One topic in particular really got me thinking on Tuesday: Dr. K noted that companies are more successful with their innovation programs if they start with incremental innovations as opposed to radical innovations. He rationalized the data by saying that if senior management came in and announced that the company was looking for breakthroughs, middle management would get turned off because they didn't see themselves or their employees as "breakthrough"-type people. In other words, a company just beginning its transition to an entrepreneurial culture needs to take "baby steps" to start its journey. While Dr. K’s explanation of the point made rational sense, my immediate reaction was, What about the employees who have really good radically innovative ideas already?
That brought me back to May 2008, soon after I started working as a software engineer at Intuit. One business unit (the one responsible for TurboTax) held their first-ever “Idea Jam,” a competition where teams could pitch their innovative ideas to senior executives. The CEO personally flew down for the event and prefaced it by challenging employees to “discover the next growth engine for the company.” A few colleagues and I entered the competition with an idea for a social network aggregator, and others pitched (and some demonstrated) truly amazing ideas, such as a smartpen mashup that translated writing and drawings from paper to computer screen instantly. However, none of the ideas that blew me away were mentioned when the awards were given out. No, the top prize went to TaxCaster, a web application that forecasts your tax refund from a limited set of data you input. Senior management invested in TaxCaster and it launched a few months later (http://turbotax.intuit.com/tax-tools/calculators/taxcaster/). While TaxCaster was a great idea and has since certainly increased sales of TurboTax, it wasn’t anything close to the next growth engine for the company. It was an incremental innovation.
The experience of seeing a set of amazing (and radical) innovations get passed by in favor of a small one caused many of my colleagues to become bitter about the company’s innovation efforts. It took some of them two years before they participated in any events like Idea Jam again; they were unenthusiastic about pitching ideas to managers who were only interested in add-ons to TurboTax.
While I now understand the logic behind focusing on incremental innovations first, I wonder if that logic fails to account for those in the company who are already entrepreneurial and are ready for radical innovation. Are baby steps worth the risk of losing the participation of the most entrepreneurial employees? Or is there some other action that leadership could take to encourage radical innovators to stay engaged?
I think one important constraint is that you have to be able to get "there" from "here". "Radical innovations" - the ones that are growth engines for the future - can take years before the business model is discovered/proven out. Techniques like Customer Development can help you navigate those uncertain times as cost-effectively as possible, but there are still huge cultural gaps to bridge on the way. In order to do anything at a big company, you have to think about how it looks on people's performance reviews. The executives are evaluated primarily on short-term financial metrics, which is appropriate for a mature business focused on execution, but are completely the wrong metrics for nurturing radical innovation.
ReplyDeleteThus, I think an important part of doing radical innovation inside a big company is figuring out how to make the internal mindset shifts that are necessary. Just as you must uncover the product and business model that's right for the customer, you must uncover the internal messaging, culture, and accounting that will be right for the business leaders. Is it worth it? I hope I find that it is.
I agree with your (and the theory's) logic that a large company needs to undergo a mindshift to be ready for radical innovation. The struggle in my mind is how to keep innovators engaged while the mindshift is in progress. On top of that is the sentiment that some companies cannot afford to wait for the mindshift to happen, as disruption can strike at any time (see The Innovator's Dilemma).
ReplyDeleteOne area of potential I see is in a construct developed by Dr. K called the I-Team. An I-Team is essentially a small team that is given autonomy (including circumvention of rules and a lack of deadlines) to complete an innovation. Perhaps radical innovators can remain engaged through participation in I-Teams.