Innovating as the Incumbent: A Roadmap to Growth

Key Takeaways:

Incumbents Innovate—Not Just Start Ups: Innovation isn’t limited to tech startups; it can occur in any business setting, especially at established companies.
Core Competency: For long-term growth, innovation should be integrated into a company’s culture and operational model.
Key Functions: Successful innovation involves solving real business problems, addressing specific pain points, and ensuring sustainability.
Effective Strategies: Integrate innovators with doers, win fast with small bets, avoid forcing new tech into the business, and establish clear measures for success.
Mindset and Culture: Foster a culture that embraces change, creativity, and continuous improvement.

In today’s fast-paced business environment, the term “innovation” can get overused—in management discussions, with boards, on panels, and at conferences. It’s often synonymous with new technology that shifts or disrupts the status quo with how work, business models, or people function. Innovation is often revered by disruptive tech startups such as Airbnb, Uber, Tesla, and Amazon creating new business models that break old business paradigms.

These kinds of technology—and this way of thinking—is important. But does it apply to everyone? Innovation isn’t exclusive to these environments, and in fact, most innovation happens outside of them at incumbent companies, the ones who’ve built established, successful business models regardless of their size.

How matured, incumbent companies innovate has been on my mind for a while.

Throughout my career in finance, I’ve seen both sides of innovation in established businesses: the projects that completely transform how companies run. And the ones that take years and millions of dollars, only for the outcome to be misaligned from how the business works.

The real goal for incumbent businesses, ones that want to innovate and “disrupt,” is to first invest in ensuring you have the operating model and organizational capabilities to realize the full value of innovation when it launches and scales.

Delivering value quickly is key. If a company can’t keep the value of its new products or changes, it might be because it hasn’t built the established the critical organizational capabilities into its daily operations.

At this point, though, having innovation as a core competency is table stakes for a company’s ability to grow long term. But it needs to be woven into the fabric of your company’s culture. It should be how a team operates in everything they do to drive business performance. When this happens, there’s no need to debate if innovation should happen. It’s just a matter of how, why, and at what scale.

I’ve overseen innovation projects from a financial and business standpoint for 30 years. Here is how I’ve seen how incumbent players grow and innovate effectively.

Understand the Key Functions of Innovation

Before we dig into what innovation looks like on a day-to-day basis, let’s discuss some key functions of innovation. What is it supposed to do? A good return-on-investment is a result—not the goal.

Here’s what I’ve seen from successful innovation initiatives at incumbent companies:

It solves business problems after listening to the market. Time after time, products are brought to market when the market never asked for it. While disruptive products can sometimes fill a void that the market never realized it needed, all successful product launches need to solve a distinct and clear end user problem. It’s vital to listen to your customers and hear what they need—then innovate off that. We’ve placed talent at thousands of companies at Insight Global. Many expressed a desire for more than talent placement. Out of that came various services and ways of working, like a robust professional services division and a proprietary approach to how we care for our consultants.
It addresses specific pain points. If you listen to your customers, they’ll tell you again and again what their pain points are. This could be from those on the front line dealing with work specific challenges. Or it could be management issues with retention and productivity. Whatever those pain points are, great innovation solves them.
It’s something that is sustainable long-term. If you listen to the customers and their pain points, you’ll often find that these are problems that didn’t pop up yesterday. They’re areas the business is concerned about right now and in the long term. Great innovation isn’t a quick fix—it’s a long-lasting solution that works on the root causes of those issues.

Underneath all of this, great innovation comes when you have a great foundation. Your operations need to be functioning at a high level to adapt to new investments. And it’s always better to innovate while you’re growing rather than as a reaction to declining. Understanding these qualities has helped me—and companies I’ve worked for—make more informed and stable investments that eventually help the business keep growing.

Innovation in Action

Now it’s time to put innovation into action. Only a small percentage of companies have the privilege of having a robust research-and-development arm that’s not encumbered by the day-to-day operations of a company. The rest of us must innovate from within.

Innovation, at an individual and a company level, starts with a mindset. It’s built into how people work. Rarely is it written or plainly stated somewhere—it’s who you are.

Do you believe your company and your people can innovate? Do you foster a culture where your people can present new ideas without fear of rejection?

Give your people the space—and power—to creatively solve. It must be part of your operating model and the company’s culture.

Here are some ways you can do that:

Don’t separate the innovators from the doers: Successful innovation occurs when the people who innovate and the people who build are interwoven on teams at all levels. Innovation hubs and incubators are great to understand pain points and ideate, but once it’s time to do the work, the innovators must work with the people who bring the idea to life—and the people it impacts.
Win fast with small bets: As a CFO, I know this can sound intimidating. Perhaps this narrows the full scope of your innovation as you get going. But small wins can snowball into an avalanche of success. They give you the room to decide quickly if something is working or not. You can fail fast with small bets, too! Innovation doesn’t become part of your culture overnight. You must have some wins to help teach the behavior.
Don’t backwards-fit new tech into your business: Business will often try to innovate using exciting new tech before fully realizing what the tech can or can’t do. There’s no need to try to fit a square peg in a round hole. As we’ve talked about, innovation is organic—when done well, it’s not forced.
Establish measures for success: Great projects become great projects when there’s a well-established goal from the start. Discuss what success for your innovations look like. Sometimes it can be operational- or business-related key performance indicators first before they are financial metrics. Communicate that to everyone who needs to know. You’ll unite the executors with clear measures of success for the innovation.
Be willing to constantly evolve: This applies to everything we’ve discussed, from what your customers need, to how you fund projects. When innovation is part of your culture, it isn’t rigid—what it looks like and how projects are completed constantly evolves across teams. Embrace it.
Test and learn: This piggybacks off being willing to evolve! You won’t know the impact of your new products or services until they’re out in the market. Test them, get feedback, and learn from it.

These innovations affect your end-to-end operating model. You must consider the change management around these innovations. How will they affect how your people work and sell? How will it be a value-add to your culture?

Innovation Is Another Lever in a Company’s Growth Plan

Businesses find success with their operating model and the products or services they offer. You can’t forget what makes you great. Innovation doesn’t fight or risk that success. When it’s part of your organizational capabilities integrated into your operating model and culture, it will push that success and that operating model to another level.

As an incumbent, you’ve already demonstrated the sustained value your business can have. You’ve given yourself the room to cultivate a culture of innovation. It will help you win in the long run.

Chi Nguyen is the Chief Financial Officer at Insight Global. Connect with her on LinkedIn.