Innovation First: Corporate innovation principles
Crises can be the right time for a re-foundation and an opportunity to focus all efforts in one single direction. Entrepreneurs feed on haste, at the edges of the abyss, and large doses of passion are needed to make the radical decisions that allow them to pivot, adapt to the market and become eventually successful. Even if they have no certainty about the future.
Large corporations are at a crossroads, and in this post-covid world in which we will all undergo a profound transformation of our habits and priorities, we can also imagine the transformation of companies.
Nobody has a crystal ball to see the future, but after this massive experiment of confinement and forced digitization, I believe that some trends are here to stay and can help us to start over, modifying the way we work and communicate in a personal and professional way.
How can we ensure that corporate structures have true strategic agility, that is, a high reaction capacity to take decisions with speed and some sort of guarantees, while facing changing threats in almost every area of the business?
I humbly propose some principles of action and an approach to innovation that could be assumed in a transversal way by organizations and become a guide to accelerate corporate transformation. So that these principles could be communicated throughout the organization and incorporated operationally into a coherent cascade of objectives and KPIs.
The client has to be at the center of the company's strategy, but not as a “cheesy” consulting mantra, or as a marketing phrase without consequences, the kind of thing you would paint on the wall. A direct dialogue needs to be established, allowing you to understand and react to the customer's needs and demands. Hence, enabling the corporate to take risky decisions, which will define the behavior of the whole organization. And those decisions might be painful, so that an emotional relationship is forged between customers and the brand.
It is essential to demonstrate brutal honesty and trust that permeates the customer service, operational communication, marketing, pricing ...
Assuming this principle, it will be possible to grant the customer the reason by default, simplify commercial offers, focus more resources on retention campaigns and less on the need for continuous on-boarding and have consistency between values and behaviors in all the touch points with the clients.
Total openness to third parties seems to me to be a foundational capacity of any digital company, ensuring it becomes a “Smart enabler” that is capable of bringing its products and services to their customers, with the greatest speed, simplicity and quality of delivery and service.
To achieve this, we need to convince the entire organization that the profit of its partners, suppliers, integrators is not to the detriment of its own margin, and therefore, win-win relationships should be the norm and not the exception. And in a fluid context, partners may be competitors and vice versa, in different temporal or geographical contexts.
All teams should be considered "as an API of X", an interface that allows the creation of a layer of abstraction between complex systems, so that the external perception of all parties involved is simple, elegant and why not? pleasant.
This requires intense collaboration and communication, and to avoid staying in the field of generalities, I argue that this implies that we define by default that openness to collaboration and the effort to create simple interfaces (both technological and people-related) should be part of the design of any new business opportunity. And if it is not fulfilled, that service should not be launched. Full stop.
From there, it will be possible to develop an entire ecosystem of Open APIs to extend technology and internal capabilities to third parties, where I believe that startups can help test the reality of the promises someone carved in stone in an executive committee. Entrepreneurs will most likely take the APIs technical capacity and need for scale to the extreme, which is a situation that cannot be made up with “one-off” integration efforts, that are sometimes used to get things done with large clients using professional services.
Treating the small fishes in the pond as nicely as the large ones, as they do so well at Amazon Web Services, which goes from the smallest startup to Netflix without further hassle, will allow corporations to scale flexibly.
For a transatlantic vessel to function as a fleet of small ships, but in a coordinated manner, it is essential that the principle of simplicity (let me add, radical simplicity) rules in each of the communication, approval and action flows.
Every corporation has processes that could be reduced in steps, breaking silos and intermediate decision layers, even if a sense of control is lost.
The months of remote work have allowed us to test how it is possible to break the physical, and sometimes mental, barrier of organizational charts and be more agile. Corporations, beyond the myths, have enough talent to spare in all their teams so that decision-making and above all, accountability can get closer to the customers, ensuring that reporting and intermediate controls are reduced.
