What the 100 most-innovative companies are doing that you’re not — a guide to growth in 2021
By Kate Eriksson
“There’s nothing like a global pandemic to cut through the complexities and reset priorities”
– Christine McLoughlin, Australian Board Director and Founder on the cover of the Australian Institute of Company Directors publication
Speaking with many of Australia’s business leaders over the past weeks, overwhelmingly, it’s set to be an optimistic, exhilarating year. And a challenging one.
The last years have signposted rapid change in the expectations of customers, employees, regulators, shareholders and society.
How we engage with employees, shop, pay, source, travel, and educate has changed — all with the added spotlight of diversity, the environment, politics, and of course, health. As well as the technology adoption necessary to get us through 2021, right now has a momentum of its own. (Zoom call anyone? Cash?)
Forward thinking from here, how will you innovate and operate differently as an executive team? The success and growth of companies and countries will not be realised by downsizing, but rather by creating new value.
Whether you’re motivated by profit, people or purpose — you and your team can’t work harder or care more deeply, and there is no more time in the day.
So, do things differently. Consider establishing the mechanisms that the world’s fastest-growing and new economy companies use.
Combining my own experiences and observations with the world’s most valuable brands and largest companies, this article is a reminder of the choices we have.
“I cannot teach you anything. I can only make you think”.
– Socrates
This article covers:
- Hallmarks of High-Growth Companies
- How to Accelerate Growth
- Entrepreneurial Executives
- Engaging & Co-creating with Third Parties and Open Innovation
- Innovation Centres & Hubs
- Corporate Venture Capital
But first, a brief announcement from your future self:
It’s 2021, despite an unprecedented year and the challenges it brought, we’re inspired and committed to the opportunities before us.
Firstly, our Board and leadership team are in the process of uplifting their entrepreneurial skills and capabilities. They will be among the most-experienced, and the most-entrepreneurial. From conversations at the Board table through to unlocking the ideas of our people, the impact will be evident.
Secondly, we know that globalisation and the pace of change require us to learn, collaborate externally, and compete to be among the world’s best. We have a new capability to scan, pilot and partner with leading global companies for the benefit of our customers and society. In this way, we will leverage an ecosystem of investment and progress that we don’t need to build or fund alone.
Thirdly, to accelerate specific areas of our strategy, we are creating an innovation and technology hub. It will provide us with disruptive, fast-tracked approaches and outcomes for customers and growth outside of business as usual, and a means to engage with an external network we wouldn’t otherwise be able to leverage or launch with.
These initiatives will be aligned with our strategy, uplift our people, and be measured and transparent in our reporting.
We are already a strong, committed, performing team and organisation. In a world where we compete globally with rapid change to benefit our customers and stakeholders, these new capabilities that inform us and connect us to the world’s best are the right way forward.
Hallmarks of High-Growth companies
Observe the world’s most-innovative companies, the highest market cap companies, and the world’s top brands, and you’ll find five traits.
- Visionary, entrepreneurial leaders. They have a long-term view and make decisions quickly to deliver their vision.
- Marketplaces, connected to ecosystems and responsive to the needs of the ‘crowd’. They create and unlock new value with every customer or provider, and continually evolve to new growth propositions.
- Underpinned by innovative business models reflecting the new economy; for example: subscription, freemium, cost reduction, third party pays, etc. (Business Model examples here and here.)
- Driven by data and technology. Data informs decisions; artificial intelligence and automation improve, personalise and predict; biometrics and identity reduce risk; and drones, 3D printing and robots accelerate manufacturing and delivery in the supply chain.
- ‘Hyper-local with global reach’. High-growth companies scale their business reach whilst providing a personalised, local aspect. E.g., Etsy’s global platform with boutique designers, Uber’s global platform with local drivers, NASA’s global challenge spinning up events hosted locally for schoolchildren — occurring in every nation.
How to Accelerate Growth in 2021
Businesses have an extraordinary opportunity to unlock new value and redesign their engines for growth. Before getting started with new ways to innovate, it’s important to check “your North Star”. What are you headed, and where in your business do you most need change?
