Scaling innovation: A challenge worth tackling

Tiếng Việt

Scaling innovation: A challenge worth tackling

"What can firms do to address the gap between innovation investment and value generation?” RMIT academic Dr Seng Kiong Kok shared his views.

“Clarify, ideate, develop, and implement” are the broad underlying design-thinking principles that guide the innovation processes at all levels of enterprises, from your large multinationals to grassroots entrepreneurs. Globally there has been substantial demand for innovation and human capital in innovation as evinced by the growing number of innovation labs. This is even more true for the Asian region, which has overtaken Europe in terms of the number of corporate innovation centres. Vietnam is no different and in fact ranks second highest with relation to innovation performance amongst the lower-middle income group of nations and has, in the previous few years, outperformed wealthier nations such as India, Malaysia, and the Philippines.

Innovation is currently a trigger word within the corporate world with recent survey data suggesting that the notion of innovation consistently ranks in the top three priorities for firms. There is also some evidence that firms who have invested heavily in innovation over the recent global health crisis have demonstrated increased performance over their counterparts (Source: BCG). However, whilst there is substantial interest in innovation, it is still a very difficult concept to define given its idiosyncratic nature to the firm. What we do see is that very few firms are keen to be seen as non-participative within the innovation landscape.

This lack of a prototypical definition could potentially be an explanation for the lack of ability of firms to be able to scale their innovation investments so that they generate value for the firm. In other words, whilst firms are able to adopt similar practices to their industry peers or predecessors when building innovation labs or other innovation infrastructure, the ensuing outcomes vary substantially.

The same market report by BCG that indicated increased performance over COVID-19 for innovation-investment heavy firms, is also quick to point out that the proportion of firms who are able to scale innovation is merely 20%. From an institutional perspective, this presents a challenging question and one that must be addressed. A review of the extant literature highlights three core areas – i) a lack of company culture, ii) poor consideration for intra- and inter-company collaborations, and iii) an absence of appreciation for organisational goals and alignment with corporate objectives. Put simply, firms have the specialisms and technical knowledge to innovate, but they lack the leadership infrastructure to coordinate, guide, and drive these resources towards achieving firm objectives.

Whilst there is substantial interest in innovation, it is still a very difficult concept to define given its idiosyncratic nature to the firm.

So how do we confront this issue? Prior to the launch of the new Innovation and Enterprise major at RMIT University Vietnam, our team of academics engaged business leaders and industry partners in conversation about innovation readiness and scalability to better understand the solutions to this corporate innovation and value gap. We also combined these conversations with a review of the extant academic landscape for explanations to help address these phenomena. We discovered four broad interventions:

Firstly, there is a need to look beyond our organisations to drive innovation. Whilst utilising and developing internal innovation resources is a good thing, augmenting these dynamics with external mechanisms can be one of the additional impulses towards narrowing the innovation and value gap.

Secondly, developing an understanding of organisational structure helps shape the initiation of these valuable innovation resources. Organisational structure here refers to both tangible structures such as branch networks and geographic location, as well as less-tangible socio-political structural assemblies such as leadership and governance arrangements.

Thirdly, an appreciation for the necessity to cultivate and support diverse teams. Innovation is, or can be, a disruptive process, requiring organisations and their people to better understand current pain-points and address any fixedness in thinking to generate solutions. Facilitating an environment that allows individuals to creatively disagree whilst at the same time supporting socio-psychological dimensions of such difficult discussions is important towards the innovation process.

Finally, there is a need to understand the regulatory landscape in relation to aligning this with organisational goals. Do note that innovation really only takes place in the face of obstacles and the local and international regulatory landscape helps to parametrise institutional innovation.

These broad interventions for narrowing the corporate innovation and value gap will also have implications on future generations, especially current and graduating students heading into the labour market. The comprehensive message is that there is a need to be mindful of skills complementarity and adaptability in light of the ensuing digital transformation of our economic systems. Traditional skill sets will have to be augmented to accommodate such rapid transformation and there has to be awareness of the benefits of opportunities for collaboration. Whilst it is possible to innovate alone, we observe its greatest marginal benefits from working collectively and collaboratively.

Story: Dr Seng Kiong Kok, Interim Senior Program Manager for Innovation and Enterprise, RMIT University Vietnam

Media Release

Business and management

21 December 2022