Innovation is hard. At big companies, that’s an understatement.
Because at big companies, when it comes to innovation, many tend to err on the side of caution. That is, until something better comes along that threatens to take away customers. Then, they scramble to react.
It’s a big reason why mistakes and outright misses are common among big companies. Look no further than Gillette’s 6 percent drop in sales to see the consequences of a missed opportunity. The razor and grooming company never predicted that customers would move to monthly subscription services like Harry’s or Dollar Shave Club. (If Gillette had predicted it, it would have gotten there first.) The established companies are now playing catch-up: Gillette launched a razor delivery service of its own, called Gillette On Demand, and Unilever acquired Dollar Shave Club in 2016 for $1 billion.
“Most big companies don’t have a culture that’s built for accepting new ideas that seem small and insignificant at first,” says Scott Kirsner, journalist, author, and editor and co-founder of Innovation Leader, on an episode of the Outside In podcast. “They often watch as startups see an opportunity and have the patience to develop that opportunity over five or ten years and turn it into a billion dollar business.”
“The thing that’s more challenging for big companies is internal innovation and unlocking the potential of your own people, talking to your customers and your business partners in new ways,” he continues.
One solution to the innovation problem is to bring customers into the process. Because customers are the disruptive force in business. Yet, customers – their ideas, their perspectives, their creativity – are underutilized inside large organizations, caused by a disconnect between the people inside the company and the people they are trying to serve. Why is that?
Kirsner says there’s often a fixed notion of who the customer is and what they want in the minds of senior leaders. Their beliefs were formed and cemented early in their careers as young sales reps or marketing associates – and haven’t changed much as they’ve risen through the ranks. Or, what’s worse, they figure that attending one or two in-person sessions with customers a year qualifies as enough.
Too often, Kirsner says, innovation takes a back seat to Wall Street. There’s always pressure to report healthy results to investors and impatient market analysts. “A lot of CEOs think that saying the word ‘innovation’ and maybe naming somebody a Chief Innovation Officer is the magic bullet,” Kirsner says. These are the usual platitudes of big business, intended to maintain a veneer of innovation.
Sometimes innovation is celebrated through the creation of Silicon Valley labs that sit outside of day-to-day business. This certainly keeps these ideas from being, as Kirsner says, “pulled into the gravitational vortex of day-to-day business.” However, the reality is, most labs are little more than a costly (and cuttable) line item on the corporate P&L sheet. As Kirsner puts it, they can be “satellites that get launched into space but can never quite wind up in orbit around the planet.”
One example of a lab that works, Kirsner says, is Visa’s innovation lab, which is located one floor below where senior leaders sit at the company’s San Francisco headquarters. Executives are known to pop down the open staircase and join customer co-creation sessions, interact with customers, and get their hands dirty exploring the future of payments.
There is no magic bullet to solving big companies’ innovation challenges. Ultimately, Kirsner says what helps large companies innovate is the “basic and fundamental stuff, like patience and investing over time and experimenting and tolerating failure.” Of course, the basics are usually most difficult to get right. But there are outliers within the corporate world – like Disney, for example, where “the DNA of innovation has been present since the very beginning.”
The good news is that innovation at large companies is headed to greater permeability. “We’re moving away from the idea that successful companies are on a campus or in a tower where all the employees mostly interact with other employees and are breathing the fumes of their own ideas all day long.”
Whether that permeability means holding open innovation challenges, like the pharmaceutical industry often does; giving employees the permission and space to ideate and prototype; or bringing customers into the innovation process – what’s clear is that it starts by acknowledging that employees and customers are creative, that they’re disruptive, and that innovation more often than not moves from the outside in.