In a world where higher interest rates and economic turbulence are the new normal, top companies are rethinking their growth strategies. In this episode, I had the pleasure of sitting down with Nicolas Grilly to explore how industrial companies can set up their innovation efforts for success and avoid common pitfalls to ensure those efforts pay off.

Nicolas is currently the CTO at the global IP firm Zacco. Until recently, he was VP of Group Innovation at Husqvarna Group, a Stockholm-based global leader in outdoor power products—think chainsaws, robotic lawn mowers, and garden watering gear, generating roughly USD 4.8 billion annually. Before that, Nicolas was the Head of Digitalisation at Northvolt Systems, Europe’s fastest-growing battery producer, where he led the digital transformation of their battery systems and factories.

Balancing innovation: strategies for success in a complex business landscape

In today’s fast-paced business environment, companies face the challenge of balancing the need for continuous innovation with the demands of day-to-day operations. Our chat shone a light on the delicate dance between making small, incremental improvements and chasing big, transformative projects.

One of the key takeaways? Companies often fall into the trap of placing small bets—those low-risk, incremental innovations that, while safe, rarely make a dent in the bottom line. As Nicolas put it, “The problem with making small bets is they don’t matter regardless of the outcome.” Sure, this cautious approach might shield you from potential losses, but it also means missing out on substantial gains. If companies really want to drive growth, they need to shift from just minimizing risks to maximizing opportunities.

Structuring innovation for success

We also dug into the best ways to structure innovation teams for maximum impact. Should innovation projects stay close to the core business, or should they be spun off entirely? It turns out, the answer depends on the type of innovation you’re pursuing.

For incremental innovations or those closely linked to existing products, keeping teams close to the core business can foster collaboration and ensure everyone’s on the same page. But when it comes to more radical innovations—those that bring significant changes in technology, business models, or target markets—keeping them separate is often key. As Nicolas emphasized, “If it’s a radical change, it should absolutely be separated.” This kind of separation gives these projects the breathing room they need to develop without being boxed in by the existing business structure.

The critical question: “Why us?”

Another crucial point we discussed was the importance of strong strategic alignment between innovation projects and a company’s core strengths. It’s all about constantly asking, “Why us?” Why should our company be the one to succeed with this innovation? If the answer isn’t clear, it might be time to rethink the project.

We talked about a corporate startup that, despite its potential, ultimately failed because the connection between the new venture and the company’s existing strengths was too weak. As Nicolas noted, “It’s good to have some kind of connection between that new venture and an existing strength of the business.” Without that link, even the most promising innovations can struggle to gain traction.

Sustaining innovation in challenging times

With many companies scaling back their innovation labs and focusing on core operations, keeping innovation alive can be tough. Our conversation highlighted how innovation often goes through cycles—companies swing between investing in transformative projects and retreating to safer, incremental innovations depending on the economic climate.

However, as we agreed, long-term success hinges on a commitment to innovation, even when the going gets tough. Nicolas summed it up perfectly: “There are some shifts that you cannot change that will happen no matter what you do.” Companies need to stay alert and keep adapting their strategies to ensure they’re not left behind as the world continues to evolve.

The roadmap to long-term innovation success

The insights from this podcast offer a valuable guide for companies navigating the complexities of corporate innovation. By balancing small bets with big ambitions, structuring innovation efforts wisely, and ensuring strong strategic alignment, businesses can set themselves up for long-term success. And in a world where external forces are constantly shifting, maintaining a commitment to innovation—especially during challenging times—will be essential to staying ahead of the curve.