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Eating your own lunch: why to invest in innovation

There was a great article this week on, Why companies must invest in new technologies, even if it eats their own lunch.

My favorite quote was from Klaus Schwab, the founder and executive chairman of the World Economic Forum:

“It used to be that the big ate the small, now it is the fast eat the slow and I’m seeing it everyday.”

To any outside observer, it’s obvious that constant innovation is imperative in any industry. Everyone wants to avoid becoming Blockbuster and instead become Netflix.

This all seems rather obvious – the key question is “how?”

For ten years, WillowTree has been helping large companies answer this question, and we see five common themes that are critical to innovation success:

  1. Innovation must start in the C-Suite: Innovation requires R&D budgets, the will to forsake short term results for long term potential, and the embracing of the unknown and of failure. All these are easy to understand, but very difficult to make part of a culture. The C-Suite is the guardian of company culture, and so the tone must be set there (e.g. permitting failure or pushing wall street analysts to accept short term investment for long term potential). When a team gets called to the mat to explain why their project failed or is running up twice the costs expected, while that team has been working nights and weekends to make a vision reality, you can be sure the culture of innovation is being killed.
  2. Innovation isn’t a Team, it’s a Culture: Setting up separated innovation teams or even COEs is a hard way to do innovation as they are “outside” the flow of the business. This might be the best approach for some truly disruptive projects. However, incremental improvement is how most innovations happens, and requires a culture where everyone is looking for abilities to innovate at all times, and a system is set up within each division to capture and evaluate ideas.
  3. Turn to Experts: As ideas bubble up, work with internal or external partners who can quickly vet ideas for cost/benefit, user acceptance and technical feasibility. Leverage experts who have years of experience in the space to quickly make decisions.
  4. Keep Teams Small and Co-located: As Steve Jobs famously said, “A small team of A+ players can run circles around a giant team of B and C players.” We run projects for some of the largest companies on the planet, with teams of 10 or fewer. When we inherit failed projects and need to “fix” them, the cause was invariably a large 20+ person team spread around the planet. Larger teams naturally get bogged down as responsibilities get divided and the natural search for consensus becomes more complicated. Performance only goes down if these teams are distributed vs. co-located.
  5. KISS: Keep it Simple, Stupid. The US Navy coined this design principle in 1960 and we humans seem to have to re-learn continuously. Silicon Valley is the king of applying this – design around one concept, prove its worth, and expand around it. Uber made it easy to hail taxis; Snapchat allowed us to communicate without creating permanent records. We get briefs every day where large companies are trying to put multiple functions into an app or website – instead, start with one thing you are trying to solve, make it great, get users (whether consumers, clients or internal employees) and then build around it.

Innovation is the guiding light of this century. That’s easy. We all know that. How to innovate is what’s hard.

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