The term corporate innovation often brings to mind well-known tech titans like Google, Amazon, and Apple. The idea that large, non-tech legacy corporations like shipping companies or FMCG manufacturers can innovate as efficiently and as effectively as these companies may sound far-fetched, but this is the reality such firms are facing today. Massively disruptive technological trends are upending entire industries, turning market dominance upside down. For corporations to survive and thrive, they must develop a culture of innovation.

Nima Shomali, Managing Partner at Acceleration Technology Partners, understands this need for corporate innovation all too well. Working with non-tech legacy corporations, Nima has seen the disparity between innovation occurring in Silicon Valley startups and the slow uptake of innovation in large corporations. He sees this disconnect as both a threat and an opportunity for such corporations. We recently caught up with him to talk about what corporate innovation is and how firms can implement it successfully.

Demystifying Corporate Innovation

What is innovation? Is it just a buzzword or is it something that can be applied methodically and measurably within a corporate environment? “Innovation is essentially a set of activities carried out to minimize cost and risk while increasing productivity and profitability,” says Nima. While this may be the well-known definition of innovation, Nima points out, when it comes to corporate innovation, theory and practice are different. For instance, while theoretically, all firms can benefit from innovation, in practice, corporate innovation is more nuanced and relies on other factors to achieve success.

First Optimize, Then Innovate

Nima makes an argument for optimization before innovation with an illustration. “Consider a large multi-unit corporation that has each unit operating as a silo, preventing data from being shared effectively. If such a firm were to go after an innovation strategy, it would face tremendous challenges as it would be trying to apply innovative changes to a disconnected and disparate set of units,” Nima says. “To get innovation right, the firm needs first to streamline and optimize existing infrastructure, assets and operations to be better positioned to derive maximum value from both existing resources as well as whatever innovation strategies it pursues later.”

Another area Nima sees as playing a crucial role in corporate innovation is structuring. Nima has seen situations where corporate innovation is a departmental unit falling under the general structure of the organization. Here, the innovation team reports to the usual hierarchical leadership structure with typical YES/NO binary answers. In this setting, innovation becomes stifled because of the layers of leadership it must go through before reaching a crucial decision maker. To avoid this, Nima suggests corporations include in their corporate structure a flat innovation hierarchy connecting internal innovators to key decision makers, in a structure that favors rapid decision-making.

Picking the Right Corporate Innovation Strategy

So how can corporations innovate effectively? We posed this question to Nima. “To achieve innovation success, firms must have an innovation blueprint that is tied to the firm’s core competency,” Nima asserts. This could mean the innovation strategy focuses on an existing competitive advantage or a new competitive advantage but both within the firm’s existing core competencies.

For instance, in the case of John Deere, the firm’s core competency is industrial machinery. Building upon this core competency with digital innovation in the form of Internet of Things (IoT)-enabled machinery serves to reinforce the firm’s existing competitive advantage. On the other hand, Amazon used disruptive digital technologies like cloud computing and Everything-as-a-Service to generate new competitive advantages through its launch of Amazon Web Services (AWS), which while dominating a different vertical, still exists within the firm’s core competency of software engineering excellence.

Once the firm has an innovation blueprint, the next step is to carve out an innovation lab staffed with the best and brightest the firm has. This lab should be responsible for running experiments outside of the firm’s existing operations while reporting directly to senior management. Nima concludes by offering perspective to firms looking to experiment with cutting-edge digital technologies.

“Disruptive digital technologies are like the tip of a spear,” Nima says. “If you do not get the rest of the spear right, the tip will not be of any benefit to you.”

Optimizing Firms for Corporate Innovation Webinar with Nima Shomali

Forward-thinking firms must embrace corporate innovation if they are to survive the digital innovation renaissance currently sweeping industries across the globe, which requires a methodical and strategic optimization approach that yields long-lasting benefits.

In a one-hour interactive webinar, Nima Shomali, Managing Partner at Acceleration Technology Partners, delves deeper into what practical steps senior executives can take to incorporate a culture of corporate innovation into their firms.