07.10.18

Building a startup mentality at corporate

Making room for innovation at corporate

Companies who carve out investment for focused innovation programs fear disruption or are already experiencing disruption in their current business. This disruption comes in many different forms, but often includes a mix of the following:

New market entrants (e.g. startups)
New product/service substitutes
New business models
Weakening of the brand as a driver of purchase
Loss of share or revenue in established markets

This happens regardless of the company’s near term, financial focus. The innovation program is a reflex action to ensure the survival of the company and an indication of the company’s interest in ‘getting ahead of the learning curve.’ No one likes surprises.

The reason why it is so difficult for existing firms to capitalize on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.
Clayton Christensen_{author of The Innovator’s Dilemma}

Large firms have to address hurdles in a few key areas to leverage the impulses that drive innovation. These are the areas for initial focus in order to ‘think like a startup’ at Corporate:

Invest in innovation – Put your money where your mouth is
Adopt a user-centered mindset – Humility + empathy + user research
Building a team of innovators – Move from talk to action
- Engaging the internal network of innovators and change agents
- Building a network of external partners
Start learning – Experiment – Measure – Learn – Repeat

Invest in innovation

Put your money where your mouth is

Good ideas aren’t exclusive to startups. Large firms are in a position to learn more about their customers and to deliver more, but often stop asking how to better solve customer problems. They are organized and incentivized to execute on known solutions and not to push the envelope on solving more of the customer’s Jobs To Be Done (JTBD).

While fear is a strong motivator to start an innovation program, the goal should be to develop a new muscle and set of skills to allow a company to develop, test and launch new ideas to the market – that may be disruptive to the current business. Innovation is sometimes stymied by the existing business protecting current product lines and market share.

As innovation may sometimes launch products that cannibalize the existing business, there needs to be an autonomous group that is carved out with the explicit permission to disrupt the existing business. New products, new services, new business models all need room for experimentation. This may not always be popular with existing business units and divisions, but it is key to rapid learning about the marketplace with its threats and opportunities.

Corporate alignment and long-term investment are needed to send a signal that innovation isn’t a fad. Technological change is accelerating and innovation is key for survival.

Adopt a user-centered mindset

Humility + empathy + user research

With corporate aligned to support innovation, how do we begin changing the culture to support it? This is a change that needs to touch the entire company.

“Adopting a posture of humility and curiosity is how you develop empathy for your customer’s needs and desires, and when you’re in constant contact with the people you’re designing for, it creates a productive feedback loop.” Tim Brown, designthinking.ideo.com.

Humility is needed because it translates into an openness to discovery or re-discovery around unmet needs and Jobs to Be Done. The trap for most companies lies in the arrogance when it comes to understanding the customers of today and tomorrow. Many companies stop asking user research questions because they believe that they already know all the answers. Empathy takes work, and user research is not the same as marketing research.

Communicating the importance of a user-centered mindset gives employees license and permission to establish or re-establish empathy with current and future customers. The user-centered mindset is necessary for focusing the efforts of the company’s innovation network.

Building a team of innovators

Move from talk to action

Engage the internal network

After laying the necessary groundwork, the company can work to identify the innovators and change agents within. The previous steps give permission to employees to think differently about meeting customer needs. In some companies that translates into an ability to challenge the status quo.

One option to accelerate this creation of an innovators network is to create a shared internal platform (albeit an actual internal social network) where innovators and change agents can go to compare notes and learn. These can be built by leveraging internal innovation tools or enterprise social networks to establish these connections across business units, divisions and time zones.

These networks need to be seeded with internal content from participants (e.g. projects, interests, technologies, etc.) and with external content from thought leaders (inside and outside of your industry). It is also possible to support these internal innovators by helping them to connect to the relevant thought leaders in the industry. It is important that the company’s leading innovation thinkers be exposed to the change that can impact the company.

An internal social network around innovation topics is required to make connections across large, matrixed, global organizations. Building out this innovation network is crucial for identifying the employees and skill sets for ongoing innovations efforts.

Build an external network

Innovation leadership will need to tap external resources to round out the innovation network. This is aligned with the concept of ‘Open Innovation’ which asserts that ‘combining internal and external ideas as well as internal and external paths to market to advance the development of new technologies.’ (see chart below)

Closed Innovation Principles	Open Innovation Principles
The smart people in the field work for us.	Not all the smart people work for us, so we must find and tap into the knowledge and expertise of bright individuals outside our company.
To profit from R&D, we must discover it, develop it, and ship it ourselves.	External R&D can create significant value; internal R&D is needed to claim some portion of that value.
If we discover it ourselves, we will get it to market first.	We don’t have to originate the research to profit from it.
The company that gets an innovation to the market first will win.	Building a better business model is better than getting to the market first.
If we create the most and the best ideas in the industry, we will win.	If we make the best use of internal and external ideas, we will win.
We should control our intellectual property (IP) so that our competitors don’t profit from our ideas.	We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.

REFERENCE: CHESBROUGH, H. (2003), “OPEN INNOVATION: THE NEW IMPERATIVE FOR CREATING AND PROFITING FROM TECHNOLOGY”, HARVARD BUSINESS SCHOOL PRESS.

Startups have to embrace open innovation in order to facilitate access to expertise along with increased speed to market. These two things are usually necessary to drive the disruption.

Take the example of a new Atlanta startup company called BoxLock, Inc., maker of an IoT product by the same name that aims to secure package deliveries on your front porch.

The founder of BoxLock was able to contract and collaborate with multiple expert teams (design, mobile development, firmware development, mechanical engineering, etc.) while still asserting product ownership and driving the definition of the product. The focus on collaboration and a shared vision has supported short, iterative learning cycles to launch this innovative new product. The product continues to evolve and the team continues to learn.

Start learning

Experiment – Measure – Learn – Repeat

Innovation teams comprised of employees and internal partners must be enabled to run experiments. The internal team members should be tasked with ensuring empathy with clients and knowledge of the business context. External partners should bring user experience and technical chops as well as a unique view on the problem based on previous experience. These teams need permission to challenge the company’s status quo when it comes to products, categories, brands, and business models.

Establish the parameters for innovation and then align your new network of innovators to the challenge of the innovation program. They need to be enabled to follow these four steps: Run Experiments, Measure the Results, Learn (or Pivot!), and then Repeat.