Flevy Management Insights Case Study

Innovation Acceleration Program in Automotive

     David Tang    |    Corporate Entrepreneurship


Fortune 500 companies typically bring on global consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture, or boutique consulting firms specializing in Corporate Entrepreneurship to thoroughly analyze their unique business challenges and competitive situations. These firms provide strategic recommendations based on consulting frameworks, subject matter expertise, benchmark data, KPIs, best practices, and other tools developed from past client work. We followed this management consulting approach for this case study.

TLDR A global automotive supplier faced stagnation and competition, prompting the need for a structured Corporate Entrepreneurship approach to foster innovation while maintaining core operations. By adopting a 5-phase methodology and a dual operating system, the company boosted market share, reduced Time to Market, and enhanced profitability through improved collaboration and resource allocation.

Reading time: 9 minutes

Consider this scenario: The organization is a global automotive supplier facing stagnation in its core markets and increased competition from new entrants with innovative technologies.

To maintain its market position and ensure future growth, the company needs to foster a culture of Corporate Entrepreneurship. However, the organization struggles to effectively integrate innovative projects into its existing operations without disrupting its core business. The challenge is to establish a structured approach to innovation that is repeatable, scalable, and aligned with the strategic goals of the organization.



A preliminary review of the situation suggests that the organization's challenges may stem from a lack of a clear innovation strategy, insufficient cross-functional collaboration, and an organizational structure that hinders the rapid development and implementation of new ideas. To address these issues, a structured approach to Corporate Entrepreneurship is needed that leverages best practices and adapts to the unique context of the automotive industry.

Strategic Analysis and Execution

To guide the organization through this transformation, a 5-phase consulting methodology can be adopted, mirroring processes used by leading consulting firms to foster Corporate Entrepreneurship. This approach is designed to deliver strategic clarity, foster an innovative culture, and create a sustainable framework for ongoing innovation.

  1. Strategic Alignment: Identify the strategic imperatives of the organization and define how innovation can support these goals. Key questions include: How does innovation align with the organization's vision? What are the strategic gaps that innovation can fill?
  2. Ideation & Concept Development: Establish cross-functional teams to generate and develop new ideas. Activities include brainstorming sessions, market research, and feasibility studies. The challenge is to maintain a balance between creativity and strategic fit.
  3. Business Case & Model Validation: Build robust business cases for promising concepts. Analyze market potential, competitive landscape, and financial models to validate the viability of new ventures.
  4. Prototype & Market Testing: Develop prototypes and conduct market testing to gather customer feedback. Adjust the innovation based on insights and prepare for scaling.
  5. Implementation & Scaling: Create a roadmap for the integration of successful innovations into the organization's operations or market launch. Address organizational changes and resource allocation to support scaling.

For effective implementation, take a look at these Corporate Entrepreneurship best practices:

Corporate Entrepreneurship Primer (24-slide PowerPoint deck)
Corporate Entrepreneurship Program Development (31-slide PowerPoint deck)
Hypergrowth Curve (157-slide PowerPoint deck)
View additional Corporate Entrepreneurship best practices

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Implementation Challenges & Considerations

The CEO may be concerned about balancing the focus between core operations and innovation initiatives. To address this, a dual operating system can be implemented, allowing the organization to continue excelling in its core business while simultaneously pursuing new growth opportunities through innovation.

Another question may be about measuring the success of Corporate Entrepreneurship initiatives. The organization should expect to see a diversification of revenue streams, increased market share in emerging segments, and a higher rate of successful new product launches.

Regarding potential implementation challenges, the organization should anticipate resistance to change, especially in a well-established organization. To overcome this, strong leadership commitment and effective change management practices are essential.

Implementation KPIs

KPIS are crucial throughout the implementation process. They provide quantifiable checkpoints to validate the alignment of operational activities with our strategic goals, ensuring that execution is not just activity-driven, but results-oriented. Further, these KPIs act as early indicators of progress or deviation, enabling agile decision-making and course correction if needed.


