Ever met anyone in business who doesn’t want to innovate? Me neither. The problem is just because businesses, especially big ones, want to innovate doesn’t mean they can or will.
In his classic text The Innovator’s Dilemma, Clayton Christensen describes this inability to innovate inside large corporations. Clayton gives two main reasons why this is the case.
Christensen believes the first reason is that innovation resembles an S-curve; meaning value gains are greatest in the middle — when businesses are rapidly expanding. Once past that steep climb, chasing innovation becomes asymptotic.
The second reason is that once a company starts growing too big, feeding the beast becomes the focus. The bigger the company becomes? The more it must consume massive sales leaving less time to focus on innovation.
While innovation happens more easily in small businesses, it doesn’t mean it can’t happen inside the enterprise with the right set of ingredients.
Now Seeds, Start Growing!
Ever read Frog and Toad childrens’ books by Arnold Lobel? One of my favorites is The Garden.
In it, Toad tries desperately to get his seeds to grow and winds up doing this.
My kids crack up every time.
I think of Toad yelling at seeds when I see executives in big businesses complain about their organization’s lack of innovation — all the while withholding the proper resources and nutrients to make things actually innovate.
Innovation rarely works, arguably never works, when it is strictly a top down edict. Eventually innovation might spring forth, but it won’t be for anything Executive Toad does other than patiently and faithfully providing the things which seeds actually need.
I saw this for a decade firsthand at IBM, a problem they papered over with fat stacks of cash. Big Blue loved paying lip service to the word “innovation,” but by which their definition conflates innovation with both “invention” and “commercialization.”
Invention in that IBM’s research arm churns out staggering numbers of patents every year, largely independent of actual business strategy.
Commercialization in the Crossing the Chasm sense that IBM regularly acquires innovative companies which they catapult over the chasm into their enterprise distribution channels to impressively lucrative (though still not innovative) results.
Sure, IBM has dug financial moats with patents and expanded their war chest through commercialization — but I strongly disagree with the definition of what IBM sells to the public as innovation. In fact, IBM Software convinces me more everyday that they have more in common with firms like Vista Equity Partners as they execute classic private equity playbook moves through never-ending roll-ups and leveraged buying and selling of assets.
In twenty years in the tech workforce, the pattern of innovation inside enterprise I’ve observed conforms to one truth:
At big organizations, the best and most innovative products grow in darkness and filth.
These are not the big bang IT projects we all know and dread.
These are not “The Bobs” helping us weigh whether Is Innovation Good for The Company?
This is about how skunkworks teams and small hacks can eventually lead to great products.
I fully admit that my data points are anecdotal, but I’ve been witness to enough big bang projects to see the trend. Whether it is company-wide business process improvements, installing enterprise message buses, or filling up data lakes, I know how the end-users usually feel about them.
I’ve never stepped into a NYSE-listed business and listened to employees break into song about their devotion to crushingly rigid enterprise resource planning tools.
Psst! Check this out!
Rather, I have witnessed a business analyst geek out in whispers about the box hidden under their desk running a humble datamart. I’ve watched people quietly fist-bump about the hundreds of hours they saved themselves by learning how scripting JOIN statements can bridge data between siloed systems. I’ve seen a junior data scientist devilishly smile about her data streaming Proof of Concept thanks to a credit card, an AWS account, and a Kinesis instance.
All of these were projects that their enterprise IT department either didn’t have the time to perform or more likely, didn’t have the interest and knowhow.
Foraging for Mushrooms
These small hacked together one-offs remind me of mushrooms.
In nature, mushrooms help break down decaying organic material into simpler, more consumable nutrients. So in this scenario, is SAP a big tree indiscriminately dropping dead branches on unsuspecting victims?
If the metaphor fits …
Rigorously maintained and massively scaled systems like SAP absolutely provide value to the ecosystem, but overlooking the little decomposers who spring up at their roots is folly. They are just as much a part of the ecosystem.
In my enterprise days, I loved and celebrated those hacked together “mushroom” solutions. Why? Because as a systems architect it was my first clue to help teams envision new possibilities … which would lead to even more value.
