The competition to lead the market is getting more and more fierce for large companies. The Fortune 500 ranking was stable for years, but that’s not the case anymore. It only took a few years for startups such as Facebook to climb the ranks, whereas it would have taken decades in the preTechnological Revolution world.
This is because the global pace of innovation is accelerating exponentially and the cost of technology is decreasing quickly, creating fewer barriers to entry for newcomers. It’s harder to stay in the race, though, and being a large company doesn’t guarantee that you will stay a leader for long.
Corporate innovation is a key component to stay in the game, and it needs to be at the heart of company strategy and top of mind for leadership. Here are six things that leaders need to keep in mind.
1. Understand the constantly evolving landscape.
Marc Andreessen, co-founder of VC firm Andreessen Horowitz, penned a famous essay on “Why Software Is Eating The World.” In today’s world, threats and competition come from places you don’t expect. The hotel industry did not expect Airbnb. Likewise, the taxi industry did not expect Uber. The car industry didn’t expect Elon Musk to come from nowhere and build a global company making the most desirable electric cars.
Today, you not only need to be an expert in your field, but you also need to pay attention to the landscape and those small startups that may not seem scary to you but that are agile and moving fast. You might think you are innovating, but maybe you’re just doing incremental innovations and improving your existing products. In the digital age, you may need to work on more radical and disruptive innovation to jump into something big.
2. Leadership is the secret to everything.
Innovation is not (only) a question of investment or having the right tech or the right road map and processes. Innovation is impossible without the right leadership. If there isn’t proper leadership, you won’t find the right vision of development.
Talking about leadership, I don’t mean just the CEO but everyone on the executive team who has to be brought on board. So, make sure you are working with leaders who are ready to learn, change and be open to new views. Train them, and show them new ideas and great startups. Then embark with them on the corporate innovation journey. Or replace them. It’s critical to the success of your transformation.
3. Innovation is global, not local.
You cannot innovate if you have only a local view of the market. Even small companies can be global leaders when it comes to innovation. When Facebook started, nobody would have predicted that it was going to take a big percentage of advertising dollars. In the early days, Facebook was a local business designed for colleges. It went from niche to global leader.
Netflix is another good example. It started as a small company based in California, mailing DVDs. It was a very physical and very local business. It’s interesting to see that Netflix is now operating in new countries, producing content for dozens of markets in local languages.
4. Investigate the startup ecosystem with curiosity.
Corporate innovation is rarely about change from inside the company. You have to understand and track the startup ecosystem; you also have to work with accelerators and VCs in order to see who is innovating in your field.
Say you are a transportation company bringing people from A to B. During those trips, people watch movies, read books and listen to music. That’s an opportunity for airplane companies to become content creators producing entertainment for clients. There’s also an e-commerce opportunity in selling goods during flights.
Another good example: Traditionally, internet access was the business of telecom companies. Elon Musk decided to use his capacity to launch satellites with SpaceX to create an internet provider company, Starlink, by launching thousands of satellites to provide fast internet to underserved communities. It’s a huge market. Many companies dreamed of doing it, and now SpaceX is doing it.
5. Strategy eats culture for breakfast.
Once you have established leadership, working on the culture of your company is a must. There are many cases where companies died because leadership was too arrogant and not ready for change. It’s the classic problem of companies becoming bigger and not understanding the need to put processes in place.
If you don’t pay attention to your culture, you will lose the best talent — the rebellious and creative people who think outside of the box and bring about change. Many of them don’t thrive in a strongly regulated environment. The book No Rules Rules: Netflix and the Culture of Reinvention by Netflix founder Reed Hastings and Erin Meyer explains how to change a company’s culture without destroying innovation mode.
6. Move fast.
It’s easy to fall into the trap of comfort if you are a leader in the market. But success doesn’t work this way. Smaller, more agile companies will come from nowhere, with knowledge becoming easier to access and access to technologies becoming cheaper. In turn, this will speed up the market. If you don’t keep up the momentum and move both your production and your innovation at the right pace, you will start losing market share and potentially your leadership position. So, move, move, move!
CEO at UNIT.City innovation park in Kyiv/Ukraine, and CEO of Sector X Acceleration Hub. Read Dominique Piotet’s full executive profile here.