Be bold. Know what you are striving for. Outcomes can be revenue, cost reduction, speed to market, market share, brand, talent or societal value. They can be leading (e.g., trials) or lagging (e.g., revenue), quantitive (e.g., customer satisfaction) or qualitative (e.g., partner feedback, attracting talent or awards).
Secondly, compared to what? Chances are you have enough programs in flight. Ask yourself not what you’re doing already, but how effective that is compared to the range of options available to make progress.
1. Entrepreneurial Executives
Why and who’s doing it?
Companies like Google, Amazon and Apple are known for their vision and entrepreneurial leaders. A study by PwC/Strategy& of the top 100 most-innovative companies based on revenue growth, market cap and profit highlights the engagement of executives as innovative leaders as being a top characteristic of high-performing companies.
Boards are always procuring entrepreneurs to challenge and bring new perspectives. There is an ongoing recognition of the need for capabilities and experience in industry, finance and risk management, infused equally with entrepreneurial boards and executives who feel able to put forward ideas out of the box and to make time to shoot the breeze. When this takes place, a powerful ripple effect of change moves through the organisation.
Examples of what happens when innovative leaders lead from the top, include Jeff Bezos, Andy Jassy, Elon Musk, Jack Ma, Mike Cannon-Brooks and many others. These leaders personify the impact that the world’s most innovative business leaders have on growth, profit, market cap and attracting top talent (Amazon’s methods and World’s Most Creative leaders from Fast Company).
How to do it?
How many times have you heard someone say “think differently”?
But how, pragmatically, do you do that? An innovative mindset is equally valuable whether solving a problem or profit gap, delivering your strategy or striving for growth. Despite the sentiment that innovation is risky (risks are obviously inherent in all business), the ability to think differently reduces risk.
Put your leadership team through a program where they:
- Agree to a new cadence and set of conversations expected from each other. Ask challenger questions in leadership meetings or put forward new innovation tracking indicators in portfolios.
- Gain a shared view of the options, cases and approaches available. How do companies fund and pursue ideas prudently, and what are the choices to test ideas or strategies quickly before deciding the course of action?
- Give your leadership team the usable tools to think differently. Distribute a playbook of practical choices and questions to ask, to be confident with innovation and technology.
- Highlight real challenges in your agenda, strategy or roadmap and work on them throughout the learning sessions as examples.
- Connect to a network of peer companies addressing innovation, founders and new-economy changemakers to leverage, share, debate and advise, bringing new perspectives.
You’ll see your leadership team transition into being confident and thinking differently in discussions with each other and with all those they engage with.
You will see the leadership team timeboxing the validation of new ideas and strategies before delivering them.
You will see faster, sharper outcomes impacting key business metrics.
In the past six months, YBF in Melbourne, Australia has piloted a program to fast-track experienced corporate professionals with an innovative, immersive experience with the end goal of accelerating their entrepreneurial aspirations and economic growth. They were welcomed into a network of founders, scaleups and corporate innovation arms of companies and new economy experts. Combined with intensive learning sessions and a playbook for daily application, the results and unexpected learnings were powerful for all parties.
2. Engaging with Startups & Third Parties
“When the rate of change on the outside exceeds the rate of change on the inside, the end is near.”
– Jack Welch, former Chairman & CEO of General Electric (GE)
Why and who’s doing it?
Conceptually, 90+% of the innovation or disruption relevant to you will happen outside of your company. Much of the time, this will be outside of your industry.
Connect to it.
The best way to focus is to have clarity on your priorities. This immediately renders some market activity, deals and emerging companies as interesting but not in your mandate, leaving you to focus on what is important.
Choices to engage with third parties include:
- Scan and Apply,
- Showcases, and
- Open Innovation
The world’s most innovative and respected companies take this approach.
Successes from engaging with new ideas and companies are evident. Motivations to reach out range from high volumes of work and limited internal resources (e.g., NASA), building an ecosystem of partners leveraging your platform (Amazon, Google), accelerating product development (Johnson & Johnson) to citizen engagement (GovHack).
How to do it?
Scan and Apply
Scan for startups, disruptors and technologies that match your specific business focus areas for innovation. Report them to your business and flag applicable portfolio managers for relevance. Be disciplined in what areas you want to make a difference. Decide if you watch, engage or take action to pursue pivots within your own products and propositions, or connect with them.
