There are many reasons companies are drawn to the notion of innovating, but three emerge as the most salient and widely-applicable:
- The existing business is built around older technology or serves customers in antiquated ways
- It is interested in a product extension perspective (i.e. retooling existing products to be more relevant across a variety of fields)
- A threat looms within the company’s – or an adjacent – industry that could render the existing business irrelevant
The problem facing the majority of large companies looking to innovate is not a lack of interest in innovation or a rationale to invest behind it, but a systemic stymying of the entrepreneurial spirit within their own companies. This spirit which is the core qualities of an entrepreneur is a key ingredient in the success of any startup – whether an investment in innovation or a venture-backed company.
We have found there are two primary factors that lead to entrepreneurial spirit styming at large businesses: structural and philosophical. To increase the odds of success, companies should encourage entrepreneurial spirit among their employees. We recommend three strategies below.
WHAT MAKES A PERSON ENTREPRENEURIAL
Before a large company can implement a successful innovation program, they must first be capable of fostering the core qualities of an entrepreneur among their employees. Intra-company innovation is built upon the foundation of these five entrepreneurial characteristics:
- Achievement Striving
- This quality is the cornerstone upon which all other entrepreneurial traits rely. It is innate motivation: the imperative to move forward and to succeed. Without this quality, one cannot hope to innovate, as there is no desire to improve.
- Industriousness is characterized by persistence and hardiness, the ability and DESIRE to overcome obstacles. Industriousness informs both the problem-solving AND problem-FINDING skills that characterize entrepreneurs – their ability to isolate unresolved (and even unidentified) issues, and generate solutions.
- Passion is the lifeblood of every entrepreneur, it is the fuel on which they run. Innovation requires a profound understanding of any given field and an understanding born from a PERSONAL COMMITMENT to the project.
- Taking Control
- Those with a higher degree of perceived control over any endeavor will invariably operate with a greater sense of personal investment. While having a sense of ownership over one’s work is crucial for PASSION, it also generates a sense of ACCOUNTABILITY, making one more likely to charge into a problem head on.
- This is the quality that enables entrepreneurs to generate solutions that break the mold. Whether it be within the established practices of a single company or the zeitgeist of the industry at large, creativity allows one to shatter the established modes of thinking and truly innovate.
These defining characteristics of entrepreneurship can be found and/or cultivated within ANY employee.
However, within large companies, the infrastructure that has enabled their success has over many years grown inflexible. Certain structural and philosophical qualities have taken root and calcified, which can constrain (and even discourage) the ability for a company to innovate from within.
Every business is outfitted with an array of standard practices and procedures, designed to streamline workflow, and ensure the scalability of the company. Unfortunately, all too often, these can become unnavigable bureaucratic systems, obstacles which all but destroy the desire and the ability to innovate among the company’s employees.
Of course, such structures are necessary for the growth of the company. They ensure rational practices, and protect the company from taking unnecessary risks.
Innovation, however, is about taking manageable risks to pursue crazy ideas. Some of the biggest success stories in the startup world involve “terrible” ideas that were given room to grow (think Twitter or Airbnb). This risk aversion manifests itself among a company’s employees as an utterly crippling blow to achievement striving and industriousness.
There can be no motivation to improve or innovate if any new idea is met by immediate disapproval from a risk-averse CFO. Why bother thinking outside the box if the box is the only place management feels safe?
Another major factor that hampers a company’s ability to innovate can be traced to the difference in the philosophical anchors of startups and those of major corporations.
Established companies tend to adhere to a “failure is not an option” approach to business, which in turn, encourages hiring outside the company when it comes to innovation. Management will typically turn to established platforms and practices to mitigate any kind of risk, opting for the safer option and all but destroying the chance to come up with something game changing.
By contrast, startups typically embrace the possibility of failure from the outset. As a rule, they are more experimental. Pioneers.
As such, they are far less likely to enlist the help of outsiders when they encounter obstacles. After all, who can possibly better understand what they are trying to do than themselves?
Instead, startups tend to source solutions from within, drawing ideas from the people with firsthand knowledge of the nuanced problems with which they are faced. This in turn, fosters a sense of personal stake in the venture, thereby increasing their PASSION for the project exponentially. If a member of the team feels they are keepers of crucial input – that they alone can solve the problem – they are much more likely to throw themselves into the challenge of generating a solution.
How do you encourage thinking outside the box combined with some risk-seeking behavior? The solution is not to do away with standard operating procedure, nor is it to force CFOs to sign off on risky ventures simply to inspire employees to come up with crazy ideas.
Rather, companies looking to innovate need to package innovation as something palatable to management, something that fits within and ultimately enhances the structures upon which the company has been built.
One such system involves establishing a watchdog department/committee dedicated to monitoring the pulse of the marketplace. Their sole purpose is to identify new trends, keeping up to date on new and emerging technology and remaining watchful of adjacent industries for signs of potential disruption within their own.
Not only will this generate new ideas, products, projects, etc., but each innovation will be backed up by hordes of real world data, data with the power to put any risk-averse CFO at ease, comforted by the knowledge that their team’s findings have already been corroborated in the real world.
Another way to mitigate risk without hampering innovation is the practice of generating minimum viable products. Whenever a new idea (perhaps generated by the aforementioned watchdog committee) is brought to the table, a group is put to the task of creating a prototype. Over the course of 6-8 months, this group will create a proof of concept capable of being tested in the real world.
In the event that it fails miserably, the project can be scrapped without having invested a substantial set of time and resources, while the work done is always preserved and usable in future endeavors
Minimum Viable Products simultaneously test drive products/ideas (making the CFO happy by mitigating risk) and foster a sense of purpose among employees, encouraging innovation by showing that ideas have a chance to be actualized.
By sourcing solutions from within, startups foster a sense of personal stake in the venture and increase employees passion for the project exponentially.
Larger companies can easily take a cue from this practice. Hosting intra-company workshops designed to source solutions from their employee-base fosters a sense of inclusion and innovation.
These workshops motivate employees to contribute to solving the large company’s problems. Encouraging a personal stake in the project will enhance their passion, leading to increased personal investment, and – as we have found – many more solutions.
Entrepreneurship is not limited to being the founder of a startup or stand-alone business, but a set of capabilities that can be developed by anyone. An entrepreneurial culture will allow you or your team to identify problems, rethink them, and then build scalable and sustainable ways to solve them. People with these talents are everywhere. Don’t miss the opportunity to identify and foster their growth within your organization.