Can you innovate in a large organization?

The business junk yard is filled with scrap from companies that failed to innovate. Think of names like Kodak, Nokia, Blockbuster, Blackberry, Toys R Us & Tower Records. Back in the day, these were companies that I couldn’t see the world without. In the cut throat business environment of today the need to innovate and be nimble has become that much more important. Both large and small companies alike need to think on their feet and be ready to pivot as the wind shifts.

For small firms the challenge is not nimbleness, but resourcefulness. And for large firms it’s the opposite. They have a lot of resources but moving fast is difficult.

Innovative ideas can come from anywhere, however the right environment is needed for innovation to spawn.

The Formula

So how can companies like Apple, Amazon & Tesla innovate so consistently? There seems to be a basic formula they all have which you could apply within your organization large or small. The four basic steps are as follows:

1. Vision
2. Culture & Environment
3. Experimentation
4. Execution

Vision

The companies listed above all have a clear vision. Without even being a customer or having anything to with the firm you know what they stand for.

Apple was born to challenge the status quo, they happen to do it by building beautiful computers, phones and other electronics. Amazon wants you to get what you want when you want it. Finally, Elon Musk wants humanity to survive in the long term and so everything he does is in congruence with that vision. Tesla’s goal was spearhead the reduction in fossil fuel dependence. SolarCity’s goal is to help individuals replace their reliance on coal-based power plants. Space X is more of a long term strategy; it’s basically a failover for humanity in case we mess up this world too bad. These are the reasons why these companies exist

The point is they all have a clear vision & mission that these companies are chasing; sometimes at the expense of quarterly / yearly revenues. Tesla has been close to bankruptcy a few times even after Model 3’s success. Apple launched the infamous Newton and Apple Maps and I’m sure you already forgot about Amazon Fire Phone. But these companies stick to their guns. They stick with their vision and despite the many failures along they way, all their successful innovations are a manifestation of those very clear visions.

In fact, when companies deviate from the reason they exist and start to focus on arbitrary numbers like revenue and growth etc they start to flounder. This happened with Apple when Jobs left in 85, and after Michael Dell left Dell, with Walmart after Sam Walton died, Howard Schultz and Starbucks, and the list goes on. These visionaries kept a clear vision front and center and when that vision became fuzzy, the problems began.

Culture and Environment

Second thing these firms do is build a culture and environment that is ripe for innovation to naturally occur. This culture is led by the vision which is the north star but defined by the people that these firms hire. They hire the people based on their beliefs and not just their skill set or resumes. Hiring employees who are already all-in on the vision will intrinsically be motivated to reach for that vision.

These companies also build a culture of collaboration without judgement. Organizational leaders need to create a safe environment for the employees to bring their ideas forward without judgement. This is very important, because if the employees are scared that they will be reprimanded they will not bring up innovative, but risky, ideas. A Harvard research has shown that only “25% of job success are related to IQ. While 75% is predicted by optimism levels, social support & the ability to see stress as a challenge instead of a threat.”

These companies also allow and encourage failure. “Move fast and break things” is the now famous mantra at Facebook which Mark Zuckerberg championed. If failure is an option then innovation will be the natural result.

Finally, they don’t let innovation just happen, they proactively seek it within the organization. Google famously has “20% time” where they require every employee to spend 20% of their time to work on any project they want. Atlassian also uses 20% time like google and they also have Ship-It days which are basically 24 hour hack-a-thons.

Experimentation

This is when the rubber starts to meet the road. Leaders should encourage Experimentation and provide the tools necessary for such experimentation to everyone. The tool set includes basic training on how to ideate, research, prototype and refine.

Another very important factor is buy-in and commitment from stakeholders. They should be open to ideas and to abide by the results of the experiment.

The renowned design firm IDEO uses low-tech tests to identify winning ideas. These can be as simple as creating a paper prototype of an app to test user experience.

Basic framework for innovative thinking:
Define Problems -> Research -> Ideate -> Prototype -> Refine -> Implement

Execution

Once experiments are run against a set of problems and some solutions have presented themselves, then it’s time for execution. This is when product teams can get involved to work on go-to-market strategies.

Putting it to work

So now that we understand what it takes, how do we implement this within our organizations? Here are some suggestions:

1. Communicate the vision. Communicate and re-affirm the vision by articulating why you exist. Why do you all come to work everyday. What is the north star.
   
2. Define the innovation buckets. Determine gaps between growth goals and current operations. Do you want to extend today’s business through enhancements of existing offerings, or do you want to reach new customers through new markets and new products or services?
   
3. Spread the innovation bug. Recruit a couple of people from different parts of your organization that truly understands your vision and believes in it. Give these individuals basic training on the innovation framework and turn them into innovation ambassadors. Finally, give them the autonomy to find problems in the front line and encourage employees to submit their ideas.
   
4. Zero in on a few strategic opportunities. Go through the ideas mined across the teams and identify key opportunities that present themselves.
   
5. Form small team to develop innovations. Form a small but capable team to further develop the ideas brought forward. Let the team run lean experiments against the ideas and find the ones that show the most promise. This should include lots of customer interviews to validate the ideas.
   
6. Act like a VC. Once a couple of ideas have been vetted it’s time to take them to market.
   
7. Refine & Reflect & Reward.You should reflect on how the innovation process be improved. Refine the areas that need some finesse and finally don’t forget to reward the individuals involved throughout the innovation process.