In attempts to boost innovativeness, leaders should pay attention to the fears that prevent ideas from developing and achieving their true potential.
As a company grows in size, innovation faces new challenges. The optimization of core business as it grows makes it less responsive to change. Innovation gradually becomes slow and organizationally complicated, which is frustrating for developers who are at their most content when simply throwing out great ideas, picking the ones with the most potential – and seeing what happens next. Squeezing an idea through the internal approval process feels like the hardest part. As a result, far too many gems never get even close to being tested and evaluated against customer needs and requirements, let alone the competition.
“As companies establish themselves and optimize the way they do business, they tend to become more resistant toward innovations”, Jim Euchner, former Vice President of Global Innovation at Goodyear Tire & Rubber Company, explains. “The more optimized operations grow, the more difficult it can be to go across functions to get something done.”
Photo of Jim Euchner.
Why can’t companies be successful at both operating their core business and launching new innovations? At which point in the life of a company does the step from ideas to implementation become so difficult to take? With all of the assets at its disposal that can be used to support new ventures, why is it taking large companies longer than it takes startups to innovate. Shouldn’t they be launching at shorter intervals?
Jim Euchner has thoroughly studied this dilemma. As a leader of innovation for several internationally renowned companies and, especially, as Editor in Chief of Research-Technology Management, a peer-reviewed journal for practitioners of innovation, technology, and research management, he has had the opportunity to talk to and work with thought leaders from various fields and to test and adapt their theories about innovation processes in the real world.
As an outcome, he wrote Lean Startup in Large Organizations – a book that addresses the biggest hurdles established companies face in their new business innovation processes. The book also provides advise on how to overcome these hurdles in stride.
Jim Euchner reveals to the readers of Nordic Business Report that the main reason behind resistance is not the company size, or age, or the communication channels that can become clogged as the start-up phase is left behind.
For the most part, it derives from the fears that arise in a smoothly-running business when it confronts innovation. This prevents companies from being the best that they can be.
To compete more effectively with startups, companies must understand the internal fears that develop as they become more established in the market – and more optimized for their current business. They must overcome those fears to re-discover the joy of new business innovation.
The six fears that drive internal resistance towards innovation
Fear of chaos
Lean learning loops are a key, knowledge-gathering element in lean startup and other learning-based approaches to innovation. Unfortunately, they can lead to fears in established companies of an unmanaged and chaotic innovation process. Acknowledging this fear and creating processes that contain the chaos is the first requirement for new business innovation. This is the role of an Innovation Stage-Gate.
Fear of disruption
Creation of Minimum Viable Products, another lean startup step, can disrupt the operations of core internal functions. Managers –especially those working in departments other than innovation – have commitments to make, and they are often afraid that they will fail to meet commitments if innovation interrupts their work. Their approval and permission, however, are often required for the team to move forward. The key is for the innovation team to start with an understanding of the situation from the perspective of the function.
Fear of losing focus
Creating a value hypothesis for a new venture without clear direction can lead to opportunities that the company cannot or will not exploit. Innovation should start with a clear focus on asset-based opportunity spaces – opportunities that are relevant for the business. If you focus on an opportunity space where your assets permit you to win, you increase the likelihood of investment later.
Fear of cannibalization
There is a fear that new ventures may succeed at the expense of the core of the company – especially by cannibalizing sales. This needs to be acknowledged, but it cannot drive your decisions. If you don’t meet a customer need, someone else will. A key is to find the synergies between old and new. The new business may cannibalize one part of the business but help another. At best, you might be able to grow your core business as you build the new. Keep both eyes open, recognize the legitimate threat, and seek to find synergy between the business models.
Fear of draining resources
Investing in a new venture can drain resources from the core that the core believes are essential for its success. This is deeper that the fear is that you will throw money at a new venture that does not pay off. In fact, there is a well-established bias in most companies toward investments in the core and, as a result, people tend to overinvest in the old and underinvest in the new. A business plan that keeps the two ventures separate but connected helps to manage this fear.
Fear of making a blunder
Investing in new spaces always introduces new risks. This fear comes from the lack of familiarity with the new market, and it is resolved by spending time in the new ecosystem, learning about its customers and their needs, getting familiar with the competition, and such. Operating and exploring at the same time is not easy, but it is possible. A key role of executives is becoming and creating ambidextrous leaders.
To overcome these fears, it is important for innovation teams first to acknowledge them and then to take a step back and try to understand them from the perspective of the other actors required for successful innovation. Once the issues are on the table, leaders can discuss what the organization can do to address them.
“The organization needs to establish a synthesis that can work for everybody to encourage innovation,” Jim Euchner concludes. “Practices for addressing the fears must be created and tested and used to address the concerns of all parties. From a leader’s point of view, this is about personal accountability for innovation.”