Over time, a false opposition has been publicly established. On the one side are the large corporations with their slow bureaucratic organization, hierarchies, and authoritarian stifling of any kind of renewal like a resistant layer of clay. On the other side sit the agile start-ups, inventing grand new products, prevailing over the dominant opinion and market power as genius lone fighters.
But innovations are crucial for the survival of the industry. Especially in the digital age, where universal knowledge is not only famously one-click away but can be enhanced and harnessed via constantly improving algorithms and Artificial Intelligence. In the course of the Digital Transformation, the global economy is on the brink of the fourth industrial revolution. Driven by the internet, the real world and the virtual world are merging together.
Innovations create competitive advantages. When a company improves a product, it differentiates itself from its competitors and gains an advantage. Others will have to follow. But much more important than the competitor is the customer, who demands new products that make life more livable and even easier.
It is not necessarily in the nature of large corporations to constantly reinvent themselves and their foundation for success. On the contrary, it is absolutely rational not to: any little innovation initially interrupts a highly complex system and can cause a drop in productivity and quality. A large innovation is even worse, it is an extremely risky endeavor, because the development costs of a new product are predictable while its market revenue is not.
It is true that Apple was founded in a garage and the inventors of Google also rented a car shed in Menlo Park – to employ the myth. But they only worked in this garage for five months and were said to have spent most of that time in the proprietor’s pool. The geniuses in the car sheds producing innovations were not the only secret to success. Silicon Valley’s astonishing success story is much more the result of a longstanding innovation process, combining smart regional-economic and research policy with intelligent funding strategies. This is how an unbeatable cluster of universities, research facilities, private equity, and innovators was created in California. The comparison with Silicon Valley shows the systemic character of successful innovation processes. It needs the turning of many small wheels at the right place to produce a successful product.
To be able to survive the international competition, corporations have to handle their intellectual capital more systematically: the real assets of a company are staff qualification, creativity, and their willingness to embrace change as well as the innovative strength of the whole company and close partnership-based customer relationships. These things don’t appear on accounting audits. Still, these intangible assets are crucial for cash flow and a company's operating profits. They should be integrated much more closely and more systematically into the value chain.
The very first step large corporations should take is to remove bureaucratic obstacles and provide scope to create a climate promoting innovation. Without the possibility for personnel to feel good and evolve there will be no innovations, not even small ideas. This is why employees of innovation-driven corporations need a high degree of liberty and in particular free access to common knowledge resources as they exist in communication networks, databases, and cultural groups. At large-scale corporations, ideas are literally in the air and born by the thousand, yet they die like fireflies if not guided through a systematic innovation process and supported from idea to marketable product with appropriate talent at every relevant point.
A process of innovation in a large corporation is extremely multifaceted because it is integrated in complex correlations of production and international co-operation with customers and suppliers. An open yet efficient innovation process therefore has to continuously be fed back, rethought, corrected, and revised. In my experience, it is important to develop the innovation process out of the corporation’s core competencies. Only in doing so will this existing experience and knowledge be mobilized; only like this can practical knowledge be radically questioned.
If innovations drive market success, who strategically drives innovation in the company and connects it with the world of customers and users? Here, design can play an important part! Unlike any classical consultancy, design has the empirical basis and the creative imagination to predict the future. Design knows customer needs, is able to anticipate scenarios for applications and can translate these into prototypes that are constantly adjusted to customer needs in an agile process. Design builds outside connections to customers and is the inside key to strategically control innovation processes within complex structures; not in a conventional sense of design as giving products shape and humanizing interfaces between technology and man, but as a cultural change agent.
Design as a cultural change agent enables organizations to inspire all employees to innovate. It gives them the scope and the tools to dare to think creatively, disruptively, and to be open to change as well as taking the risk of failure. Design Thinking has made this cultural change agent available for corporations and it has taken a leading role in the business strategies of innovation-driven corporations. When design becomes a relevant part of business strategy, it takes on leadership function.
Design leadership implies that the top management has to systematically deal with trends in technology and society and in understanding these, develop new growth opportunities and innovative applications. The core task of every entrepreneur is added atop that: intelligently combining creative talent with necessary future investments.
These are actual traditional virtues of an entrepreneur who, according to Schumpeter, introduces innovations and is driven by the joy of being creative. A CEO wanting to create value to sustainably increase his business value therefore has to literally unleash the creative potential of his company. He will become a leader if he applies his convincing visionary strength to inspire employees to support the process of change and conquer new profitable market opportunities.
