“Close, but no Cigar.” What Startups can Teach Corporates about Innovation.
When his Falcon rocket went up in flames over the ocean, Elon Musk light-heartedly twittered ‘Close, but no cigar’. The rocket was lost, but the experiment was a success; Elon Musk now has a working version. Many corporate organisations, however, will never earn that cigar for an innovation. Love for experimentation is one of the seven ingredients for innovation success that large corporations can learn from startups.
Startups have the je ne sais quoi that is often much needed in large organisations, something which is difficult to define but that does seem to be a requirement to reach intergalactic heights. Because, let’s be honest, many big corporate companies have huge difficulty when it comes to innovating and bringing a truly remarkable product to the market. So what gives, what’s the problem? In my years of experience as an innovation strategist, I have seen many projects run aground for those same large organisations. I have also seen various startups in various stages of development. Time to compare: what are corporate organisations doing wrong, and what can they learn from startups?
No vision to guide innovation
The only reason the Tesla is actually driving around is because Elon Musk is a hyper-intelligent daredevil with a vision. Of course, other organisations have drawn up a Corporate Purpose, too. We’ve all seen the Simon Sinek talk so often we know it off by heart, the Golden Circle is drawn on the flip chart in every organisation weekly, but has it penetrated deeply enough in the company culture to stand at the base of all innovation? Experience tells us that for that to be the case, the company vision has to live right at the top of the organisation. Like Elon. Like Steve. But do you have any idea what the company vision of, say, Barclays Bank is? Exactly.
For a startup, the visionary leaders are just about the whole staff, which makes things easy. In fact, the vision was often the reason for starting the startup.
No widely felt necessity
Large corporates also often may be missing tangible proof that innovation is truly needed. They may be earning so much money that there is no hard necessity. They think that trends implying that the organisation may be superfluous in ten years if it doesn’t innovate don’t have to be taken seriously. It won’t happen to us, right? The music industry, book publishers and retailers have learned their lessons the hard way.
Startups, however, think in opportunities, not in necessities. If you launch a startup out of bare necessity, you are probably better off looking for a regular job.
Projects. Can. Not. Fail.
In a pitch I once did for a large bank, I referred to an earlier project of theirs during the first meeting, a project which had failed rather spectacularly. The company representative I was talking to smiled uncomfortably. “You‘d better not use that word in your presentation. People hate it.” At the time, heads had rolled, and the message had been clear to the entire staff: Projects. Can. Not. Fail. Everybody was afraid, and the predominant thought became: just don’t do anything, avoid all risks. The risk of failing weighs heavier than the opportunity to shine like a diamond.
Each startup knows that product development is all about doing experiments and testing hypotheses. If a theory was wrong, then you have learned, not failed. Shrug it off, laugh about it, and then pivot (as it is called in startup-jargon). The failure has taught the startup where it should be headed.
The person responsible for a win rarely gets the credit
Success has many fathers, failure is an orphan. If you have worked for a large organisation for a while, you will know that one person rarely gets the credit if their project is a tremendous success. When the spotlight and the microphones are switched on they suddenly find themselves standing in the shadow of their manager. The only way to get the admiration you deserve is by playing Don Quixote, with all the accompanying ridicule and scorn. Often, there is no business case, your project’s only aim is to contribute to the financial goals of the whole department or business unit and therefore it will become part of the greater picture. Just a drop in the ocean.
In a startup everybody knows who the person was who was responsible for an accomplishment and people are happy to put that person in the spotlight. Your success is the team’s success, so get the champagne!
Getting stuck on definitions
Say you work in a large organisation. The budgets are going to be defined for the coming year, so you are asked: what is your innovation going to cost? Unfortunately, that is a very difficult question to answer. But without a plan and a budget, the project will not be approved. What does it cost to start a hotel on Mars? Let’s define the project point by point, and write down all the requirements. Talk, talk, talk. Type, type, type. Before you know it, you will have been at it for months; the energy will evaporate just like that and the feeling of urgency (remember: strike when the iron is hot!) has disappeared. I’ve seen project plans with dates on the covers that go as far back as eight months.
Each startup has read The Lean Startup by Eric Ries or Running Lean by Ash Maurya, and knows that precious time should not be spent on defining. Go, go, go! Build-Measure-Learn, get that Lean Cycle moving, no time to waste!
Mandate. Opinion. Support. Approval.
It is a rare thing to get a mandate in a large organisation. “Hey Peter, you’re the expert on this, we pay you an insane amount every month, so why don’t you just make all the decisions.” This never happens. Because why else do all these people work here? It must be so that they can give their Opinion on each project. Which becomes more than an opinion, because it then turns out you need Support. Which then seamlessly morphs into Approval. And then there is the Branding department. The Marketing department. Progress presentations — called “sprint demos” in Scrum — for an audience of more than fifty (!) stakeholders is no exception. The horror.
A startup is often far too busy to have everybody be involved in everything. More importantly, they hate having meetings.
Eagles catching flies
“An eagle doesn’t catch flies” is a well-known expression. But it is striking how many boards of directors start to micromanage where innovation within the organisation is concerned. “But this is about the future of the company!” is their opportunistic excuse. The pressure on the project rises. The bar is raised further up. With important input such as “Isn’t that a much lighter blue than the blue of our logo?” True story, I’ve heard directors say this.
And suddenly someone decides that it would be better to get bi-weekly progress reports. And no, the sprint demos (the place for stakeholders to be) is not a suitable setting for the directors to give their feedback. Before you know it, the Board of Directors is the stakeholder. The three layers of management in between can only stand by and watch helplessly. You feel your knees go weak as you ride the lift to the next presentation, while a colleague jokingly slaps you on the shoulder “So, how’s everyone’s favourite project owner today?”
A startup has only one stakeholder that matters, and that’s the end user. Everything revolves around them, and that end user does not care if the blue is slightly lighter than in the logo.
So what now?
What can you do when the above points are issues in your corporate organisation? Firstly, everyone needs to become aware of them. Then, there has to be enough pressure to change. Finally, rigorous movement is needed to get enough momentum. But in which direction?
Copy what you can from startups. Use Scrum, it will avoid many of the above issues or at least make them tangible. Apply Lean Startup, this will give you starting points for a fresh new development process.
The Dutch ING bank transitioned to Spotify’s tribe model last year, has started Scrumming and let go of half the management staff. A brave move which shows organisational vision of the highest level. They know: ‘If you always do what you’ve always done, you’ll always get what you’ve always got.’ — and you will certainly never get that cigar.
