On small mice, giants and confusion
You can all go home because corporate innovation simply doesn’t work. At least, that is what Narry Singh, the global head of growth and strategy for Accenture Digital, claimed during his talk at the WIRED2016 conference in London.
“There are some pretty interesting challenges when you’re trying to be innovative,” Singh explained to his largely corporate audience. “You’re competing against a series of smaller mice. There is no one giant in the disruption space. You’re being nibbled at by different industries. If you’re a home improvement retailer, you’re having part of your business being attacked by a Task Rabbit or a Rated People. You’re having another part being attacked by Porch, Houzz and others. There is no giant, but it’s this death by a thousand cuts that most of our corporate clients are trying to struggle and deal with when it comes to innovation.”
According to Singh, most large companies are still far too slow to move and change their working practices. Throwing money at corporate innovation labs, accelerators and venture capital schemes won’t make any difference. The solution to the problem is collaboration. From Accenture’s research, Singh has seen that where large corporates work with startups, that’s where business victories are created.
Targeted research, investment in startups, scaling companies up and venture co-development can be successful options. General Motors investing more than $1 billion in self-driving car technology, is one example. It’s something Singh believes is rapidly catching on as 80 percent of corporate leaders are either interested in working with or knowing more about startups.
Singh’s remarks probably don’t come as a surprise. Over the last year, I’ve been trying to instill innovation and corporate entrepreneurship into a 80-year old consultancy firm, and ‘too slow’ doesn’t come near to what I’ve been experiencing. But guess what, according to Daniel Isenberg, a professor of Entrepreneurship Practice at Babson Executive Education, startups are not more transformative than older, bigger companies. Confused? No worries, so am I.
In a recent post, Isenberg writes how he almost overlooked a telling fact when reading The Transformative Business Model by Stelios Kavadias, Kostas Ladas and Christoph Loch. The authors had identified six elements, driven by technology trends on the one hand, and market needs on the other, that define how likely a company’s business model will be to transform its market:
— Personalized product or service: think NikeID
— Closed-loop process: think Philips Pay-per-Lux
— Asset-sharing: think AirBnB or ZipCar
— Usage-based pricing: think Google Adwords
— Collaborative ecosystem: think Apple’s iTunes
— Agility and adaptiveness: think Lego’s move into movies
They had subsequently analyzed and ranked a wide range of 40 companies with innovative products and services on these six elements.
When Isenberg had a closer look at these rankings, and started looking for a correlation between a company’s age and its transformativeness, it appeared there wasn’t any. At least not for this broad sample of 40 companies, which, if anything, is heavily populated with highly visible and well-funded startups. In other words: the older companies are just as likely to develop transformative business models as the startups are.
“I then closed my eyes,” Isenberg writes, “and let my mind wander to come up with a completely unsystematic list of things I used or know that are used by others, such as seat belts and microwave ovens and Hello Kitty. In fact, so many of these products, innovative in their own times, were developed by established companies. If we are honest with ourselves, almost everything we use has been around for decades. Surprising to me (I admit, it seems obvious), a large number of successful products were first patented by inventors, to be picked up (or bypassed), modified and scaled by larger companies.”
Also this shouldn’t come as a surprise because research already tells us that the bigger a company gets, the more innovative it is.
“So next time you read about a program to teach large companies to ‘think and act like a startup,’ pause and think whether it isn’t more important for startups to think and act like larger companies,” Isenberg concludes.
But where does this leave us? I think it’s safe to say that large companies aren’t very good at innovation (Singh). But when they are, they’re just as good as the most transformative startups (Isenberg). It’s ‘simply’ a question of people and mindset — of thinking rather than just doing (me).
A few random finds …
“Entrepreneurs can live anywhere in the world and focus on any industry. Urbanpreneurs embed in their socio-ecological environments — cities and towns — to draw influence. They’re tapping into what cities have to offer so they can collaborate and innovate in their community,” says Boyd Cohen in an interview with Citylab about his latest book written with Pablo Muñoz, The Emergence of the Urban Entrepreneur.
“The book explores the changing trends in entrepreneurship and how it has been urbanizing in recent years,” Cohen explains. “We know the creative class has started to migrate to urban areas in cities around the globe. Lower-cost innovation and less need for physical space have converged and changed the way we work. As part of the creative class, tech entrepreneurs and their staff are increasingly preferring to live and work in dense, diverse urban areas with excellent public transit, cultural amenities, food, and night life.”
“Fin-de-siècle factories and modern-day workplaces aren’t too dissimilar. Both were designed explicitly for teams of specialists.” — Lisa Baird in Want To Be More Productive And Creative? Collaborate Less.
“Hiring for innovation is different from hiring for specialized roles. For innovation, a good rule of thumb is to hire more generalists; and less specialists. Why? In the corporate world there is quite a lot of ‘sameness’ in the ranks, people who we like; but that aren’t necessarily essential to the success of the organization. When hiring in traditional organizations, a common rule of thumb is ‘Hire people you would want to have a beer with.’ Actually, if you want to innovate and remain relevant; only hiring people you like will lead to failure. More of the same people creates myopia, so a multiplicity of viewpoints (diversity) is your best defense against it. That means you must hire for brilliance: mavericks, weirdos, lunatics; are the people who challenge that status quo.” — Jorge Barba in Homogeneity in an organization breeds failure.
“Successful technology businesses can be fantastic myth-makers. Many have stories of questionable veracity, typically involving that perennial of start-up lore: the modest garage. In reality, however, their ideas frequently originate in university laboratories and lecture rooms. Those ideas turn into innovations in clusters, within which universities play vital roles, including the provision of spaces and facilities for startups.” — Mark Dodgson and David Gann in Forget the start-up garage myth. We need golden triangles and super clusters.
“Visioning — the process of coming up with breakthrough ideas — is often assumed to be an isolated and instantaneous affair. We have images of the isolated creative genius experiencing a moment of ‘eureka!’ in the bathtub, or a great vision while fasting in the desert. What commonly happens is that a new concept is developed over a sustained period of time. Looking back, such a period will be riddled with moments of serendipity, moments where lucky connections, unexpected insights and breakthroughs made the difference. These breakthroughs are rarely the product of one mind; they almost always are the result of cross-pollination of ideas, and approaches from a different field being applied to the field the creative person is working on.” — Lieselotte Nooyen, Berend-Jan Hilberts and Menno van Dijk in The Process of Visioning (THNK School of Creative Leadership).