Can Large Businesses Innovate?

When you think of big organizations, “innovation” isn’t what immediately springs to mind

Start-ups are generally thought of as agile and flexible. The ability to move fast is a widely recognized benefit of working at a small scale.

By contrast large organizations are seen as heavy, cumbersome things, weighed down by bureaucracy. Change in big companies tends to prompt metaphors like turning an oil tanker: it’s possible but it takes ages and needs lots of preparation.

So, the same must be true when it comes to innovation, right?

But you can’t allow that to be the case in today’s competitive landscape. All organizations need to be able to innovate if they are to remain competitive. And that’s true even if your strategy is not to be a market leader. These days if you want to sit comfortably in the middle of the pack, you still need to run to keep up. Your competitors are all innovating, you’re going to have to do the same.

So, is that even possible for large organizations?

Absolutely.

Cross 8 have been at the heart of change in large organizations for years, and that has given us the chance to see that big companies can not only keep up with the little guys when it comes to innovation… you actually have some advantages that smaller companies don’t have.?

The secret is to unlock them.?

The myth of the “good idea” and the “genius” – What is innovation?

Contrary to the popular impression, innovation isn’t just about coming up with clever ideas. Sure, a clever idea is necessary, in fact it’s essential… but it isn’t?enough. Innovation happens when an idea is turned into a new reality on the ground.

Ideas are wonderful things but they live in your mind. Innovation is a practical, tangible thing with results in the physical world.

At Cross 8 we use a proven, structured process to build and manage innovation, and coming up with good ideas is only the very first step in that process.?

And if that sounds like it takes the genius out of it, then you missed the previous point:?

Innovation is not about a lone genius sitting in a darkened room waiting for a flash of inspiration, it’s about taking good ideas and?implementing?them.

We’re labouring this point slightly because of how entrenched the myth of the “genius innovator” is in our society.

We celebrate lone individuals like Steve Jobs or Elon Musk and play down the role of the thousands of people it takes to deliver on their ideas.

This makes sense, up to a point. It makes for a good story, and as we’ve covered in articles on?implementation?before, having a strong sponsor to drive change forward definitely helps. But it’s only?part?of the story, and getting too caught up in it means that we miss the?strengths that big organizations have?when it comes to innovation.

How can you increase innovation in your organization?

You can’t just insist on innovation. It’s like commanding someone to be funny on demand, it rarely gives you the results you’re after.

But you can set up the environment in which innovation can flourish. And many of the ways to do that favour larger organizations over smaller ones.?

Let’s consider each of the steps in the Cross 8 innovation process and see how big organizations can play to their strengths.

1.???Generate

If we put the idea of genuine stand out geniuses to one side for a moment, then we can assume that the ratio of good ideas to bad ideas is pretty constant for the rest of us.?

So the trick to increase the number of good ideas is simple:?increase the number of ideas as a whole.?In this first step we don’t worry whether they’re good or bad, we’re simply looking to increase the volume.

This is one of the key advantages for large organizations:?your depth.

The sheer number of minds you have access to in a larger organization gives you a head-start in innovation… as long as they’re used effectively. And we’ve got some pointers on how to do that in the Practical Steps section below.

2.???Filter

The goal here is to take the ideas we generated and sort out the ones that are worth pursuing.?

If you don’t handle it carefully then this is usually the trickiest step in a large organization, because it’s far too easy to fall into the trap of filtering?everything?out, when in reality big companies should be lowering the threshold for filtering.?

The truth is that large groups of people?do?become more conservative, and phrases like, “That would never work here…” or “But we’ve always done it like this…” can be all too common in the meeting rooms of larger organizations who don’t intentionally control it.?

However, if you can resist that… or better yet set up processes to prevent it… then your size gives you an advantage in the Filtering stage:?You have the scale to allow yourself mistakes.

In practice this means you can extend the concept of filtering into the Proving stage, and your initial filtering does not need to be as accurate as it does in a smaller organization.

You can let more ideas through to the next stage, committing a small group and allowing it to fail without it breaking the company, something smaller companies don’t have the resources to do.

3.???Prove

This is where you take the ideas with the most promise from the previous stage and test their essential characteristics in the real world.?

Using tools like rapid prototyping, incubator models, and split process tests means that your final decision to roll out new solutions company wide will be based on actual results.?

So, does the big organization have an advantage here??

Yes.

