Jul 31, 2019

This article was originally published on as part of series of articles on innovation sponsored by Henkel

Can corporations learn to innovate like startups?

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By Duncan Jefferies

Examples from history show what happens when big companies fail to evolve. But what’s the secret formula to keeping things fresh?

In 1975, a young Kodak engineer called Steven Sasson showed his bosses a device he’d cobbled together from a portable digital cassette recorder, a Super-8 movie camera, 16 nickel cadmium batteries and various other components. The device could capture and display a small black and white image on a TV screen. His bosses weren’t impressed. But they allowed him to keep working on the project, and in 1989 he presented them with a DSLR camera that looked and functioned much like the ones on sale today. Kodak – fearing it would cannibalise its film sales – promptly buried it.

It proved to be a mistake. The company’s film business was swept away by the switch to digital, and its eventual embrace of the new technology came too late for it to avoid bankruptcy in 2012.

Kodak’s lack of foresight is a textbook example of what can happen when corporations ignore innovation. And in a world where companies such as Uber, Airbnb and Amazon can disrupt established business models in record time, there’s arguably never been a greater need for large organisations to develop new products and services. But how can a multinational company that potentially employs tens of thousands of people hope to match the agility and entrepreneurism of a Silicon Valley startup?

Tendayi Viki, co-author of The Corporate Startup: How Established Companies Can Develop Successful Innovation Ecosystems, says there are some obvious challenges. Although most corporations were once scrappy startups, as they become successful they move towards protecting their core business and away from the kind of mindset that fosters innovation.

Bureaucracy and traditional management practices tend to stifle out-of-the-box thinking and the corporation’s ability to identify new trends and societal changes, leaving them slow to respond to disruptive business models. But at the same time, they “can’t simply view themselves as startups, because startups don’t have a core successful business to run.”

Fears about not meeting their market predictions for new products and services and taking a hit to their stock price, as well as a general lack of methodology for tracking the success of innovation teams, can also stop corporations from innovating successfully.

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To overcome these problems, says Viki, they need to think of themselves more as a portfolio of products and services, “and what you want, as with any form of investing, is a balanced portfolio”.

In this case, “balanced” equates to the time horizons of different projects, products and services. “You have your core product, which is the biggest chunk of your portfolio. And then you have adjacent innovations that help you to improve your current products or enter new markets. And finally you have the kind of transformational innovations that are much more future-facing – the five-, 10-year roadmap products. If certain things become successful, you can incrementally move them into your core [business] ... so you end up having this live ecosystem that’s constantly evolving,” says Viki.

Joined-up thinking

Accelerator programmes, innovation labs and hackathons are already part of the corporate toolset but joined-up approaches that can truly change internal cultures are less common. Henkel, the chemical and consumer goods company behind household name brands such as Schwarzkopf and Pritt, is addressing this challenge through its Henkelx platform, which is designed to unite entrepreneurial activity inside and outside of the organisation and accelerate the company’s digital transformation strategy.
The Henkelx Mentorship Club brings together leading entrepreneurs, venture capitalists and industry experts willing to share their knowledge with Henkel’s teams. They participate in panel discussions, provide external points of view on industry trends, and act as a sounding board for ideas.

“My goal was to find people who are experienced, who have been successful, who have had failures, and who can lend their advice,” says Dr Rahmyn Kress, chief digital officer of Henkel. “They’re not consultants. They’re people you can call up and say ‘I want to do X, Y, Z’, and they’ll say ‘I’ve done it before, don’t try it, it fails.’ If you trust them enough, you can save yourself a very hard journey, and a lot of time and money.”

Innovation as a service

For the past four years, Henkel has also been working with Jovoto, an open innovation platform where creatives from 153 countries can collaborate to transform global brands’ products, business and mindsets. Jovoto calls it “innovation as a service”, and believes it has the potential to transform the way organisations approach innovation. The scope of the tasks it has tackled with Henkel spans marketing, products, packaging, service innovation and HR. With the latter team, Jovoto is currently working on a cultural leadership project. Another example involved redesigning the packaging for Somat dishwasher tablets to highlight their improved environmental credentials.

“Jovoto helps us leverage its global creative crowd to inspire us with future products and concept designs – very pragmatic, fast, and guaranteeing to keep the process private and confidential. This cocreation approach is a fantastic springboard for further ideations and concept development,” says Jens Bode, international foresight and innovation manager at Henkel.

It only takes Jovoto a few days to check whether a particular task is suitable and whether the right people for the project are on its platform (which currently includes nearly 100,000 creatives). Projects start soon after the completion of a short technical assessment, with the fastest yielding results in as little as a week.

To date, Henkel and Jovoto have implemented 27 projects, with more than 1,300 individuals designing over 1,400 solutions together and evaluating them in around 24,000 peer-to-peer discussions. As a result, around 90 concepts have now been licensed for Henkel.

The company’s digital transformation strategy and the Henkelx open innovation platform undoubtedly represent a major cultural shift for the 143-year-old company, which employs around 53,000 people globally. But Kress believes that disruptive entrants to the market mean “you need to reinvent [yourself], and you need to be the first to do so.” That’s a big challenge. But, as Kodak discovered, it’s not one that corporations can afford to shirk.

Dr Rahmyn Kress (2nd from right), Chief Digital Officer at Henkel

Dr Rahmyn Kress (2nd from right), Chief Digital Officer at Henkel