Corporate innovation is like giving up smoking or losing weight. Everyone thinks they’re going to get around to it, but can cope with the fact they’re not.
That’s from Peter Robbins at Maynooth University.
It should be noted, too, that the risks of not innovating are high for both big and small companies.
Research from Boston Consulting Group’s Martin Reeves and Lisanne Pueschel revealed that though business lifecycles have sped up, with the risk of a big business failing growing uniformly across all sectors in the 30 years to 2015, the risk has grown for companies of all sizes and ages.
Furthermore, contrary to what you may think, companies that got venture capital funding in the boom years of the mid-1980s and late 1990s were 25% more likely to fail than those that hadn’t. Though some of the survivors did go on to threaten incumbents, many were snapped up by said incumbents.
Want some practical steps for innovation?
Why not refer to Econsultancy’s Innovation Best Practice Guide (subscriber only), which includes much more comment from innovative brands, as well as nine practical steps for innovation, flawed assumptions to avoid, and key considerations to take into account.
Why is practical advice needed? Well, because so much of what’s said about innovation is woolly. That brings us to our second quote, from David Heinemeier Hansson, founder and CTO at Basecamp…
‘Innovation’ is not really a word that I’m keen on. The first thing that comes to mind is not a set of positive adjectives! As with lots of words they get worn out to the point they become meaningless. It may have meant something specific to someone at some point, but when no one would describe themselves as the opposite then the word has lost its appeal.
Why is innovation important to marketing?
In order to understand the importance of innovation to marketing, it’s important to understand disruption. As Econsultancy’s Stefan Aquarone puts it, ‘disruption as a concept in modern business might be overblown. But it’s certainly true that what’s changed the most is the route to market: how people buy and who from.’
He continues to point out that the changes to marketing and communication that the web has engendered are greater than wholesale changes to most end products.
To put it plainly, Aquarone writes ‘the same toilet paper, the same taxis and the same car fuel are being consumed. But if someone offers me toilet paper on subscription so I don’t have to think about it again, or the taxi comes to me faster with my phone, or the fuel is delivered to my car while it’s parked at the road side, then the only thing required for a newcomer to steal the lunch of an incumbent is a better way of reaching customers – not a new or better product at all.’
John Lewis is one business that saw the way the winds were blowing fairly early on. Here’s Paul Coby, CIO at John Lewis Partnership:
We can help influence people, but we can’t change them. The retail revolution is what we called it. We wanted to signal to everyone in John Lewis Partnership that things were changing, that we felt the tectonic plates moving.
At the macro level, we set some very challenging targets – 40% of sales online by 2020. This was top-down recognition that our business was changing and has to change. It opened the door to thinking about a lot of things differently.
Remember it’s not all big bang stuff…
Big targets for selling online or pivoting the business are one thing, but when you get down to brass tacks, innovation is often about much simpler stuff, as James Donkin, General Manager at Ocado Technology explains…
There are a few different ways people use the word innovation. There’s ‘Big’ innovation – Big Bang gamechanging projects. But the other sort is the stuff people like me are focusing on, ‘Small’ innovations and the space needed to make them. Space means mind-space. You need to be not so overloaded with tasks that you can’t improve your own work. This means stepping back, altering things, changing the process and trying things out.
This sentiment about taking a step back is echoed by David Heinemeier Hansson of Basecamp:
We try to run as calm companies – not trying to squeeze every last drop out of the lemon.
Innovation requires wellbeing
HR Director at PwC, Sarah Churchman expands on the theme of allowing employees space to work outside of typical or rigid BAU processes:
My role is to make sure people thrive in their work environment. We don’t want to produce a load of clones or restrict people in their thinking and behaviour. One of our goals is to ensure that our employees have an objective, free from personal preference and bias – to ensure rich diversity is mirrored throughout the organisation, including in leadership roles.
Wellbeing refers to embracing various types of people and ensuring we don’t marginalise people who want to work differently. We focus on how to keep people well when they’re at work. We’re good at it when they’re unwell, but our aim is to build resilience as a core.
‘Big’ innovation may need insulation
Here’s Ocado’s James Donkin again painting an exciting picture of ‘big’ innovation, but perhaps a fragile one, too, unless the right support is provided.
[‘Big’ innovation] is probably distinct and separate from the main business, but has a clear purpose and defining result. It’s difficult to put people in a conflicting position with two conflicting goals. You have to protect people – create small groups of people who share a common mission, who can avoid the encumbrance of how things have been done in the past.
Who you put in the group depends on what you’re trying to achieve. If it involves lots of visuals – then more designer resource. Or more data. But you need a mix of people who can dive off with new ideas and those who can consolidate. If the mission involves building software, you’ll need lots of people who can do that. But there are many roles that don’t require the ability to code. The smaller the team, the more you’ll need to have people who can do several roles.
Diversity can counter group think
Organisational culture is a slippery concept, but there’s no doubt that innovative companies put stock in their culture. One aspect of culture is diversity and its ability to shake up decision making. Sarah Churchman of PwC refers to diversity as a way to achieve productive chaos:
When you achieve genuine diversity, you achieve complete chaos. That is, unless you’ve got an environment or culture where difference is embraced and valued. To avoid the chaos, you’ve got to create the right environment, because difference is not easy to manage for the reason that we don’t really like it. This will arguably slow down decision making, which leads to less group think, less agreement, affability but the argument is that you might have a very different and better decision at the end of it.
Please note, process innovation can masquerade for something darker
Peter Robbins from Maynooth University offers us a counterpoint or a warning when it comes to process innovation:
One of the first pitfalls is to mistake process innovation for product innovation. The two are linked – process innovation can release money to do interesting stuff. And sometimes organisations give the same person both roles. But they’re really trying to romanticise what is essentially a cost-cutting exercise.
Don’t forget the hidden dangers in the startup mentality
The last word in this article goes to Mike Baxter, founder of Goal Atlas. Baxter sounds a note of realism, arguing that for all larger companies may aspire to imitating some elements of startup culture, startups themselves can prove to be myopic.
There are two ways to look at startups. The optimistic way, where they can pivot on a sixpence and go through a thousand prototypes in the time it would take an established organisation to look at 50. There is some genuine truth in that.
The other view, that I also have sympathy for, is the one in which startups are naïve to the point of being delusional and therefore they don’t have to think about 90% of customer requirements because they don’t know about them! And so they can focus their efforts on making the 10% they do know about compelling, exciting and interesting. There’s an element of truth to both – startups can move faster, and they can be naïve. Also, a vast number fail and never get reported at all. It’s quite hard to work out the number of startups that didn’t make it.
That’s your lot for today. Hopefully you have picked up some sage piece of advice to apply to your organisation’s own innovation efforts. Remember, there’s lots more practical advice in the Innovation Best Practice Guide.