If innovation is the new global currency, how do we do it right?
In 1995 Bill Gates famously announced the ‘internet tidal wave’ and officially threw Microsoft’s future at the web. Steve Jobs went one step further, after he returned to Apple, adding ‘i’ (for internet) in front of its product names. A decade later the iPhone was launched. The ‘i’ may as well have stood for ‘innovation’, because that is what they were searching for.
Leaders are betting on innovation to stay ahead of 21st Century threats. Biden has re-framed the relationship with China as a battle between two arch competitors - and may the most innovative win. Johnson sold Brexit as a tool to unlock the power of British ideas, in particular ‘Peppa Pig’. And everyone is praying for new technology to save us from the climate crisis - while emissions just keep climbing.
Like cancer, it seems that there is no cure for poor innovation, a disease which destroys the majority of companies. It is becoming a business epidemic while product variants are increasing and product life cycles are becoming shorter and shorter.
Corporations thought they had found a solution when they latched onto corporate incubators over a decade ago. A number of management consultants and academics touted it as the answer to hatching unicorn scale ideas in a factory. Today, corporate incubators are largely bust.
Larger companies are desperately seeking new approaches. John Lewis, the UK department store owner, is launching a £1m innovation fund that will channel cash into projects with the potential to end the high street’s “throwaway” culture. The fund is aimed at identifying “innovators” that are challenging the industry’s outdated “make… use… throw away” model.
In order to power their transformational strategy, and generate new ideas for tobacco-free products, PMI harnessed the power of crowdsourcing - engaging more than 65,000 employees worldwide. This gave employees from multiple departments and backgrounds a means to contribute suggestions, as well as assessing and developing them.
Businesses have also tried to develop ‘future thinking’ techniques and techno hackathons. They have attempted to outsource innovation and partnered with innovation consultancies like IDEO and Hubbub. They have even tried collaborating with venture investors and entrepreneurs.
And yet none of this seems to be working too well. Big companies used to have a lifespan of 61 years, it is now down to 18.
McKinsey believes that, in 2027, three quarters of the companies that were quoted until recently on the S&P 500 will have disappeared. They will be bought-out, merged, or bankrupt. General Electric, Exxon Mobile, Procter & Gamble and DuPont are among the oldest companies on the New York Stock Exchange. Nevertheless, those with the largest market capitalizations today have new names: Apple, Alphabet, Meta or Amazon.
General Electric recently announced that it will break up into three separate businesses. DuPont has merged with Dow Chemical and Exxon Mobile is struggling with investigations and lawsuits.
In 1973, the English economist Ernst Friedrich Schumacher asked why large companies keep disappearing at such a rate when he published his influential book ‘Small is Beautiful’. He exposed the inefficiency of large enterprises and anticipated the current trend towards sustainable development. He maintained, “What characterises modern industry is its enormous consumption to produce so little… It is inefficient to a degree that goes beyond imagination!”
The loss of energy is called entropy. It’s what kills large companies.
Large companies need a continuous input of more and more management energy simply to continue to exist. The larger the company, the more energy it needs - just to survive. Apparently large companies spend more time managing themselves than they do serving their customers.
As the life expectancy of companies drops, that of its workers is increasing. That’s changing the makeup of business - as their employees demand more labour market flexibility and greater mobility. In the US, almost a third of all employees have an independent or contingent activity and are not linked to a company by a full-time working contract.
It seems we are all becoming entrepreneurs. And yet no one has cracked repetitive innovation.
Or have they?
One of the world’s oldest corporate incubators is attempting it. And they believe the secret lies with their customers.
John Letts invented a world’s first corporate incubator in 1796. He started out with a simple philosophy, that the customer was the secret to innovation. He just had to figure out how to get them to invent things with Letts. Later, he developed the infrastructure to take these products to market and scale them.
He built an incubator studio that nurtured and developed new business ideas and inventions coupled with a vibrant store in the heart of the city of London where they could mingle with customers. These interactions led to prototypes and prototypes were tested back with the customers. Successful prototypes quickly became live, paid-for concepts. Concepts became products.
The studio was attached to the store. Today the store is virtual.
In the early 1800’s John Letts’s incubator developed a series of successful innovations including the first commercial diary. He launched interest tables, specialist clerical and medical diaries, calendars, parliamentary registers, ledgers, and logbooks.
The latest generation of the eponymous diary family is betting the new shop on cracking sustainable, repetitive innovation. They have developed a methodology called Innov@te™ which modernises and extends the initial incubator approach developed by John Letts. It tackles the process for innovation, like Ford cracked the process for mass producing cars.
Innov@te™ comes to life in virtual incubator studios that bring together inventions, their inventors, designers and customers in live, iterative, customer concept phases.
Combined, it offers a modern factory for ideas that are engineered into new projects.
LettsGroup also created the Size Zero philosophy, which sets out the necessary structure for turning projects into businesses. They call it the ‘organisation’ for innovation. It supports and enhances the theory that getting too big can kill innovation.
According to them, the secret to innovation lies with customers, from the outset, adopting tight-loop systems that curate innovation out of a series of physical and virtual interactions. All while conventional thinking assumed that the answer lay with entrepreneurs and inventors. The power of ‘one’.
LettsGroup has challenged itself to develop a brand new venture every two and a half years. Time will tell whether their approach will get us any closer to cracking one of the 21st century’s greatest dilemmas. After all, we will need all the innovation we can muster to face society’s newest set of challenges.
This article was first published in the Letts Journal.
LettsGroup is a branded incubator group, which is active through @LettsGroup on twitter.