Is Corporate Innovation Dead?

by Yaron Flint

The last few years have been tough for corporate innovation. The COVID-19 pandemic, the wars in Ukraine and Israel, high inflation rates in many countries, rising prices in energy, food, and services, and slower economic growth in China have all contributed to putting immense pressure on multinational companies.

When facing such crises, it's no surprise that the first areas to be cut are often those that aren’t seen as directly contributing to revenue. This includes departments focused on innovation, which are often seen as "cost centers" rather than profit drivers. Companies that once prided themselves on being at the forefront of innovation have, in many cases, slashed these departments in a bid to appear leaner, reduce costs, and attract the attention of analysts.

While I won’t delve into why I believe this is the wrong move, let me put it this way: cutting these departments is similar to someone trying to lose weight by cutting off their leg - sure, they may lose the weight, but they'll have no leg to stand on when they emerge from the crisis. Innovation is the lifeblood of future growth, and these departments are exactly what organizations will need to rely on when they step out of crisis mode and start looking for new revenue streams.

Don’t get me wrong - cutting unnecessary expenses during tough times is important. However, cutting innovation initiatives is an easy but shortsighted decision that may leave behind other, less visible inefficiencies within the organization. More importantly, reducing innovation efforts is often a symptom of a larger issue. The real problem is that many companies believe they can simply "flip a switch" and reignite innovation when conditions improve. This kind of thinking is both naive and dangerous. Meanwhile, their competitors are moving ahead, employees have moved on, and they’ll find themselves with a less experienced workforce when they try to rebuild.

What often happens next is that these companies start buying into other businesses, hoping that acquisitions will somehow close the gap and put them back on track. However, this approach tends to waste both time and resources.

Those who have been in the industry for a while know the cyclical nature of corporate innovation. They understand that weathering the storm is often the best strategy, and that, sooner or later, companies will need innovation more than ever. They will once again become the valuable asset corporations turn to for growth. But there is one key trend that’s emerging from all of this: the rise of innovation management.

Tired of the endless cycles of boom and bust, companies are now looking for more efficient, cost-effective ways to innovate. They want to invest less time and money, while showing higher results. In the past, companies would throw money at innovation with no clear strategy or measurable KPIs, but today they are demanding more accountability. They are realizing they need to do things better, with greater efficiency, lower risks, and a higher success rate.

This is where consulting companies focusing on structured innovation processes have emerged, and they’re gaining significant traction. Companies are beginning to recognize that instead of giving an internal manger an “innovation” title and hoping for the best, they need to hire true experts in the field of innovation management.

This trend reminds the evolution of roles like QA (Quality Assurance) Managers and Product Managers. These positions, which once had vague or undefined responsibilities, have now become well-established and respected professions. As companies began to understand the importance of quality control and product success, the roles of QA and product managers were more clearly defined, and these positions became critical to business operations. Today, QA Managers and Product Managers are sought-after careers with clearly established practices, certifications, and methodologies.

Innovation management is going through a similar transformation. The introduction of ISO 56001, a new standard for innovation management systems, is a clear sign that the field is maturing. Soon, it won’t be enough for companies to simply claim they are innovative - they will need to show their adherence to structured standards like ISO 56001 to prove their commitment to innovation.

So, no, corporate innovation is not dead - but corporate innovation as a mere PR exercise is. The future of innovation is structured, accountable, and led by experts who understand the nuances of managing it effectively. Companies that continue to treat innovation as a buzzword will find themselves left behind, while those that invest in true innovation management will be the ones that thrive in the long run.