Innovation Management & Innovation Units

How can the impact of innovation activities be significantly increased?

To generate new competitive advantages and grow profitably, companies today are more dependent than ever on innovation. But the ever faster changing, complex world presents them with a major challenge: classic tools such as product development, R&D, etc. are no longer sufficient to meet the needs of the new world with digital business models, customer-centric offerings and rapid marketing. Recent studies showb that the importance of R&D departments for innovation will decrease from 69% in 2020 to only 29% in 2025. In contrast, 71% of companies (internationally) expect innovation units to be the most important source of innovation in 2025. Just 5 years ago, these were mentioned by only 2% of companies. This trend can also be observed in Germany. More than 250 innovation units are now listed here. There are probably even significantly more, because internal units are difficult to record in such statistics. 

71% of companies surveyed expect innovation units to be the top source of innovation in 2025 - only 2% did so 5 years ago!

Thompson, Bonnet, and Ye, Sloan Management Review, 2020, & Thompson, Bonnet, and Jaballah, Research Policy Journal, 2020.

However, the great expectations placed in innovation units are rarely fulfilled in reality. Numerous studies now indicate that the father of the lean start-up approach, Steve Blank, was right when he said that this would mostly just be "innovation theater" with no value contribution to the organization.

Impact instead of innovation theater with "networked-ambidextrous" innovation units

To create real impact for the company instead of innovation theater, there is no need to turn away from established forms of innovation management and current approaches to innovation units. Instead, smaller changes in organizational design and procedural approach are often sufficient to achieve strategically relevant new business with these tools. Three changes can be highlighted in particular in this context:

  1. Von opportunistic to planned innovation logic: By introducing an agile management system that is aligned with the company's goals, a strategic framework is created that makes successful innovations plannable. The classic innovation funnel is replaced by a strategic, goal-oriented management system.
  2. From separate to networked structures: Instead of operating separately from the company, suitable formal and informal organizational interfaces must be created and responsibilities clearly defined. 
  3. From exploratory to ambidextrous process: Rather than operating as far outside the core business as possible, identify and address those market opportunities that both meet the new demands of the market and leverage the traction of the existing core business. 

Instead of separate innovation units or purely indirect, integrated innovation management, these mechanisms can be established in so-called "networked-ambidextrous" innovation units. These units operate independently but are strategically and operationally networked. They develop new opportunities on the basis of existing competitive advantages and assets and implement them or transfer them to the appropriate place in the company.

Image title: Corporate Venturing Units Typology
Source: Weiss & Kanbach (in publication)

Adaptation of existing or establishment of new innovation units or processes

With the help of a capability check, the existing capabilities and prerequisites for strategic innovation management in the organization can be reviewed (see figure). The recommendations for action derived then offer concrete starting points for adapting existing or establishing new, suitable innovation units or processes. Often, innovation and venturing units are already fundamentally well positioned and combine the necessary resources and skills to create new business. If, however, the desired effect is not achieved, there is usually a lack of certain organizational or methodological success criteria, which can be supplemented accordingly in a targeted manner. If an innovation unit does not yet exist, it is also necessary to enable the development of dynamic capabilities in an appropriate team.

Image title: Capability model for strategic innovation units
Source: Weiss & Kanbach (in publication)

"Thanks to venture.idea, we were able to successfully reactivate the old inventive spirit".
Jochen Hein, CEO, Hymer
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Dr. Lysander White

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