Being big and settled has always had its advantages. Take software companies like Microsoft and Apple for example. Their huge cash stockpile and brand value ensure that they always remain at the top of their game.
But being big doesn’t ensure excellence in all aspects. Despite having all the money to source the best talents, corporates are often found lagging behind small peers on the innovation front. This chink in their armor has led to the downfall of several companies, including the likes of Kodak, Blockbuster and Xerox which were once deemed to be “too big to fail”.
So what is it about mid and large companies that make innovation so difficult?
The short answer is culture. Anyone who would have worked long enough in a big company would tell you that there’s little scope for innovation in such firms. And it’s not that companies develop such a culture on purpose. In a big enough firm, management has no option but to develop rigid processes to ensure continued production. These processes lead to hierarchy which stifles any scope for innovation.
On top of that tight work schedules leave no time or incentive for employees to indulge in creating something new. Moreover, employee reward model at most places are itself kryptonite to innovation. In some companies, the process is such that it punishes employees who take the risk of indulging in new projects.
Why do startups win the creativity race?
Startup cultures are characterized as being creative, passionate, innovative, and agile. While some of the characteristics need to be developed with great care, others are present by default.
The biggest plus point for startups is the small size of the workforce, which automatically develops a sense of ownership in each player. In such a scenario, an innovation-friendly culture is bound to spring up.
Beyond this strong synergy that develops by virtue of small and coherent teams, modern-day startups invest a lot of time, energy and resources to create a culture of innovation.
This starts right from the workspace. Most startups develop their offices in such a way that there are no physical barriers between those who like to bounce ideas off of each other. This is why you are more likely to find bean bags and open areas on startup workspaces as compared to cabins and cubicles in companies.
Moreover, founders and CEOs make constant efforts to involve all employees in decision-making. They also push team members to develop their creative thinking by way of competitions and workshops.
In order to keep reinforcing the sense of ownership, many startups award employees with ESOPs.
All these efforts and the very nature of startups together play a key role in developing a culture that is pro-innovation.
Do corporates have no solution at all?
Companies have long been trying to adopt the startup culture and some have been quite successful at it. If you follow large companies closely, chances are that you would be aware of the term ‘innovation lab’. These innovation labs, which are now present in most big companies, are nothing but startups funded by corporates to develop future products for them. The only difference is that innovation labs, unlike startups, do not have to worry about selling the product. The selling is done by the company.
But this isn’t the complete solution. To remain ahead of the tech curve, it’s important that all employees are involved in the innovation process. This leads us to the other question: Is there a way for companies to completely adopt the startup culture?
The answer to it lies with a 2019 report published by Innovation Leader in collaboration with KPMG LLP. The two companies fielded a survey to find out what sets successful innovators apart. Here’s what they found out:
They create synergies: Such companies make constant efforts to bring various departments closer. This ensures the unhindered flow of ideas and leads to the creation of synergies that facilitate innovation.
They design innovation-friendly incentive systems: Companies that were better at innovation were found to be offering incentives to employees who were engaging in innovation activities. The incentives included recognition and awards, bonuses, seed funding and dedicated time to further develop the project.
They build a positive environment: The survey found that focus on innovation automatically diluted the negatives of corporate culture like politics, turf wars and the lack of alignment. The report inferred that the longer an innovation program survives, the better the company’s work culture becomes.
They bet on the big bets: Pro-innovation companies spend less time on incremental innovation than on the creation of entirely new products and businesses.
The findings indicate that the adoption of a startup culture can lead to the development of an innovation-friendly company. And the fact that some companies have already done that up to some extent shows that it’s possible for all corporates to tread on the innovation path.