Innovation in established companies

Business commentator

Friday 12 October 2012

When we think of innovative companies we usually think of small start-ups that are focussed on a single product, led by a visionary leader.

Many of these companies have been covered in previous articles. Scotland also has many large, well-established companies that employ a substantial number of people. Are large companies good places to innovate?

The differences between large and small companies are well documented. Large companies tend to focus on efficiency, scale and operational excellence. Companies that are focussed on operational excellence tend to strive for a defect-free performance.

Two problems arise when taking this approach. There is an assumption that once something is free of defects that it will be automatically excellent. A company may work to remove all of the defects from one of its processes, only to discover that it is fundamentally flawed as an important requirement was missed when the process was first established. However, the bigger disadvantage of striving for defect-free processes is that such a mind-set is the opposite required to nurture innovation. Innovation requires the freedom to explore and experiment. There is a fundamental level of 'unknownness' in innovation. There is only one sure way to test the validity of a new idea. Do it. The proposed idea may be fundamentally flawed but the only way to discover that, and to truly understand why, is to try it out. Trying out an idea requires people to commit to exploration and experimentation. And that requires everyone to acknowledge that the idea may fail. If it does fail, the company must learn why and that new information can be used when the next new idea comes along. If you are working within a culture that strives to be free of detects, suggesting something that requires exploration and experimentation and the possibility of failure may be hard. In such a culture, people aren’t likely to want to be associated with something that may fail. Such a culture - and such cultures are more common in large businesses - can halt innovation in its tracks. New innovations may never be realised as the company culture has ensured that (potential) failure is not an option. Isambard Kingdom Brunel is credited with saying this about the construction of bridges “I am opposed to the laying down of rules or conditions lest the progress of improvement tomorrow might be shackled by the recording as law the prejudices or errors of today”. His point is generally applicable. Companies need to be careful to not lay down too many rules, especially in areas where creativity is required to work for the benefit of both the company and the company’s customers. A rule today may prevent something great from happening tomorrow. The irony of a focus on becoming defect free is that for such a company, the current approach is based on experience. An approach was tried, it didn’t work and something else was tried. Over time, different approaches would have been considered, some were adopted and others were rejected. This is experimentation. Experience is knowledge accumulated over time based on observations of what has and what has not worked. When considering a new idea within your company your answer should focus on the benefits that your customers will derive from your implementation of the idea. Is this an idea that no one else has yet offered? If it is, the idea is likely to be successful and your company then needs to turn that idea into a reality. If you feel that the idea 'maybe' a good idea, a new question presents itself: 'Can this idea be made to work for my customers?' Perhaps by building a prototype you can answer this question quickly and cheaply? The current rules and processes of a company can lead to a culture that may not be the best for the creative pursuit of innovation. A different approach that doesn’t emphasise a defect-free operation is required. One that is more akin to a play-ground where experimentation and failure are nurtured, supported and learned from. The defect-free approach should not be replaced by the play-ground approach as excellence in operation is required to exploit any of the generated ideas. But a focus on only removing all defects misses out on the possibility of generating the innovations that will drive growth in the future. Happy innovating.

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