Companies are continually faced with challenges to grow faster to stay ahead of competition and meet investor expectations. Books, leadership experts, and business journals are always pointing to new mechanisms for driving innovation speed, and processes like Agile and Lean have become increasingly prevalent and popular as a result.
However, even when these approaches are adopted, a range of issues constrain organizations’ ability to maximize their effectiveness:
- In large organizations especially, risk aversion can put a major drag on progress. Employees tasked with driving innovation programs are generally not encouraged to stick their necks out, even in companies that have ostensibly embraced “failing fast.” Without a holistic overhaul of culture and incentives, mechanisms like Agile may have limited effect.
- The use of conventional yardsticks may also retard the progress of an early-stage program, as there is often not enough data associated with these opportunities to meet the burden of proof for questions like “What is the expected return?” Again, adopting program management tools from start-up culture is all well and good, but if not deployed along with a fresh and responsive set of metrics to evaluate a program’s promise, these new methods are unlikely to produce new results.
- Lack of top-level support, often resulting from infighting between business unit leadership and innovation leadership, tends to create a substantial “activation energy” barrier to any forward motion.
We advise clients to focus on three areas to overcome activation energy for their innovation programs:
First, think differently about hiring for innovation. Creating more action in your innovation organization requires a mechanism for breaking from the typical corporate hire, and the folks who can run a business unit like a well-oiled machine are not the ones you want leading an early-stage application development team (and vice versa). CTOs and CIOs in our network recommend seeking “ambidextrous” folks with both strong technical savvy and the ability to interface with customers – the more entrepreneurial and resilient, the better. Work ethic is important, but early-stage innovation is not the time for diligent box-checking; rather, your criteria should lead you to individuals who are flexible, curious, and willing to pivot when necessary.
However, it’s not enough to simply hire creative, risk-taking types. Much has been written about intrapreneurship, but oft-touted success stories like the 3M post-it note are few and far between – in reality, the “intrapreneur” experience more often looks like the infamous Kodak digital camera cautionary tale. If you’re serious about accelerating innovation, you also need to provide systems and structure to support their efforts.
Early on, this means developing and applying specialized metrics that reflect the uncertainty inherent in non-incremental innovation. As promising programs transition to new businesses, it means developing a “starter set” of processes (for, e.g., HRM, IT, S&OP, etc.) that won’t overburden the fledgling group. The world of PE and venture capital has developed exceptionally effective tools for gradually scaling support around early-stage growth-oriented programs; large corporations can learn a lot from these established methods.
Finally, support must be reflected at the top of the organization. Without commitment from the top brass – in the form of explicit affirmations, participation in leading innovation programs, and adjusted incentives – implementation of mechanisms designed to speed innovation will fall flat. More often than not, the success of an Agile-like initiative depends on leaders putting their money where their mouth is: making bold bets instead of “peanut buttering” resources across a long tail of projects; killing things quickly and completely rather than letting mediocre programs linger; insisting on market-led insights to drive a project forward versus letting it ride on its technical merits; etc.
If executives are willing to force those tough decisions, the odds of the organization falling in line with a new way of life are much higher, and much more likely to produce the results that the Lean Startup gurus have promised us.