So inside the enterprise, what should we be looking for? Here’s a few ideas:
Lots of underlying substructures – Mushrooms exist as part of a much larger organism that runs underground, in extreme cases for many miles. What are those substructures you can utilize? Can you pull data from your ERP system? Are there enterprise buses you can tap into? Would an LDAP hierarchical permissions chain provide value to your work?
Compostable Material – I don’t know if this would classically be defined as technical debt. But I see “compostable material” as the delta between the allowances of the current systems, versus the unmet needs which users currently have. That’s the material which is ready to be broken down.
Right conditions need to be present – For mushrooms to sprout, there needs to be sufficient moisture, the right range of temperatures, and the fungi have to have access to dying structures from which to pull materials. If they aren’t all there? The organism stays dormant; waiting for its Goldilocks Zone to appear. Are all the right conditions present for you to start to build out this system?
Visible growth happens quickly – Once the substructures and conditions are in place, the value could “mushroom” almost overnight. Be ready to use the new information and tie it back into your operations and management and document and demonstrate how quickly change can occur.
A brand new colony – Mushrooms propagate through releasing spores which can then turn into future colonies. Can successes of others help you to find your own? Can you now pass your own successes on to others? How can you as a team and a corporate culture celebrate those successes?
Ownership and Accountability
Gary Pisano, professor of business administration at Harvard, rejects the idea that big businesses can’t innovate and recently wrote a book about how big businesses can act like startups.
In his book, Pisano outlines three principles for these businesses who want to get scrappy. To paraphrase, Pisano believes that businesses need an overarching strategy to give resources and support to explore innovation. Then businesses need to allow for the right kind of systems that favor innovation over optimization. Pisano’s third principle is hardest to pin down, which he calls culture, but by which he means accountability and ownership:
… [T]hese are tough organizations to work in. Every day you’re challenged. Nobody lets anything slide. There’s a lot of collaboration, but there’s huge personal accountability. And you need accountability to make decisions. You need individual accountability to make decisions quickly, and that’s key to innovation.
What I have found is very often companies and people in the organizations are less comfortable with that other side of the innovation culture ledger … There’s a lot less taste for, “Well, we’re going to actually hold people personally accountable for the decisions they make. We’re going to set really high standards.”
Innovative cultures are tough. They’re very tough.
Seek and Destroy
Inspiration for innovation can come from stories like how Amazon built the Kindle. Dan Rose, who worked at Amazon and Facebook during pivotal times in their growth, was on Jason Calacanis’s podcast Angel recently. In the podcast, Rose discussed what wild innovation must look like inside established businesses.
Rose saw this firsthand as one of the first members of the Kindle team — the product which disrupted the book industry and Amazon itself, all from within. Rose explained how Jeff Bezos launched the discovery process for what eventually became the Kindle. Watch this section of the interview:
‘Effective from tomorrow you’ve been fired from your job in our core business. [..] Your new job is to build a digital media business and you’re the only employee. Go build a new team. And your job is to kill your old business.’
Dan Rose retelling Jeff Bezos’s commissioning of the Kindle
That’s radical innovation. Looking through Pisano’s prism of innovation, it’s easy to see how Amazon succeeded.
Bezos saw the future of the publishing industry and had a strategy to disrupt his own business rather than let someone else do it.
As such, Bezos started dedicated resources to build a protected system which would disrupt his own business from within. Steve Kessel provided the right systems for Amazon to succeed from one venture to another. From the early days of Amazon online “stores,” to the Kindle, to brick-and-mortar Kessel was a catalyst for building new things and knew how to build those systems from a blank slate.
With Kessel at the helm, Bezos trusted the right culture of ownership and accountability would foster innovation as the team grew. As evidenced by the success of all those groundbreaking products.
Conclusion
The Innovator’s Dilemma is real, but is it insurmountable for big business to innovate? No, but whether your business is big or small, innovation won’t happen by fiat.
Instead, innovations best thrive in an opportunistic, bottom-up approach. Think of innovation like mushrooms and create the right mix of conditions. In order for them to flourish innovation needs a strategy, the right kinds of systems, and a culture of ownership and accountability.
Have stories about awesome innovations or innovation trainwrecks you’ve seen in your career? Please share them in the comments!
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