When we think of innovation in business, our minds might jump to stereotypical images of sleek innovation labs, ping-pong tables and charismatic leaders promising to “disrupt” industries. This image, popularized by Silicon Valley success stories, has led many corporations to invest heavily in creating similar environments within their organizations. However, our research suggests this approach might be doing more harm than good.
Many companies have fallen into the trap of equating a cool-looking innovation lab with value-creating innovation output. They invest in trendy office spaces, adopt the latest buzzwords, and hire charismatic innovation leaders. However, these surface-level changes often fail to address the fundamental challenges of fostering innovation within a corporate environment.
One of the key issues with this approach is that it can create a false sense of progress. Companies feel like they’re innovating because they have all the trappings of an innovative environment, when in reality, they may be no closer to creating meaningful change or new value for their customers.
René Herrewijnen, Head of Business Innovation at ANWB, the Dutch touring club, The Netherland’s largest mobility association, points out: “How you organize innovation as a company is not a turnkey solution that an outsider comes up with for you. You have to look at what works for your company, you need the trust built up by successes, luck with the timing, and a sense of urgency. Eight years ago, the ANWB couldn’t do it.”
In contrast, successful corporate innovators increasingly focus on a more strategic, fact-based approach to innovation. This shift emphasizes the alignment of innovation efforts with the core business strategy and the focus on creating tangible value.
Lysander Weiss, Senior Research Fellow at HHL Leipzig, emphasizes this point: “Companies don’t need an innovation lab, but a strategy lab because it’s not about building from new ideas but aligning to your strategy and building relevant new business for the future. Not just whatever business for the future.”
Lufthansa exemplifies the power of strategic innovation by integrating digital and data-driven solutions into its core business. Rather than opting for flashy innovation labs, Lufthansa’s Innovation Hub focuses on practical innovations that improve operational efficiency, such as real-time flight tracking and customer-centric digital services. This aligns closely with their long-term strategy of enhancing customer experience and operational performance. By embedding innovation directly into their operational framework, Lufthansa demonstrates how a fact-based, methodical approach can lead to sustainable growth. Their success shows that innovation, rooted in the company’s core mission, delivers greater value than trend-chasing initiatives.
Key elements of this strategic approach include clear alignment with business objectives, fact-based decision-making, focus on value creation, integration with core business, and a balanced portfolio approach. Rather than isolating innovation in a separate lab, this approach seeks to embed innovative thinking throughout the organization, addressing the growth gap between current performance and future aspirations.
Companies that have found success with this strategic approach often start with a clear mission, vision, and financial targets. They allow exploration within defined focus areas that balance structure and freedom. For instance, one company we studied set clear financial targets for their innovation efforts, only pursuing projects that had the potential to generate significant revenue. This approach helped focus their efforts and ensured that innovation contributed directly to the company’s bottom line.
Stephen Parkins, founder at Culturedge and former Head of Innovation at SGS and Senior Innovation Manager at ABN AMRO, highlights the importance of clear mandates: “If in trading, a trader doesn’t see the upside in the mandate, he’ll give it back. Similarly, in innovation rather than hiring Mr Charisma, who promises everything, you could say to a newly recruited head of innovation, ‘This is what we’d like you to achieve, and here are the resources we are prepared to allocate so you can make an informed choice of whether you want to work for us’.”
While a strategic approach is crucial, the importance of culture and leadership in driving innovation cannot be overstated. Thomas Mensink, CEO, Partner at Golden Egg Check Capital, notes, “Entrepreneurial people thrive less in a corporate environment, which means that you have fewer and fewer entrepreneurs left and the culture shifts more and more toward the typical corporate culture.”
This observation underscores the need for companies to create an environment that nurtures entrepreneurial thinking while maintaining strategic focus. It’s about striking a balance between the freedom to experiment and the discipline to align with business objectives.
PepsiCo’s innovation journey, particularly under Mauro Porcini, who previously led design innovation at 3M, illustrates the power of embedding design thinking into a company’s strategic framework. At PepsiCo, Porcini applied the principles he honed at 3M – empathy, strategy, and rapid prototyping – to create consumer-driven innovations like the Pepsi Spire and Mountain Dew Kickstart. These innovations, combined with a strong focus on sustainability and consumer engagement, have contributed to PepsiCo’s stock price increasing by 29.9% over the past five years. This impressive growth highlights how PepsiCo’s strategic, design-driven approach to innovation is not only creating valuable products but also generating sustainable financial performance, reinforcing that long-term success comes from strategic alignment rather than flashy initiatives.
Cautioning against the cult of the “innovation hero”, Weiss says: “Companies tend to celebrate the innovation heroes, who make things happen despite everything. If you have that in a company, if you need an innovation hero or if you celebrate one, this just shows that there’s no system for innovation in place here.”
Instead, he advocates a more systematic approach: “Innovation should just be a job like marketing. You are not going to celebrate every marketing campaign. You are not going to fight for everything you do; how often and how long will you do that? People will leave frustrated after two years. You should build a system for strategic value contribution.”
“Being slower is better for innovation.”
Our research also uncovered a paradox in the relationship between innovation speed and success. Weiss shares a fascinating insight: “We ran a study of 4,000 medium-sized businesses and saw that while innovation strategy increases innovation performance, it also decreases innovation speed. But innovation speed is again negatively correlated with innovation success. Being slower is better for innovation. So, find the right focus topics and the right unfair advantages. It takes time in the beginning, but you will be more successful.”
This finding challenges the common notion that faster is always better in innovation. It suggests that taking the time to develop a thoughtful strategy and identifying the right focus areas can lead to more successful outcomes in the long run. Not only in fables can the tortoise be faster than the hare.
The path to successful innovation may not always be the most glamorous, but it's the one that leads to sustainable growth and competitive advantage.
The lesson here is clear: effective innovation isn’t about appearances or following trends. It’s about strategic alignment, value creation, and integration with the core business. As Eric van Westbroek, Chief Innovation Officer at PostNL, puts it: “For me, innovation must have a real P&L impact, and that is why I start at the core. But to improve, not to frustrate. Because it is precisely at the core that there should be no exceptions, and everything must run smoothly. That is where the power of scale, brand, and reach lies, and those are the assets.”
While the allure of flashy innovation labs and charismatic leaders can be strong, companies would do well to focus on building a systematic, strategic approach to innovation. This doesn’t mean abandoning creativity or the spirit of entrepreneurship but rather channeling these forces in a way that aligns with business objectives and creates real, sustainable value.
The path to successful innovation may not always be the most glamorous, but it’s the one that leads to sustainable growth and competitive advantage. By busting the myth of flashy innovation and embracing a more strategic, fact-based approach, companies can unlock their true innovative potential.
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