Make your innovation a hedging process

They are the largest, probably the among the best in class at what they do. They are highly branded and recognized for what they have achieved. They have more resources than most other players to play with. The smartest people. The most money. They desperately want to stay on top. And yet, they fail.

How can Nokia go from one of the largest in the world to junk status in 10 years? Why are we seeing speculations that Apple will fall, or Google, or Facebook?

Because their innovation power drops (in relative terms) as they grow. Sure, it is a numbers game. The bigger, the more cash available, the more a corporation most grow – in absolute terms. (And yes, in principle there is a limit to growth). But, let’s leave that for the moment.

Corporations spend billions of dollars on innovation training – and yet they don’t get at the real issue, the real drivers of innovation.

Successful enterprise innovation is a cross functional exercise. Problem is, innovation is typically done vertically and from a local point of view. 75% of all innovation resources, for example, are spent on product development alone. Without connecting the dots horizontally across departments, regions, etc. you might have tremendous research and development, marketing and logistics innovation and still fail miserably in the marketplace.

Ironically, during the worst recession in nearly a century, money isn’t among the top barriers to innovation. Instead, the primary challenges are essentially leadership issues of coordinating and integrating innovation seamlessly across a labyrinth of boundaries and barriers.

The larger the company, the deeper the orthodoxy. Leaders of complex organizations tend to surround themselves with likeminded people, which reinforces their conventional approaches.

How to achieve better growth rates? Reverse your field. Start the innovation in a distant place, with unusual resources around you – change the settings, people, location, timing, activities, etc.

Work out of sight and prototype your project until it starts to look like something that might actually succeed. Then work your way back to the company. You will experience other barriers. In fact, when innovation is done outside the usual functional departments, it often becomes a not-invented-here orphan with little ability to find an operational home within the enterprise where it can grow to scale.

Thus, we have developed a 3 month process that will take enterprises through what typically cost them years and millions of dollars to achieve. This is a process deeply inspired by how startups innovate. We accept that innovation is a game of attrition. We will take multiple shots on goal because you never know what project is going to score and what isn’t until you take the shot. So hedge first and optimize later. That is, it’s easier to change 20% of your company 80% than it is to change 80% of your company 20%. Good luck.

(We are happy to share more about the details of the process.)