In our previous articles, we’ve explored the ways in which complexity increases as companies grow. While an early stage start-up may consist of just a handful of individuals all pitching ideas and collaborating to drive the company forward, corporates have entire divisions dedicated to a single strategic goal, be it HR, procurement or legal matters.
The way that larger organizations are set up is not necessarily a bad thing – as businesses grow, the bootstrapping, all-together approach that works so well for start-ups simply isn’t practical any more. Creating bespoke business functions makes a lot more sense.
However, these supporting functions can create challenges, particularly when corporates want to innovate. Instead of offering support, too often, they put up barriers. For businesses that want to create an agile environment conducive to innovation, getting supporting businesses functions on board as early as possible is essential.
In a corporate setting, most impediments take place on a tactical level. If we look at an example of a major FMCG brand looking to launch new products, its legal team obviously represents a hugely important support function. It has the knowledge and experience needed to navigate the intricacies of trademark protection, contract law, and industry regulations. But its priorities are not the same as those held by the venture team.
From the perspective of the legal team, the most important thing is avoiding unnecessary risk. Launching new products runs the risk of misleading the customer, causing reputational damage, or worse. In the European Union, for example, consumer goods firms have been issued significant fines for restricting sales in certain markets and manipulating prices. These are issues that must be considered. The legal team is primarily concerned with protecting the core business – and they are right to hold this attitude.
But when support functions become overly protective, they risk blocking attempts by venture teams to invent a new future for the business by embracing innovative ideas. In order to prevent these types of hurdles from developing, organizations need to get support function on board with new innovation projects as early as possible. That way, any challenges that do emerge, can be overcome without delay.
Function not friction
When supporting business functions are involved in the innovation process as early as possible, not only can impediments be avoided, but innovation can flourish. Procurement can be used to recruit new team members accustomed to lateral thinking; HR teams can drive learning programs that push innovation to the fore. If there is tension between core business needs and innovative new ventures, this can be balanced early on in the innovation process.
Fortunately, there are always individuals residing within supporting departments that are eager to help venture teams – the intrapreneurs we spoke about in pillar four – but businesses may need to make a few changes to ensure that their support functions really are as supportive as possible.
First, the number of rules that venture teams need to abide by may need to be reduced to ensure that they can run experiments in a manner that is agile but which also protects the core business. Second, if there are rules in place that are not helpful, venture teams cannot wait months for them to be changed – they need a decision in days or, preferably, hours. There needs to be a clear escalation pathway so venture teams can go directly to the individual that is able to facilitate their needs. Compliance rules should not be abandoned completely, of course, but they may need simplifying.
Perhaps most important of all, mindsets may need to shift. Instead of departments saying, “It can’t be done” they should ask, “How can we do it?” Once again, the most important thing here is taking support teams on the innovation journey from the very beginning. This will lead to certain challenges but in the end, businesses will innovate faster – avoiding disagreements will not help in the long-run.
Unless engaged early in the process, and properly trained on lean innovation, supporting functions could hamper the scope and speed of a new venture. Ironically, corporates risk undermining their own innovation efforts.
At Innoleaps, we have worked alongside corporates to ensure that their scale is an asset, allowing them to innovate freely without bureaucracy getting in the way. Throughout this series of articles, we have explored several other factors that will enable corporate organizations to exhibit the innovative approach more commonly associated with start-ups.
Whether it’s through having a dedicated growth governance structure, taking a portfolio approach to innovation, or by partnering with smaller players, these are the essential tips that will help corporates combine speed and scale and drive growth from (non-incremental) innovations; these are the pillars that will create the framework for your 10X growth machine.