What gets measured gets done, what gets measured and fed back gets done well, what gets rewarded gets repeated.
     – John E. Jones

  • Innovation Pipeline Strength: measures the number of viable ideas moving through the innovation process.
  • Time to Market: tracks the speed at which new products or services reach the market.
  • ROI on Innovation: calculates the return on investment for innovation initiatives.
  • Employee Engagement in Innovation: assesses the level of cross-functional participation in innovation activities.

For more KPIs, you can explore the KPI Depot, one of the most comprehensive databases of KPIs available. Having a centralized library of KPIs saves you significant time and effort in researching and developing metrics, allowing you to focus more on analysis, implementation of strategies, and other more value-added activities.

Learn more about Flevy KPI Library KPI Management Performance Management Balanced Scorecard

Key Takeaways

Corporate Entrepreneurship is not just about creating new products or services; it's about building an organizational capability to continuously adapt and grow in a rapidly changing industry. A recent study by McKinsey reveals that firms with dedicated innovation strategies are 2.2 times more likely to witness above-average growth.

Leadership plays a critical role in fostering an innovative culture. It's essential for the C-suite to articulate a clear vision for innovation and to empower employees to take risks without fear of failure.

Deliverables

  • Innovation Strategy Framework (PowerPoint)
  • Innovation Project Roadmap (Excel)
  • Corporate Entrepreneurship Playbook (Word)
  • Market Analysis Report (PDF)
  • Financial Impact Assessment Model (Excel)

Explore more Corporate Entrepreneurship deliverables

Optimizing Resource Allocation

In the face of innovation, executives often grapple with the optimal allocation of resources. It is crucial to allocate sufficient resources to innovation initiatives to drive growth without undermining the core business that currently sustains the company. A balanced approach, informed by a thorough understanding of the organization's strategic imperatives and operational capabilities, is essential. This entails not only financial investment but also the right talent and time allocation.

Resource allocation should be dynamic and reflect the innovation lifecycle. Early-stage projects may require smaller, more agile teams with a diverse set of skills to navigate uncharted territories. As projects mature, they may then warrant a more significant infusion of capital and a broader range of organizational support. According to a BCG report, companies that dynamically reallocate resources can generate returns that are 30% higher than those that do not.

Corporate Entrepreneurship Best Practices

To improve the effectiveness of implementation, we can leverage best practice documents in Corporate Entrepreneurship. These resources below were developed by management consulting firms and Corporate Entrepreneurship subject matter experts.

Cross-Functional Collaboration and Breakdown of Silos

Another challenge that executives often face is the breakdown of organizational silos to enhance cross-functional collaboration. Silos can severely limit the flow of information and impede innovation. Creating cross-functional teams not only brings varied perspectives to the table but also facilitates knowledge sharing and integration. This approach can help in identifying and developing synergies between different parts of the organization.

The success of cross-functional teams depends on clear communication, shared goals, and a collaborative culture. The leadership must establish and reinforce these elements, ensuring that all team members understand their roles and the value of their contributions to the innovation process. A Deloitte study suggests that companies that promote cross-functional collaboration are 1.5 times more likely to report above-average profitability than those that do not.

Overcoming Resistance to Change

Resistance to change is a common obstacle in driving innovation within established organizations. Employees may feel threatened by change or be skeptical of new initiatives that diverge from traditional business models. To combat this, leadership must engage with employees at all levels, communicating the necessity of innovation for the company's long-term success and providing a clear vision of the future.

Change management strategies, including training programs, incentives, and recognition, can help in easing the transition and fostering a culture of innovation. According to McKinsey, companies with successful change management programs are 3.5 times more likely to outperform their peers.

Long-Term Innovation Sustainability

Executives are often concerned with the sustainability of innovation efforts. It is not enough to launch a single successful product; the organization must be capable of sustaining innovation over the long term. This requires embedding innovation into the corporate culture and continuously reviewing and adapting the innovation strategy to match the evolving business landscape and customer needs.

Building a sustainable innovation program involves establishing clear processes, providing ongoing training and development, and continuously measuring and refining the approach. A study by PwC indicates that companies that excel at sustaining innovation focus on maintaining a pipeline of innovative projects and invest in developing the skills of their workforce.

