It’s unreasonable to ask well-established enterprises to move at the same pace of startups. The two types of organization are inherently different—like apples and oranges, to use a-far-too-common (but very relevant) analogy.
As entrepreneurship professor and innovation leader Steve Blank writes for HBR: “You can’t just tell a company ‘be more like a startup’.” Here’s why, he says: “Startups can do anything.”
Big companies, on the other hand, are restricted to corporate compliance restrictors and must often pursue conservative paths. From shareholders to c-suite leaders, there are too make stakeholders involved. Companies need to preserve their core businesses with an element of stability and predictability.
That’s why corporate innovation efforts often run more smoothly when operations are isolated from core business units. What c-suite leaders have found is that it’s easier to stage investments and control for risks when experimental and core business operations have more of a line between each other. That’s why companies are creating innovation labs, building accelerators, and building partnerships with startups outside of their core business operations.
What innovation teams are finding is that just like startups, corporations can do anything too. After all, what startup has the resources, technology, and people power of a billion-dollar-plus global company? Sandboxes of innovation help ignite R&D programs.
Eventually, however, experimental and core business practices need to converge. If a product looks like it’s going to be profitable, a more integrated business will be essential sooner rather than later.
The question is how to make that happen. Here’s a blueprint:
Step 1: Ensure that Multiple Teams Join Forces in Establishing Progress Benchmarks
If a company is making changes to its core business operations, multiple stakeholders will need to be involved. But decision-making—and progress-update sharing—gets challenging when large organizations bring multiple teams on board for a united front.
As a recent report in Innovation Leader puts it: “Innovation councils wind up being the size of a marching band, rather than the Beatles. Representatives from every function and business unit get a seat. With more members, focus dissipates and the meetings get tougher to schedule. There are more people who can potentially feel like a piece of their business might be cannibalized — or their influence diminished — if a new idea succeeds.”
What ends up happening is that it’s easier for team leads to say “no” instead of “yes” to a project that will inevitably require extra work.
That’s why teams need to work together to establish success milestones, early on. Cross-functional leaders should join discussions to establish goals, early. Companies like Johnson & Johnson, ExxonMobil, Thomson Reuters, Kennametal, Brown Brothers Harriman are implementing corporate governance models to strengthen ties between innovation sandboxes and core business units.
In a Q2 2017 survey from Innovation Leader, 72% of respondents reported that innovation sandboxes were overseen by either multiple executives or an appointed committee. This group should have both a long-term and short-term view of a company’s corporate innovation goals, facilitating integration with core business units.
Step 2: Reinforce Business Results
The best way to reinforce business results is to ask questions that tie business activity back to ROI. Corporate innovation is a moving target. CEB Global encourages corporate innovation teams and core operations groups to find alignment around the following business questions:
- Which of our business objectives will this to help us achieve?
- What specific behavior or behaviors do you expect from recipients / readers as a result of this communication?
- What specific progress will we see towards that objective if this communication project or program is successful?
"Asking these three questions directly connected what we were doing to business results, and took the concept of informative (rather than behavior-changing) communications off the table,” explains CEB. “It also guaranteed that every communication we developed had a clear call to action. Finally, asking these questions assured strategic alignment. We could identify and report on metrics (behaviors we could observe) that linked strategy in the C-suite to execution across the organization.”
Organizations should sync up with their corporate innovation teams quarterly to discuss these questions. This level of alignment will help ensure that all experimental projects bring value to the core business.
Even if an experiment fails, the learnings that your company derives will be valuable.
Step 3: Take a Systematic View
Gary Hemet, professor at London Business School and Nancy Tenant, vice president of innovation and margin realization for Whirlpool Corporation, explain in an HBR article that cultures of innovation fall flat due to a lack of a system. Innovation sandboxes and core business units are operating in completely different worlds.
“Typically, when we’re invited into an organization to review its innovation efforts, we find a jumble of tools and methods that are not only incomplete, but also poorly integrated,” the duo explains.
“Individually, each piece makes sense—the crowdsourced idea contest, the internal venture fund, the customer sentiment analysis, the stage-gate product development process—but the whole is less than the parts. It’s as if a dozen different executives wandered into an auto parts store and each came back with something they thought would be useful in constructing a car.”
A company’s disparate R&D functions need to converge into a single, unified operation.
“The entire top team has to be on board,” write Tenant and Hemet. “Beyond this, the re-engineering efforts need a strong C-suite leader to be responsible for the design and construction of the company’s innovation engine.”
Innovation is a process on a continuum--not an isolated endeavor.
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