Many large organisations use their scale as a powerful competitive advantage, but with size often comes rigid structures, culture and processes that make them slow to adapt and make decisions, and leaves them vulnerable to competition from disruptive, agile start-ups.
Of course, most companies want to grow quickly, but how can you achieve scale without losing that innovative start-up mindset and agility, and is it possible for large organisations to still be disruptive? We spoke to five leading business experts to find out.
Helena Rubinstein, Behavioural Scientist at Innovia Technologyand author of new book, Applying Behavioural Science to the Private Sector (Palgrave Macmillan) believes that “one of the reasons that start-ups disrupt is that they tackle a big problem that really needs to be solved. Many of the solutions are based on an understanding of what really motivates customers and what turns them off.”
“Consider Uber,” Helena continues, “Before they came along, we had to wait in the cold for a cab to pass us by or make a phone call and be told it will take 30 minutes. And then when the cab finally arrives, we have to fiddle around to find the right change, worry about how much to tip and wait for the receipt. Uber removed all these pain points for passengers. Behavioural science is a way to keep businesses one step ahead because it allows you to go deeper into what motivates consumers and to understand the factors that drive their decisions. Far from being irrational, people are influenced by multiple factors, often simultaneously, and if you can identify what these are, and which are most important, you have a better chance of designing products and services that people want, are easy to use, and that people will pay for.”
Chris Dyer author of The Power of Company Culture: How any business can build a culture that improves productivity, performance and profits(Kogan Page) advises companies to “stay ahead of the curl”. He says that established companies typically respond to change more slowly than start-ups and this may be because “it’s more difficult to anticipate how to ride a building trend when you’re in the middle of one. You can harness your company’s power through an uncertain future by looking to a physical move used by surfers to stay ahead of a breaking wave, so they can ride it farther. It’s called the cutback; in business terms, it means losing a bit of ground, so you can gain more”.
Chris Dyer continues, “Start-ups that don’t yet have codified protocols are always looking for ways to advance. This seeking process, often called “tsunami planning,” involves taking time out from doingbusiness and falling back to revisit planning—again and again. Even if you’re at point A, consider how you’d get to point B if some deadly rocks lay in the way, or if you got a lucky tow from a nearby boat. What would happen if a key executive fell ill, or if your product orders exploded? Wondering how to replace an instrumental leader or how to meet consumer demand is much easier when you’re upright on your board than under the lip, about to be Maytagged by a roiling wave. Take advantage of periodic planning for contingencies to find your next big breakthrough”.
Another piece of advice is that we should stop asking innovation teams for business plans says Tendayi Viki, co-author of The Lean Product Lifecycle: A playbook for making products people want(Pearson). Tendayi believes that. “Disruptive innovations on day one always look like toys. They don’t have enough revenue or market share. So, if you ask your teams for business plans with five-year revenue projections, disruptive innovations will never look like good investments. If they do, innovation teams are making up the numbers just to convince leaders. Instead, leaders should focus on key trends that are happening in their business environment. On the basis of these trends, they should develop an innovation thesis. This is a clear statement of where they think the world is going in terms of key trends and how the company is going to use innovation to respond to these trends. With this clear innovation thesis in hand, leaders can then invest in disruptive ideas using alignment to their innovation thesis as the main criteria. These disruptive innovations can then get small initial investments to start testing the market. If any of the ideas begin to show traction, leaders can then increase their investments. There is no way to plan for disruption – there is no business plan that can be written for that. Instead, leaders can allow their innovation teams to begin work by using an innovation thesis to define the playground within which teams can explore”
Finally we spoke to Cliff Bowman and Paul Raspin, co-authors of What’s Your Competitive Advantage?: 7 Strategies for running a more profitable business in a complex world who have identified sets of organisational practices that they believe enable innovation. They group them into three categories: culture, organisation structure and systems:
- A culture which values importing knowledge from ‘outside’ and which encourages and rewards the generation of new ideas and promotes constructive collegial rivalry
- Inspiring visions that motivate
- Management attitudes which encourage experiments, expects some ‘failures’ and recognizes learning from them
- Forming of ‘loose’, fluid, temporary project teams which can generate new knowledge by enabling specialists with complementary knowledge to interact
- Create time and space for interaction
- Vertical integration to speed up coordination, change processes and the pace of innovation
- Joint ventures, alliances and cross-organization collaborations
- Place many ‘bets’ but have timely appraisals so that failing projects can be ‘killed’, and resources can be readily re-directed to more promising projects
- Frequent trialling of prototypes with high quality feedback
- Recruitment and retention of talent as a strategic priority
- Capture the best brains, and ‘lock out’ competitors”.