Disruption is everywhere and will affect all organisations. This disruption is being driven at a faster pace, with greater impact, than ever before. Large organisations have learnt how to survive in the battle for growth within their own segments but are not adequately prepared for the sort of disruption they are now facing.
This disruption is coming from all sides:
1. The technology giants of GAFA (Google, Amazon, Facebook, Apple) that are rapidly entering adjacent markets.
2. The global community of start-up business, now with over 100 totalling greater than US$1 billion1, that are eating into the lunches of existing players, or,
3. The ever present threat of new market entrants from emerging markets.
In the US this has contributed to 52% of Fortune 500 companies having merged, been acquired or gone bankrupt since 20002. The traditional response of investing in R&D is not working. R&D investments are increasing while the returns are decreasing. Hardly surprising given a recent Forbes study that showed only 5% of the R&D staff felt highly motivated to innovate3.
What are organisations doing about this . . .
This constant threat, and R&D failure, is causing more and more organisations to invest in innovation labs. A Capgemini study found 38% of the worlds’ largest 200 organisations already creating their own4. Read the full report here.
These labs have a range of goals, to help their organisations experiment with emerging technologies or better understand their customers; however they do all feel the same. Having visited a fair few of these labs over the last year it is quickly apparent that they all have similar characteristics. Costly real estate, in desirable tech global centres, decked out in bright colours and exposed brick. You can almost guarantee the presence of a 3D printer in a corner somewhere.
Recognising this disruption and making the investment in a lab is a good place to start. However many organisations are focusing on the lab rather than the end-to-end capabilities required to overcome the disruption and make innovation a core competency within their business.
We have learnt that In addition to a lab, if an organisation is serious about competing amongst all of this disruption the organisation must also develop the following capabilities:
1. Ecosystem stimulation and open innovation management. Creating and managing a crowd of interested organisations, start-ups and SMEs engaged in your business problems.
2. Dev, test, deploy, analyse - dev-ops delivery for all innovation projects. Managing the relationship between business critical legacy systems and the rapidly changing test and learn initiatives.
3. The ability to align stakeholders and make collaborative decisions. This is key to moving out of the pilot phase and deploy at scale.
Developing and scaling these capabilities is essential to making the most of any investment in an innovation lab. They elevate your innovation lab from exposed brick and a 3D printer to the key capability to combat disruption and ensuring the future of your organisation.
1Wall Street Journal, “The Billion Dollar Startup Club”, February 2015
2HBR, “Making Sense of Digital Disruption”, May 2015
3Forbes, “Why U.S. Firms Are Dying: Failure To Innovate”, February 2015
4 Capgemini ,“The Innovation Game”, June 2015