Facebook took two years to reach 50 million users; WhatsAPP did it in 18 months; Angry Birds in eight weeks; Pokémon Go in 72 hours.
This is the environment we live in now: disruption may not be new, but the speed at which it happens is increasing exponentially. If you’re not accelerating, you’re falling behind.
That’s what 15 Executive MBA students and alumni discussed at the recent Neeley executive workshop with Michael Sherrod, William M. Dickey Entrepreneur in Residence.
Sherrod explained that competitive advantage is increasingly about how fast an organization is able to adapt. But large companies rarely move quickly; they tend to reward anything that strengthens the established system, versus innovations that disrupt the system. And those massive companies are paying for it – by dying out.
That’s part of why we’re seeing a shift toward entrepreneurship. Individuals and smaller companies are better able to adapt. More than 30 percent of adults are on 1099s now; that number is predicted to hit 40 percent, or 65 million Americans, by 2020.
So how do you keep your organization alive and growing? How do you promote innovation? Sherrod covered many of the strategies corporations try – maybe one or two that you’re trying – and why they don’t always work.
Internal Innovation Strategies
- Dedicated innovation team – Companies hire employees specifically to serve on an innovation team. The problem: most of these hires are more interested in rising to a CEO position than in innovation. Plus, it can hurt morale among other employees to see the innovation team spend all their time brainstorming – which often looks like goofing off.
- Innovation outpost – Companies create an innovation team in a completely separate location – often in an area famous for innovation, like Silicon Valley. This fixes the morale problem, but disconnects the team from the company, and doesn’t always successfully plug them into the community of innovators.
- Innovation centers of excellence – Some organizations seek to build cross-functional groups throughout the company. For instance, Steve Jobs designed Pixar’s headquarters with the bathrooms, food and exits centralized, so everyone would run into everyone else, have conversations and share ideas outside their silos. “Diversity is the seedbed of creativity and innovation,” noted Sherrod.
- Intrapreneur programs – New companies often form out of the laid-off employees of other companies. Intrapraneurship allows companies to capture that activity for themselves. Instead of laying off a department that’s no longer needed, some companies give them a platform and resources to innovate anything from customer service improvements to full-blown internal startups.
- Innovation tours – Corporate leaders visit innovative companies, such as those in Silicon Valley, to discover trends and find inspiration. But an occasional field trip won’t necessarily fuel the radical ideas you’re looking for – besides, there’s a winner-take-all attitude in Silicon Valley that tends to ignore great ideas simply because they came in second place to others.
While some of these strategies are more effective than others, the overarching problem with internal innovation strategy is that it relies on existing employees who are already trained in corporate-think; already programmed to preserve the system rather than adapt it. Knowing that, some companies seek to promote innovation from the outside.
External Innovation Strategies
- Corporate incubators – These companies act as incubators for fledgling startups by providing funding and office space at their physical location, like the AT&T Foundry.
- Partnering with an accelerator – Other companies act as mentors and investors in accelerator programs that identify promising startups and help them grow quickly.
- Partnering with a university – Some companies tap into graduate projects and other research at universities. But the nature of this type of research requires several well-funded projects to develop something useable.
- Direct investment or acquisition – Other companies either directly invest in startups, or buy up a bunch of them cheaply and see what sticks.
The overarching problem with external strategies is that they depend on innovators who are pursuing their own ideas – not necessarily ideas that will fit your organization’s needs.
So what innovation strategy really works?
TCU is experimenting with a reverse pitch strategy: Gathering a group of entrepreneurs together and letting companies pitch needs and goals to them. The entrepreneurs who are interested then approach the company with ideas, and the company can choose to fund them. This will be one of the first programs like this: harnessing the creative power of outside individuals specifically to create things that fit the company’s vision, all in a diverse, collaborative setting designed to foster creativity.
Right now, we’re still building the pool of participating companies and angel investors, but we’re looking at launching next year.
What can you do in the meantime? We’ll discuss Sherrod’s tips for fostering innovation in Part 2 of this series.