Innovation Insights for Big Companies

Why Big Companies Can't Innovate – and How They Can

Highlights

  • Behaviors are a critical success factor for creating innovative products or services. They are far more important than skills, actions or assets.
  • Startups exemplify the behaviors that drive successful innovation.
  • Big companies that struggle with innovation should examine and learn behaviors from startups.
Johnny Grow Revenue Growth Consulting

Innovation Insights from Startups for Big Companies

In my prior post I shared why startups succeed and big companies struggle with innovation. It was a candid perspective that big companies can reference for self-diagnosis, which is a prerequisite to a prescription for improvement.

A stark differentiator between startups and incumbents is behaviors. It's a big deal and I'll explain why.

Success Starts with a Mindset

The shortest path to success is to repeat the actions of others who were successful. When it comes to creating innovative solutions, startups demonstrate success. Big companies, not so much.

It's not the startups actions that need to be replicated, it's their behaviors. It's the passion, culture, pace, agility and perseverance; in that order.

Sometimes these behaviors get expressed in different terms. Speed and sense of urgency are critical for sure, but just different terms for pace.

Behaviors are driven by a combination of incentives and pressures. The incentives include things like company liquidation events, personal riches or a desire to change the world. Pressures are often created by constraints and include things like little cash or few available resources. The incentives and pressures are far more influential with startups. So, if you want to replicate their behaviors you may be well advised to imitate some combination of their incentives and pressures.

Stay Goal Focused

Startups relentlessly pursue a unified goal. That goal is born from a customer problem that creates a market opportunity. The challenge is finding a customer problem significant enough to create a high growth business model.

Fortunately, the answer lies with customers. They will tell you the answer if you know how to ask them. That's why techniques such as customer research, market research and white space mapping are effective in identifying, measuring and prioritizing market opportunities.

Innovation Insights and Lessons

Startup goals are not for the shy and nor should they be for larger companies.

Skip the incremental improvements and focus on the big bets that create new revenue streams or business models. Leave the incremental stuff for the core business and use the innovation team to seek out the transformation opportunities that will otherwise stay hidden.

Assemble the Right Team

The right team is everything. If you are allocating staff to the team based on their availability, you are probably allocating the wrong people. The right people will have no availability. As my dad use to say, if you want something done give it to a busy man.

Choosing people with the right skills is important but insufficient. If those people don't also share the passion, culture and tenacity they will not withstand the significant obstacles ahead.

Startups show that flat hierarchies work well. When we create innovation teams we use agile principals, one of which is there are three and only three roles on a team. Also, recognize that flat structures increase the need for a strong leader.

Creative teams cannot be suffocated with the corporate hierarchy, norms, bureaucracy and guard rails. Navigating approval processes or taking days or weeks to make decisions just won't cut it. It's best if the team is separated from the machine. An alternative is an innovation lab, which is a dedicated space inside the company to perform workshops, meetings and activities.

Innovation Team

I heard an interview with Scott Cook, cofounder of Intuit, and a serial big company innovator. He shared some great advice, "If I had to point to one thing that's made the biggest difference at Intuit it was to change how we make decisions, whenever possible, from decision by bureaucracy, decision by PowerPoint, persuasion, position or power, to decision by experiment."

Culture Trumps Everything Else

Just about any successful entrepreneur or startup founder will tell you to put culture above all else.

There are a lot of things the company can do to drive success. But the one thing that will directly impact everything else is culture. It's a precursor and top contributing factor to anything and everything that requires employee effort.

Culture Eats Strategy for Breakfast

The company culture is the implicit shared values, unspoken behaviors and social norms that recognize what is encouraged, discouraged, rewarded and penalized. It's built over time, either by design or happenstance, and guides team member behaviors and actions. You know, those behaviors such as unbridled passion, a relentless sense of urgency and an overwhelming bias for action. The culture views things like risk and uncertainty as challenges to be resolved, not as factors to be feared.

Every company has a culture. Most low performance cultures are a consequence of unplanned actions, unforeseen behaviors and random outcomes. In contrast, high performance cultures are intentional and in a constant state of awareness and improvement.

Here's why big companies should take innovation insights and lessons from startups.

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Here's the Point of These Innovation Insights

Unlike startups, big companies have more people, specialists, skills, assets and money. What they usually don't have – and why they struggle to create breakthrough products or services – are the behaviors. Things like mindset, laser focus, team dynamics and culture. Fortunately, these behaviors can be learned, and startups are an ideal source to learn from.

Here's How We Do It

Johnny Grow has a program to help companies improve their success. We start with innovation research that shows what the top innovators do differently than others. We then follow with the right behaviors and a repeatable innovation methodology. We put it all together in a stepping stone process we call The Innovation Lab.

The Innovation Lab

It's an interesting mix of capabilities. It applies the speed of a startup (think of a startups unrelenting purpose, strong bias for action, unified vision and autonomy), with the tools and scale of an enterprise (think resource capacity, cross functional teams, importance of metrics, and funding).

It's a methodology that is less telling and more showing. Output is measured in visible outcomes – such as observable, demonstratable, workable solutions.

It's an end to end process built on advanced collaborative methods and technologies to improve team performance. And it de-risks the process by achieving measurable business value and transformative change with speed. It moves innovative solutions from potential idea to commercial delivery in short order.