ANOTHER INTERNAL START-UP IS BORN

By Andrew Moore, DAV

Andrew Moore

I was reading recently about the latest attempt from yet another large organisation, this time its MasterCard, to fund a new internal start-up. It then struck me how rare it is to actually hear about the ‘success’ of such initiatives.

Over the past couple of years we have seen giant corporations such as American Express, Coca-Cola, MetLife, General Electric, IBM, Mondelez International, Cisco, and Tyco International all jumping on the internal start up bandwagon. They’re holding innovation contests and using panels of executives to dole out investment money to fund internal start-up ideas.

However, unlike special projects of the past where a single initiative was typically run as its own unit to allow it to flourish, these efforts are intended not only to nurture profitable new entities, but also to infuse entrepreneurialism and agility into organisations built around traditional, siloed operational delivery streams.

Whilst many of the pundits are saying it is still too early to measure the success of such ventures, in my opinion these efforts are often doomed to failure: the mind-set and approach required to nurture such entrepreneurial innovation is by nature at odds with the typical corporate culture, where the drive for shorter-term returns and low tolerance thresholds for perceived failure, are more the norm.

It’s less of an issue for smaller, more nimble companies but much harder to achieve in larger organisations.  To overcome this, senior management must avoid the temptation to ‘force’ entrepreneurial thinking onto an organisation that’s structured along traditional lines, with KPIs to match and instead think and act like entrepreneurs themselves.  This comes naturally to some leaders but not all and bigger companies have processes and governance that they must adhere to.  Even so, there are ways to stimulate an entrepreneurial culture, such as creating smaller, more agile teams with more compact projects and fast-paced challenges.  Getting this right will help the business to become a true learning organisation where individuals are encouraged to experiment and where it’s okay for ideas to fail – providing there is a resilient management structure in place that supports fast feedback loops on the reasons for failure and channels the lessons learned into other initiatives that stand a greater chance of success.  As Woody Allen once said, “if you’re not failing every now and again, it’s a sure sign that you’re not doing anything very innovative”.

There’s a further dimension to all of this, brought about by the widespread misconception that innovation is an ethereal process resulting from the musings of a gifted few.  The reality is much more pragmatic and examples of this appeared in a recent article published by LinkedIn (Pulse).  The article, by writer and broadcaster Matthew Sayed, highlighted the experience of James Dyson, who not only revolutionised vacuum cleaners with his dual-cyclone design, but also, arguably, made them a work of art.  In it Dyson recalls how his design evolved from an idea that was sparked when he grew frustrated at the way his then current vacuum cleaner lost power due to what he realised was the bag, which doubled as a filter, becoming clogged with fine dust.  The proposition here is that innovation is not brought about by brainstorming ideas in isolation of the real world, but rather in response to a specific problem or need.

We had first hand of experience of this with one client when we were asked to design and facilitate a process that would enable them to develop innovative new services, enabled by the introduction of new technology.  The client wasn’t looking for marginal improvements in its existing services, it wanted a step change that would propel it ahead of its competitors.  To achieve this, we worked with the client to bring together thought leaders from some of the largest organisations in the technology industry and a group of enlightened, empowered executives from within the client’s business, with a straight forward brief: to identify a small number of innovative ideas that could be developed into proofs of concept by the appointed working groups, from which their commercial and technical feasibility could be assessed for adoption by the business.

What made this seemingly traditional process so successful was the mind-set of the client.  Their willingness to work entrepreneurially with working groups focussed on real-life business problems, who were free to experiment and fail safely, helped to establish a constructively creative environment that delivered innovative new services in support of the organisation’s five-year growth plan.

Which brings me back to the organisations highlighted at the start of this article.  If they are able to create and sustain a similar environment, then I believe the initiatives they are supporting will achieve their aims and make a real difference.  I will watch with interest how these initiatives unfold.