We live in a world of “Innovation Theaters” © Benjamin Rohé

Every corporate leader emphasises the importance of innovation these days. Following my article sparked by the Corporate Venture shut down by Bosch (a BCG DV project named COUP) I wanted to dig deeper:

Corporate innovation is the process of integrating innovative opportunities with existing business models. Implementing burgeoning technologies into a company’s DNA enables it to keep up with the ever-evolving market, industry, and consumer demands.

But instead of real change, corporates aim for the fig leaf of innovation.

Instead of result oriented, deep routed change they opt for the spectacular PR campaign.

Why? because they are (still or even more) afraid to fail!

Not every company that embraces innovation sees success. Around 74% of companies have a digital strategy. Of that number, only 15% are confident in their skills to execute such strategies. According to a study by the Harvard Business School Review, 67% of well-formulated strategies end up failing.

Certainly, corporate innovation is challenging — but not impossible. We’ve done our research. Looking at our work with family owned businesses, traditional Mittelstand Companies up to 6 of the DAX 30 companies: We will show you how to overcome the obstacles and establish high-impact initiatives that drive long-term growth.

The Biggest Challenges of Corporate Innovation

Fear of change

Why fix what isn’t broken? Success lures companies into doing the same methods that have brought them positive outcomes in the past. Given the rate of failure, we aren’t surprised that CEOs are reluctant to take risks. Fear is primarily the largest obstacle to innovation. People are apprehensive about change because they fear the unknown. On the other hand, comfort and complacency also lead to nowhere.

CEOs must champion innovation and preach about the need for change within the organization to dispel fear. Having a clear vision and metrics helps. Corporate leaders must also engage employees and educate them on the risks and benefits of innovation. Apart from starting discussions, leaders must learn how to listen to the concerns of their employees and ask for their input.

Technology adoption

Certainly, organizations with over 10,000 employees excel at many things — but working nimbly isn’t one of them. Large companies often lack agility. They aren’t flexible enough to integrate innovations when opportunities arise.

Sometimes, companies fall behind because there are limited breakthrough technologies that fit their business models. Many require new, one-of-a-kind structures. Any innovation initiative that necessitates a new model will require some form of structural change within the organization. Kodak and Xerox faced such predicaments back in the day. Although they had resources and foresight to design new technologies, they lacked the drive to implement new business models.

War for talent

Talent acquisition and retention are among the biggest obstacles to corporate innovation. A study conducted by PwC showed that 80% of corporate leaders are concerned about finding employees with the key skills that will help their businesses succeed in the digital world. The thing is: innovative minds are drawn to innovative companies. Companies must promote a culture of innovation internally and externally to attract and retain key talent.

Death by process

Startups often end up outperforming long-standing companies. That’s because large enterprises must go through complex processes and tedious production cycles before they can move forward with innovative ideas. Such processes are the opposite of what goes on in nimble startups. They can swiftly execute ideas that compete with larger companies.

Not only that, middle management in large enterprises stifle innovation. This layer in the organization only centers on short-term goals — not long-term growth. Its primary focus lies in encouraging employees to work efficiently, but it often leaves no room for innovation.


Keeping legacy systems and old organizational designs can hamper the company’s strategy. Often, corporate leaders only shift elements of the organization design around, which doesn’t affect performance at all. To be successful at corporate innovation, leaders must become architects of their own organization. They should understand the company’s capabilities — from its technologies and its competencies to its processes.

Maximizing shareholder value

Many CEOs of traditional companies are only incentivized through the increase of profitability and shareholder value. Incentive models are not implemented to consider a sustainable and lasting business. Mostly short-term results are in the scope of today’s management.

The Secret Sauce

MINDSET: Failure culture

Building a company culture that can cope with failure is imperative to corporate innovation. Some of the leading innovators today have struggled with their fair share of failures, but their failures never stopped them from innovating. Take Google for example. Google Glass wasn’t much of a success. Amazon’s Fire Phone and Apple’s MobileMe weren’t either.

These innovative companies might tolerate failure, but they don’t condone incompetence. They only recruit exceptional talents that meet their high-performance standards. Anyone who fails to meet the required performance levels is either replaced or transferred into new roles that better fit their strengths.

EDUCATION: State-of-the-art training

Every company that wants to establish a culture of innovation should invest in their workforce. Simply put, they should invest in state-of-the-art training. Leaders must educate employees on the importance of innovation. They should also promote the need for change from the top down. From leveraging internal workshops to hiring external speakers, education is the first step to cultural change. During the initial stages of development, execs and other teams can also do innovation excursions to explore possibilities.

Using state-of-the-art training methods can help us nurture a culture of innovation and hone employees with the capabilities and mindset to move the business forward. Not only that, training the workforce can also draw in additional key talent and retain them.

OUTSIDE INNOVATION: Startup M&A and partnerships

Mergers, acquisitions, and partnerships drive corporate innovation as these strategies empower startups to innovate by giving them access to external resources. At the same time, it enables larger companies to keep up with their more agile competition.

Companies like Airbnb and Uber have proven that startups with unique business concepts make a serious threat to larger companies. That’s why companies act fast and partner with their smaller competition for long-term collaborations. Although Airbnb and Uber have seen tremendous success, not all startups see the same fate. In fact, most startups fail, while those that gain access to significant resources gain a better chance of survival.

Partnerships vary. Startup and large enterprises can collaborate in a myriad of ways, depending on what’s best for their respective companies. Ideally, partnerships should be long-term collaborations, not project-based relationships.

INSIDE INNOVATION: Result-oriented innovation initiatives

Successful corporate innovators have well-outlined business goals and metrics. Leaders must establish a clear vision so that their organization can work towards a common goal. If employees don’t understand what you’re working towards, then they will struggle to contribute to your initiatives.

Of course, having well-defined goals isn’t enough. Corporate leaders must also set the right metrics to measure their progress. The usual metrics such as return-on-investment aren’t much help when it comes to measuring innovation progress. Thus, innovators must design their own metrics to fully grasp their growth.

GOALS: Profit vs. Impact

Profit is important to drive the corporates development and innovation — A successful corporation in the 21st century needs to have sustainability in mind to create lasting impact. Employees and Customers will identify with that above shareholder value. So it is not “Profit vs. Impact” it is “Impact creates Profit”.


Sustainable technology and Innovation can drive positive change for organizations and businesses.

And yes: Innovation involves risks, change, and failure. Indeed, it is not an easy journey for any business. But the alternative is to remain in the same place, do the same strategies, and slowly wither away as everyone else evolves. We urge companies to continuously innovate to keep themselves competitive, avoiding the fate of businesses like Blockbuster.

To do that, we’ve got to do more than change the company’s culture. Companies must embrace change from top to toe to help the organization integrate new sustainable business models and processes that can lead to long-term success. Hire CEOs and Board Members that can champion innovation within the company, set clear goals and metrics, draw in key talent, and create results-driven innovation initiatives — as well as to speak up on matters relevant for society to drive politicians towards a sustainable and innovation friendly legislation. But more about that in my next post.