The Best Way To Innovate: Big Company Edition
As seen on Forbes.com
There is a reason why the tortoise always beats the hare. The hare lost to the tortoise, and big companies will lose to entrepreneurs every time if they try to compete on speed. That was our message last time when we talked about innovation.
Having talked about what large companies shouldn’t do when it comes to trying to innovate efficiently, let’s discuss three proven strategies that will work for big companies.
Are these strategies sexy? No.
Extremely profitable? Yes.
Now, I am not advocating that you move at a pace that makes molasses in winter seem like a raging river.
As I have written about before, your company needs to be agile. But that agility must be in the context of what you do well. Yes, you need to move faster. But when you do, you need to leverage your core strengths, and speed is not one of them.
That’s OK. As the tortoise proved, corporate evolution is a marathon, not a sprint.
Strategy 1: Know Your Customer’s, Customer’s Customer
The most innovative companies—big and small—have an intimate relationship with the needs of their end consumer. This is often the reason that small companies are better at new product development; they go way beyond demographics; they know everything about the deepest desires and fears of their true customers—the people who ultimately use their product.
Large organizations tend to listen too much to the “experts”—distributors, agents, doctors, professors, etc.—who stand between them and the ultimate users of their product or service.
Too often these experts get it wrong when understanding the real desires of you and me. Dentists initially rejected teeth whitening products. They thought they were in the oral health business. What we really wanted were brighter smiles.
The trick is to understand your customer’s, customer’s customer—to stop thinking of yourself as a B2C or B2B business and instead become a B2Me business. If you haven’t segmented your potential clients deeply, you are missing an opportunity to discover significant needs that someone is going to serve. It might as well be you.
This type of work is a marathon, not a sprint. The companies that realize this win in the end.
Strategy 2: Create A Portfolio Model For Innovation
If you want your team focused on the right finish line, please stop speaking about innovation broadly, e.g., “What our company needs is a real innovation.”
When you leave things open-ended like that, one person thinks you want to build a flying saucer, and the other believes you want to figure out how to modify what you already have just a tiny bit.
What you want to do is to create a portfolio of innovation.
We recommend a simple model that includes four types of innovation: evolutionary, differentiated, revolutionary and fast-fail. Each of these types of innovation requires different strategies to execute. For example, fast-fail innovation requires the ability to use minimally viable prototypes to make very small bets quickly. Here, speed trumps perfection; and the real cost is time. But remember, this is only one quadrant of your portfolio, not your entire new product development strategy.
A balanced approach across these four quadrants will help your teams mitigate risk. It will also give your rabbits fields to run in while your tortoise teams are focused on the horizon.
Strategy 3: Work On The Soil As Much As The Seeds
Every farmer knows that you need great soil to grow any kind of seeds. Plant even the best ideas in a culture that isn’t prepared to grow them, and they will die on the vine. Let’s face it; you already have plenty of good ideas, but they never seem to go anywhere, right?
To truly embrace innovation, you must institutionalize the language, frameworks, practices and incentives from the top of the organization down. So before you start planting the seeds of ideas, make sure that you have an equally strong plan for dealing with the soil: the culture.
The takeaway here: Think like a tortoise, a very clever tortoise. When it comes to innovation, companies that act like hares invariably lose the race.
Next time, I’ll tell you how the entrepreneurs win the race by changing the rules.