Disruption has gone mainstream. Ever since the media picked up on the disruption thread and the technology revolution where startups have disrupted established slow-moving corporations, there has been a flurry of activity at these staid organizations to get onto the innovation bandwagon. Advisory firm Gartner, who gave us “hype cycles” and who thrive on publishing “magic quadrants” has coined the term “bimodal” to sanctify an exploratory, experimental approach to IT. Organizations are rushing to instill “intrapreneurship”, accelerators, corporate venture capital funds, and innovation labs to preempt being disrupted.
One of the cautionary tales that has emerged is that of Kodak. Even though Steve Sasson created the first digital camera prototype in 1975, blinded by its “cash-cow” success, Kodak failed to invest it it and missed the digital bus. This is about change being constant and being prepared for it, and decisiveness. Time and time again, such complacent behavior has made once prominent corporations irrelevant. The shelf-life of S&P 500 company has been shown to be fast reducing. Cloud computing models and agile/lean startup methods have made innovation accessible to startups worldwide. This realization of the threat of disruption has forced corporations which are in leading positions in various industries to start their own innovation programs.
Not all innovation programs are same. Innovation labs which have millions in funding but poor leadership often fail to take advantage of the capital. Some of these leaders may need to show they’re doing something about the threat of disruption, but have no clue on how to move forward. Some facets of the innovation theatre:
- They often have nice sounding but open-ended goals with no or few actionable metrics.
- Agile methods are not institutionalized
- Ceremonies are given more importance than validated learning.
- Often there is talk about bringing learning from the outside into the new organization but no systematic way to do it.
- Lack of people with credible startup and VC experience
- Rather than “get out of the building” to collect feedback and figure out the right “product-market fit”, such corporate innovation leaders tend to do the silicon valley pilgrimage to bring back “insights”.
- Lack of independence due to investment decisions resting with old-school executives
- Such programs can also get caught up in the parent corporation’s slower processes and lose valuable time in decision making.
- Have committees designing so-called “agile delivery frameworks / models” with lots of stage-gates and which are subject still to highest-paid-person’s discretionary approvals
- Produce lots of presentations and slides and very little working code in actual use
- The focus is on looking cool and “startup-y”, so burn-rates are high with spending on real-estate and decor, conferences and events so that everyone can talk about failing fast, design thinking, growth mindsets …
- Spend hours in debate trying to agree on definitions of “MVP” and roles like “product owner” and not focusing on acceptance criteria / “definition of done”
- Hire a lot with fancy titles, usually with “Chief” in them.
It’s not that innovation programs are not successful in large organizations. Microsoft which was fading into irrelevance as the tech industry shifted from the desktop to smartphones and after several debacles (e.g. Zune) has since been steadied with a new leader Satya Nadella at the helm. In a little over a few years, Nadella has changed direction with swift decisions: cutting losses (write-off of Nokia deal) and doubling down on Azure - its cloud computing platform. This has generated more than $250 billion in market value in three and a half years, more than that of leading unicorns Uber, Netflix or Spotify.
CVCs funded by the incumbent companies may be doing a better job where they follow “innovation accounting” and have more empowerment, but are critiqued due to the lower-quality startups these seem to attract. Several companies have been able to instill intrapreneurship, working around slow decision-making processes and building more agile product teams. These thrive on internal “idea challenges” and seed-funding, but care needs to be taken to empower the people. As long as capital flows freely and poor accountability persists, the champagne will flow.
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