Disruptive innovation is a buzzword these days.
Entrepreneurial ventures always remained ahead in coming up with new innovative
products. Big giants were always tried to innovate but failed mostly in really
disrupting the markets. These companies did really well on sustaining
innovation front. There is lot of material and management advice available to
transform these bureaucratic giants into innovation power. I am pessimistic
about this approach. Everybody should do what they are really good it. There
are structural problems that will stop big companies to be innovators of next
generation products. Instead of trying in house innovation, big companies
should look outside for good acquisitions. Google is a great example for company, which
failed miserably in creating great in house products – Google+, Google Buzz,
Wave, Google videos… on the other hand Google did great in acquiring great
product companies – youtube, doubleclick, Android, quickoffice and many more.
To understand the process of innovation, I have come up with
interesting yet natural analogy. How does living creatures improve their
species? Answer to this question explains why, where and how innovation can
thrive. Living creatures acquire or
generate new skills among new generations by evolution. We can take
examples of humans to understand the process of generating new ideas. When two
individual with different sex get attracted towards each other and decide to
get intimate, we see starting of new life. New life is the result of free and
natural process i.e. Sex. Chromosomes decide most things in people’s life and
there is no way, we can change the genetics of a person once life is created.
Now once baby is born, baby learns many things at a rapid pace. Walking, speaking, acquiring new languages,
understanding emotions, listening etc. are learned by a child in a very fast
pace because baby is allowed to make mistakes. Baby is allowed to fall as
many times as possible and then try again. On the other hand parents of baby
are selflessly doing everything to help the baby to learn things. They don’t
see a fall as weakness but every small step taken by baby is a celebration for
them. This is the process that brings the most amazing skills, intelligence and
courage to the society that we all celebrate in the form of Nobel Prize,
Entrepreneurship, World Cups, Olympics and great Leaders (Like Gandhi).
Lets observe this process of creating diversity and better
species closely. We can see four core principles applied to the process-
1.
Mating
of diverse Ideas
Take any startup with 2 or more founders, you will find that
people who founded the company were very different persons. We sometimes take
diversity in very narrow terms. We see people’s background and education to
define diversity. More than background and other things, personalities of founders
matter the most. People, who have very different perspective to a problem,
start startups together. They enjoy trust of each other. Diversity and trust
helps the startups to see the future and solve problems, which are ignored by
others. This is the most crucial that decides the DNA of new project or Idea.
2.
Wait
for Ideas to mature
Just
like pregnancy, a startup idea takes time to mature. People spend years to
think and plan about starting the venture. Many a times, ideas are initially
very abstract and they need time to mature. Sometimes external environment is
not ready to accept news ideas. Think about iPhone in 1990’s, iPhone would have
been a dumb machine as there no high connectivity networks. That’s why founders wait patiently for right
time to start a new venture. There are no shortcuts here. Entrepreneurs wait
for right opportunity to work on new product ideas.
3.
Nurturing
and freedom to fail
I
have seen no parent who scolds a child when child falls while trying to walk.
Parents just shower praise and encouragement. Same we see in startups. Founders
are focused on creating wonderful products and even if team fails, team gets nothing
but encouragement of internal stakeholders as well as external stakeholders.
Team shows very strong desire for trying new things and creating a useful
product to customers. This is the essential part of process to create awesome
product. Nobody can run when chaianed.
4.
Agility
and Speed
Startups
are known for agility and speed. Speed is not artificially created but it comes
from the team’s motivation to try new things. Team (just like a kid) is always
ready to do new things, accept change and listen to market and users. Speed is
not just execution of project from learning from past mistakes and avoiding
them in future. Teams work so closely in startups that title become obsolete
and functional expertize goes out of window. In such environment everybody owns
the product and hence the blame.
Now
if we look for these core values in any big organization, we can see some of
them in parts and isolation. In most of the big organization we will find anti
core values for above values. Lets look at how these anti values are hurdle to
innovation-
Core
Values for Disruptive Innovation
|
Anti
Core values that we find in Big gaints
|
Mating
of diverse Ideas
|
Teams work in
Silos, Management believes in standardize processes
|
Wait
for Ideas to mature
|
Do it now or it will never be done
|
Nurturing
and freedom to fail
|
Meet the Goals or get the worst rating
|
Agility
and Speed
|
Do something only
if you are sure
|
1.
Mating of diverse Ideas -->Teams work in Silos,
Management believes in standardize processes
Every
organization strives for standardization of process. Teams become too big and process
is the only savior. Once things get standardized, new ideas have very less
scope of getting noticed. Teams are focused on their own goals and hardly
anybody gives preference to other teams’ priorities. Teams always interact as adversaries and not
as friends. Managements see things but takes step that further worsens the
problem. Why? Because management brings new processes to kill the old processes
and these steps are seen as bureaucratic and burdensome.
2.
Wait for Ideas to mature --> Do it now or it will never be
done
Wait a minute? You said that we should wait for right time.
In a big organization, right time is the time when idea strikes and management
is convinced about the idea. People can see the ideas’ future and predict the
failure of new products but they won’t speak. Promotions and rewards flow for
executing the ideas and shipping the products. If you wait for right time, your
colleague may convince management about the idea and run away with promotion
and rewards.
3.
Nurturing and freedom to fail -->Meet the Goals or get the worst rating
All big organizations are driven by quarter and year-end
goals. Shareholders pass the burden of meeting goals to higher management.
Higher management adds some more buffers and passes the goal to mid management.
Mid management adds some more buffer and passes the goals to lower rank
employees. Now all those who will meet their goals, will be rewarded and rest
will be punished. Tell me where is the opportunity to fail??
4.
Agility and Speed --> Don’t waste resources… Do something
only if you are sure
Agility
and speed requires flexibility to change decisions every day. This means that
we have to go back on what we said as early as yesterday. We all get resources from management after
convincing them about viability of a project. If an employee shows that he/she
may be wrong sometimes, management will tag him/her as unreliable or a person
with low confidence. He/she may not be given adequate resources in future as
he/she is seen as person who wastes resources.
All this stops employees from trying new things and asking resources
from them. They genuinely go for ROI
analysis and most of the times, new products don’t have clear revenue models.
Think about WhatsApp. Can Whatsapp’s business model will pass through any
management’s screening ? Too much focus on ROI leaves us option with low ROI
yet safe options.
We
can clearly see from above analysis that Big companies inherently develop
cultures and processes that throws innovation below the ‘CUT Line’ where as
innovation should always be above cut line for all companies which want to
survive in this highly competitive business environment. Big companies should focus on what they are
good at and be open for acquiring new product companies as soon as opportunity strikes.
We can call it – “Acquisition driven
Disruptive innovation”. This should be always above the ‘CUT Line’ for a company
that wants to survive.
