We start this serial story about innovation at large companies with a testimonial of Jean-Louis Constanza: he identifies some key challenges to overcome for successful innovation at established firms.
Jean-Louis Constanza is Orange Vallée CEO. Jean-Louis is a serial entrepreneur, more specifically focused in the digital industry (Internet, media and telecoms).
Among the companies and projects he started up, Tele2, a leading European carrier, has become a case study for low-cost / lean and mean, combining marketing innovation with excellent processes. Other ventures sought differentiation through innovating in technology and user experience, such as Ten, a MVNO focused on mobile Internet, and the projects he today leads within Orange.
The meaning of innovation for established companies
Innovation is a combat sport. For a company, innovating is always synonymous with self-denial. The employee or the department of a big company dedicated to innovation always runs against resistance on three levels.
- The first level of resistance is linked to strategy
Innovation is firstly useless as it represents initially a low share of business revenues. Any wise manager would rather allocate fundings to marketing campaign to increase traditional product sales, rather than to invest on uncertain innovations.
Return on investment on innovation is always hard to demonstrate. Arguments like “this is out of our business”, “we’d better stay focused”, and “we have to concentrate on market share” gather quite often executives on a NO GO decision, all the more easily that executives are more likely issued from the traditional proven business than from innovation business. Innovation is then delayed pending additional market study.
- The second level of resistance is linked to organization
Executives have built their success on businesses which have become traditional. Their core DNA is to optimize the mainstream operations. In their 40’s or 50’s, they are in the middle of their carrier, having pushed for 20 years to develop mainstream buisness, they have 20 years to crown their success. Risk linked to innovation can be paralysing. Thus, large companies organizations and culture tend to be more efficient to fight for market share, renewing product range and developing incremental innovation; the same organizations are weak at developing disruptive or radical innovation.
- The third level of resistance is linked to the outside world: clients and competitors.
We talk a lot about this one while it is actually the easiest one! Like in Formula 1 Grand Prix, where there are a lot of books about any technical matters such as engines, aerodynamic, but very few about how to become a great pilot, we have a lot of books about innovation strategy, co-creation, user-testing, innovation portfolio, and new products development . But practically speaking, the value of innovation work is limited as long as big companies don’t engage, that is to say don’t know how to organize themselves in order to transform an abstract strategy into concrete products.
The value of the Rapid innovation model
Rapid innovation framework designed by Nicolas draws clear models for innovative organization, based on in-depth investigation across various case studies which are comprehensive and not limited illustrations. Rapid innovation model seem to me adaptable to all industries, from industrial equipment goods to mass products.
It comes at the right time as we seem to lack of efficient innovation management in France. Our traditional industries are sliping on innovation slope. We are good at strategic understanding, even our journalists could be experienced consultants. Our problem is that no brilliant strategy is succesful without true execution, while an effective organization always managed it, even when starting on a thin strategy.
Compared to Silicon Valley, Corean and Chinese Labs, the French digital industry is weak, though potentially powerful. In practice, it should take inspiration from Rapid innovation insights to learn how to organize itself and transform this potential power into global products.
Orange Vallée and the way to articulate the innovative unit with mainstream operations
Orange Vallée is a skunk works, a new co dedicated to innovation, agile and leveraging on small coherent teams. It’s an innovation unit next to the core company, so as not to be stifled by the two first levels of resistance mentioned above.
An innovation project has to be lead by an ambitious team, highly motivated from concept design to commercialization. Few projects require more than 20 resources at their core. As Steve Jobs puts it: « Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it. »
Like Lockheed skunk workss or original PC unit at IBM, new co dedicated to innovation can play a positive role. But this role is necessarily limited as it doesn’t impact the complete company. In order to maximize the value of innovation brought back to the core co, it’s the whole of the company that has to become innovative, as explained in the Rapid innovation model.
Transform innovation paradox into correlation
To complement Rapid innovation framework that you’re about to read, I remember another interview from Steve Jobs back in 1996 : « Microsoft (…) have no taste. They do not bring original ideas or culture into their products ». And another interview, quoting hockey player Wayne Gretsky : « I skate to where the puck is going to be, not where it has been »
For those who know Apple, Jobs “genius” is not to invent products, but mostly to create a perfectly efficient organization on these two contradictory aspects: existing business and innovation.
A truly excellent organization has to perfectly manage the priority of innovation and mainstream. This way, it can devote its collective intelligence to the things that will really make a difference with its competitors : tastes, original ideas, culture or vista.
Jean-Louis Constanza, Orange Vallée, March 2011