Are we there yet? — Why corporations are taking so long to actually innovate?
How far are we from having true ambidextrous corporations as the norm? When is corporate innovation, in the 2020 sense of it, finally going to become mainstream? Companies that have the ability to both focus on their core business and yet, still look forward and truly invest in new, disruptive (and, yes, quite uncertain) horizons of innovation? Why is it taking so long? Because more and more I feel that companies are napping at their posts and letting startups come in and take over.
We all know the famous cases of empires that got buried by innovative companies, like Blockbuster and Netflix, Kodak and digital cameras, the entire music industry and Apple. But it seems like we have a short memory, or it simply is that we are too afraid to believe in William Gibson’s quote: “The future is already here, it’s just not very evenly distributed.” But it is getting evenly distributed, my friends. And very fast.
Just recently we suffered the loss of Clayton Christensen, the incredible Harvard Professor and author of the worldwide famous “The Innovator’s Dilemma”. His book was published in 1997. 1997! Twenty-three years ago! By that time I was fifteen and trying to innovate on how to cure my acne and talk to girls in high school without being a complete nerd (the latter quite unsuccessfully till this day, I might add). But since then, I’ve worked for over 10 years in the stock market, lived in 4 different countries and built 4 different startups. A pretty good improvement. But don’t take me as a comparison.
Probably the most read book of the startup generation, “The Lean Startup” by author Eric Ries, was published in 2011. Fourteen years after “The Innovator’s Dilemma” and just mere nine years ago. And how many companies were born since and, using his methodology, have become monsters (or better yet, unicorns), and are coming, hell-bent, to grab the seat as industry leaders? If they haven’t already. A few examples are Robinhood (stock trading), Juul (vaporizers), Impossible Foods (plant-based meat), Warby Parker (eyeglasses), Lyft (ride hailing), Lemonade (insurance). Not to mention entirely new industries such as cannabis, that will eventually take on consumer goods giants by the horns. These are just a small number of companies that didn’t exist nine years ago. And there are countless more.
Tesla has just announced a market value of over 100 billion US dollars, overthrowing Volkswagen, and becoming more valuable than Ford and GM combined. And I heard sooo many times people telling me that, when legacy motor companies decide to put electric vehicles into the market, Tesla will not stand a chance, given their knowledge and years of experience in the industry. There are just two things they didn’t take into consideration. The first is that, innovation is not done by digitizing analogue solutions — as what seems to be the general “faster horses” mindset, and that Henry Ford famously warned us about (quite ironic given the picture above).
And the second is one little concept called blitzscaling, coined by Reid Hoffman, LinkedIn’s very own founder, in his homonymous book. And don’t get me wrong, I am a great believer that corporations can be a massive instrument for change in human evolution, that is one of the reasons why I decided to switch careers from startup entrepreneur to corporate innovator (and because I saw you could use the help). But please… if C-suites and corporate innovators do not wake up and step up on their innovation game, they will inevitably share the same destination of the Kodaks of the past.
"History doesn’t repeat itself, but it often rhymes.”
Okay, that’s out of my system. Phew. Now, what do I mean by “truly invest in new, disruptive horizons of innovation”?
As Steve Galveski writes in his article Why Big Companies Choose Not To Innovate (referring to Christensen as well), companies have a “short-termism” that plagues them based on their growth targets and employee incentives, that are evaluated on an annual basis. Why risk messing the quarterly results and our yearly bonuses, if we can just do business as usual? This has created employees that are very well trained to know what’s good for the company and build a structured career within it.
The problem with this modus operandi is that, not only it prevents corporations to rival head to head with these faster, hungrier and much more innovative companies, but it is also making them deal with the biggest transformational change the corporate workforce has ever seen: these “entitled” millennials that won’t stay in the same company for more than 3 years in a row (but that’s a topic for a whole new article).
So, corporate innovators, my honest question (and a few more below) as a fairly new member of this ecosystem is: why is this not moving forward at the speed that it should be? Because the cases are all there, and so are the solutions, at least from where I’m standing. We just need to actually want to apply them. We have seen venture capital investors succeed, time and time again, looking at a minimum 5–7 year timeframe for their invested companies. We have seen Apple disrupt an entire industry with the iPod and, less than six years later (6!), purposely cannibalize it with the iPhone — and become the most valuable company in the world.