At YBF, we track hundreds of subjects and startups weekly, assessing their backers, market segments, technologies and traction, then apply to priorities. It’s an ordered way to be aware and give yourself options for current or future business challenges to overcome, or targets and timeframes to be met.
Showcases & Cohorts Selected
Following on from Scan and Apply, this is where third parties are invited to pitch and showcase their innovation and engage in questions.
The strength of this approach is direct engagement and a wider team of executives or employees being exposed to external ideas.
Engaging and selecting interesting concepts to work with is the next step. They can be paired with one of your business owners or teams, focusing on questions for your business’ next phase. Questions can include: how soon can we test the innovation partnership? Can we find one customer? Can we test based on one historical data set? This is important, as the cliché about larger organisations is that they take too long to respond to opportunity, burning a startup’s most precious commodity: time.
Organisations can also provide space and mentorship or assets to a small cohort of companies in a co-working space, with the goal of trials. Successful examples include most tech companies, and global organisations like Unilever, Treasury Wine Estates, and Honeywell.
Open Innovation
Open innovation is used to seek ideas and engage the strengths of startups, partners and employees.
Usually, a challenge is posted with specific insights, problems, and supporting data sets shared. These might be, for example framed by:
- An internal strategy or transformation project (such as to increase digital adoption, or leverage available data)
- A business priority or goal- (such as to better serve new segments, diversity, inclusion, sustainability, or reduce response)
- Customer insights, or stimulating technology-related opportunities (to improve supply chain through drones, automation, or 3D printing)
- Co-creating with your ecosystem of customers, partners or technology providers
This approach has the benefit of setting the brief, broadening ideas, and a by-product of transferring the process for innovation to all participants.
Open innovation can bring significant value to:
- Social impact agendas where multiple parties, skills, and data sets are brought together to collaborate and solve for large and important agendas like disability, sustainability, bushfire management, or health.
- Technology-specific including building on selected APIs (like open banking), voice, security, cloud, or data sets.
To get better outcomes, tips include:
- Consider if you want to scout and invite specific companies with advanced knowledge (‘closed innovation’) or existing capabilities. Companies with existing capabilities are helpful to build on during the open innovation time period such as suppliers or tech companies that may be familiar with voice technologies, and have traction already.
- Allocate an executive who will be ready to pilot, sponsor or trial the most promising outcomes. If the ideas are not pursuable, agree to mentor the winning companies or ideas for three to six months. As mentioned previously, the cliché is, that you will fail to engage or action ideas after the event.
- Communicate your initiatives. This uplifts your brand, encourages people to reach out to you with new ideas and inspires your employees to be more innovative internally.
Bear in mind, open innovation as a single event by itself, is on the lower end of impact due to the newness of ideas and therefore their ‘seedling’ stage.
3. Innovation Hubs & Centres
What and how to do it?
Innovation centres and hubs are persistent, physical and digital spaces that cultivate collaboration, new ideas and opportunities, and pilots to market. The tools, processes, rules and experienced, entrepreneurial facilitation and program management are deliberately different from business as usual and are focused on delivering whatever the specific desired results are.
The world’s top companies have them, acknowledging that however innovative they are within their walls, the capability is, by its nature, a capability beyond.
How to do it?
Innovation centres and hubs can be in pursuit of outcomes for:
- Uplifting brand and brand collaboration (tap for one of many examples from Unilever)
- Solving a business priority
- Accelerating the progress of a future or strategic agenda (Ikea)
- Engaging the ecosystem (Lego)
- Attracting talent and changing culture
- A social purpose such as community engagement (Tommy Hilfiger’s ‘Adaptive’)
- Using technology to accelerate and share investment (Ford and VW)
- Geographic or regional growth
Many of the world’s top retailers are developing innovation hubs to address sustainability, inclusion and social impact.
Their functions may be to collaborate, ideate, prototype, pilot, research, launch or educate.
In most cases, to ensure impact, they are tasked with designing the business models and paving a way to connect to launch via a business executive sponsor or investment.
This way of working and impact is designed to be transitioned into the organisation’s business-as-usual operations, freeing the innovation centre or hub to continually advance and solve for the next disruptions.
A rise in collaborative innovation centres and hubs is anticipated due to the need to address new challenges with shared investment at scale.
