Corporate innovation

From CEOpedia | Management online
Corporate innovation
See also

A corporate innovation model consists of two essential elements: the value proposition and the operating model – each of which has three subelements. The value proposition answers the question, What are we offering to whom? It reflects explicit choices along the following three dimensions:

  • Target Segment(s). Which customers do we choose to serve? Which of their needs do we seek to address?
  • Product or Service Offering. What are we offering the customers to satisfy their needs?
  • Revenue Model. How are we compensated for our offering?

The operating model answers the question, How do we profitably deliver the offering? It captures the business’s choices in the following three critical areas:

  • Value Chain. How are we configured to deliver on customer demand? What do we do in-house? What do we outsource?
  • Cost Model. How do we configure our assets and costs to deliver on our value proposition profitably?
  • Organization. How do we deploy and develop our people to sustain and enhance our competitive advantage?

The corporate innovation machine

The corporate innovation machine is a model for understanding how to implement an effective, idea management based innovation strategy in your firm. As with any machine, the corporate innovation machine comprises several components, all of which must work together for the machine to work properly. When the entire machine does work, it builds ideas, evaluates those ideas and implements the best ideas as new product, service and operational improvements which translate into increased revenues for your firm.

The corporate innovation machine is powered by management. Just as the most sophisticated machine will not run without a power source, likewise your corporate innovation strategy will go nowhere without top management taking the lead. Management's main task is to create within the organisation a culture of innovation which will empower workers to think creatively, collaborate on ideas and contribute their ideas to the company. This is not an easy task, but done well it will make construction of the remainder of the innovation machine a relatively easy job [1].

Management must:[2]

  • Ensure that there is environment of trust. If the workforce does not trust the company, they will not innovate for the company. Survey after survey has shown that trust is one of the most critical factors in establishing a culture of innovation. If your workforce trusts the company, this is not an issue. If not, establishing trust must be your very first step.
  • Establish innovation goals. Determine what you wish to achieve through innovation. This should translate into a series of short term and long term goals against which the results of implementing the innovation machine strategy can be compared.
  • Designate responsibility and resources. Who will take charge of the innovation programme? What tools will you invest in? What resources will you provide? What budget will be available for the innovation programme? Will you provide a skunkworks (see below) budget for crazy ideas?
  • Develop a communications plan. It goes without saying that your workforce must understand why you are implementing an innovation strategy, how you are implementing an innovation strategy, how they should participate and how they will benefit. Likewise, your shareholders and customers should also be aware of your new innovation strategy and how it will benefit them. This all demands a comprehensive communications plan.
  • Demonstrate innovation. Assuming management wants the workforce to be more creative, senior managers should also be demonstrably more creative themselves. If management is seen as managing by the book, employees will doubt management's commitment to innovation.
  • Reduce creative risk. Albert Einstein once said: “If at first the idea is not absurd, then there is no hope for it[5]”. For many people, sharing a potentially absurd idea with their company is overly risky. At best, they may be ridiculed by their colleagues. At worst, they may be reprimanded by their superiors or even damage their career progression.
  • Establish a rewards scheme. Rewarding innovative thinking is an important part of an idea management based innovation strategy. Rewards increase motivation for employees to continue developing and sharing ideas. There are various methods of rewarding ideas.
  • Implement creative ideas. Ideas are no more than ideas until they are implemented. Management needs to take charge of implementing creative ideas so that they may become innovations which deliver value to the firm. Highly creative ideas, which have the potential to become breakthrough innovations are also highly risky.

< Individual creativity is, of course, the creativity of an individual person. People can learn to be more creative by reading books, participating in workshops, learning creative thinking techniques and so on. Organisational creativity is the creativity of an organisation. Unlike people, however, organisations cannot simply pick up a book and learn to be more creative [3].

Creative collaboration occurs in several ways:[4]

  • Creative teams put together by management in order to handle a specific task or project. When management puts together such a team, an effort should always be made to build the team with people from different divisions and locations.
  • Creative teams that are formed when an employee asks one or more colleagues to assist her with a task. Unfortunately, when people form their own teams, they tend to work with other people in their own division and with whom they have worked in the past.
  • Brainstorming groups that are brought together to perform a single brainstorming session. Again, an effort should be made to bring as wide a variety of people as possible into each brainstorming session. When appropriate, business partners, customers and others from outside the company should be brought in to participate.
  • Networking that employees do when they seek the assistance of a colleague for ideas, advice or help. Networking tools, such as staff directories and discussion forum tools can help encourage people to network outside their departments and immediate contacts.
  • Open collaboration that is possible through web based discussion fora, some web based software and other on-line collaborative tools. Open collaboration is where any user can interact with any other user in a transparent manner.

Academic research

There are multiple pathways through which spillovers from academic research may occur. Since some channels are more easily measured than others, we only review the evidence for a limited number of topics. Academic patenting and licensing have received a lot of attention as potential tools to transfer knowledge from academia to the private sector. But while academic patenting and licensing have been growing over time, this phenomenon is highly concentrated in few universities and a limited number of industries. Evidence shows that academic patents and licenses are among the least effective mechanisms to promote private sector innovations. Instead, informal contacts with faculties and recruitment of university graduates are the biggest contributors to corporate innovation. Research-based education spurs private sector innovation and economic growth.

Summary of importance of collaboration

So, collaboration is an essential element of organisational innovation. When a team of people come together to devise and develop ideas, they can potentially be much more innovative than any individual member of the team can be on her own. However, to be effective, teams must comprise a variety of people with different backgrounds and areas of expertise. In a corporate setting this requires, at minimum, that teams are made up of people from different divisions within the company.


  1. Kazadi, K.; Lievens, A.; Mahr, D.2015, 69, 525–540.
  2. Sung, S.Y.; Choi, J.N. 2014, 35, 393–412.
  3. Zheng, W.2010, 12, 151–183.
  4. Camps, S.; Marques, P. 2014, 88, 325–348.


Author: Alevtyna Kazakova