Essay by Philipp Thesen
Essay by Philipp Thesen
Over time, a false opposition has been publicly established. On the one side are the large corporations with their slow bureaucratic organization, hierarchies, and authoritarian stifling of any kind of renewal like a resistant layer of clay. On the other side sit the agile start-ups, inventing grand new products, prevailing over the dominant opinion and market power as genius lone fighters.
But innovations are crucial for the survival of the industry. Especially in the digital age, where universal knowledge is not only famously one-click away but can be enhanced and harnessed via constantly improving algorithms and Artificial Intelligence. In the course of the Digital Transformation, the global economy is on the brink of the fourth industrial revolution. Driven by the internet, the real world and the virtual world are merging together.
Innovations create competitive advantages. When a company improves a product, it differentiates itself from its competitors and gains an advantage. Others will have to follow. But much more important than the competitor is the customer, who demands new products that make life more livable and even easier.
It is not necessarily in the nature of large corporations to constantly reinvent themselves and their foundation for success. On the contrary, it is absolutely rational not to: any little innovation initially interrupts a highly complex system and can cause a drop in productivity and quality. A large innovation is even worse, it is an extremely risky endeavor, because the development costs of a new product are predictable while its market revenue is not.
It is true that Apple was founded in a garage and the inventors of Google also rented a car shed in Menlo Park – to employ the myth. But they only worked in this garage for five months and were said to have spent most of that time in the proprietor’s pool. The geniuses in the car sheds producing innovations were not the only secret to success. Silicon Valley’s astonishing success story is much more the result of a longstanding innovation process, combining smart regional-economic and research policy with intelligent funding strategies. This is how an unbeatable cluster of universities, research facilities, private equity, and innovators was created in California. The comparison with Silicon Valley shows the systemic character of successful innovation processes. It needs the turning of many small wheels at the right place to produce a successful product.
To be able to survive the international competition, corporations have to handle their intellectual capital more systematically: the real assets of a company are staff qualification, creativity, and their willingness to embrace change as well as the innovative strength of the whole company and close partnership-based customer relationships. These things don’t appear on accounting audits. Still, these intangible assets are crucial for cash flow and a company's operating profits. They should be integrated much more closely and more systematically into the value chain.
The very first step large corporations should take is to remove bureaucratic obstacles and provide scope to create a climate promoting innovation. Without the possibility for personnel to feel good and evolve there will be no innovations, not even small ideas. This is why employees of innovation-driven corporations need a high degree of liberty and in particular free access to common knowledge resources as they exist in communication networks, databases, and cultural groups. At large-scale corporations, ideas are literally in the air and born by the thousand, yet they die like fireflies if not guided through a systematic innovation process and supported from idea to marketable product with appropriate talent at every relevant point.
A process of innovation in a large corporation is extremely multifaceted because it is integrated in complex correlations of production and international co-operation with customers and suppliers. An open yet efficient innovation process therefore has to continuously be fed back, rethought, corrected, and revised. In my experience, it is important to develop the innovation process out of the corporation’s core competencies. Only in doing so will this existing experience and knowledge be mobilized; only like this can practical knowledge be radically questioned.
If innovations drive market success, who strategically drives innovation in the company and connects it with the world of customers and users? Here, design can play an important part! Unlike any classical consultancy, design has the empirical basis and the creative imagination to predict the future. Design knows customer needs, is able to anticipate scenarios for applications and can translate these into prototypes that are constantly adjusted to customer needs in an agile process. Design builds outside connections to customers and is the inside key to strategically control innovation processes within complex structures; not in a conventional sense of design as giving products shape and humanizing interfaces between technology and man, but as a cultural change agent.
Design as a cultural change agent enables organizations to inspire all employees to innovate. It gives them the scope and the tools to dare to think creatively, disruptively, and to be open to change as well as taking the risk of failure. Design Thinking has made this cultural change agent available for corporations and it has taken a leading role in the business strategies of innovation-driven corporations. When design becomes a relevant part of business strategy, it takes on leadership function.
Design leadership implies that the top management has to systematically deal with trends in technology and society and in understanding these, develop new growth opportunities and innovative applications. The core task of every entrepreneur is added atop that: intelligently combining creative talent with necessary future investments.
These are actual traditional virtues of an entrepreneur who, according to Schumpeter, introduces innovations and is driven by the joy of being creative. A CEO wanting to create value to sustainably increase his business value therefore has to literally unleash the creative potential of his company. He will become a leader if he applies his convincing visionary strength to inspire employees to support the process of change and conquer new profitable market opportunities.
Do you have questions about my consulting services or about working together? You can contact me with press and publication inquiries as well as general requests by phone or email:
Mail: office@philippthesen.com
Do you have questions about my consulting services or about working together? You can contact me with press and publication inquiries as well as general requests by phone or email:
Mail: office@philippthesen.com