Innovation is about creating value in a rapid, urgent manner while using your resource efficiently. Lean and Agile both power rapid and efficient execution by R&D. Large companies get Lean, they run their R&D in sprints, so why can’t they move as rapidly as the start-up with Lean?
The answer is not in the engineering execution but in the decision process. Agile runs the engineering team well and is mostly focused on current projects in the First Horizon of current business. The decision to try new models, the decision as to what the results mean, the decision where to pivot often live is the second and third Horizons, Decisions are slowed due often to bias from executives in all functional areas. Start-ups have their own biases to deal with from founders, investors and sales but seem to move beyond them faster.
Companies evolve by moving through a series of biases. We are a __ company. We are right. My favorite is founder bias, that concept that an individual is the creator and holds a special insight or vision. Top of the market bias is also a killer. Market Leaders have a long way to fall and must work harder or risk more to stay ahead of the fast followers or try controlling a market which is rarely successful.
Ideas of who you are as a company need to change as you grow from a single product to a multi SKU company. Holding the vision while making considered changes in your team or product or approach is tough but the rewards are great. It is easy to get fixed on early definitions of the company internally.
In each of the companies I have engaged I have begun by writing a simple “who we are” statement. This starts a conversation and draws out biases across the organization not only on mission or vision but more so on core domain skills. There is a correlation between the degree of diversity or incivility of this conversation and the level of disruption it is going to take to make change.
Innovation in vision and product management requires constant review cross functionally of the value to customers and willingness to put away that favorite old tee shirt or bias.
The power of the product team in large companies
Private equity is learning that beyond the traditional methods of rapid value creation is the product portfolio. Horizon one, maximizing efficiency through SKU consolidation, resource reallocation. Horizon two, new concept capture, and removal of executive bias are tools that can help move the stalled growth company. Horizon three, disruption of the market establishing a new leadership profile in the market.
The product mangers as a team can facilitate this mx of optimization tools, who knows better the secreted biases, their owners and their true market potential. An optimized product process from evaluation to execution in a large company can overcome biases that start-ups can’t like engineering bias toward certain technologies or lower risk items.
Then of course start-ups get stuck with strong personality issues more than larger companies where executives can be more easily moved out of the way. Strong cultural leaders can steer a function team through the challenges created by these biases regardless of who owns the problem. Additionally in larger companies there are teams on the market facing functions that can bring data over opinion which will fuel changes.
When multiple groups are deployed with specific questions to answer then those answers evaluated rapidly the larger organization can research or perform test faster than any start-up. Engaging the market facing and market connected teams is where larger companies gain cultural empowered innovation cadence over the smaller start-up.
The value of being in the market when testing a solution can not be underestimated. Customer have already made a commitment to your company and that grows as they see you continuing to seek new ways of helping them. Sales may be concerned with cannibalizing current revenue flow however if there is still significant value to be added someone will find it. Customers also will give a known vendor more access internally based on personal relationships assuming that they can move ahead with the current vendor with less risk.
This all requires new tools for management. The larger company can run many more tests then the smaller firm, so how does management evaluate all this activity, choose the best ones to act or decide to shut some down? Won’t you just end up with a new bucket of soft performing SKUs? Yes, if management focuses on minimal disruption or risk.
The new management tools include courage to fail, incentive to go big, and reward for embracing risk. Success from higher risk taking removes technical or cultural change debt that will accumulate. However success from high risk ventures has an escalator effect on cultural change. There is a strong kinetic effect for the entire organization. The company will begin to execute well on all three horizons understanding each levels value.