It’s been over 12 years since Clayton Christensen’s The Innovator’s Solution answered the questions posed of corporate innovators, leaders and managers by its influential and evergreen predecessor, The Innovator’s Dilemma.
We’ve seen the emergence of methods and philosophies such as human-center designed, lean startup and agile project management which have taken center stage, at least among circles of innovators.
A growing number of industry incumbents collaborating with the outside through different interpretations of open innovation such as corporate incubators, blackthorns, open data platforms and online crowd-sourcing campaigns.
Organizations are spinning off independent companies with their own processes, values and resources in order to get out of the building and test potentially disruptive concepts that they normally wouldn’t be able to do from inside the walls of the mother-ship.
However, the technology adoption curve, made famous by Geoffrey Moore in Crossing The Chasm, stresses that initially, only about 2.5% of an eventual market adopt a new technology. This can also be applied to the rate of adoption by corporate executives of the above mentioned mindsets, methodologies and tools.
Many are simply yet to acknowledge the need, demonstrate an appetite for or simply priorities innovation and break out of ‘the way things have always been done around here’ mentality. Despite the fact that at current rates of churn, 75% of the S&P500 is set to be replaced by 2027.
Most organizations are full of decision makers who ultimately got to a position of authority because they were great at playing politics, executing set procedure, stretching the S-curve and achieving short term goals.
Unfortunately, in order to stay competitive we must look not just at stretching our existing S-curve, but at ways to catch the next S-curve.
Exploring disruptive innovation is anything but procedure, certainty, safety and achieving quarterly KPIs. As such, it does not present decision makers with an obvious green light to invest. Often, executives might pay lip service to lean startup and disruptive innovation and the need to be bold but stop short of defining what this actually means and more importantly, how to go about it.
As far as they’re concerned, it all sounds a little too risky, it feels radical, and if I’m getting paid a pretty penny for doing the duties outlined in my position description – which doesn’t include shaking the tree – then why should I go out and do something purportedly ‘crazy’ when none of my peers appear to be doing so, and I’m due to collect a bonus so I can take my family to Hawaii this summer?
As a result, entrepreneurs often bang their heads against their desk, figuratively and possible literally, as they’re told to focus on only their core competence, again, as outlined in their position description and annual performance review.
They often either leave the organization to join more progressive companies, start their own company or stay on-board but become progressively disgruntled and unproductive.
So, if you’re currently banging your head against your desk but don’t necessarily want to take the aforementioned paths, what can you do?
Through our conversations and observations of how entrepreneurs at different companies have gone about doing this, we’ve outlined a handful of strategies that you can try to secure buy-in, support and resources to foster enterprise innovation.
1. Present relevant case studies to decision makers
Corporate executives want you to speak their language. There’s no point showing them examples of companies like Airbnb disrupting the hospitality industry if you’re in mining. Find relevant case studies from like companies operating in similar countries, industries and facing the same kind of economic, political and regulatory challenges.
Show them examples of companies that have adopted new practices to explore disruptive innovation and more importantly the outcomes that these campaigns have generated. For example, have they run idea campaigns that have gone on to generate 500 ideas, 30 of which were commercialized and are now generating millions of dollars?
Show them examples of companies that have failed to address disruptive forces and have now found themselves and their market share being marginalized due to new players and/or new business models.
2. Use the cost of employee churn
Within any large organization, sponsorship is usually required from different business units to free up resources and support new initiatives. Somebody has to pay right? For example, inSync Surveys recently found that an average staff turnover rate of 18% costs organizations with 100 employees around $1 million every year. Got thousands of employees? Tens of thousands? Multiply it.
This cost is attributable to variables such as employee on and off-boarding, training, interviewing and recruitment costs, lost knowledge, productivity downturn and the overworked impact on remaining staff.
Giving employees more say over company direction and strategy through initiatives such as idea contests, blackthorns and corporate incubators can give them a greater sense of ownership and belonging which prompts greater loyalty and a longer stay at a company, particularly amongst natural innovators who are the employees that many companies need most in what is an era of rapid disruption.
Find out what the average cost of employee turnover is at your company. Then go and speak to Human Resources about how innovation initiatives can help to bring this down.
