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Challenges of Corporate Innovation in Product Development
Product development and innovation ideally go hand in hand. How come huge companies with seemingly limitless resources find it harder to innovate than start-ups, then? It is no coincidence that numerous sizeable businesses that were once major innovators have since lost ground and found themselves playing second fiddle to emerging disruptive players.
All too often, the ability to leverage innovation makes the difference between a successful company and an industry leader. The travel and hospitality industry being disrupted by the likes of Uber and Airbnb is a fine example. Streaming services that have all but destroyed gigantic record companies also spring to mind, as does Nokia losing massive market shares to iPhones. The list goes on forever.
There are many reasons behind that, and they are secret to none, including the former trailblazers that now have to settle for runner-up positions. The bottom line is large corporations struggle to develop innovative products in general and mistake sticking to a winning formula with becoming formulaic and predictable. Here is why.
Problems
Inertia
Long-running and often repeated processes within enterprises tend to create rigid structures which generally resist change. Change, being the foundation for innovation, happens only by fighting significant resistance and is, therefore, much harder to achieve than to follow the established process. Short-term thinking and reluctance to take risks are also part of the vicious cycle that is turning organizations into well-oiled machines that are going nowhere fast.
For most shareholders, safety comes first. Therefore, products and services with a proven track record are, more often than not, left to their own devices. True to the “if it ain’t broke, don’t fix it” winning formula, massive corporations would rather go with the flow and ignore innovation than leverage their privileged position and invest in emerging technologies and new markets.
R&D costs
It is true that the bigger the company, the more it has to lose. This might be a bit simplistic, but a valid explanation of the fact that start-ups and small businesses are more willing to stray from the beaten path and discover new ways and technologies in the process. Sizeable corporations can ill afford failure and damage a brand that takes decades to build. And this is before the actual cost of innovation comes into the equation.
Some large enterprises still treat R&D as a cost center as opposed to the profit centers that support the day-to-day business and show measurable results on a quarterly basis. Innovation endeavors are, therefore, hard to fund, especially if their timeline is long or even unknown in the beginning. And it often is, as Einstein once famously quipped, that “If we knew what it is we were doing, it would not be called research. Would it?”
Too much focus on a particular domain
Having immaculate domain expertise and knowing your business inside out is undoubtedly an incredible asset. However, it takes years to perfect such knowledge and create working business patterns, while disruptive solutions might need months, even weeks, to make these utterly irrelevant. Such focus also means tapping into a limited talent pool of experts that are more unlikely to bring innovation than open-minded outsiders with the potential to become genuine disruptive players.
Focusing on a particular domain, its trends, and current developments, enterprises tend to neglect innovating events in other domains, which might apply to their own problem set. Only after such external trends start affecting the domain directly the enterprise finds itself in a situation where it needs significant resources to catch up. For example, technology adopted by customers who take it for granted no matter the application domain. We can also put the case for wearables in the healthcare domain.
Approach
When companies come to grips with these shortcomings and the necessity of perpetual digital transformation, it becomes evident what they need is an external partner for technology development and innovation. An innovation ally can rapidly transform compelling ideas into innovative digital products by bringing focus to customer needs and championing disciplined design practices that revolutionize digital customer experiences.
To supplement the owning organization’s domain expertise and market knowledge, a technology partner needs to be flexible, unbiased and experienced in multiple domains. Such a consortium can synergize these assets and create an innovative product by compensating for each other’s weaknesses and focusing on their respective strengths.
- Utilize an external technological partner to mitigate the issues mentioned above and kickstart product development for solutions that might partially contradict the current structures of the organization. Of particular importance are the ones that are supposed to bring innovation and change to the organization.
- Let the external technological partner analyze the internal structures with an unbiased eye and create alternative structures without affecting the steady delivery of the day-to-day business.
- Allow the external product development partner to take on responsibility for product development by working on a defined budget range and lower risk for R&D “financial black holes”.
Effect
- Innovative product development on top of optimal structures.
- Delegated delivery responsibility with clear targets and constraints.
- Externalizing projects guarantees innovation-focused activities are not put on hold whenever less significant, but more urgent things emerge.
- Intra-domain synergy by leveraging experts who bring experience from “alternative universes.”
- Reduction of Uncertainty and Costs – by testing ideas iteratively to determine whether the market will accept them before investing
- Differentiated and long-lasting solutions – by discovering unsolved problems and designing unique solutions to engage and impact customers
Scalefocus Success Stories
Scalefocus is a domain-agnostic technological partner that can operate at product level (as opposed to purely low-level outsourcing organizations). The company’s projects cover many domains, including healthcare, fintech, logistics, insurance technology, automotive, e-commerce, gaming, etc. The internal technological network (guilds, domain clubs, and knowledge-sharing events) lead to the propagation of trends in an intra-domain manner.
Read on to learn more about two of our successful partnerships with industry leaders.
Case study 1
Our client
One of the largest biotech companies globally, whose processes were slowed down by reliance on external equipment for diagnostics and complicated supply chains. Time-consuming and error-prone manual methods for sample tissue processing meant automation was crucial.
Our mission
Develop and implement innovative technology solutions and automate the breast cancer diagnostics workflow. We also had to drastically reduce the size of the hardware solution with a new hardware platform and implement a new software architecture based on it.
Our solution
IoT concepts and MVP prototyped using different technological stacks to verify productivity and performance and to improve hardware capabilities and workflow. We developed the entire software architecture for better integration with the existing client’s infrastructure and reusability of already developed components. Our extended R&D capabilities allowed simultaneous development of software and hardware – a first for the company.
The results:
- Automated machine workflow for cancer diagnostics
- Reduced cost and time for product development
- 5-step automated processing samples to reduce human errors
- Better and consistent test results impacting decision-making time
Read the full case study here.
Case study 2
Our client
A Fortune 1000 manufacturer and digital retailer, whose inefficient new product launch processes and redundant tech platforms constrained the ability to enter new markets.
Our mission
Drastically accelerate the development and implementation of critical components for a wide range of digital products. Faster time to market and enhanced portfolio would eventually help the company stand out from the crowd with its innovative solutions and augmented customer experience.
Our solution
Scalefocus enhanced the components that cover the entire user flow with large-scale engineering projects. Our team implemented a data-driven approach for new product discovery and ideation and used rapid prototyping and validation of ideas via innovative methodologies. The focus was to simplify the consumer creation experience and achieve straightforward UX design, ultimately increasing consumer engagement and conversions.
The results:
- 30x faster time-to-market for new products
- 5x reduced operating costs to business-critical rendering platform
- 2x decrease in engineering costs
- 6x faster staffing when new resources are needed
Read the full case study here.
Conclusion
It is not that simple to constantly come up with innovative products and services in a big corporation, and challenges include inertia, budgets, internal politics, inability to identify the right direction for innovation, and extended supply chains, among others.
That is why sizeable companies need to take a leaf from the disruptive start-ups’ book and think long-term. Outsourcing innovative projects would enable them to painlessly undergo digital transformation while concentrating on the day-to-day business that they would generally prioritize anyway.
Scalefocus helps companies overcome product development and innovation-related challenges and brings cross-industry expertise to solve unique clients’ problems.
Contact us, and we will happily discuss how we can assist yours, too!
