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The Foundations of Corporate Innovation in the Digital Age


The need to adopt digital technologies is forcing companies to re-think their approach to corporate innovation. For several decades, starting in the 1960s, innovation was concentrated in R&D centers at large firms, which gave those firms a competitive advantage in setting the direction of innovation and harvesting its benefits. However, starting in the 1990s, this model began to be disrupted by the confluence of new digital technologies, venture capital and increasingly-fast consumer adoption of new technologies. Companies started to build innovation ecosystems that evolved into an “open innovation” model. This was particularly valuable because many digital technologies are general- purpose, and thus the best experts are often outside the firm, and in other industries.


As new digital technologies are introduced at ever-faster rates, there will increasingly be opportunities to capture new markets and unseat incumbents. For large corporations, this scenario is double-edged; while they have an opportunity to unseat others, they also face the risk of being unseated themselves.


Digital technologies don’t just threaten large corporations, they can also be a source of immense value-creation. Thus, since adoption rates for new technologies have accelerated in recent decades, there is increased potential for rapid value-creation and value-capture for firms that can bring innovative solutions to market.


Faced with these trends, large firms must re-consider their approach to innovation. But how? One answer, which is already clear in the data, is that firms are increasingly using patents to protect innovations. However, our research reveals that, faced with the array of opportunities created by digital technologies, large firms want to do more than just protect the innovations they are already producing: they want to generate more innovation, and to do so as quickly as possible. To rigorously navigate through the many practices proposed by strategists and used by innovative companies, Capgemini Consulting has partnered with the MIT Initiative on the Digital Economy (IDE) to study how large companies can improve their corporate innovation practices in the digital age. In this report, the first of a series, we outline the important lessons that can be learned from the academic and business literature as well as lessons learned from interviews with executives in many of the world’s most innovative firms.


To access the article, please go here.


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