All large companies started small, as startups with an appetite for creating value in new ways. Startups are by definition entrepreneurial because they are adventurous, daring, and ready to act fast on new discoveries. That's what the word means: To seize opportunities. However, an apparently inevitable effect of success, as a function of time and growth, organisations create structures that tend to stifle the natural curiosity and courage of the early-stage startup. And there's a reason for that: Large organisations must build systems of control in order for their operations to become as predictable and fail-safe as possible.
The unfortunate consequence, sometimes called the innovation paradox, is that these very systems of governance, process, incentives, hierarchies, and silos are largely preventing organisations from responding to change and to seize new opportunities quickly enough to capture value and market share. We even see this clearly during the market expansion of startups, when they morph into scale-ups, and focus all efforts on stability and predictability. Innovators in a scale-up have a particularly confusing life because the business model has become stable, and any attempt to expand or improve it is not helping the strategy at all.
Studies of corporate innovation consistently show that around 80% of business leaders believe innovation is crucial for their future growth, while less than a third are satisfied with their current level of innovation. Meanwhile, almost every business executive say that people and culture are the most important drivers of innovation.
To understand what we can do to solve the innovation paradox, we have to first accept that the operating models of larger organisations don't provide many useful answers. Even though a reasonable question from leadership teams is to ask for "best practice" to help accelerate innovation, such "best practice" is at best context-dependent and usually won't be effective in isolation.
At Unlikly, we believe that people are naturally "agile". It's innate in human beings to collaborate, and to bring different competencies together. We understand that we can only succeed with anything in teams, and we know the meaning of "all hands on deck" as a metaphor for stepping out of the comfort zone and doing whatever it takes. This natural agility, or willingness to learn and act together in teams, is precisely what organisations have to set free for innovation and entrepreneurship to flourish.
Rather than adding extra complexity by introducing more processes and governance, we must look for ways to descale complexity by removing it. This exercise is more fundamental, and maybe to some, existential, than one might think, because it challenges some of the underlying values of how we organise: At the root of the innovation paradox lies the difficult balance between autonomy and alignment (or freedom vs. control) that touches all functions and levels in complex organisations.
So where do you begin? As always, by thinking big and starting small. To rediscover your entrepreneurial DNA as an organisation, you have to reimagine how you organise around the work ahead by getting your priorities straight:
Organising differently beats retro-fitting tools and processes This first means forming a few teams that have the necessary collective skills, ability, knowledge, and freedom to own part of the overall value proposition end to end, and to trust them with getting the work done. The cross-functional teams must be dedicated and stable (good-bye to resource allocation), and ideally rewarded as a team rather than individuals.
Improving over time beats starting with the right idea With a team or two in place, you can start putting in place expectations to innovation relevant for the business area they cover. The teams will naturally self-organise to explore new and better ways of delivering, and they will learn how effectively they can improve because they have control over their own decisions. Make sure to measure team happiness regularly (good-bye to yearly employee satisfaction surveys and follow-up projects)
Problems worth solving beat suboptimisation Usually within 3-6 months, teams will build the confidence required to move beyond continuous improvements of the existing work and commitments. At this point, you can connect your product or business strategies with the teams and ask them to solve some of the wicked problems in their area that might have an impact on the value proposition or business model itself (good-bye to random design sprints and executive innovation workshops).
Pull beats push Add more teams to the new way of working over time, covering adjacent areas of your business. Mature teams can help getting new teams afoot. You should experience a "pull" from elsewhere in the organisation.
On this journey, you must resist building unnecessary governance to control or manage the teams, because there is really no need for it - the teams will know best what to do within their respective domains. Instead make yourself available to solve problems or pave the way if the teams get stuck. And equally important: Avoid the up-front discussion on scaling new ways of working: The model is largely scale-free, meaning you don't need the overhead.
• Thanks for your interest.
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