The Randomness of Corporate Innovation.

Bruce Nussbaum

The big consulting firms, such as Deloitte, McKinsey, BCG and Mercer, are doing more and more in the innovation and design space. So far, I still hear complaints from top corporate managers that what they mostly get from their consultants is analysis presented through heavy "decks" and books that sit on their desks with few actionable takeaways (sorry for the jargon) and precious little operationalizable advice (more jargon). Managers feel they need to move fast in innovation and they can't act quickly off the information the big consulting firms are providing.

True enough. Yet the analysis from consultants is often first rate and worth noting. Take Deloitte's research--Gambling with the House's Money: The Randomness of Corporate Innovation, for example. Deloitte had a recent webcast in which it presented a new survey that showed that more than half of all big, game-changing innovations inside big companies take place outside the formal, in-house development procedure for creating new products and services.

Here's a quote: "The most effective innovations are the result of formal product development teams in less than 50 percent of cases. The rest of the time, effective innovations stem from rogue inventors or "under the radar" skunk works."

Here's another quote: "For all the effort that companies pour into establishing a capability for repeatable innovation, they have precious little to show for it."

The Deloitte study says that innovative ideas are denied funding for three main reasons: they don't show sufficient profitability down the road, they are not consistent with existing core competencies and they are not aligned with current strategy.

Kind of breaks your heart to read these survey results, doesn't it? So what to do? Create informal skunk works inside companies and allow them to do their thing? Reshape formal innovation methodologies to increase effectiveness and productivity? Both?

Yep. Both. And try and remember that incremental innovation in the things you already do well will not meet new unment consumer needs and make you vulnerable to competitors who do.

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