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11 Ways Big Companies Undermine Innovation
October 22, 2013 Editor 0
In centuries past, explorers searched for the legendary city of El Dorado, where everything was made of gold. Today, at large organizations, innovation is the new El Dorado. Consultants and keynote speakers all purport to provide maps to it. Chief executives and business unit leaders weave the word innovation into their PowerPoints, hoping it will magically yield better product ideas, or miraculous improvements to existing processes.
I’m not (only) mocking the cult of innovation. Something very real is happening here: as it becomes cheaper and easier for startups to upend existing businesses with new offerings, big companies are realizing that they can’t continue to rely on their time-worn methods for cultivating and developing new products, and lumbering into new markets.
But in pursuing new strategies like open innovation, hackathons, corporate venture capital investing, or the “lean startup” methodology, the hulking mass of corporate culture and structure can get in the way. It’s like heading to the jungle to hunt for El Dorado in an overstuffed Winnebago.
I’ve spoken with more than twenty innovation-oriented executives over the past three months, at multi-national giants like Intel, Whirlpool, General Mills, and Publicis Groupe, always opening the conversation with the same question: How do companies shoot themselves in the foot when it comes to innovation? I also interviewed entrepreneurs who have been acquired into big companies. These were the 11 answers I heard most often. All of them describe various kinds of corporate underbrush that need to be hacked through before real innovation can happen.
- No definition or metrics for what success means. “One of the typical flaws I’ve seen in innovation programs is starting without a clear view of strategy: What is it supposed to do? What do you want out of it?” asks Moises Norena, global director of innovation at Whirlpool.
- It must be instantly apparent and quantifiably demonstrable how every new idea has billion-dollar potential, or 18-month return-on-investment. Ideas don’t move forward without scads of spreadsheets modeling every aspect of cost and benefit. “It’s a sign that things aren’t working when there’s a lot of deferring commitment, asking for more analysis and data,” says James Euchner, vice president of global innovation at Goodyear.
- Seeking more influence and power, the company’s Chief Information Officer has altered his title, becoming Chief Innovation Officer. Sorry, but innovation doesn’t tend to radiate from the corporate data center.
- The innovation team is considered “the CEO’s thing,” disconnected from business units and their most pressing concerns. “You need to embrace lots of people, so they feel they are part of the story,” says Rishad Tobaccowala, chief strategy and innovation officer at the digital ad agency VivaKi, part of the Publicis Groupe.
- Innovation is expected to happen in cubicles and around conference tables. “I can’t tell you how many companies I know that have innovation programs, but no space to foster creativity,” says Julia Austin, formerly VP of innovation at the tech company VMware. “Large spaces with whiteboards and comfy places to sit so people can brainstorm ideas are critical.”
- Ideas don’t gain momentum if they’re seen as potentially competing with existing products or services, or threatening today’s business relationships.
- The paradox of proximity. If innovation groups are connected too closely to business units, they are typically asked to collaborate on near-term projects that can impact revenue quickly. But if they off on their own working on long-term, truly disruptive projects, it can be hard to get participation from business units when they need it.
- Fear of releasing “alpha” or test versions of new products and services to get early market feedback. Entrepreneur David Rose calls the alternative approach “Let a thousand flowers bloom, then mow.”
- Every good idea is expected to spring from the hermetically-sealed world of the corporation. Those from outsiders are consistently undercut. “A decade ago, our lab was the world,” says Peter Erickson, senior vice president of innovation at General Mills. “Today, the world is our lab.”
- Company culture doesn’t tolerate — or understand how to learn from — failure. Staffers who are linked to failed projects see their career prospects dim.
- Lack of commitment. Innovation initiatives get started, but then are de-prioritized as strategies shift — or executives leave. Corporate venture capital programs especially have the tendency to come and go when enthusiasm for startups abruptly ends. Erickson at General Mills says, “Innovation is not a short game. It’s the art of playing the long game.”
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