Large Companies: Are You Losing Your Innovation Mojo?

  hipster

Leaders in enterprises, is "disruption" keeping you up at night? If so this post is for you.  Sometimes it feels as though the only companies getting attention these days are startups.  That today's established companies are dinosaurs and, except for a handful of large companies who are consistently succeeding – the rest are increasingly at risk.   If you fear that you are drifting toward the latter category, this blog is for you.   It might require a change in how you look at your people and how you get things, especially product development, done.   I am here to offer encouragement.

Let's start with three fundamental truths: 

  1. First, I hope we can all agree that the primary role of a company is value creation.  Yes, companies need to create products and services.  Yes, they need to engage and 'delight' customers -- even build communities of interest sometimes.   But these are all business model decisions in the context of some value creation system.   He or she who creates and monetizes the most value wins.
  2. Second, barriers to creating value have never been lower.   If your company's value is either created or enhanced "digitally" ( its becoming increasingly difficult to find one that isn't these days), your world has been changing around you. You have to move - fast.
  3. Third, the path to end-users has never been more direct.  Almost everyone has a smartphone.  Almost everyone is a part of LinkedIn, Twitter, Facebook, Instagram - pick one or two.   And they all get the news and information they want from Google.  There is no longer good reason to allow others between you and those for whom you are creating value.

What does all this mean?  Well, for one, small companies -- startups, more specifically -- have some important inherent advantages over big ones. They have not institutionalized business processes made obsolete by today's "401(k) world," as Thomas Friedman calls it.  In his recent NYT opinion piece, Friedman says that, "more people can start stuff, collaborate on stuff, learn stuff, make stuff (and destroy stuff) with more other people than ever before."   As Friedman points out, this has all happened in the last ten years or so, and many of us are not well suited to succeed in these new operating conditions.

Startups don't have to "unlearn" or "work around" the old ways of doing things.  They can pivot quickly on feedback gleaned from real prospects in real purchase situations in real-time.

So, what's a large company to do?

It all begins by remembering that the only reason for your existence is to create value.  In this context, your role as an organization is to efficiently do two things:

1. identify and qualify new value-creation opportunities, and

2. rapidly deploy the business models to monetize them.

How to identify new value creation opportunities

With respect to the first imperative, large companies do have an advantage: a highly attuned sensory network of employees and partners, all focused on today's business, channels, customers and everything we do to create value for them.

Think of them as thousands of iron filings through which a big magnet has been pulled. No other company has a collection quite like yours.  And it got you where you are today.  You just have to employ it more efficiently in the context of identifying and qualifying business opportunities.

This is where 'innovation crowd-sourcing' or 'social problem-solving' comes into play.   Treat these communities as an idea-generating asset - one which can be systematically harvested for new value-creation ideas.  They are smarter and more attuned than you think.  In other words, the time when all the good ideas come from the strategy team at HQ is well behind us.

How to rapidly develop new business models

On the second imperative, big companies need to harness the principles of Lean Startups:

  • Trade in 3-year business plans for Lean Canvases.
  • Cultivate a culture of Testing Hypotheses.
  • Quickly deploy Minimum Viable Product prototypes.
  • Employ the Build=>Measure=>Learn cycle.
  • Encourage fast failure and know how and when to Pivot.

In short, start treating your employees like entrepreneurs.  Give them the tools, training and environment to behave like a part of your value-creation system.  (We can help.)  Remember, the world hasn't changed in favor of more nimble start-ups.  What has changed are the conditions for success. There is nothing keeping you from being a part of that change, right?