

  • Have an innovation strategy that enables changes in the corporate structures and supports the culture of innovation
  • Consider having a separate operative unit, that handles innovation and new business, so you don’t hurt your core business
  • Have innovation teams that work towards set objectives, one team focuses on product development and another on working with startups for instance. Have regular review sessions where ideas are pitched and validated.
  • Quit driving blindfolded – ask your clients regularly what they want and need, involve them in the development process
  • Partnerships with startups help accelerate the implementation and experimenting process. (The faster the process is, the more money you save)
  • Be aware that changing people’s mindsets takes time, at first doing things outside the company’s comfortzone, faces resistance and hesitation.
  • Set ambitious objectives - If you want your business to grow 15% next year, double your goal! Pressure can help people execute more efficiently and discover solutions that they otherwise wouldn’t have thought of.
  • Employ people from different businesses with different backgrounds and experience. This will bring innovative solutions for your teams.

 

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For reference check out: http://www.rocketspace.com/corporate-innovation/inside-one-multinational-banks-strategy-for-fintech-expansion