is it possible to innovate within a large organization?
Short answer: it depends.
Many times when large organizations talk about innovation they’re really describing incremental change — improving internal systems or gaining slightly more margin on legacy business.
Change is necessary for companies to survive.
Innovation is necessary for companies to thrive.
Although an exact description of innovation is difficult to pin down, I've found it easiest to describe using the Innovation Outcomes matrix:
To put this in terms of products out in the market today:
Tesla Roadster = revolutionary.
Toyota Prius = evolutionary.
Ford EcoBoost = incremental.
Many corporate innovations fall into this “incremental” category — integrating improvements in existing offers with existing users.
As with most things, large organizations tend to lag behind the startup world. Small teams, unburdened by the internal process inherent to large organizations, are able to build, measure, and learn quickly. This agility and freedom (and maybe even naivete) is why startups have been able to disrupt so many traditional businesses over recent years.
So, this leaves the question: is it possible for a large organization to lead with innovation? Can intrapreneurs be as effective as entrepreneurs?
The research would tell you no: 70% to 90% of intrapreneurship type projects fail in large organizations. Despite this, some of the biggest companies in the world are trying their hand at it:
GE has FastWorks.
Google has Google X.
Amazon has Lab126 and A9.
Audi has quattro GmbH.
Ford has Silicon Valley Innovation Labs.
These skunk works are made up of small, highly effective, independently managed teams focused on identifying and executing new opportunities.
Think of them as corporate Navy Seals.
The value of a small team is mostly within their ability to remain agile and react quickly to failure and success. As soon as you place the weight of a large organization on these teams, their ability to innovate swiftly disappears. The Navy Seals don't go into a mission with tanks blazing and hundreds of soldiers in tow. They attack a situation as a small, highly effective team. Using a refined set of skills paired with a practical tool kit, they are able to move as they see fit in order to survive.
Large companies can innovate by allowing groups to operate under this same premise.
Full disclosure: I don't believe there is any one set of instructions for successful intrapreneurship. However, I have learned a few lessons that I believe are essential for large organizations to thrive.
1/ Create a small team that focuses on revolutionary and evolutionary ideas.
Taking a group of people and giving them the title “innovators” doesn’t spark innovation. Giving a team the freedom to take action outside the standard operating procedures while working on projects that have the potential to make a dent in the universe does spark innovation.
2/ Embrace failure and share in success.
Without embracing and sharing failures, 3M would have likely scrapped one of their biggest products: Post-it Notes. Failures, when learned from and not repeated, are a powerful tool in building success.
Companies that denounce failure are missing out on valuable lessons and losing great talent. The same is true for companies who don't share in the success with their employees.
Success and failure should be embraced, shared, and celebrated.
3/ Build. Measure. Learn. Repeat.
The “Lean Startup” model is nearly gospel at this point. Many startups have been built upon the idea of shipping. Build something, ship it in the world. Gather feedback, measure results. Learn from your success or failure. Repeat the process.
Stop killing your employees with a thousand papercuts. Start letting them build something that exists on more than a sheet of paper.
Without realizing these type of teams are essential, companies that focus solely on incremental innovation will continue to disappear. The proof is in the numbers: 88% of companies that were on the Fortune 500 in 1955 were no longer listed in 2014 and it’s predicted that 40% of today’s Fortune 500 will no longer exist by 2025. Without pursuing leaps into evolutionary and revolutionary innovation, many of these giants, happily sitting on their piles of money today, will soon be distant memories.
If you're interested in learning more about the Innovation Outcomes matrix, check out this great analysis from Lisa Baird of IDEO: The Innovator’s Blind Spot.
Also, Peter Diamandis, the man behind Singularity University and X Prize, shares advice he gave to a Fortune 500 company recently: My Advice Earlier This Week.