鈥淵ou can鈥檛 do things the same way and expect different results.鈥� I think we all grasp this concept, that doesn鈥檛 stop us stubborn humans from being set in our routines and processes hoping that this time will be different. We鈥檙e all creatures of habit and let鈥檚 face it, change is hard, we avoid it because it鈥檚 uncomfortable, but in reality, the only certainty, ironically, is that things will perpetually change whether we like it or not.
Another irony is that innovation management itself isn't that innovative. Processes have evolved over time and improvements have been made, but it takes hard work, discipline, and the right tools in order to make the complexities that are inherent in it work.
Innovation management has come a long way in the past century, and innovation leaders need to understand these shifts in order for their enterprises to stay competitive and grow in the years to come. At 黑料吃瓜, our growth innovation consultants are constantly analyzing and synthesizing the methods successful enterprises use in order to create and commercialize new offerings鈥攁nd in the past few years, we鈥檝e seen a shift large enough for us to call a new generation in innovation management.
We鈥檝e only seen shifts this big a few times in the history of enterprise innovation. This one is so significant, we made a major acquisition (Sopheon) and underwent a whole brand refresh in order to address it.
We're at an exciting moment in innovation management, kind of at a cross roads where technological capabilities and AI are all comverging together to create the ability to orchestrate innovation and drive growth like never before.
- Chris Townsend, VP Product Marketing, 黑料吃瓜
Understanding this new generation of innovation management is key for enterprise leaders: if you want to compete in today鈥檚 rapidly changing economic and technological environment, you need to understand this.
So let鈥檚 take a look at where innovation management is today, and how we got here.
The evolution of enterprise innovation management: a brief history
Throughout history, people have found ways to create new tools, processes, and ways of thinking in order to adapt and grow as a species. Innovation is applied imagination, and it鈥檚 one of the key reasons humans run the show on this planet. However, while innovation has been around as long as we are, the discipline of innovation management is much more recent.
Proto-history: Rise of the modern enterprise (1800s鈥�1945)
The Renaissance brought in a new age of scientific exploration and discovery. During the industrial revolution, enterprises learned to produce and distribute at scale. By the end of the Second World War, enterprises had all three ingredients they needed to usher in a new era of commercial innovation:
- Teams of expert scientists and engineers poised to invent new things and discover new applications
- Manufacturing and production facilities ready to produce new products at scale
- Global distribution and marketing channels ready to market and deliver offerings to larger markets than ever before
With these resources in place, enterprises enjoyed a boom in commercial innovation: a golden age of research and development.
First-generation innovation management: Discovery-focused (1945鈥�1980s)
From the 1950s through the 1980s, breakthrough innovations came from enterprises with the talent and resources to invest in taking big swings. Engineers created new technologies, and the world wondered what the geniuses in the labs at companies like 3M, Proctor & Gamble, and General Electric would think of next.
During this period, enterprise innovation was a space race鈥攊n some cases literally. The prevailing wisdom pushed enterprises to make big financial bets on making new discoveries. To skimp on innovation investment was to run the highest risk of all: letting your competitors out-innovate you.
R&D departments enjoyed a long leash, if any leash at all. Innovation teams were responsible for finding breakthroughs鈥攖he rest of the enterprise worked to bring them to market and turn a profit off them. This meant that although R&D wasn鈥檛 entirely unmanaged, the general approach to innovation management looked a lot different than it has in recent history.
But the end of the Cold War, the dawn of the internet, and the rise of the saw a shift in how enterprises approached innovation鈥攁nd it brought us into the second generation of modern innovation management.
Second-generation innovation management: Risk-focused (1990s鈥損resent)
Through the 1990s to the 2010s, enterprises became more and more fixated on consistently providing short-term value to shareholders. Stock-incentivized leaders steered enterprises toward projects that would ensure the next earnings call had plenty of good news to report, and the financial risks associated with innovation became less attractive than they were before.
This is where the 鈥渕anagement鈥� part of 鈥渋nnovation management鈥� came into focus. Innovation, along with the rest of the enterprise鈥檚 functions, needed to earn its keep. Instead of R&D exploring possibilities in the lab for the rest of the business to derive value from, innovation projects had to make a stronger business case up front.
As a result, R&D gradually ceded their place at the center of the enterprise. The enterprise鈥檚 success didn鈥檛 come from breakthrough discoveries; it came from realizing new efficiencies, cutting costs, and boosting stock prices. This emphasis on financial value metrics created the discipline of 鈥渋nnovation management鈥� as we know it today.