3. Conduct a ‘postmortem’ to gauge risk profiles
Oftentimes, innovation doesn’t get buy in because decision makers and corporate executives can be seen as risk averse and with short term incentives and shareholders at front of mind. As such, putting everything on red tends not to make sense. But it is definitely not a case of all or nothing when it comes to exploring corporate innovation. We need to encourage taking lots of small bets.
You need to find out what the worst possible outcome the decision maker is willing to accept. If you know what this looks like then you can frame your business case around it and if it’s clear that the worst possible outcome will fall within the boundaries set by decision makers you’re much more likely to receive support than you would if you didn’t provide this comfort.
4. Blackops: Ask for forgiveness, not permission
Many entrepreneurs are setting up their own hackathons, agile and lean startup guilds to get people talking and doing things in their own time around different innovation practices. Oftentimes they build prototypes in their own time and show them to executives or if they’re really keen, show them to a select group of customers and get some real feedback that they can take to decision makers.
Either you will win them over or have to ask for forgiveness.
Worst case scenario? You get fired. Perhaps working for a company that doesn’t encourage out of the box thinking and employees who take ownership and initiative isn’t where you want to be anyway!
Sue Hogg, an Iteration Manager at Australia Post, ran informal hack days with staff that wanted to participate, in their own time. Eventually, these grew so popular that they’ve now received sponsorship to run these events as part of business as usual. She called this approach “blackops!”.
5. Use Innovation metrics, not accounting metrics
If you’ve managed to get buy in for a project, it’s just as important to keep buy in. Oftentimes, companies pull the plug on innovation projects because they’re not generating X ROI within a few months of launch. Airbnb made $200 a week in their first year. They’re now worth US$25B. Such is the nature of disruptive innovation – initially the market is insignigicant and the only people interested in a product make up about 2.5% of the eventual market. As such, we need to give projects time. But how do take small bets if we give every project 2y ears? How do we know which projects to give time to and which to pull the plug on?
We need to encourage the use of actionable innovation metrics which track customer engagement against changes to the business model, product or marketing strategy. If we can align our actions with a progressive improvement in customer acquisition, activation, conversion and retention then we can present this data back to decision makers and show that we’re on the right track. Perhaps set weekly, monthly or quarterly go/no-go checkpoints.
If we’ve made a hundred changes based on validated customer learning and still can’t get the engine started, then it might be time to make an executive decision and invest time and money in another project.
Applying the survey results to a company with 10,000 employees, the annual cost of employee turnover becomes $100 million. Suddenly, being able to justify, say a $100,000 investment in employee time and resources to an innovation project, which may serve to bring down that $100m cost, doesn’t seem like such a bad idea.
6. Protect the brand
Oftentimes, decision makers are fearful, and rightly so, of doing reputation damage to their brand by releasing half baked prototypes to market.
But that needn’t be the case.
Perhaps make it clear that the product is in beta and target only a segment of customers, cap the number of users that can try the product or release it to market under a unique brand. These methods help us avoid reputation damage while still tapping into the value of obtaining customer feedback and validated learning early in the piece.
7. Invite executives to participate in short hackathons
Show, don’t tell. Foster those “aha” moments that are absolutely critical in getting people to change long held beliefs. If you can get a decision maker to give up, say three or four hours of their time (not easy but doable) to sit in on say, a lean startup bootcamp, should get you much closer to opening their eyes to the need to explore disruptive innovation and the value of taking lots of small bets in order to explore it successfully.
If you can’t get them for a few hours, perhaps organize a keynote speaker to come in and give a lunchtime talk on the premises on disruptive innovation as it applies to industry incumbents.
Do whatever you can to foster “aha” moments – particularly when those moments are fostered by an independent third party with social proof, having done work in the space with comparable companies.
Check out Eric Ries, author of the Lean Startup, talks how he went about getting buy in at one of the world’s biggest companies, General Electric, in this video.
Go ahead, try one or more of these different strategies. What works at one company, on one executive, might not work on another. But each experiment brings us one step closer to yes. With each objection, we learn what the hurdles are and become better equipped to jump them.
Successful startups tend to be those that make enough changes to their business model before running out of resources. Entrepreneurs who are successful at securing buy in for enterprise innovation projects are those who make enough changes to their approach based on executive feedback before they run out of patience.