Organization Culture and Innovation

Internal Collaboration

Focused colleagues brainstorming in the boardroom

It is important to create cross-departmental teams and make communicating across departments easy. When, for example, the marketing team only speaks to the marketing team this creates a recipe for groupthink. To ensure employees understand how the different parts of the company work and how they must work together to achieve progress, leaders might, for example, create a policy whereby anyone who wishes to become a business unit general manager must have worked in at least two functional areas for two or more years. The CEO of a very successful technology company requires the R&D people to spend about 10% of their time in marketing and sales and vice versa.

A great example of internal or cross-company collaboration is Starbucks. As the rise of café culture birthed hipster pop-ups and independent shops, the dominant chains began to lose ground. Keen to avoid a Kodak moment, Howard Schultz jumped to action. The Starbucks CEO invited store managers from all over the world to come together for a conference to redesign the café experience.

Innovation Labs and Intrapreneurship

Designing innovation labs is one way to foster and support innovative initiatives.  Some well-known organizations create innovation lab spaces where their employees can experiment and work on innovative ideas.  Some companies share successful ideas from employees by supporting them in intrapreneurship initiatives which often take the form of company spin-offs or subsidiaries whereby the employee who came up with the idea often becomes a top-level manager of the new spin-off company.

Top Innovation Labs

Innovation Labs focus on business growth. They can either be internal to a company that has the resources and the team available to run their own internal programs, or they can be external such as a consulting firm that supports the innovation process of other businesses. Innovation labs are strategic and goal-focused and are used as tools to address specific company innovation requirements. An innovation lab is a fast, flexible and creative concept that adapts to the needs of the host organization. Innovation Labs can be set up for just a few days, run over the course of a few months, or can become an ingrained part of a company that provides a constant source of innovation.

Below is a list of a few companies with successful innovation labs.

• Kohl's Innovation Center
• Google[x]
• Amazon Lab126
• Verizon 5G Labs
• Volkswagen Automative Innovation Lab
• Staples' Velocity Lab
• Coca-Cola's KOLab
• Lowe's Innovation Lab
• Capital One Labs

Some successful intrapreneurship examples include:

BOXLAB

Intrapreneurship programs are a great way to make innovative projects and ideas happen. This happened in BASF and its intrapreneurship program, Chemovator, where BOXLAB Services became the first corporate spin-off in the organization. Mischa Feig and Lisa Ruffin are the intrapreneurs behind the spin-off, which now operates as an independent startup on the market with BASF holding minority shares.

Vimeo

Vimeo is an exceptional example of how an Intrapreneur, Anjali Sud, transformed its companies' business model inside out and went from being the Marketing Director to the CEO of the company. Increasing sales by 54% in a year, Anjali Sud changed the struggling online video platform to a successful SaaS business.

PlayStation

Back when gaming consoles were first being developed and marketed, Sony was not interested in entering this industry. It's hard to believe this considering that today, gaming accounts for 29% of Sony's revenue. Ken Kutaragi is the intrapreneur behind the launch of the first Sony PlayStation in December 1994 in Japan. It eventually became the first "computer entertainment platform" to ship over 100 million units, doing so in under a decade.

Innovation Time for Employees

Innovation team

Leaders who build innovation into their culture may offer "free time" to employees who wish to work on innovative initiatives. Leaders want to encourage innovation in non-obvious areas. Getting employees to expand their definitions of innovation is essential, so leaders should explicitly spell out for employees distinct areas that are ripe for innovation within the company, such as product, process, or business model, and let employees know the company is seeking contributions in any of these areas.

Companies like Google, 3M, and a host of others are known for letting their employees spend 15 to 20 percent of their time each week working on creative side projects, innovations, and ideas – and it pays off. (This is how Gmail and Google Earth were created.) In addition to creating space for employees to innovate, leaders should also be prepared to reward employees for their creativity. For example, employees might be promised a certain percentage of net revenue for any employee who comes up with a new product that goes to market.

Partnerships and Acquisitions

Forming partnerships with other organizations to create a new innovation is often a great idea since it will reduce the risks of innovating for each company because each partner shares in the risks. With that said, each collaborating organization will also share in the rewards.  An organization that may be weak in some areas and has determined it would not be feasible to expand operations, purchase technology, or obtain patents that would be needed to develop a specific innovation, might gain the strengths needed (e.g., supply chain, manufacturing, technology, patents, trademarks, etc.) through a partner company that would share these with the innovation team.  (Note that some of these concepts were discussed in the chapter on innovation risks).

Large companies may work with smaller businesses that have a niche, expertise, technology, or specialty that the larger company does not have.  Many times large organizations purchase (acquire) these smaller companies so that the larger organization can expand its innovative skillset, technologies, processes, patents/trademarks, and expertise with what the smaller company brings. For example, software and application development might not be the company's thing so the company might consider partnering with a Python developer to launch a brand new web application that the industry has never seen.

Cisco's acquisition strategy generally targets smaller companies that have developed innovative new products,  but the key to making these acquisitions pay over the long term is the company's ability to retain the talented engineers and managers from the acquired companies. They've been very successful at this, bolstered of course by the company's increasing stock value.

The government often partners with businesses toward innovation, especially social innovation, technology innovation, and environmental innovation. Governmental organizations across the globe have launched their own innovation hubs often partnering with businesses to find innovations that will bring value to entire communities. (Note that some of these concepts were discussed in the chapter on innovation risks.)

Innovation consultants can help guide the innovative process.  Companies can outsource these experts if they do not have an organizational structure for innovation or lack talent within the organization. (Note that some of these concepts were discussed in the chapter on innovation risks).

Open Labs for Co-Creation

BMW sports car engine

An "open lab" can offer real benefits for organizations, for example, reinforcing corporate commitment to innovation and creativity in a physical space. Auto manufacturer, BMW, has a co-creation lab where its customers can share their ideas and become an integral part of concept vehicle development. Collaborating with customers by inviting them into innovation projects through gathering feedback to participating in development, customers have helped companies make great strides. Companies might consider co-creation partnerships with customers, universities, suppliers, start-ups, and even competitors. In early 2018, Swedish furniture and home goods retailer IKEA launched ‘Co-Create IKEA', a digital platform encouraging customers and fans to develop new products. In 2018, Coca-Cola entered into a co-creation experiment with customers to make sure its Southeast Asia product strategy reflects the tastes of the region and its people.