Corporate to Cofounder: Pitfalls in Corporate Innovation

Where we stand dictates our view, right?

For 15 years my view was the inside of large corporations, first as a consultant and later as an executive. But after 5 years as an entrepreneur, my line of sight back at the cliffs of corporate life reveals some new contours. Now I can pick out some of the barriers to innovation in large companies that I unfortunately (and gleefully) participated in in the past.

“Big company thinking” is usually pejorative, but that’s really not fair. Institutions persist because they work, however imperfectly, unfairly, and inefficiently at times. Big companies drive a huge portion of the economy. And they have a lot going for them that startups don’t – cash on the balance sheet, both depth and breadth of expertise, established distribution, stable go to market processes, cash on the balance sheet (you get my point.). I sure do miss the infrastructure and support of a corporate job some days.

And it's not that big companies can't be innovative - we can all think of life changing products built by the Fortune 100. It's just that scale bogs down agility almost without anyone noticing. These three patterns are especially pervasive: Spinning Plates Syndrome, the Department of No, and Zombie Resurrection.

Spinning Plates Syndrome

One of the most terrifying moments as a new startup founder was staring at a blank document on my screen and realizing that absolutely nothing about Surround was going to exist unless my cofounder Jay or I (and later our team) willed it into being. Without repeated acts of creation, a startup literally does not exist.

The relative safety of corporate life all too easily conceals that foundational truth. The only things that will ever exist, other than the natural world, are things some human somewhere willed into being by doing productive work.

You remember back to high school physics? Work requires both force and movement. If it’s just force, it’s not work, it’s just…force. Same in the office. If you’re lots of force, but nothing is moving, that’s just effort, not work. And in large organizations, there’s a tendency to measure and reward effort, not progress. Keeping the plates spinning is super visible, and sure looks cool, but at the end of the day you put the plates down and you’re exactly where you started.

What does progress require? The courage to do something that’s possibly wrong, and an organization that doesn't punish mistakes. It takes courage to figure out how to do something that’s not been done before and show the results to others. Courage is a fragile bird, and the hand slapping in many corporate environments prevents that courage from taking flight.

What’s just effort without progress? Steering committee meetings. Projects that are so big that the overhead to deliver is a significant portion of the time spent. Status meetings. Detailed meeting minutes. Some of this is necessary, but spinning the plates is a distraction from the real work. No steering committee has ever had an engine.

What to do if you’re stuck in this loop? Look carefully at what you and the managers in your organization look for as proof of work. Is it fancy Powerpoint decks? Or is it a signed contract, a draft landing page, a delivered feature?

You get what you ask for.

The Department of No

Startups are relatively permission free – everyone builds, everyone contributes, and the projects are small enough that it’s usually easy enough to figure out what you’re supposed to be doing next. Asking a manager or coworker whether you’re permitted to make a change might well get you laughed out of a lot startups. Nobody’s got time for that.

However, corporate jobs often mean living in a permission-bound world. There’s serious downside to being caught doing something without permission (aka no plausible deniability) and relatively little upside.

The direct result is the Department of No.

Who often gets rewarded? The people who save the corporation from infamy and failure by bravely crushing everyone else’s ideas? Or the people who sometimes break things, carefully and in limited ways. The former is the Department of No. If you have a Department of No, you probably don’t have much innovation.

Big companies can do it well, though.

I worked at Progressive Insurance early in my career. Glenn Renwick was the CEO back then, and every month there was an all hands get together in the cafeteria in the Cleveland headquarters. They’d have a cake for all of that month’s birthdays (you know, the good kind, the sheet cakes with the swirly frosting and sprinkles)? Glenn would speak for bit, and he’d share Progressive’s wins for the month.

Then he’d do something interesting. He’d list out the failures as well. Pilots that didn’t work, product launches that failed, advertising campaigns that fell flat. Sounds horrible, right?

Well, no.

He was calling out the good failures. The ones where someone had taken the initiative to come up with an idea, made a data-backed case for trying it, implemented it well, measured it, then shut it down and reported it. Glenn called out the names of the people involved, explained we were able learn from their work, and led a round of applause.

Pretty darn powerful statement that failure is a learning opportunity for an organization, no?

Does your organization do cake and fails? You should.

Resurrecting Zombies

Technical debt is one thing you get to start a company without. I can’t even begin to describe how freeing that is. (In fact: nah nah nah nah nah. Ok, enough gloating). There’s more than technical debt in large organizations though – there’s also historical debt.

You know the person in your department who knows everything that ever happened? Like that deal in 1973 that led your company to acquire Below Sealevel Homeowners Insurance, Inc? And the fee you’ve charged those homeowners for the doodad you send them every year? The 12 remaining customers who are expecting their doodads? And the person in your department who knows this also continually explains That It Is Crucial To Send The Doodads Because We Have Always Done It?

Well, the history of where a company has been is important. It like Chesterton’s fence – if you come upon a fence, and it doesn’t make any sense where it is…pause for a moment. Someone put a lot of effort into putting it there for some reason. Best to understand why before you choose to tear it down, no? That being said, there are plenty of fences that should go. They create a clear path for innovation. But tearing down those fences takes courage, too, and making decisions that are going to be unpopular with both long tenured staff and some customers. That doesn't make them the wrong decisions.

You cannot grow towards the future without letting go of at least some of the past. Startups have no past; big corporations do, and therefore need to make intentional decisions about what to hold on to, and what to let go.

Which zombies are you resurrecting, and which matter? Kill off the zombies.

A Final Thought

People everywhere are full of ideas. It’s why we stood up on two legs and built grand civilizations. Willing innovation into being doesn’t usually require more ideas… it requires systematically clearing a path for those ideas to take flight. That means rewarding actual work, reducing the impact of naysayers, and saying no to work your organization has outgrown. That’s saying yes to innovation.

Kate Terry is Cofounder and Chief Operating Officer at Surround Insurance , an investor-backed startup rebuilding insurance for Gen Z. She has held executive roles in Product Management at several large insurance carriers.