In Conversation with Stephen Newport
Companies have no shortage of great ideas, however, in 2017 it’s all about execution. We sat down with Stephen Newport of Economical Insurance to define what it means to move innovation beyond just concepts and conversations into reality. It was a fascinating conversation that touched on the types of inertia present within large enterprise, the Innovator’s Dilemma, and the role of internal teams within the Innovation Process.
Thinking of ideas is easy. Connecting them to the business is challenging.
Every company is full of wildly talented employees with fantastic ideas. But there’s a perception that innovation can be stifled due to organizational culture or a lack of good ideas, causing enterprise innovators to chase these issues instead of focusing on the real levers to pull. So instead of focusing on changing a culture of innovation, you need to understand what blocks innovation — and how to drive through these barriers.
Let’s say you’re working at a big company. When you’re innovating, expect three types of inertia.
1. Old processes.
Established processes at your big company can block innovation. Because they were created by people with entrenched, well-defined roles, those people tend to protect their processes – which can cause frustration and wasted time. The definition of bureaucracy.
Trouble is, over time, industry trends develop, but processes stay the same. Netflix found a good solution. They refer to these process relics as scar tissue. They’ve identified scar tissue as processes that helped protect the organization at one time, but are now redundant and need to be redefined.
To break the cycle, we still need processes – but they can be more dynamic. Define (and re-define) processes that work from the customer’s perspective back into the organization. Define processes around the customer and what it takes to delight them. In large organizations, where not everyone is customer-facing, design processes to directly support those who are customer facing. Our contact center at Sonnet, for example, is one of my team’s primary customers. Most importantly, arrive at a new process knowing that this new process may also become superfluous down the road.
2. The Innovator’s Dilemma.
“The Innovator’s Dilemma” is a term coined by Harvard professor Clayton Christensen, and you should know what it means if you’re innovating in the enterprise. Hugely successful companies who focus on a single product can be blindsided by unexpected competition.
Need an example? Take the automobile industry. Because of their successful singular focus, Ford Motors was tremendously successful in one area, and therefore wasn’t able to predict the rise of companies like Tesla or Uber. Your big company gets big because you focus on a single product or service really well. Trouble is, success with a singular focus often leads to an inability to develop awareness for competition, evolving trends, or disruptors.
To break the cycle, foster and protect the capacity to experiment in other markets.
3. Lack of burning platforms to create a sense of urgency.
As your big company grows, you’re riding waves of ongoing success. Innovation and risk taking become buzzwords without an acute need to change.
To build urgency around innovation, teams need an external source of competition. If groups don’t have real competition, leaders often create competition to drive alignment and execution. Pick a potential disruptor even if they aren’t a direct competitor. Take them seriously. Communicate this throughout the organization. This is critical.
And if you’re working in a highly-regulated industry where disruptors abroad have barriers to entry into Canada, don’t ignore them as competitive threats. Use them as models for innovation. Until you can focus on an external competitor, your efforts to innovate will be scattered and ineffective.
To break the cycle, find disruptors, identify them as targets, and align around the competition.
To form these innovative groups, look to your employees.
When you’re charged with innovation in a big company, create a small and completely independent group. Form the team, untether it from the organization, but make sure their work ties back into the company’s strategy.
The ensemble should be comprised of people from within the enterprise. Key cards equal membership cards. This small agile team will create and own innovative ideas. They’ll need to build ideas without inertia getting in the way. To enable this team, recognize that they can work without a net – that their efforts might fail or even momentarily defocus the enterprise. Get permission to do that.
Be comfortable with ambiguity.
Let the innovation group prove-out their value by tying objectives to real-world budgets and numbers. This will eliminate speculation that it “might not work,” and gain acceptance from the enterprise. Hold-up the results to the enterprise, and map important areas of dependency back to the legacy business. There will be aspects of the enterprise where you’ll need to achieve scale (i.e. Shared Services). Being able to create the links between this independent group and the enterprise is a critical art to master – and it needs to be supported by the senior management team.
There are two forms of failure: when the idea isn’t good, or when the idea’s value hasn’t been proven to the enterprise that funds it. When you’re striving towards agility, ideas won’t be protected unless they connect back to the broader business. Most ideas are actually pretty good. But they won’t work unless they plug back into the enterprise.
And to really, actually protect new projects: plan ahead, and understand failure.
In the front-end planning phase, think about iteration zero. Design the minimum architecture required to execute. Don’t just go out and start iterating like a real start-up. Instead, lock down an architectural model that is innovative, but aligned to organizational realities. Some say this “big planning up front” isn’t necessary. Time spent in planning and preparation is never wasted.
Advice for future innovators with that next big idea.
Find innovators in your big company, and partner with them. Especially in more conservative companies with mature business practices, show a genuine interest in innovation. Leaders will help you get involved. Seek them out and be persistent. Ask five times. It works.
And what’s on the reading list?
Look at Ten Types of Innovation: The Discipline of Building Breakthroughs, by Larry Keeley, Ryan Pikkel, Brian Quinn, and Helen Walters.
So fail fast, and bookend the planning. Think big up front. Connect ideas to the business.
And have fun.