Disruption is undoubtedly one of the current words du jour. It describes the outcome when small, agile startups create a new model that flips an industry on its head. Take Uber, Dropbox, SurveyMonkey and Pinterest - all are innovators that have revolutionised their industries.
As an intellectual property firm, AJ Park sees innovation on a daily basis. It doesn't always have the far-reaching impacts of the companies mentioned above, but our clients have clever and original ideas that have the potential to disrupt their industries.
Many are entrepreneurs at the early stages of launching a business - but not always. Some are among Australasia's largest companies.
While we tend to associate innovation with startups, large, established corporations aren't immune to coming up with good ideas. What they can find more difficult is managing the process.
The challenge of leveraging scale while staying innovative is covered in the recent report Big Entrepreneurship, produced by New York-based innovation strategy and design firm Fahrenheit 212.
One of the report's authors, Pete Maulik, the firm's managing partner and chief growth officer, says the way businesses need to organise and behave has fundamentally shifted. He notes that the fastest-growing companies are all run by entrepreneurs. Startups are achieving scale more quickly and in more lightweight ways than ever before.
In just six years, Uber has expanded to 60 countries and was expected to generate US$10 billion ($15 billion) in bookings by the end of 2015 " and all with virtually no overheads.
The message to established companies is clear: innovate or die. Businesses of every size must keep up or run the risk of getting left behind, says Maulik. The challenge big companies face is how to compete with small, nimble startups that don't have the same shareholder pressure, customer expectation and heavy infrastructure.
With innovation now virtually synonymous with growth, the imperative is to develop internal innovation capabilities. For many larger companies, innovation labs are a way to rapidly ignite stagnant pipelines and foster a culture of innovation.
Almost 40 per cent of the world's top 200 companies have set up their own innovation labs.
In the United States, the number of international innovation incubators has rocketed from a dozen in 1980 to an estimated 7000 today.
In New Zealand we have our fair share of sizeable companies doing the same. In the past five years, Vodafone has joined with the police to create the Mobility Innovation Lab and Experience Centre; ASB Bank has launched its own innovation lab; Auckland DHB is collaborating with AUT on the DHW (Design for Health & Wellbeing) Lab initiative; and Chorus and Alcatel-Lucent have created their Co-Innovation Lab.
Seven ways to focus innovation strategy
When setting up internal innovation capabilities and embarking on innovation activity, Fahrenheit 212 advises companies to consider seven key questions.
1. Have you identified sustainable, winnable growth opportunities using scale as an advantage?
2. Are you set up to defeat the underdog? It's vital to develop a strategy to do this. Pete Maulik, managing partner and chief growth officer at Fahrenheit 212, believes the key to valuable growth is to identify your defensible, profitable core, invest against it, and build competitive barriers around it.
3. Do you have platforms that will ground and inspire innovation? For big companies to create internal alignment and support, your innovation strategy must translate into evergreen platforms for innovation. Every innovation should be a new manifestation of the strategy that deepens and expands the relationship with your customers.
4. Have you weighed up the risk of investing versus the risk of not investing in innovation? The decision to fund an innovation needs to involve an honest assessment of the risk of not investing. If you've identified a meaningful opportunity for growth, it's safe to assume that you're not alone.
5. Do you have a champion to lead your project?
6. Are the innovations in the pipeline solving the two-sided problem? That is, they need to simultaneously solve for the consumer and the business.
7. Are you managing innovation like the experiment that it is? Real innovation pushes outside the core business so it cannot be accurately measured using traditional metrics. By learning fast - from your successes and your failures - you can course-correct the innovation's development as you go.
AJ Park provides intellectual property services in Australasia and the Pacific.