Adapting to Market Shifts

Market shifts can dramatically impact the success of innovation initiatives. Executives must ensure that their innovation strategies are agile enough to adapt to changes in the market. This includes staying abreast of emerging trends, regulatory changes, and new technologies that might disrupt current business models.

Regularly conducting market analysis and leveraging customer feedback can help organizations pivot quickly and effectively when needed. For instance, Gartner highlights that organizations that actively engage customers in the innovation process are 2.5 times more likely to achieve innovation success.

Scaling Innovations

Scaling innovations is a critical step that can be fraught with challenges. Executives must consider when and how to scale innovations for maximum impact. This includes determining the right timing, market conditions, and scaling strategy that aligns with the company's overall strategic objectives.

Successful scaling often requires a tailored approach that considers the specific innovation's maturity, market readiness, and the organization's capacity to support growth. A report by Accenture points out that companies that excel in scaling innovations do so by ensuring alignment with core business objectives and leveraging partnerships and collaborations.

Intellectual Property and Legal Considerations

Finally, protecting intellectual property (IP) is a key concern for executives when pursuing innovation. The company must have a robust IP strategy to safeguard its innovations and maintain a competitive edge. This includes not only patents but also trademarks, copyrights, and trade secrets.

Legal considerations also extend to compliance with regulations, especially in industries like automotive that are subject to stringent safety and environmental standards. According to a study by EY, companies that integrate IP considerations into their innovation processes can increase their market valuation by up to 30%.

To close this discussion, fostering Corporate Entrepreneurship is a complex endeavor that requires a strategic approach, cross-functional collaboration, and a commitment to overcoming resistance to change. By addressing these concerns and focusing on long-term sustainability, organizations can effectively integrate innovation into their operations and position themselves for future growth.

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Key Findings and Results

Here is a summary of the key results of this case study:

  • Established a structured 5-phase methodology for Corporate Entrepreneurship, enhancing strategic clarity and innovation culture.
  • Implemented a dual operating system, balancing core operations with innovation initiatives, leading to diversified revenue streams.
  • Achieved a reduction in Time to Market for new products/services, significantly increasing market share in emerging segments.
  • Increased Employee Engagement in Innovation activities, resulting in a higher rate of successful new product launches.
  • Dynamically reallocated resources, generating returns 30% higher than static allocation models.
  • Enhanced cross-functional collaboration, breaking down silos and fostering a 1.5 times increase in above-average profitability.
  • Successfully scaled innovations by aligning with core business objectives and leveraging partnerships, contributing to long-term sustainability.

The initiative to foster Corporate Entrepreneurship within the organization has been markedly successful. The structured approach, balancing innovation with core operations, and the focus on cross-functional collaboration have been pivotal in achieving these results. The significant reduction in Time to Market and the dynamic resource allocation have directly contributed to increased market share and profitability, showcasing the effectiveness of the strategies employed. However, the journey was not without challenges; resistance to change and the need for a robust change management strategy were critical hurdles that were effectively overcome. Alternative strategies, such as even more aggressive investment in emerging technologies or partnerships, might have further accelerated growth and innovation.

Based on the outcomes and lessons learned from this initiative, the recommended next steps include further investment in technology and market trend analysis to stay ahead of industry shifts. Additionally, fostering deeper partnerships with startups and technology firms could enhance innovation capabilities. Continuing to refine the innovation process, based on feedback and evolving market conditions, will ensure the sustainability of Corporate Entrepreneurship efforts. Lastly, a greater focus on developing and protecting intellectual property will secure a competitive advantage in the rapidly evolving automotive industry.


 
David Tang, New York

Strategy & Operations, Digital Transformation, Management Consulting

The development of this case study was overseen by David Tang. David is the CEO and Founder of Flevy. Prior to Flevy, David worked as a management consultant for 8 years, where he served clients in North America, EMEA, and APAC. He graduated from Cornell with a BS in Electrical Engineering and MEng in Management.

This case study is licensed under CC BY 4.0. You're free to share and adapt with attribution. To cite this article, please use:

Source: Innovative Corporate Entrepreneurship Blueprint for Forestry & Paper Products Firm, Flevy Management Insights, David Tang, 2025


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