Change or die: what big business can learn from start-ups about internal innovation "Product people - Product managers, product designers, UX designers, UX researchers, Business analysts, developers, makers & entrepreneurs 22 January 2019 True Lean, Product Culture, Skills, Mind the Product Mind the Product Ltd 1775 Product Management 7.1

Change or die: what big business can learn from start-ups about internal innovation


What’s the single key advantage that start-ups consistently hold over big businesses? One which allows them to move faster, and change course quicker than large corporations?

It isn’t talent or creativity, and it’s certainly not resources. Start-up nimbleness comes from employee empowerment – a culture where people at all levels of the organization feel free to think, behave, control, and improve their work autonomously.

Start-ups have to be agile to survive. Since they aren’t sure what will work in the marketplace, they are forced to try various different angles to find the right way to solve problems, market, and sell. The same cannot always be said for larger, more established companies who have been executing the same way for decades. These companies often struggle to adapt and evolve as they are stuck in the rut of their existing processes, resistant to changes, and have a more rigid decision-making hierarchy.

So how can large organizations take a page out of the start-ups’ book by sparking a cultural transformation from the bottom up, and empowering their workers – as individuals – to make change?

Staying alive

With added competition from millions of new start-ups, globalization and other new-market-seeking enterprises, large organizations lay themselves open to difficulty unless they are open to change. You only need to look at the numbers. In 1958 the average lifespan of a S&P 500 company was 58 years: today the average is less than 18.

The only way to survive is to continuously transform into something else, but many large companies are so focused on upholding and improving their “bread and butter” core business, that they spend no time exploring or experimenting upon other opportunities. Borders went under because they were too busy focusing on selling more books in bookstores rather than exploring the way the market was moving towards the internet, e-readers and a more boutique retail experience.

Of course innovation is important in the corporate landscape, but the idea that it boils down to culture is a new idea. To date, innovation is often left to a chosen few inside labs or incubators, often referred to as the Skunk Works Model, instead of empowering employees throughout an organization to identify and pursue projects beyond the existing business model.

To break out of stagnant processes, and truly motivate a more “bottom up” flow of ideas, I believe corporates need to change their internal structure, and put in place a system where employees are educated, enabled and empowered to think and work in new ways.

1. Educate: Teach your staff a new way of working

A key component of the popular process of design thinking is creating empathy between employees and customers. However, a common problem with this approach is that while teams learn much about their customers, they still fail to take sucessful action on their insights.

One of the first steps to creating a bottom-up flow of ideas is forcing dialogue between teams, offering them insight into parts of the company other than their own, and allowing them to “step into the shoes” of other teams. At established companies you will regularly find that personnel have spent years working in the same job, and have no idea what other departments day-to-day work consists of and how they contribute to creating value for the end customer. The same goes for executives and the C-suite.

At the root of a culture that enables entrepreneurial action amongst all employees is the desire to think independently, and take action to meet an end goal or improve a process,  and having the skills to do so. One without the other doesn’t really work. I believe it is important for companies of all shapes and sizes, but especially larger scale enterprises, to educate their individual team members that they ‘can’ and ‘should’ put ideas into action, regardless of whether they are in a management position or not.

Aaron Eden, prior to co-founding Moves the Needle, started a series of successful Lean StartIn workshops which were designed to help teams learn how to use the Lean Startup methodology to rapidly test the viability of their ideas.

Intuit, for example, had been making a big investment into driving innovation. It was certifying internal innovation catalysts and consistently running design thinking workshops. Unfortunately, teams were getting stuck in “empathy land”. They had interacted with customers, but were unsure about how to turn their new-found insights into business impact.

After taking Intuit’s teams through a Lean Startup workshop, Aaron Eden felt that taking them through a rigorous hands-on bootcamp could be the key to turning those insights into impact. In the bootcamps, teams would choose ideas, identify the riskiest assumptions, and run rapid experiments to make decisions and guide next steps with evidence.

In just over 100 days, Intuit was able to help create 100 internal start-ups that generated hundreds of millions of dollars in impact thanks to the insights generated and ideas implemented. Not only were people learning new skills, but they were motivated to turn those skills into action. It started a transformation within Intuit, which is now regularly named as one of the world’s most innovative large organizations.

