*This article was originally published on prooV’s website on 04/03/2019. prooV merged with QAssure to become 1TX in July 2022.*
With the advent of industry-changing startups, it became clear to large enterprises that legacy business models no longer create value equal to their potential.
Time and again, pundits and business leaders point out that there isn’t a direct correlation between R&D spending and revenue, and that more capital doesn’t always lead to better returns.
Large companies that want to power new innovation agendas need to enact a culture shift to do so. Incremental, or even radical innovation is not only possible but necessary, and such endeavors can be successful as long as companies recognize the obstacles in their way.
There are four such obstacles common to innovation-bound corporations: aligning innovation with strategy, overcoming bureaucracy, being aware of your market and taking on the fear of failure.
Recognizing these barriers is the first step toward changing company culture and creating an environment that is innovation-friendly.
Aligning Innovation with Strategy
Large enterprises may have a hard time reconciling their innovation goals with their strategic goals. This is because innovation isn’t something that can be planned – it requires improvisation, testing, and analysis to continually grow. 54% of executives say they struggle when it comes to creating this alignment and feel like they are flying blind.
The difficulty of aligning strategy with innovation rises because the requirements for short-term bottom line results versus those for long-term success seem to contradict. To solve the issue, enterprises can update their company mission in an effort to give employees purpose in their jobs.
Mission-driven companies are more successful in both the short and the long run, so corporations need to review their company goals and how they convey these goals to their employees.
In 2011, for example, no one thought Google could act like a startup. Fast-forward to 2018 and the company has found the formula that enables them to quickly adapt to changes while having the security and bank account of a market leader.
Other companies that have been successful in this endeavor include Amazon and Tesla, and their continued success is a testament to the importance of aligning a company’s strategy with their mission.
The way forward for your company is to find ways that will ensure your corporate mission is up-to-date and that it promotes innovation in all levels. Such an alignment will propel you forward.
Overcoming Bureaucratic Sluggishness
Corporate agility is easier said than done. Long administrative processes, complicated managerial and departmental requirements and too many rules all act to demotivate employees.
When employees are not motivated, or there is stagnation, their engagement in entrepreneurial thought or creative tasks is limited, which may limit innovation.
To counter such inherent tendencies, many organizations have implemented hackathons or “FedEx Days.” During these days, employees are given the opportunity to work on anything they want to, provided they deliver the results in 24 hours (as in FedEx’s overnight shipping method).
By letting employees explore creative solutions to problems they encounter, not only can bureaucratic sluggishness be combated, but innovative solutions can come from the ground up, truly impacting a company in the long run.
To break down barriers and make innovation possible within a company, agility and flexibility in thinking must be encouraged. Departments must review their administrative requirements and look for ways to create shortcuts, relying on employees to help them.
Being Aware of Your Market
Innovation is hard for companies that assume the current business model will continue to work just fine for years to come. Since times are always changing, along with customer needs and expectations, companies have to be on the lookout for potential areas of failure.
Getting too comfortable in old business models can lead to complacency, which can lead to lack of foresight and lack of innovation. Some enterprise C-levels may not want to shake things up if they seem to be going well enough, or if they fear that change will have a negative impact on the market value.
Consistent with this fact, surveys show that many executives exhibit low confidence, with just over 25% stating that they believe they are superior to competition. This lack of trust in their own company and foresight to see market changes can have a negative impact on a company’s goal of remaining innovative.
Lack of confidence is not the only thing impacting a company’s ability to be innovative. The opposite can also happen. Some companies feel pressure to disrupt, and get into risky ventures to do so, falling victim to their overconfidence. Not every market is ready for advanced technology, new competitors or disruptive solutions.
Virtual and augmented reality products are a good example of products that were disruptive in theory but not on the market. The application of VR and AR is still nascent in most verticals, and their introduction did not disrupt the market as their innovators expected.
This is a case of introducing a new technology at the wrong time and showcases the importance of knowing the market, its players and how products will impact it.
To achieve the delicate balance between the right amount of confidence and accurate risk assessment, your company must focus on evolving market needs and let them lead you to new ideas and implementations. This is opposed to trying to pull the market into uncharted territory on your own without taking market conditions into consideration.
Meeting Fear of Failure Head On
In publicly-listed corporations there is a board of directors to answers to, a stock value to keep up, and a public to please. All of these factors make fear of failure more intense, and at times a dominant driving force. For private companies too, such fears are not unfounded, as failure could mean closing up shop.
But failure has to be part of the game. It took WD-40 thirty-nine attempts to get it right. As Thomas Edison famously said, “I have not failed. I’ve just found 10,000 ways that won’t work.”
It is a known statistic that 90% of startups fail. Because failing is such a real, palpable possibility for them, startup employees are more open to taking risks and pushing boundaries. This different approach to failure is what many enterprises are trying to emulate now, in the hopes of helping them retain an innovative edge.
To be innovative implies taking risks. It implies the possibility of failure and/or an undesirable impact on the bottom line. Creating a corporate culture that accepts and even embraces failure will give you access to more ideas and make you better able to select which ones to pursue.
Turning Obstacles into Stepping Stones
One way to turn these four common obstacles on your path into stepping stones is to continue on the path to innovation.
By not giving up on the first try, actively encouraging company-wide self-examination to assess what could go wrong, improving company culture with targeted activities and learning from failure when it happens, companies can improve their ability to innovate.
Companies looking to encourage innovation can also do so by bringing in intrapreneurs.
The bottom line is that in our day and age of hyper-innovation, your company must continually adapt to survive and thrive. There are no successful plateaus anymore.
To learn how 1TX can support your organization, contact us today!