Rethinking Our Approach to Innovation| Part Two: Internal Innovation

With VC funding down more than 50% globally to-date in 2022, continued interest rate hikes, and ongoing geopolitical tensions, the future global economic outlook remains bleak at worst and uncertain at best. There’s no better time for organizations to rethink their approach to innovation than during a downturn, when many companies either breakaway or die – and a multipronged approach to innovation is critical. Prong #1 of this approach was partnerships. Prong #2 is internal innovation.

As we continue to see the adoption of new technologies accelerate even more rapidly, it will become increasingly important for organizations to adapt the way they work, while also embracing a more open, innovative mindset. CEOs will be responsible for facilitating this shift by cultivating a culture of continuous innovation and learning.

Organizations looking to create a culture of continuous innovation can achieve this through a combination of: 1) CEO/leadership team that isn’t afraid to dream big or take risks; 2) general understanding that the drive for continuous innovation must be inherent to the company’s DNA; and 3) blank slate attitude similar to that of startups. CEOs should always be asking, “where are the market transitions coming from?”, and then they need to communicate to the team how to disrupt business models to catch these transitions.

However, in order to really be successful in the future, internal innovation needs to occur at all levels within an organization. Creating the right culture, and perhaps even including an internal tiger team that is focused on innovation across the company, is another approach I’ve seen work. Businesses can encourage this by providing current talent with education and training opportunities around new skills and technology, an initiative that is especially important given global talent shortages are higher than they’ve been in 16 years. It’s for this reason that JC2 Ventures is looking more closely at the future of work with investments in companies such as BigSpring, an AI-powered work readiness platform, and Denim, which is focused on incentivizing behavior and optimizing performance.

What’s more, the aforementioned top-down approach is extremely relevant here too. Leaders must also strive to continuously educate themselves on new tools and tech. With leading by example in mind, the JC2 Ventures leadership team and I have started meeting regularly to discuss emerging technologies and trends, such as quantum computing, applied AI, and more, so we can best advise our startups on how to navigate what’s to come.

I also like to invite industry leaders onto my Chambers Talks podcast to better understand how they’re using technology to achieve innovation and create disruption at an enterprise-level. In an upcoming podcast episode, I’m joined by the CEO of Ericsson, Börje Ekholm, to discuss how Ericsson is prioritizing internal innovation as it ushers in a new wave of connectivity. Driven by a strong purpose of creating connections that make the unimaginable possible, Börje and #TeamEricsson understand the importance of reinvention and risk-taking. While it’s certainly not easy, organizations need to find a way to leverage both external (i.e., the partnerships we discussed in the last iteration of this series) and internal innovation if they’re hoping to achieve the level of success and staying power that Ericsson has over the past 140+ years.

“You know, Ericsson has in a way reinvented itself for every generation in wireless technology. So, we’re not afraid of taking risks, and you see that with Ericsson One, which is an internal incubator, accelerator, for internal innovation. So, we’re takings some risks there, with some promising results, but we’re also participating externally. But I think, unless you innovate, you are not going to survive. So, I think that realization is so important for the way you drive a business as well.”

– Börje Ekholm, CEO of Ericsson

It takes a talented leader to know how to prioritize, cultivate, and nurture internal innovation. In fact, it’s when we’re faced with a growth-constrained external environment that internal innovation is especially crucial.

As we look to the future, we’ll need to rethink and reexamine how we approach innovation and disruption. It’s true that there’s no right way to do this. In fact, I’d say there are many ways. The organizations that incorporate a muti-pronged approach will be the ones that come out on top. And while not ideal given the current economic environment, external innovation via acquisition targets is another way for enterprises to further spur their internal innovation engine – something to watch evolve and keep in the back of your minds as we adapt to what comes next.