Only 52 companies have appeared on the original Fortune 500 list each year since 1955. A Capgemini Consulting study found that since 2000, half of the companies on the list have acquired, gone bankrupt, or ceased to exist.
If a company wants to survive, it has to innovate, but as history shows, it’s not as easy as it sounds.
“Companies need to make strategic decisions and be strategic about it in order to innovate. Senior Lecturer in Innovation, Entrepreneurship, and Strategic Management Group at Massachusetts Institute of Technology Sloan.
“This is not something you can leave to a corporate research department and expect it to lead to innovation,” says Budden. “It’s not something you can leave to M&A teams, it’s not something you can leave to corporate venture capital units.”
Budden recently spoke at an MIT Industrial Liaison Program webinar on corporate innovation. He shared his three mistakes companies make when trying to innovate and how to avoid them.
1. Equating digital technology with innovation
Budden has worked with many companies and their leadership teams as a diplomatic advisor to the MIT Regional Entrepreneurship Program and as a former New England British Consul General responsible for business matters such as trade and investment.
One of the biggest mistakes corporate leaders make is conflating innovation with technology, especially digital technology, instead of starting with the business problem they are trying to solve.
“Innovation is driven by technology, but technology is only part of the matching of ideas between problems and solutions,” says Budden. “Innovation is about demonstrating how technology solutions can solve real business problems.”
2. Aim for 10x Innovation
Startups are designed to innovate 10x because they’re small, agile, and good at applying new solutions to new problems, Budden said.
For established companies, it is difficult to achieve ten times the original innovation rate. Because they have legacy customers, legacy IT, and existing business to consider. This means that in large companies he is likely to innovate at a scale of 10%, and that’s fine, he said.
“If you can get 10% innovation that leads to a 10% improvement in customer acquisition costs or a net promoter score or a 10% return on investment, that makes sense for a large company,” says Budden. “The trick is to be realistic about what you can do in a corporate environment and not expect the sexy guy on the horizon to do 10x ‘Big I’ innovation. ”
3. Ineffective External Engagement
Another mistake corporate leaders make is thinking that simply joining an innovation ecosystem opens the door to innovation and partnerships within that ecosystem.
To get the most out of external partnerships, corporate leaders need to think strategically about what they’re trying to achieve, Budden said. Waste your startup time. ”
A leader with a strategic vision for innovation can focus on who they want to meet and who can help set up that meeting.
“Finding a partner like MIT Corporate Relations who can actually broker a relationship with the right professor doing the right research, or the right startup at the right stage with the technology solution will move things forward. It’s the best way,” Budden said.
Read: 3 ways companies can keep innovating during global upheaval
