Three reasons for the difficulty of enterprise innovation

Guidance: There are two kinds of innovation, one is independent start-up, mainly related to venture capital; the other is the Project team within the Enterprise, which operates within the enterprise environment.

Three reasons for enterprise innovation

The first question is, what is the problem that the enterprise is actually facing? First of all: We say failure is the mother of success, but from the enterprise point of view, in fact, the previous success of a business is often the reason for its failure, because each existing enterprise exists, it must be some place to do, that is, it must be its existing business, and the entire enterprise body, generally around its mainstream business configuration resources, But innovation needs to break through the past, and then it doesn't.

Second, especially big companies, it is not interested in small markets. This is a basic principle of corporate strategy, that is, it often has "access threshold" for a new market scale. For example, many companies in the United States have to ask first, in five years can the market to achieve 1 billion dollars? Is it possible? If you can't do it in five or ten years, it won't take that energy. This is a valuable business, because enterprise resources are limited, of course, to vote what it thinks may be bigger business.

But the problem was that when companies predicted the size of the market, second, the market you know today may not be the market tomorrow, because the market will evolve, so the early definition of the market is actually vague, and many of the early innovations are based on guesswork, which leads to a lot of opportunities for companies to give up.

That enterprise at this time to market size judgment and VC what is different? This may involve the third reason I say, is: VC to the final enterprise into which market is not very Care, he cares is return, that is, you can make the business bigger, financial returns bigger, or VC will care about, but will not be limited too much, but large enterprises, it will be concerned about which market to go, And there is bound to be a limit, for example, IBM, which will now have several main directions, then it will focus on its investment. So in the original enterprise it will actually have two barriers: one mechanism flow, the second market choice.

A dilemma between headquarters and the business sector

The second question, many people say that big enterprises do not have the innovation consciousness, this is wrong, in fact many big enterprises have very high research and development budget, but if we divide the innovation into three stages, one is based on the company main business innovation; the second is somewhat like the adolescence stage;

Then here because many companies have their own research institute, it is easier to do is actually the first stage, and then the third stage is also good, but the hardest hardest, often the middle of this stage.

Why? Because when an enterprise develops a better promising thing, it decides to devote resources, but many enterprise resources are actually controlled in who's hands? This resource is not just money, it also includes people, databases, relationships, and so on, and many times it is actually controlled by the existing business unit.

This poses a contradiction, because "Boss" is an abstract concept, such as you have to contact with customers, who and customers most closely connected? The sales department; It's like you need a lot of engineers to help you grow bigger, who has the resources? Engineer department or product business department. Therefore, these people will be due to the resources and power of the subjective factors, resulting in his difficult to cooperate.

Here I would like to emphasize the power of the enterprise a constant truth is: which department has the highest income, it certainly has the largest voice in this enterprise, and decide it to accept headquarters demand or not accept headquarters demand criteria? Their own sectoral interests. So the general large enterprises, it is a lot of resources and manpower is in the business unit that Business, and the business unit every year to report performance, and even this performance every quarter to track, so just said that the second phase of innovation it is difficult to grow out.

Because the second stage involves not only resources but also organizational processes, how do you manage it? What's the pressure on it? It takes some real process to do this, and your existing business unit, often set up basically for an existing business unit set, its thinking style, market understanding, customer understanding, all around this set of things to do, and take over an innovative project requires it to spend time and manpower costs, So this is one of the big things about a company's limited innovation: the resources are not at the corporate headquarters, and in each business unit, how do you get these business units to meet the innovation needs of your headquarters?

Five models of American enterprises

In this case, there are five models for American companies. The first is the headquarters center it does not promote innovation, but by the business unit to make their own ideas.

This model is driven by the business unit itself. At this point, the headquarters will be a few things, a human, two experience, because the incubation process many business units it will not actually, including management processes, management procedures and organizations. In other words, because it is your own idea, my headquarters is just here to help you, and then because the project has different stages, in the early days, the headquarters also gave you some money and manpower, to help you develop, so for the business unit it is very motivated to work together.

The second: ideas come from Headquarters. This is also a very common way. Why? Because if it is the first, the business units will certainly not be able to mention some useful to the entire enterprise, but not good for their own business units, because it does not have a big picture, it must be its own local concept, so the second model, project headquarters, this is the IBM case, and then because the resources are not in the hands of the headquarters, It goes to find a "business unit" as a sponsor.

Here, this sponsor has two meanings: one vote, two cast, the latter in this "business unit" recruit a very high-level Senior VP responsible. But the problem with this model is that the person who is the head of the idea must have a lot of power and prestige and must have a very strong influence on the business unit, otherwise it's hard to say. In other words, he must be able to influence the business department to say: "This project, although it seems not directly related to you, but ultimately very relevant to you." He must be able to convince the business unit to take over and invest in resources.

The third model is that the Headquarters centre presents a number of projects, but for a long time it does it itself, without looking at the business unit. Why is that? Because it feels like the business sector is not willing to spend money early, this is usually about the basic research project, so it does it on its own, and at the next stage, the business unit is involved, and the purpose is to get the business unit to understand and take over, but the main money and manpower to hatch, or the headquarters themselves.

The fourth model, the headquarters of ideas and funds including manpower, then the project hatch to a certain extent, it is not directly to the business unit, but to find a company specializing in this intermediate stage project incubation department, the department does not do ready-made business, responsibility is responsible for those who already have some appearance, but has not become the main business. So it turns out that slowly the project hatches out after the next paragraph is handed to the business unit? or become an independent business unit? This is another topic, but that is to say: Can not each come out as an independent business unit, because the enterprise incubation every year, the development of so many innovative projects, if each is independent, the enterprise will be out of chaos.

So this is four models, and the other fifth is that it becomes an independent business unit from the start.

Pros and cons

It depends on the nature of innovative business. I feel, the first is by the business unit to mention, the advantage is: the least resistance, the most motivated, but the bad place is: The business unit does not have a big picture, because it must be based on their own things to do.

And the second model, the benefits in the general view, the headquarters of the project, has been removed from an existing department limitations, you can take into account the entire pattern, but the bad: resistance is large, difficult to be accepted by the business sector.

Sometimes I even see an example where my business department has agreed to invest and help grow but you know it's a process, and it's a few years, and there's a lot of things going on, so in the second model, the head office has to be very tight in the early days to make sure the business unit is really understanding, and willing to help.

The third is more suitable for basic research projects, and the enterprise judgment must be done, after doing the business unit, and because the early it is the headquarters to do their own, there will be no major obstacles, but the risk is: it may be the headquarters to go to a certain stage, it can not find a business unit to take over, because the business unit feel and my main industry is not much relationship, Or I don't understand this project.

And what's the problem here? This is a big problem, is that after I have a it often has a big impact on my performance, because I have to spend time and manpower costs to go in, and the other reason is: I do not have such a person, I do not understand the market, and I do not believe that there is a market, these are why it is unwilling to pick up the reason.

The fourth kind is what I just said, put it into the so-called transitional sector, but the difficulty is that you have a bit of molding, it is difficult to put it in the business unit, and finally you can only become an independent business unit, or sell, because like a child, it has grown to a certain stage, there will be their own culture, Contacts and teams.

But in fact, the enterprise ultimately choose which mode, depending on the enterprise resources, but ultimately my feeling is: excellent enterprise IT generally the first model and the second model have, that is, each business unit not only can mention, there is a set of management system, and then headquarters also has its own set of systems.