Startups are much lighter, by design, and I do not pretend to be naive and believe that a large and complex company does not need processes to ensure quality, compliance, governance and communication between dispersed parties. But it is possible to take advantage of the enormous effort made by large corporations during the confinement, to be able to use scalable tools and modern communication systems in all areas that allow all teams to have the greatest possible context, while not halting decisions by concatenating actions that could be parallelized.
And even so, there are still pending challenges in digital and remote work, finding new ways to allow the replication of the creativity of personal meetings, the transmission of culture and motivation to teams and the optimization of the time dedicated to meetings and 1: 1 conversations.
A large company can lower decision making by 2-3 levels, empowering the subject experts sitting in some isolated cubicles, eliminating committees and empty reporting efforts. Most of the workload must come from outside, from the customers and the market, not from within, from the internal structure. Too much effort is often devoted to prepare presentations, or meetings to showcase the best side of an issue.
And therefore, many meetings turn into a display of overcooked data, to the detriment of strategic discussion. The new normal will force a greater focus on planning and data-driven analytics and hopefully with greater weight of scientists and engineers at the decision table.
Managers still have a lot to contribute, but a culture of working sessions can be established, where the items that keep the experts awake are night are dealt with, while the managers' mission is to unblock them or give them strategic guides so that they can move forward .
Those managers can then be actively involved in their business areas without creating question/answer chains which go nowhere. And therefore breaking a corporate culture of denial, which only delivers good news upstream, instead of discussing the challenges, always keeping the customer satisfaction at the center.
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This absolute empowerment needs to be linked to full accountability, in which inaction and lack of collaboration are punished. While risk taking should be rewarded, even in failures. Meritocracy should govern professional careers and that these can be more fluid, with different levels as you have more or less scope or responsibility.
Approach the culture of excellence that Netflix advocates, hiring the best, who put the interests of the company first and understand that they work in a high-performance environment, giving them enough space so that they can act without restrictions.
Leaders cannot be a bottleneck to approve small budgets, products or projects and each party has to be clear about its responsibilities and fields of action, avoiding duplication or in the worst case, opposing efforts that deplete and consume scarce resources.
In a large company, it is complex to see where the function of an area begins and ends and it is easy to get lost in attempts at global/ local alignment to avoid conflict. But conflict is a natural part of transformation, and to face it, we have to start from a solid foundation of trust. And from there, we can mark the accountability of each individual and a responsibility towards the objectives, which will cascade down from the most strategic and global items to the specific detail of each team and person.
And then, the strategic lines of global action can be firmly established, with clear governance and a shared purpose, principles and objectives, allowing the business units a margin of maneuver for their implementation, given that they are the ones close to the client.
The customer, as I said at the beginning, is at the center and from there, its service and satisfaction, beyond organizational charts, silos and personal agendas, has to guide a culture of excellence and commitment. Those leaders who do not share this way of working and vision should leave room for action to internal talent.
The need for perpetual reinvention is a reality that corporations have clearly assumed by now. To achieve this, it is possible to choose two paths in parallel, an iterative innovation of processes, products, technologies and a disruptive innovation, in which it is difficult to reach scale, with bottlenecks in purchasing, approval, and deployment processes.
There is a very great potential in the creation internal products and its integration with third parties, but it is a must to provide the corporation with a second operating system, which coexists with the core of the day-to-day life and allows the design and execution of a disruptive strategy.
The moment a group of talented individuals is organized with a clear mission and a clear reward linked to that mission, magic happens. But also a competitive force is created, the internal antibodies, with different incentives. To be successful, innovators must be able to develop their project "end-to-end", using a flatter and more agile structure, with greater ease and access to experimentation with the client and with the ability to react quickly and creatively to business challenges.
To achieve this, I propose to rely on informal networks of peers, which enable a safety net that allows taking more risks and connecting areas that do not communicate on a day-to-day basis.
And I believe that a portfolio approach can succeed, where internal and external innovation complement each other around strategic areas to quickly launch products to the market, using external startups connected with internal assets.
