What startups can teach us about innovation
Adopting a ‘startup mindset’ is key in innovating and this is more critical than ever, as is evident in this blog, that shows mid-size organisations are becoming innovation laggards, sabotaging their own innovation efforts with complicated governance processes and rigid thinking.
According to the CBA’s Business and Innovation study, 74% of businesses with a turnover of less than $1 million and 70.4% of businesses with a turnover of between $1 million and $5 million cited innovation as critical to the Australian economy. But as business size increases, this figure drops to 65.1% for businesses with a turnover of between $6 million and $25 million, and 64.8% of those with a turnover of more than $25 million. The significant shift in priorities as businesses grow indicates that size acts as a barrier to innovation. Other roadblocks to innovation cited in the study include a lack of ideas, time and resources, business partners who are ‘all talk, no action’ and an absence of data required to make strategic business decisions.
CBA Group Executive, Adam Bennett, concludes, “It is vital that as businesses grow, they continue to think like a startup or the small challenger they once were”. And with CIOs specifically under pressure to play a role in business transformation, this is advice they should embrace as swiftly as possible.
Don’t fear failure
One of the greatest culture-related innovation killers is a fear of failure. Bigger organisations should take inspiration from the ‘lean startup method’, which encourages entrepreneurs to quickly abandon ideas that aren’t working. Failure must be accepted as an inevitable part of the innovation process. Bennett says, “Smaller companies have more of a ‘fail, fail fast’ attitude and move on to the next one – you come up with lots of ideas and the best way to do it is trial it and move on if it doesn’t work”.
In a recent video interview with the Enterprisers Project, CIO of the US Tennis Association Larry Bonfante explained that eliminating a culture of blame is the key to creating a culture of innovation. He said, “A lot of companies talk about having a culture of innovation and allowing people to innovate, but the first time someone ‘fails’ they are punished for it. There is no failure. If you learn from something and you move on and are better reformed from that experience, then you have learned something from that experience and you can innovate better moving forward. [At USTA], we don’t punish people, we actually reward people for trying things, taking risks, and going out of their comfort zone.”
Stop before you start(up)
Granted, an entrepreneurial spirit is a key ingredient when embarking on innovation initiatives, but CIOs shouldn’t get too carried away. According to a recent article in CIO Magazine, some organisations are actually jeopardising their innovation success by taking this advice too literally. It says, “In pursuit of a startup mindset, enterprises are shedding so many processes and systems, they’re ending up with innovation without execution”. So, while creating a culture of open innovation requires a parting with traditional hierarchy to some extent, there still needs to be a formalised approach to change.
The right attitude
Business size shouldn’t be a factor in innovation – it’s about attitude. Business leaders and CIOs should look to startups for inspiration when laying the groundwork for innovation. A work environment where free thinking and creativity are encouraged is a recipe for success.