Co.Design

How To Prepare For The 4th Era of Innovation

Tomorrow’s leading innovators aren’t geniuses toiling away in their garages. They’re corporations, argues Scott Anthony, author of the The Little Black Book of Innovation: How It Works, How to Do It.

Imagine you are a mother in rural India, caring for your three children and keeping busy with chores. The water source is unclean, but you’re too busy to prioritize boiling water for cooking and bathing. Such was the case for Nagammal in the village of Vadugapatti.

Today, Nagammal still doesn’t boil water, yet she’s able to provide clean water to her kids. The innovation that delivers water to Nagammal and more than 35 million people in emerging markets didn’t come from the government, an NGO or a venture capitalist-backed startup. It came from Unilever. The consumer packaged goods giant has created a booming business bringing affordable clean water to consumers in developing countries through its Pureit brand.

Unilever’s Pureit story is no anomaly; it points to a seminal shift in the world of innovation where a big company’s scale can shift from shackling innovation to enabling it. In my Harvard Business Review article "The New Corporate Garage" out this month, I make the case that we are entering "the fourth era of innovation," in which global giants are leading the way in solving global challenges. Taking advantage of the narrowing focus and increasing pressures on the venture capitalists and startups that defined the last era, these global giants are better equipped to launch transformational, difficult-to-replicate innovations.

Corporate innovation success stories aren’t driven by faceless committees or charismatic CEOs. Rather, they rely on "corporate catalysts" that blend entrepreneurial behaviors and big-company capabilities. Pureit’s catalyst is Yuri Jain, a vice president who leads the company’s global water initiatives. A few years into development, Jain’s team arrived at a viable solution, but it cost four times as much as Unilever’s target. Faced with the choice between a high-priced, niche solution and a stripped-down affordable product, the team rejected both. Unilever’s 100 scientists rose to the challenge, creating an elegantly affordable solution that makes safe drinking water more accessible.

Jain’s work draws appropriate comparisons to the work historically done by individual innovators toiling away in their garages. In Jain’s case, his "corporate garage" teems with amazing tools. Like other "fourth era" innovators we have studied, Unilever’s success traces back to core behaviors that include leveraging an organization’s unique capabilities, approaching innovation holistically, and building an ecosystem that involves external parties.

Corporate leaders looking to create their own 21st-century corporate garages should ask the following five questions:

Who will staff our garage?
Not everyone is cut out for corporate catalyst work. Many companies fall prey to what I call the "Michael Jordan fallacy." When Michael Jordan—arguably the best basketball star in history—briefly retired to pursue his dream of being a baseball player, he faltered. Companies that ask their best operators to switch gears to serve as corporate catalysts run the same risk. They need to look for what software entrepreneur Donna Auguste calls "aliens." In the corporate garage, "aliens" who might formerly have been relegated to the fringe of the organization because of their entrepreneurial behaviors can become superstars.

What will we stock in our garage?
The essence of a fourth-era innovation is a big company doing what few people in the world could match. Few could match Unilever’s knowledge of India, distribution acumen, technological prowess, and brand-building capabilities. To identify what makes your company special, identify what capabilities competitors or startups would struggle to replicate. A medical device company might have unique relationships with doctors. A bank might have in-depth knowledge of a customer’s transaction history. Determine no more than five capabilities and ensure that corporate catalysts have the ability to access them without dealing with layers of bureaucracy.

How will we connect our garage both internally and externally?
Companies that set up incubators often create substantial space from the core business. While some space is important to allow for testing approaches and developing a unique culture, too much space can be dangerous. Separation can block access to critical capabilities and lead to the "not invented here" syndrome, inhibiting the ultimate scaling of the new venture. External connections enable companies to combine corporate capabilities with third parties to create impact that no ecosystem participant could achieve individually.

How solid is the foundation?
Most companies are built to execute, but building a culture of innovation will allow catalysts to innovate naturally. To create a solid culture of innovation: treat innovation as a strategic imperative; provide incentives to prudent risk-taking; and chose leaders who model desired innovation behaviors.

Does our garage have a clear and compelling purpose?
Unilever Chief Marketing & Communications Officer Keith Weed highlights this by describing his interactions with the Pureit team: "When I go visit countries around the world I see sales numbers flashed on the walls. When I see the Pureit team I see the number of lives protected." Finding purpose in the work of a corporate garage should not be difficult. Bringing clean water to millions of lower-income Indians. Providing a lifeline to people in a struggling industry. Giving birth to a new business. Who wouldn’t be motivated to work on these problems?

Transformational innovation isn’t easy. But burgeoning success stories at companies as diverse as Apple, Nestle, Unilever, Medtronic, Syngenta, and IBM demonstrate that success is possible. The thoughtful creation of a corporate garage stocked with powerful capabilities, staffed by catalysts, and connected internally and externally can unleash tremendous innovation energy.

[Image: sahua d, Zurijeta, and Gemenacom via Shutterstock]

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2 Comments

  • Harold Sharples

    Even the Corporations mentioned in the summing-up made their most significant innovations when they created semi-independent "Startups" who's day-to-day existence and eventual success lay in their early days beyond the reach of their suffocating corporate "bear-hug".
    Nescafe's innovative personal cappuccino machine twice needed to be protected and saved from oblivion by the CEO himself.
    IBM's personal computer gave birth to a whole industry - and Microsoft - arguably its Nemesis in terms of the IBM pc and a serious headache in terms of the innovative strategic challenges it heralded in the corporate hardware / software environment.
    The argument is reads better as one for the success of startup innovation - whether inside or outside the corporate veil.

  • Tracy & Tom Hazzard

    While we are all for corporations being innovative, it is a stretch at this time to even begin thinking that there might be an "era" of innovation within corporations. Too many companies think they are innovative but haven't the first clue what that really means, let alone what it takes to be truly innovative. The corporate world is built to weed out the "catalysts" typically considered renegades, and do not encourage them. The fastest way we have found to make this work is for us catalysts to stay outside the company - we do that be being Consulting VPs. That way we have high enough visibility and resource access but we stay outside the company so we are not bogged down or overly-influenced by day-to-day meetings and firefights.