4 ways to boost innovation in an uncertain world

The world currently faces unprecedented levels of volatility, uncertainty, complexity and ambiguity. Societies and markets are changing with an accelerating speed. This could be good news: change can be a powerful catalyst, spurring the development of new ideas, products and services. On the other hand, in the face of too much novelty and uncertainty, people tend to cling to the familiar patterns of the past and grow more conservative.

It has become clear that the traditional research and development methods of large companies are no longer the best way to create value in a volatile world. At Mitsubishi Heavy Industries (MHI) Group, we confronted this problem head on two years ago, breaking up our R&D functions and forming hundreds of small, agile research teams, each focusing on one aspect of the 120 ‘megatrends’ we had identified as shaping our customers’ business. Every team was given just three months and a limited budget to test an initial hypothesis. They then had to present their progress, defend themselves internally and in front of clients, revise their premise and try for another three months. This ‘pivot development’ process was repeated until it ended in failure or a workable prototype.

The new approach has far exceeded our expectations: in 24 months we have completed over 1,000 small trials, leading to 39 taskforces and 18 large new projects. For example, we are working on micro data centres that need less power and generate lower emissions; we are turning used batteries from electric vehicles into energy storage reservoirs; and we are trialling a robot valet parking system at a shopping mall near Narita airport. Here are four key ways to encourage innovation:

Partnerships with other companies, government bodies, venture firms and academia can spur on innovation. Each of our pivot development teams is actively seeking external help and this has enabled us to broaden our expertise to the point where we now work on over 700 technologies, including artificial intelligence and materials chemistry that go well beyond its heavy engineering heritage.

Combining the knowledge base of a big company with ideas and expertise from a small one sometimes means that development times can be compressed from years to months. At our Yokohama Hardtech Hub, for example, we are currently backing nine external start-ups and four internal projects. In the US, we have invested in a range of companies testing zero-carbon fuels. We are also working with universities on ‘blue sky’ projects such as seeing if nuclear waste can be made safer.

Large companies often have a wealth of knowledge and experience. At MHI, for instance, we have 33 business areas that make over 500 products based on more than 700 base technologies. The possible combinations are virtually infinite. Since our resources are not, we have to not only pursue agile development but also rigorous selection – a process that involves not only our researchers and engineers but colleagues working on legal matters, intellectual property and much more.

We also need to include our customers of course. MHI, for example, has long been a world leader in CO2 capture technologies. But it was our clients that pushed us to standardize what are traditionally highly tailored installations, leading us to develop a series of modular CO2 capture systems that can be put in place in two days rather than over months.

Advanced technology requires advanced connections and co-operations, not only among business units inside a company, or between a manufacturer, its suppliers and customers; but also between machines and systems. While companies like ours are known primarily for their hardware, we also design and build the secure, fail-safe operating and control systems that run it. Using these to smartly connect machines – will help us to achieve carbon neutrality.

Companies must balance the pursuit of innovation and environmental progress with energy security, economic efficiency and safety. Otherwise, neither our customers nor consumers at large will accept it. We have an opportunity right now to do just that. Those of us managing corporations can use the public trust we have earned to showcase a future that is technologically advanced and allows a higher quality of life while remaining safe and reassuringly familiar.