Does company size or
company culture matter when it comes to innovation?
It’s no secret that in technology, people rather than
products are the key to success. It’s the old scenario of a couple of guys with
a great idea and great coding skills teaming up with a “business founder” and
before you know it, their company is funded and worth tens of millions of
dollars. The meteoric rise of technology start ups is no surprise when one
thinks of how ‘software is eating the world.’
What is often overlooked is how big companies innovate
across technology and other sectors. Afterall with the march of software into business,
the disruptor effect is shortening product life-cycles and transforming whole industries
overnight. With such risk out there, the saying “innovate or die” has
understandably become very popular in C-Suites. The response is normally two
fold in big companies.
A) Fund R&D keeping it as a high priority on the
senior management agenda with a focus on high calibre talent acquisition to
keep that new product project pipeline filled with viable entries.
b) M&A. Buy small companies where those couple of
guys and gals teamed up and made their successful company out of their idea and
collaboration.
Many large companies that consider new product
development a priority often do both. So, why do so many companies not consider
innovation a priority? In my experience, it’s down to a senior level perception
of inelasticity in its product range despite the threat of the disruptor effect
to their current business model. We are entering a disruption era and
industries that have remained relatively unchanged for many years are starting
to realise that they need to learn how to change or face becoming obsolete in
the wake a disruptor wave.
For example, banking had the corner on the lending
market for generations with no real competition on lending. The technology
disruptor wave has hit Ireland’s retail banking shores with companies like Grid Finance
offering investor 2 business connections on the Grid Finance platform for the
purpose of evaluation of projects and offering of (debt) loans in a manner that
is similar to how banks lend BUT the lender makes the decision on his/her money
cutting out banking as the “loan middleman”. This type of innovation was
considered unthinkable a few short years ago yet it is upon us in today’s cash
strapped hyper competitive and
hyper connected world.
So, with that in mind, the need for change is apparent
and yet so many cling to the notion that change will pass them by and all will
be well in their world view. This could be true for tomorrow, next week and
next year but eventually change will happen and those who ignore it will be
left behind. In facing it, what are the biggest problems for business, is it
size or culture?
Some considerations about size when looking at a large
company's ability to change:
Size should not matter -
in this light, if the company is structured correctly, the organisational
design should be flexible enough to facilitate change.
Too risky
- if presented as a knee jerk reaction to a change idea, it once again is down
to culture, not size. Companies over-focusing on the transaction and process
hierarchy do so at the expense of creativity and innovation.
Too expensive -
a classic shut down which once again if returned as an answer in record time to
a change idea is down to culture. When this happens, the senior team incur an
opportunity cost for their risk adversity.
When looking at company culture; dogma, vertical
“silo” structures and leadership practices are all keywords in any evaluation.
Strategy -
A company must see a need to a) innovate and b) value in their people to help
them innovate. If they don’t, then nothing will change their fate including the
below comments until they do.
Leadership Practices -
A company who has business practices that are about control (classical
management theory) instead of collaboration will never get the best out of
their people. Innovation comes from free will to commit to an idea for the
greater good of the company and its staff, not from a pay cheque.
Organisational Design
- A company who has a classical management model of strict vertical silos
leaves little room for effective cross company collaboration making change
extremely difficult by design. This again is a cultural (V size) preference for
stability. Apple and Google have variations of the Adhocracy culture with a
strong focus on collaboration, cross functional projects and ‘common good’
values with creativity and controlled risk taking rewarded.
If your organisational model has matrix or horizontal
components of other kinds in their design, then your chances of good in-house
innovation are greater than most! Here is a couple of pointers on good practice
that encourages and manages innovation:
Engineer Work Practices -
Make change part of the norm. Google stays innovative by allowing staff to work
20% of their work time on projects of any kind that Google may like. That
freedom fans trust and creativity like no other.
Situationally aware leadership
- onboard new employees with collaborative leadership and make sure all leaders
practice collaborative leadership for their teams
Process map change -
make change a process, have regular meetings on new ideas and present them in small
groups that pass into the next phase and the next, etc.
Create a giver environment -
keep takers out! The malevolent practice of taking credit for the work of
others, backbiting and physiological bullying creates an predatory environment
where office politics can kill an innovation programme. A giver environment
will never take hold if takers are in it. Takers see givers as weak. Givers eventually
become victims and leave. No-one wants to be targeted for creating something of
worth.
Reward innovation
- ensure politics and practices exist to reward innovation that is successful
and learn from failures. Risk takers after doing a post mortem on a failure
should be coached on what went wrong with the sole purpose of learning from it.
The process being controlled should know when to kill a bad project in a timely
manner.
Communicate
- All of the above through change and after it is worthless if communication is
not two way and regular with a strong collaborative tone. This applies to all
levels with one standard for the company.
Whilst big companies have the safety of size, they
should use their positives to address the threat of disruption, competition and
natural life-cycles by becoming leaner, more creative and more innovative. It
beholds senior management to follow this path no matter the industry, size or
longevity of their organisation to date. Sustainability and the future of their
staff is centred about management’s ability to convert the payroll “cost code”
into a profit centre where innovation, not simple compliance is the biggest
return they get from their biggest asset, which is their people.
Sources/Credits:
Pics;
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Credits:
Feature pic by Stefanus
Martanto Setyo Husodo on unsplash.com