2. Enable: Build systems and mechanisms to support employees’ entrepreneurial action

After teaching employees how to work in a way that supports new value creation, you then have to develop systems and mechanisms that allow and encourage this newfound entrepreneurial spirit to flourish.

Ideas can become severely bottlenecked and new skills wasted if the systems that enable innovation are not put in place. After surveying Intuit employees, Aaron learned that most employees who went through a Lean StartIn workshop felt as if their day-to-day business teams were slow and lacked initiative. They had seen the light, but were back in an environment that was locked into business as usual. At that time, there were no systems in place to exercise the newly developed skills in day-to-day work. Since then Intuit has made strides to identify customer benefit metrics for various teams so that they focus on activities that create new value for their customers.

Humana, the Fortune 100 insurance company, is a prime example of a large corporation that has successfully put systems in place that enable entrepreneurial action.`

Humana was able to move from education into enablement rather swiftly. After doing a series of bootcamps that taught employees how to tactically apply lean innovation methodology to everyday work, the company created a Consumer Experience Lab under the helm of Geeta Wilson. In the lab, developing customer empathy,  focusing on their problems and rapidly experimenting with solutions are the norm, not the exception.

The Consumer Experience Lab has created an environment that enables employees to deploy their newly learned skills, and channel their entrepreneurial spirit to unlock massive value. Within the first year they created $10 million in new value for the organization through running experiments on ways to improve customer service.

3. Empower: Transform the culture so the discovery and creation of new value is business-as-usual.

Once employees have the skills and support structure they need to create new value, the final step is to empower employees throughout the organization to act like entrepreneurs.

Empowering employees often involves breaking down the rigid ‘top-down’ hierarchies which are in place. While a company will always need managers, they need to facilitate and incorporate suggestions and ideas from all stages of the ladder, not just the commands coming from above. Providing employees with autonomy — and accountability — makes them more motivated to achieve results, and make positive changes.

Barry O’Reilly, a principal at software design consultancy Thoughtworks, says: “Culture comes from the top. It is up to leadership to define and enact the behaviours that make people feel empowered to innovate and experiment. Pushing down authority is an enabler and empowering teams to come up with their own solutions to solve business problems can give rise to wider innovations.”

Rather than inciting a short-term burst of innovation in the aftermath of workshops, enabling and empowering employees to be innovative should become an integral part of the company’s culture and values.

Innovation through internal mentorship

Even if a team has not gone through a workshop, team members and managers alike should ‘mentor’ and support other members of the team. One means of doing this is by encouraging ‘internal mentorship’ between colleagues.

Established molding company RJG Inc. went through an lean innovation accelerator, where RJG staff were pushed to build customer empathy, run rapid experiments, and make decisions based on evidence. They came up with a new product design after building empathy with their end clients through a series of customer interviews and onsite visits. After continued experimentation they started getting purchase orders and functional prototypes in the hands of customers in under a year compared to the company’s typical six-year product cycle.

Internally, people saw the benefits from working this way and wanted in. People who had never gone through the experience were running experiments while receiving guidance from their more experienced colleagues.

The new way of working was not merely becoming the norm for a select few, but rather the entire business culture was shifting. Employees didn’t feel the need to seek out permission to run experiments on new ideas because the culture empowered them to do so.

Some large companies are going a step further to demonstrate to employees that they are able to, and encouraged to be innovative.

Adobe rolled out the “Adobe Kickbox” program, which offers any employee the chance to be an innovator. As part of the scheme, employees get access to a ‘kickbox’ —  a red paper box containing $1,000 of seed money, instructions for Adobe’s six-step innovation process and other innovation tools – that intrapreneurs are free to use to test new product ideas.

Since rolling out the scheme, Adobe has handed out more than 1,000 red boxes to employees around the world. By focusing on the people, and not the outcome, Adobe has found a means of incubating thousands of new ideas from within. Other large companies like Mastercard have since followed suit.

While offering cash to each employee might not be the right answer for all companies there is a lesson to be taken from Adobe’s plan. Using the idea of “educate, enable, empower”, all large-stage companies can break down the internal barriers to innovation by showing every employee that their they really can make changes, and put great ideas in motion.

Corporate leaders know their organizations must move faster, be more agile and act bolder. But just saying it, doesn’t make it so. Trumpeting “be bold!” without fostering an environment that makes it safe to work differently results in fear, not innovation.