And as R&D ceded their preeminence to financial functions, enterprises ceded their status as the centers of breakthroughs. Enterprises were playing it safe, and fresh startups became the new face of innovation to the public.
Three internal trends have defined the past three decades of enterprise innovation management:
- Digital transformation. Enterprises found ways to improve their operations and offerings using digital technology, with some business functions adapting to the digital era more rapidly than others.
- Go-to-market (GTM) joins the innovation ranks. In the golden age, traditional 鈥渂usiness鈥� functions like sales and marketing were tasked with commercializing R&D鈥檚 inventions. But over time, these functions began driving more downstream innovations, especially in terms of iterating on existing products to reach new-to-the-business markets.
- R&D diffusion. The traditional function of R&D gave way to various teams and departments within the enterprise. Some companies (and sometimes departments within companies) created their own internal incubators. New product development (NPD) became the face of innovation within the enterprise, with more of a focus on keeping new iterations of products coming down the pike than discovering breakthroughs. Front-end innovation (FEI) functions such as tech scouting, research, and viability testing saw drops in funding鈥攐r they were outsourced entirely.
This period of innovation management history has brought advantages and disadvantages to the enterprise. On one hand, innovation has permeated more of the enterprise than it did in the golden age. Instead of innovation being consolidated in the R&D labs, every arm of the enterprise finds ways to innovate, evolve, and grow the company.
But on the other hand, innovation is fractured. GTM teams are mostly focused on realizing short-term revenue goals. NPD teams are focused on pushing projects through the innovation pipeline. FEI teams are chronically underresourced, and often need to do their own projects in stealth mode. Very few enterprises have a comprehensive view of their innovation portfolio, and fewer have a unified approach to innovation strategy and data architecture. Innovation is still happening, but it鈥檚 hard for enterprise leaders to get a clear idea of what is happening, and it鈥檚 even harder to get a clear idea of what the ROI on innovation investments truly is.
Third-generation innovation management: Holistic growth鈥揻ocused (Present)
In recent years, forward-thinking enterprises have begun reevaluating their approach to innovation management once again. (It鈥檚 one of the biggest learnings we took away from commissioning a Forrester Consulting study on our enterprise customers.) This shift involves less emphasis on traditional innovation success metrics (e.g., using NPV alone to green-light or kill projects, focusing the portfolio on product vitality, etc.) and more concentrated energies on making sure innovation efforts, both individually and in aggregate, are materially supporting the enterprise鈥檚 short- and long-term plans for growth.
This shift expresses itself in three major trends we now see emerging in the enterprise:
- Realigning innovation activities around enterprise growth objectives
- Reintegrating innovation functions across the enterprise
- Restructuring and unifying current and historical innovation management data
Of course, each of these trends have their own change management implications in terms of how strategies are set, how resources are allocated, how portfolios are optimized, and how automation helps human managers coordinate these moving parts across the many innovation teams within the enterprise.
Why is innovation management shifting this way?
Innovation management is changing, and enterprises who want to survive in the coming decades need to change too. But these changes aren鈥檛 easy ones to undertake鈥攔estructuring innovation management data alone can take months or years to do effectively across a large company. If all of this is just hype, then it鈥檚 an expensive and time-consuming set of trends to jump aboard. So let鈥檚 take a moment to examine the two major forces pushing enterprises to make these kinds of changes: one external, and one internal.
External pressure: The shrinking product lifecycle
More than half of 2003鈥檚 Fortune 500 companies have vanished from the stock market, and almost three-quarters of the original Financial Times Stock Exchange 100 companies from 1984 are no longer traded, . Several factors contribute to this turnover in the world of publicly-traded enterprises, but one of the biggest is the rapid reduction in a given product鈥檚 lifecycle. WMC鈥檚 co-founder Richard Jackson commented on this in November 2023:
鈥淭he three-year product lifecycle of the early 2000s had been reduced to less than a year by 2020. Now, in 2023, product updates occur daily, sometimes even multiple times in a day, making it increasingly difficult for businesses of any size to maintain their market position, withstand the threat of competition and grow revenue."
Shorter product lifecycles demand more rapid innovation on the enterprise鈥檚 part, which means organizations need to manage their innovation projects in a way that gets new products from concept to market quickly and effectively. This involves all three major families of enterprise innovation functions (FEI, NPD, and GTM) working in more harmonious ways than they鈥檝e ever had to before鈥攚hich leads us to the major internal reason enterprises are rethinking innovation management.
