It’s been about 20 years for me in corp, 17 of which have been spent with the undisputed market leader of the re-insurance industry. As have all big corp over the last few years, so also did this magnificent sturdy giant take on innovation as a strategic objective, as much to reassure themselves as to assure their shareholders that they can stay relevant and keep on growing in an exponentially changing world.
With all the wisdom and experience put out there already on why corporations struggle or fail at innovation, what does it boil down to? Louis V. Gerstner, Jr. who led IBM back from the brink of extinction in the 90’s had famously said culture is not merely one aspect of the game, culture is the game. Here was a leader trained at Harvard business school and McKinsey, that believed in a soft subject like culture. He knew a strong corporate culture of ‘this is how we do things here’ can inhibit the ability to adapt in a changing world. IBM had to change, or it would die. Yet, it was also important to preserve the strong IBM brand, keep the core value proposition while mobilising the company with a new maniacal attention to customer’s needs and an enormous sense of urgency. His proudest accomplishment was to institute a culture that brought IBM close to its customers by inspiring employees to drive towards customer-defined success. Re-invention is well in motion when an organisation successfully moves its focus from within (itself) to its customers. That cultural change has to seep into the DNA of the organisation, the mind-set, the incentive system, the rewards system.
Shut down the Labs?
About three years ago, in an attempt to jump start a new kind of innovative energy, large organisations packed off their creative brains to camp in a location outside of the business campus, emulating the Silicon Valley scenario. In theory, the idea of co-locating the team in a casual start-up type environment, away from the din of daily business, dropping the stuffy suits and ties of big corp has its advantages. Labs are great if used as a breeding ground of the kind of culture to infest the entire organisation with. To have that kind of reach, first the intention must exist and then the necessary mechanism put in place to create a system for cultural change.
Too often though, Labs remain separate and away from core business, creating a 2-class system within the organisation, one who’s job is to innovate and the others who come to see their jobs more and more as a daily drudgery in comparison. I have spent some fun years in corporate Accelerator Labs learning and practising cool stuff long enough to know that there does exist an unmistakable air of privilege. The core business is separated and disconnected from the privileged creatives, who in turn lose sight of where the money for their cost centres come from. Large corporation have the huge advantage of a sea of resources in budget and people that the regular 3-person start-up can never match. Mobilising these assets to break away from the old inflexibility takes more than setting up hip warehouse-styled Labs. A culture of innovation means training everyone in the organisation to think different, have two jobs, regardless of if they answer the phone, or work in the spark room, or work in marketing or sales or are head of accounting – they do each of those and they innovate, with anything they can bring to the table to make the product or service better for their customers and meet their needs better.
Set up an innovation system!
The most familiar measure of success is ‘in-time’ and ‘in-budget’ to build and ship. The more is built and shipped, the greater the success. It’s certainly true for manufacturing where increasing the efficiency in the production of something that has been produced many times before makes sense. Such linear models bear high risks in an uncertain environment. There is no point in building that hammer with great efficiency, even if that’s what the team got the money for, when all the subsequent evidence is pointing towards an axe. Systems that apply to improving the core business are a hindrance to doing stuff well outside it. In the absence of a structured system for innovation, existing archaic systems of budgeting and measurement are applied, or worse still, personal management preference takes precedence. The process becomes chaotic, expensive, and also excruciatingly frustrating in its lack of transparency. You know when there are innovation gate keepers, much more thought has gone into controlling the system than the actual setting-up of a sound system that will help the organisation adjust to change. A clearly structured system guides through what needs to happen to encourage collaboration across the organisation to create value and share information, when and where can it happen, how much of it needs to happen. New metrics have to be defined for a system where an essential and important activity is the practice of listening, of observing and learning. How can these be encouraged and rewarded to avoid spending years of money and resources building the wrong thing. I have repeatedly gone through the inefficient task of introducing, presenting and convincing management to adopt tested and tried systems. High potential teams are inhibited for months on end trying to decode the cryptic path to the next stage of management support, rather than acquiring their next customer or running the next experiment or researching their competition. It is a terrible shame when entrepreneurs are left guessing what might be expected of them to prove the potential of their ideas. The best brains burn out when this happens often enough. The burn-out can by stopped by empowering through clarity and structure.
Bringing about grass-root change has got to be directed by a shared vision of the future, an inclusive atmosphere that mobilises the organisation as a whole to collaborate together and a clearly structured and transparent system to guide teams and their results under conditions of extreme uncertainty.
As Gerstner prove, elephants can dance if they have to. Corporations can innovate if they seriously mean to. Change is not always necessary, survival is a choice.
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