Once these products reach critical mass, they can be transferred to the operating business, ensuring a change in the control and incentive mechanisms of the traditional organization, to promote the growth of new products at scale.
Scale ups are a good example of the ability to create those informal networks of internal change agents who work below the hierarchical radar, but are capable of executing projects in a very short time.
Open innovation can be a touchstone of this customer-centric vision and strategic agility, pushing the boundaries to move the company toward collaboration with third parties (small partners are always more difficult to integrate and scale than large ones), inspiring the entire corporation with ways of working that reflect the ethos of startups and simplifying processes out of sheer need for survival.
I believe that this crisis can foster a powerful commitment to innovation, not in the specific area of innovation, but in the entire company, with room for experimentation, incentives from HR and celebration of the failure that generates learning and more financial muscle to do relevant investments in relevant startups. Of course this shall be very linked to the business, actually very linked to the customer satisfaction and from there, of course, to the business.
I like to focus on the "new" part of the "new normal", as Marek Fodor tweeted, which brings massive digitization, unthinkable e-commerce adoption and new habits where, paraphrasing Mary Meeker, "it is possible to bet on companies that accelerate the implementation of cloud services and allow customers to be more digitally efficient, with products that can be sold online and with automated after-sales, at scale". Restructuring the processes of digital adoption, implementation and support towards processes with light touch.
Open innovation allows startups to launch new products, even if their MVPs are not yet perfect but that quickly solve serious and new customer needs (zoom has been used massively during the pandemic to enable live classes, although it was not intended for this purpose). And in addition to being an interface to facilitate interaction with startups in the ecosystem, it is possible to transfer these learnings and the fight against the barriers encountered by intrapreneurs to the entire company,.
Without trying to turn the Open Innovation area into a one-stop shop for access to startups, but trying to infect the rest of the structure with the necessary agility. And within the innovation “portfolio” approach, promoting the creation of spin-offs, with Venture studios where to create external products but integrated by design with the existing offer of the corporation.
It is much easier to write this very long post than to execute a strategy based on the principles it proposes. The inertia is brutal, and it implies to break the status quo of many agents, with decisions that are also risky and with little incentive in the short term.
These years I have been able to admire some of the virtues of large corporations, and an exciting element is the enormous vocation of permanence, of leaving a legacy for those who come after us, unlike the more ephemeral vocation of startups.
That is why we have to believe that these changes are needed, even if they hurt. From that vocation of permanence, we can avoid being stuck the short term, fleeing a little from the tyranny of the quarterly financial results. Taking decisions aimed at real experimentation with the client and not prior analyzes that protect careers, but not the company. Cutting duplications between global areas and empowering teams to launch products or resolve barriers quickly.
These principles must emanate from the leadership, and from there, ensure their understanding and their adoption on a day-to-day basis, overcoming divergences and managing a continuous give and take of going off course and correct, which should maintain a delicate balance between daily operations and constructive disruption.
Like a Phoenix, corporations have a lot to say in this new era and become places where the best talent wants to work because they find space for their development, customers love the brand because they always think of them first, and innovation arises at every corner because it is an integral part of the DNA.
Innovation Craftman
3 年I would say that we need Innovation as a principle to be "embedded" into corporate culture much more than a handful of Innovation Principles to be permanently rephrased by corporate management to reflect the dominant business jargon... Having said that, I have to congratulate you for the effort putting these principles together in the same post ? ?? ?? Last but not least, If I'am allowed to do it, I would suggest to be titled straight and simply as "Innovation First", putting your fruitful concluding remarks into value.
Driving systemic impacts towards Sustainability × Climate Action & Innovation
3 年Ajay Parasrampuria
Technology and Innovation in the ideation and introduction of new products
3 年Great article. I have some thoughts about the role of employees and company culture. The profile of employees should be open, wi?ling to grow and learn continiously. It's also building a culture of fostering learning and entrepreneurial mindset to pursue new ideas even when they are disruptive. Its building the whole ecosystem.