Internal pressure: No more patience for unnecessary ambiguity
Innovation as a discipline is notoriously ambiguous and unpredictable; nobody expects to see the future with absolute clarity. However, modern analytics capabilities give us the ability to assess historical data, monitor market trends, and track internal goings-on with more intelligence than we鈥檝e ever had before鈥攚hich means business leaders know not all of the murkiness associated with innovation is necessary.
Forward-thinking enterprises recognize three types of information disconnects that innovation managers should be able to eliminate within the enterprise: strategic disconnects, cross-functional disconnects, and reporting disconnects. Third-generation innovation management takes measures to patch each of these disconnects.
Patching strategic disconnects
Late-stage second-generation innovation management has the problem of innovation activities being distanced from the company鈥檚 overarching strategy. Everyone knows that innovation activities should support the overall business objectives, but very few managers and workers in the innovation organization can demonstrate direct evidence of how the work they鈥檙e doing on a daily basis contributes to those objectives.
Strategic disconnects in late-stage second-gen innovation management
Enterprise leaders know that this shouldn鈥檛 be the case, and they鈥檙e using collaboration software and refreshed approaches to innovation portfolio management to fix this problem. Third-generation innovation management enterprises address corporate strategy and expected innovation outcomes with greater specificity, eliminating unnecessary murkiness and giving innovation managers a clearer idea of how their activities scaffold up to the company鈥檚 overall objectives.
How second-gen innovation management connects strategy to innovation activities
Patching cross-functional disconnects
Second-generation innovation management norms gave GTM functions more of a hand in the innovation process and fragmented R&D into various NPD and FEI groups. The uneven adoption of digital technologies across these departments forced various teams to create processes and structure data in ways that made sense within those teams, but gave no unified approach to structuring those processes and data in ways that translate across teams.
This leads to communication breakdowns, delayed progress, and redundancies across the enterprise:
Cross-functional disconnects in second-gen innovation management
Third-generation innovation management addresses this problem by aggregating every team鈥檚 data and workflows into a single platform. This gives each team the ability to set expectations with other functions, strategically plan resources for upcoming projects, align efforts, and analyze the entire innovation lifecycle in one place.
How third-gen innovation management de-silos enterprise innovation functions
Patching reporting disconnects
For decades, business schools have taught leaders that 鈥測ou can鈥檛 manage what you can鈥檛 measure.鈥� However, despite the efforts of second-generation innovation management to apply success metrics to the creation of new offerings, it remains notoriously difficult for business executives to to get satisfying ROI numbers from innovation teams. This is frustrating for both corporate leaders and innovation managers: leaders don鈥檛 feel like they can make confident innovation investments, and innovation managers feel chronically underfunded in their efforts.
This creates a vicious feedback loop. Executives want to see more results from innovation investments, but innovation managers can鈥檛 provide straightforward ROI numbers. Innovation managers want more funding to execute projects, but executives can鈥檛 justify endless investments that can鈥檛 be tied to returns.
Third-generation innovation management fixes this by setting innovation KPIs that map directly to corporate objectives. By doing this, executives and innovation managers agree upon shared success language at the beginning of a new undertaking, which keeps conversations around investment and ROI consistent and predictable for both parties鈥攆inally solving the 鈥溾�� that鈥檚 plagued innovation management for the past two decades.
Make the leap with growth innovation methodology
In order to compete in today鈥檚 markets, you need to bring your FEI, NPD, and GTM functions into the third generation of innovation management. This all starts by implementing growth innovation methodology in your enterprise.
Growth innovation is the innovation management philosophy that sets growth as the enterprise鈥檚 growth as the single most important innovation outcome, and manages every step of the innovation process accordingly. It鈥檚 more than a simple framework for success: it鈥檚 a mindset that, when implemented, permeates the enterprise and empowers every function of your innovation organization to confidently and competitively take your company into the future.
This is a big undertaking鈥攈ere are a few simple ways to start:
- Read our guide on the principles of growth innovation. This lays out the philosophy of growth innovation and explores the implications it has on the various functions of the enterprise.
- Download the Forrester Total Economic Impact Study鈩� on Accolade. This shows the results that early adopters of growth innovation have achieved by implementing growth innovation principles on 黑料吃瓜鈥檚 purpose-built enterprise innovation management software platform.
- Schedule a consultation with the 黑料吃瓜 team to see how growth innovation can help your enterprise graduate into third-generation innovation management practices.
Innovation management is changing. And at 黑料吃瓜, we鈥檙e helping forward-thinking enterprises change with it. See how Accolade can get you started, request a consultation today.