With the world changing rapidly most corporate executives are starting to feel the pressure. There is a realization that beyond cost-cutting and operational efficiency, companies must also invest in developing their innovation pipeline. At the beginning, corporate leaders often reach for easy solutions or low hanging fruit. They focus on the training and improving the capabilities of product teams. There are now quite a few organizations offering training in design thinking, lean startup and agile product development. While these grassroots movements are well and good, it is also starting to dawn on most executives that lean startup training is not enough.
The rhythms and ways of working for innovation are different from the rhythms and ways of working in most large companies. While we may be able to build up the capabilities of our innovation teams, the culture of the organizations within which they work will continue stifle their efforts to innovate. As such, every company must build an innovation ecosystem; which is a repeatable and scalable process for turning creative ideas into profitable business models.
This is not easy work. There is a lot of political inertia in large companies and any efforts at transformation will trigger resistance. In my enthusiasm for change, I have made a lot of mistakes in my work with large companies. I have learned that organizational transformation must be approached carefully using incremental steps that allow for learning and iteration. Below are eight things that all innovators working to transform their company’s innovation culture must consider.
• Focus On Why: An organization cannot be successfully transformed without some clarity as to the reasons why change is necessary. Transformation is a painful process that requires executive level commitment to push it through. As such, it falls on leadership to identify with clarity the reasons for the transformation. It is key to avoid generic statements about wanting to become to a more innovative company blah blah blah. Leadership have to be clear about the how the world in changing, key trends that are affecting their business and how they plan to use innovation to respond. This thesis will then serve as the true north of the innovation culture transformation work.
• Begin With Discovery: There are a lot of great innovation frameworks in the world (e.g. Running Lean, Design Thinking, Lean Startup and Customer Development). There are also some great case studies of companies that do innovation really well (e.g. 3M, Amazon, Apple and Intuit). However, we must resist the allure of implementing standard frameworks or what has worked in other companies within our own organization. Most standard frameworks break when they face the reality and complexity of large companies. As such, we have to begin with discovery. What are the unique challenges within our company? What has worked successfully before? What initiatives have failed and why did they fail? Where are the roadblocks and resistance to innovation? Such discovery work will also uncover key allies and champions that we will need as our transformation work begins.
• Get Air-Cover: Without executive buy-in any efforts at innovation culture transformation will be dead on arrival. We must never forget that a company’s culture is determined by what its leaders reward, celebrate and punish. An example with innovation culture is the idea that companies have to celebrate failure. The people in charge of this celebration are the executives! I have been part of guerrilla movements that tried to change a company’s culture via the grassroots. This almost never works until a key executives is convinced of the value of change and becomes its champion.
• Executive Buy In Is Not Enough: Although it is an essential component and you will fail without it, executive buy-in is not enough. While executives set the overall strategic direction of the company, the people that actually run the company day-to-day are the middle management. These people are often referred to as permafrost; the place where all innovative initiatives go to die. The mistake most innovators make is that they often mock middle managers as ignorant MBAs. Innovators then try to bypass middle management by going straight to the C-Level executives. But even if you get C-Level support, you are still going to need some help from middle management to implement your project. While they may not actively resist you, the passive resistance via procedural delays will eventually kill your project. As such, you have to work hard to find allies within the ranks of the middle management.
• Work With Early Adopters: There is an impatient energy among innovators and entrepreneurs that can be admirable. However, this energy can also cause problems when we try to transform a large company all at once, in one big bang. I have never seen this work well. What seems to work is when we systematically identify early adopter business units and begin our work with them. Within every large company there are pockets of leaders that get it. They understand how the world is changing and what needs to be done. Working with these leaders first means that our transformation agenda will not face too much resistance while it is still in its nascent stages. This is why it is important to begin with discovery because this will help us find our early adopters. As we succeed with early adopters, other business leaders will then be attracted to our transformation agenda.
• Get An Early Win: A key mistake I have made with the teams I have worked with is to spend a lot of time preaching to company leaders. However, as they look at our track record within their company, we have no examples of success. We are just talking. This makes it easy for them to dismiss us as just another group of crazy consultants who will soon be out of their business. As such, before we begin preaching, we have to make sure we get an early win. Working with early adopters helps with this. We should select a high profile and important project within our early adopter business unit and work quickly to demonstrate that lean innovation and design thinking methods work. We should document this early win with data and begin celebrating it widely within the company. Such an early win buys us goodwill and the time we need to systematically implement our transformation programme.
• Be Tough On Principles, But Loose on Tactics: Principles trump tactics. Rather than rigidly focus on the tactics of our transformation plan, we should keep a laser focus on the principles that underlie lean innovation and why transformation is necessary. All other aspects of our work will be emergent. As much as we plan, the organization will also be changing at its own pace; and sometimes in different directions. To paraphrase Steve Blank, our transformation plans will never survive first contact with the organization. As such, we have to be prepared to be responsive; tough on principles but flexible on our tactics.
• It’s A Battle For Hearts (And Minds): Nobody likes a know-it-all! As much as we may feel we are on the right path with our ideas for transforming our company, we have to recognize that change is scary for a lot of people. So while the logic of transformation makes sense, this is a battle for hearts as well as minds. Getting buy-in from our colleagues will result in a culture change that sticks. We have to do the hard work of reaching out to our most resistant colleagues to find common ground.
These are some lessons that I have learned in my work with large organizations. Organizational transformation is brutal work. It is not for the faint-hearted. It is one step forward — two steps back, everyday gut-checking work. But when done well, the results are truly rewarding. We are now beyond the realm of makeshift innovation solutions for large companies. The world is changing so quickly that we need a paradigm shift in how we manage innovation. This shift requires us to transform our organizations and create successful innovation ecosystems.