As an other example, a report from Capgemini states that 80–90% of the innovation labs fail. This has already been called by Steve Blank an “innovation theater” — when Lean Startup tools and concepts are being applied, along with post-its and bean bags, without really understanding how they work. But yet, it keeps being done. Why? Aren’t there enough experienced entrepreneurs in the market to help you build these ventures? Bring them aboard. These will be the most resilient and forward thinking employees you’ll ever have.
Why aren’t internal silos being reduced, allowing cross-functional teams to be built, to leverage the company’s very own assets and resources to create these disruptive ventures? Ventures made by the very hands that are seeing the real customer problems everyday and, most likely, know exactly how to best use the company’s strengths to solve them. Why isn’t there an environment that allows safe experimentation and ideation to flourish already in place?
“We put up a system that makes it easy, and fast, and cheap, for them [employees] to run an experiment. Nothing signals more strongly to an organization that you want their ideas.”
Scott Cook, Cofounder and Chairman of Intuit
On the McKinsey Interview with the heads of Intuit, Idealab and Autodesk: “How big companies can innovate”.
Also, why are open innovation and corporate acceleration programs being promoted, with startups being scouted sometimes from the most innovative hubs in the world like San Francisco and Tel Aviv, without previously changing simple internal process like, for example, streamlining legal and procurement departments to roll out proof of concepts faster for these startups? Why is there not a buffer in place between the corporate and the startups, that will help them operate at a scale and maturity that the corporation is used to? Not having these systems not only creates huge frustration for the corporation, but also leverages the startups in a way that can be very cruel. Most startups do not have the time and financial runway to endure corporate processes and procedures, and they will probably bet all their chips to serve this massive client that can make the difference to put them in the market. But it can also break them to the ground. Simply because internal processes were not thought through well enough beforehand. And trust me, I’ve been in this situation myself.
We all know that innovation must start from a cultural and, as importantly, a normative and processual structure. Steve Blank has also showed us in his article from 2017 How to Remove the Roadblocks to Corporate Innovation — When Theory Meets Practice: Most impediments that innovation teams face are pretty tactical, such as HR policies that prevent recruiting employees other than by seniority; legal policies that don’t allow minimal viable products because of openness to lawsuits; sales that shut out innovation groups from doing any kind of customer discovery with current or potential clients; finance who measures a new venture’s success by first year’s revenue and gross margin; purchase who insists teams use existing vendors that take weeks to deliver simple purchases that could’ve been delivered overnight by Amazon. The list goes on and on, but for the sake of a tl;dr feeling, I will keep it also for another article.
And how do you decide which is better? An open innovation approach, building ventures internally or a combination of both? Who makes these decisions? Is a clear study of the market, the opportunities to be explored and an innovation strategy set in place? Why is it not made in a more lean and agile way? No wonder people can’t stand ideation hackathons anymore.
And don’t get me wrong, I am very aware that there are amazing ambidextrous companies out there, doing a marvelous work in innovation, disrupting from product lines to entire corporate cultures, that we can learn from. Companies such as Telstra, IAG, and IBM, but these are the exception that prove the rule. We must think about how more of these cases can be evidenced to become a source of inspiration, and even mirrored and replicated.
For all the companies out there that wrote Innovation as one of your top priorities for 2020, I congratulate you. But I also urge you to start looking at it from a very different perspective if you haven’t done it yet. Different then just “we need to invest in AI”, or blockchain or whatever the buzzword of the moment is. Remember that, in order for this to work, this change must be cultural, it must come from within. It must be about processes and mindset before anything else. The good news is that it’s doable. And it can start with just a few, small, but very impactful steps that will get your corporation on the drivers seat again and set the course for Tomorrowland.
I have created a free quiz that measures how innovative a company is in regards to some of the aspects mentioned above. I call it the Innovate-o-Meter (yes, the nerd in me still lives). Feel free to try it and please send me any feedbacks and suggestions you might have to improve it. This is a “pocket version” of a longer research that I am conducting to create the 2020 Global Corporate Innovation Report, that will rank and showcase the most innovative companies in the world, to inspire a more effective growth towards corporate innovation. To participate all you need to do is answer the Innovate-o-Meter and we’ll take it from there.
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