Based on the YBF team’s experiences establishing centres such as the AT&T Foundry, the LawTech Hub in partnership with law firm Lander & Rogers, the YBF Fintech Hub with the Victorian Government, SquareGrape in collaboration with Treasury Wine Estates, and the PropTech Hub with Honeywell, we observe increasingly, that hubs operate as an umbrella to incorporate all aspects of this article — entrepreneurial executives, third-party engagement and the delivery of business priorities in a new way.
Innovation hubs may be established for a topic, division, program or market focus. Smart hub designer tools can quickly highlight the options, decisions and benefits to choose from to find out if a hub is the right course of action. They are presently being pursued and established by organisations of all sizes and sectors.
4. Corporate Venture Capital
Why and who’s doing it?
Corporate venture capital (CVC) is a more arms-length approach to participating in growth. They are a mechanism for companies to invest in startups and privately-owned companies that relate to their current or future business strategy.
According to EY’s Report, corporate venture capital programs are more important in a downturn, than ever.
“Corporate venture capital offers the most direct path to strategic and financial rewards from new business models, emerging technologies and disruptive innovation.”
EY
Drivers may be:
You’re already using it.
Investing or buying into a startup or technology provider that you have procured. For example Australian companies such NAB, Westpac, Telstra.
You can contribute to a startup’s success with your customer base, and advise on its strategy, thus influencing its future direction for your benefit (as a user of the product), and return on investment.
It’s related to a business focus.
Investing in a startup that is disruptive or adjacent to your business gives you options should the technology take off and leave you unprepared or with the need to partner or integrate quickly. Alternatively, if you lose with your strategy, you may win with the investment company valuation.
Estimates indicate that more than 1000 corporate venture capital funds exist, with examples at a global level of top-performing CVCs, as well as local (Australian) examples such as AGL‘s investment in a US-based smart lock startup or NAB’s recent acquisition of challenger bank 86 400. Learnings, as well as tactical or strategic options, and return on investment, are drivers.
Placing a bet on valuation growth.
Investing in a fund, or fund of funds that may be industry or topic specific, or just represent an investment return based on insights of an expert investment panel. It is advised to seek information from qualified sources and advisors as this is a broad and deep set of options. Two interesting examples include Softbank, the world’s largest tech VC fund, and funds such as Australia’s Global disruption fund, which is overseen by a group of former CEOs of Australia’s most successful companies, in high-growth areas.
Here are two additional notes outside of Corporate Venture Capital, because they are interesting.
Crowd Sourced Funding. Increasingly, investments are being made into new ideas by consumers, businesses, angel funds or private equity via Crowd Sourced Funding (CSF). Refer to Birchal’s recent ‘CSF 2020 Yearbook‘ for these trends including a strong sense of societal values in terms of investments in businesses that are purpose-driven, environmentally-focused and diverse — emphasising female founders.
Governments. Another way to “invest” and increase engagement between large organisations and startups is where governments increasingly aim to take the lead in investing by giving startups access to their customer base or platforms, which then catapults the credibility of startups, into other large organisations. The motivation here is economic growth of startups and job creation, rather than any own financial gain.
5. Company Setup/Structure
Whichever growth options you pursue in the above list, your company also needs core DNA enablers that embrace internal innovation. Such as:
- A strategy that pursues emerging areas
- Allocation of budgets and funding, and metrics to indicate future readiness
- Hiring and talent that seeks diversity
- Physical spaces and digital collaboration tools to accelerate connections and ideas
- Leveraging of data and AI to learn and pivot
I’ll leave you with best wishes for 2021, the offer to share any aspect of this if it’s helpful, and the words of American composer John Cage:
“I can’t understand why people are frightened of new ideas.
I’m frightened of the old ones.”
As a leader, what will be your legacy?
Kate Eriksson is experienced internationally across startups, corporates and technologies having lived and worked in Australia, Sweden and Silicon Valley for companies such as Ericsson, AT&T and PwC. She is the founder of healthtech company helloEd, and a member of YBF’s executive leadership team. YBF is Australia’s largest technology and innovation hub, enabling startups and scaleups grow, corporates to innovate, and the Australian tech ecosystem to thrive.