Again, your size gives you opportunities that smaller, traditionally more “agile” companies don’t really have. You can carve off parts of the company or customer base and experiment without having to pivot, and potentially put at risk, the whole company.

If your innovation is customer facing then use your larger customer base to identify a representative group and try out your new option with them, containing any risk. (Of course, you’ll need to handle the messaging and PR right, but that’s a topic for another day).

If it’s an idea that is primarily internal, then look at how you can best select a department function or team and apply it to them.?

Remember, you’re not looking to replicate the whole thing across the organization, only to prove that your idea will deliver the results you want. And designed well, the Proving stage doesn’t need to take forever.

4.???Implement

Now, this is the point where smaller organizations often do have it is easier. Rolling out a change across a small group of staff or customers is inherently easier than doing the same thing at your scale.

But…

Don’t underestimate the power of experience when it comes to implementation.

There’s a survivor bias operating here that artificially inflates the success rates of smaller companies when it comes to innovation. Of course, there are small companies that innovate effectively all the way from idea generation to implementation. These are the ones that make the news or stick in our mind from our own experience.?

As of 2020 there were 5.94 million business in the UK with fewer than 50 staff.?[1]?How many of them are?effectively implementing?new ideas?

As we all know implementation is notoriously difficult to get right, and you have experience, partners and methodologies which have been tried and tested over the years.?

Once you’ve proven the idea will deliver results and is scalable, then bring that experience and expertise to bear rolling it out.

Practical steps you can take to foster innovation

Hopefully this has shown you that innovation is very definitely is not confined to start-ups.?

As a leader in a large organization, you have some starting advantages. The key is to recognize them and use them, not to buy into the self-defeating myth that you’re too big to innovate.?

Here’s a quick list of some concrete things you can do to build and embed an innovation culture in your organization:

• Implement a structured process like the one above to manage innovation so that you increase the number of ideas being generated and ensure they make it through to become genuine change in your business?
• Add explicit training in innovation to your leadership development program, and consider rolling out a less intensive equivalent such as an online course to your broader workforce
• Develop systems and processes to capture the embedded intelligence in your company, and don’t just look in the usual places. You want to draw on the widest possible pool for ideas – use your depth. (Don’t overcomplicate this, you can implement an innovation portal to record and categorise ideas, etc. but you could start with a suggestion box tomorrow.)
• Appoint a board level innovation champion – this is a cross business role and the goal is not for this person to own any of the delivery but to increase the inflow of new ideas
• Include innovation in performance frameworks and bonus schemes across the business, with a tighter link as you go further up the organization?
• Set aside a budget for innovation each year with an explicit allowable failure level, and make the failure level higher than you’re comfortable with – Think of the innovation process as similar to an R&D budget, room for failure will actually increase the amount of success?
• When in an active idea generation stage use teams that are as diverse as possible – diverse in terms of gender, cultural background, viewpoints, and business roles. Not just because it’s obviously the right thing to do but because it’s going to broaden the types of ideas you get?
• Involve your supply chain in the process – Supplier Enabled Innovation is covered in more detail in our article?here. For now, it’s enough to note that by leveraging your suppliers you give yourself access to another large group of minds, and a broad supplier base is yet another advantage that large organizations have over the start-up.
• Make an implementation plan a key part of the?Proving?stage for each idea – implementation is where you are going to realize the benefits and set yourself apart from the competition
• Measure innovation – start simple by capturing the number of new ideas being generated and the percentage that make it through to implementation
• Add a review of innovation to each business unit or department’s Quarterly Business Review?

Conclusion

As we’ve shown, large organizations not only?can?innovate, they have several in built advantages that are usually overlooked.?

If you want help unlocking the potential of your organization,?get in touch with us.

And in the meantime, remember the advantages you have:

• The sheer number of minds you have access to gives you a head-start. Use them all.
• You have the scale to allow yourself mistakes. Be brave and lower the threshold for filtering.
• You have enough customers and staff to test on small groups without putting all your eggs in one basket. Experiment.
• Many companies, big and small, will fail when it comes to Implementation, but you have the benefit of experience. You’ve had wins and losses. Use that experience to turn a good idea into practical real-world innovation.

[1]?BEIS:?https://www.gov.uk/government/statistics/business-population-estimates-2020/business-population-estimates-for-the-uk-and-regions-2020-statistical-release-html#composition-of-the-2020-business-population