Executing into the Future

Abstract

In the past three decades, I've had a chance to work with some amazing companies struggling to define, or redefine, their innovation strategies. Far too often, sustainable change has proven difficult, if not impossible, to achieve, even for companies with committed leadership teams and a real sense of urgency. How can such a collection of smart people, across multiple sectors, fall short? This question has been bothering me for a while now. I may have found one answer in the pages of Inc. Magazine's 35th anniversary issue, which came out this summer. In a retrospective column, editor-at-large Leigh Buchanan summarized the "familiar rules for entrepreneurship" the magazine has captured: "Become connoisseurs of risk. Recognize opportunity. Change things up. Above all, do it your way." These are precisely the things I've seen large companies fail at; otherwise stellar leaders back away from the innovation cliff. Sometimes caution makes sense, but at other times, their reluctance to invest in a great idea has been foolhardy. In fact, I've seen many of the ideas abandoned by cautious leaders launched by other, often smaller, companies--and often to success. So how does an established company, particularly a large, successful, established company, execute innovation ideas in a way that strengthens their competitive advantage into the future? Perhaps it's as simple as a return to the basics, as defined by the entrepreneurs who have appeared in the pages of Inc. Become connoisseurs of risk This is a major hurdle in today's corporate world, particularly for established companies. This is due to at least three factors in corporate culture. First, risk, by its very nature, implies a chance of failure. And failure, in and of itself, is understood to be a bad thing, especially within the systems that structure and motivate many large companies. The stock market takes a very dim view of failure. As a stockholder, I might concur in some instances, but this mindset has reduced the appetite for risk taking as a general operational philosophy. I have only seen one company that celebrated failure--well, celebrated the lessons learned from failure--with an award. Each year, this company identified an employee or team that attempted a difficult challenge, failed initially, and then learned from that failure to produce an even better idea. This approach changed failure from an end state to a stepping-stone. Another serious challenge to embracing risk is the way that we value learning and failure. Intelligent, fast failure can be a good thing, particularly when the lessons learned from it strengthen the ultimate market offering. Unfortunately, many of the management tools used to shepherd innovation from germinal idea through to market-ready product or service don't really promote learning. Few companies actually do retrospectives on past initiatives to make sure lessons learned are incorporated into future offerings or even into business processes. Instead, failures are swept under the proverbial rug. Finally, the time frame frequently used to determine success or failure is short, in part because of the demands of the same financial markets that punish failure. Such a short-term view limits the ability of an innovation to grow to its full potential. Despite the recent focus on the fast pace of change and the need to innovate continuously, many innovations don't actually achieve their full impact in a year or less. In an information-intense world, a year to achieve impact may be meaningful, but this expectation is unrealistic for companies serving more traditional markets and working in more traditional distribution channels. Recognize opportunity Innovation blindness often results when experts attempt to tackle a new problem they believe to be within their field. The reason? The experts already believe they understand the nature of the problem and, thus, the best solution. This explains why the more successful the company, the less able its employees are to identify opportunities, particularly opportunities in adjacent markets. …