Why innovation needs more than ‘thinking out the box’
When working with clients, Radical often advocates an approach to innovation that doesn’t just seek out valuable ideas. We also look at the environment in which those ideas are nurtured and brought to market — as this is often the key factor in success.
Don’t just think out the box. Create a new box
The challenge for all large organisations is that they’re driven and constrained by the day-to-day. It’s difficult to disrupt yourself while also hitting your quarterly targets.
Instead we’ve found that actually creating a stand-alone unit or team — a new box, if you will — is the key to successful disruption and leads to better results: greater speed, better focus, and increased market penetration.
Research by Harvard scholar and innovation guru, Clark Gilbert, echoes our experience:
Separation seems to help companies untangle the contradictory imperatives of threat and opportunity. Released from obligations to the parent organisations, freestanding ventures are more likely to view the new business as an independent opportunity and frame their plans accordingly.
However, creating an innovation box outside of your core business has several challenges:
Cutting the chord
You can’t set a venture free and then start tying hands behind backs. To be successful, a venture needs to have autonomy and not be constrained by proximity, culture and the working patterns of the parent business. Where such things exist the team typically reverts to previous thinking and behaviour.
Most commonly this happens when senior management become back seat drivers. Although done with the best intentions, it has the effect of reigning in disruptive thinking and reducing effectiveness.
Funding for growth
The next best way to undermine a new venture is to make it conform to existing budgeting and operating models.
Venture funding models that work in terms of seed funding and growth funding linked to achieving milestones are more effective. Ensuring management then have access to funds in a timely manner is also crucial.
Gilbert wrote:
The financial commitment to these ventures should be significant, but they should be staged in a way that lets the management team get the framing right. That’s how most venture capitalists finance start-ups. They may commit to a large total investment, but they deploy that capital only as the business model is sharpened and the market is better understood.
Bringing in fresh thinking
A new venture will need the best people to succeed. The easy and seemingly cost-effective approach is to re-assign the smartest people from within the parent company.
However this risks limiting new thinking. There is a natural tendency for existing knowledge and experience to lead towards alignment with the parent.
At Radical, we like to ask clients to build their dream team. Typically this will end up with a variation on Jobs as CEO, Zuckerberg running technology, and Bezos running operations. If we drill down into what it is about these people — beyond their obvious success — that makes them right for the roles, we can then compare back to the team created from inside appointments, and decide if we also need to look outside.
Most often, building a new team with a large proportion of external team members is the smart move. This also allows the parent business to remain focused on its core business with least disruption.
Innovate your environment
The fact that most large organisations find it so hard to innovate is proof in itself that structure is as important as new thinking when it comes to actually delivering disruptive ideas. Rooted in London’s start-up culture, Radical can help you create not just game-changing propositions, but the environment that will give the best chance of success.
Looking for a fresh perspective on innovation? Get in touch…
by Ian Wilding, Group CEO. Radical Company
References:
Clark Gilbert HBR Disruptive Change: When Trying Harder Is Part of the Problem
