David vs Goliath or the story of corporate innovation
01.03.2019 | Agnes Uhereczky
2018 saw the toy giant, Toys R’Us close down all of their shops. Marks & Spencers has been hanging by a thread for a number of years now. Toshiba was forced to sell its computer chip business in 2017, and we know of the massive losses in the billions of Euros suffered by mobile phone giants for their texting services, due to the arrival of WhatsApp and Viber.
Volatility and unpredictability are increasing in business, as well as in the economy and the environment, and one of the questions large corporations and companies need to ask themselves, where is our innovation capacity going to come from in the next couple of years.
Disruptive innovation happens when an industry or a long-term player is shaken up by a smaller company with fewer resources, which either carves out from the established market, or it can even lead to previous incumbents stumbling, if not failing.
So, how can large established companies protect themselves against the small startups that always seem to jump out from behind a corner all of a sudden?
And more importantly, what is the role of HR in all of this? Well, we believe there is probably a bigger role to play, than what some may assume. In this Blog article, we will explore what people managers can put in place to foster creativity in order to drive innovation from the inside. We will look at some of the systemic inhibitors that are getting in the way of corporate innovation, and see how they can be unblocked by HR, as well as other programmes and initiatives that can create the type of enabling environment that will help reduce the risk to companies of being surprised by competitors.
First things first: get recruitment right
And here we don’t only refer to hiring the right people – that of course also matters, but we need to also look at the roles we need to fill today to get that innovative edge for tomorrow? One of the biggest mistakes organisations make is to hire the best and brightest, who after a short period end up leaving, either because the culture was not able to absorb their ‘out of the box’ thinking, or they have been headhunted by a competitor. Not least, some of these great minds end up leaving large corporations, set up their own companies and themselves create that dreaded competitor for your business.
"One of the biggest mistakes organisations make is to hire the best and brightest, who after a short period end up leaving."
Let’s look at the hiring part. If we are focusing on innovation, then organisations need to recruit candidates with a “growth mindset”. Google is famously obsessed with its own culture of innovation, and one of their mantras is “The most important skill any business person can develop is interviewing.” It means recruitment from a slightly different talent pool, then your usual channels, it also means being open to more diverse, even perhaps unlikely candidates, people who will be able to challenge the status quo, will be able to adapt to change, communicate their ideas and teach managers as well as others about a thing or two. This also implies hiring people who may not have all the answers at the time of the recruitment, but have all the skills, curiosity and grit to go after these answers and be able to take the organisation with them.
The work at this stage also entails close collaboration with the team-leader, division manager or the upper levels of management, to understand the type of positions the organisation needs to hire for. Some of the most forward-looking organisations don’t shy away from hiring talent without the actual job being already carved out for them. What do you think about this trend?
"Some of the most forward-looking organisations don’t shy away from hiring talent without the actual job. What do you think about this trend?"
Borders, the former bookselling giant in the US made a crucial mistake when they didn’t jump on the eReader bandwagon early enough. Amazon launched Kindle in 2007, Apple came out with the iPad in 2010, which has a pre-installed e-book reading feature. Borders finally launched Kobo, their own eBook reader (which is still around), but it was a bit too late to regain their leading position in the US bookselling market. In 2011 Borders filed for bankruptcy, closing 399 stores and laying off 10,700 employees.
We will probably never find out what was going on in the inner workings of Borders, or Kodak, or Nokia for that matter, but based on how the fate of these companies evolved, they all ignored what the competitors were up to, failed to pivot or adapt, and most importantly, they didn’t innovate fast enough, or at least as fast as incumbents. The trouble with market disruption is, that your biggest competitor may emerge from an entirely different sector, then your traditional competitors.
The same goes for competing for talent, namely candidates and employees that have very specific skills can adapt them to any sector. They can jump ship from a sporting goods manufacturer and join a tech company, where their specific skills and talent is needed.
So what can HR contribute to building a culture of intrapreneurship? How to keep the talent and skills, as well as foresight in-house, to be able to come up with innovative products and services, as well as fine-tune service delivery?
Some larger corporates now set up their own incubators, to actively draw in the innovators to a hub or lab, where they are given the freedom to experiment and learn from mistakes. This is not new, as Steve Jobs famously moved the Macintosh team to a different building on the Apple campus and even stuck a pirate flag on top, to give the engineers total freedom from the burocracy and office politics. Lufthansa Systems, IT services provider in the airline industry with over 300 airline customers, initiated an Intrapreneurs program named Invent IT in 2007-2008.
"Some corporates set up their own incubators, to actively draw in the innovators to a hub or lab, where they are given the freedom to experiment and learn from mistakes."
Bosch set-up its startup-hub, “grow” in 2013, offering a truly modern mix of coworking in 5 locations, having attracted over 200 entrepreneurs, with 14 startups already under their belt. These innovative approaches allow for a great fluidity of talent, people and ideas, and create an environment in which people can experiment, take risks and develop ideas, that may just be the next big thing for Bosch.
Create a culture of growth and innovation
I know that this sounds rather obvious, but we know from organisational psychology and behaviour studies, that there are a number of factors, that are direct inhibitors to innovation. So a company may have set up the most wonderful incubator, makers-lab or coworking to foster and generate new ideas and products, but if there is an underlying culture of fear, competition or mistrust, it won’t happen.
There is definitley a place for HR to take a hard and honest look at the culture of the organisation, detect some signs and therefore be able to predict, whether the organisation will be able to foster the environment, in which employees will feel empowered and motivated to come forward with their (perhaps even crazy-sounding) ideas.
Part of such an environment are also inspiring workplaces. A lot of companies already experimenting with new ways of working and working places. Pim de Morree und Joost Minnaar, co-founder ot the Corporate Rebels, will give you some good advices in the interview:
Hier das Video einfügen !
Big data problem
But probably a lot of the data is anyways at the disposal of HR professionals: what do our engagement surveys tell us about how employees feel about their employer? What is the staff turnover rate? What is our diversity rate? Where are we recruiting from? Is there a glass ceiling for women, people with migrant backgrounds? What is the average tenure for managers? What about our burnout rate? A lot of these data is already available, and can give us a pretty good picture about how we treat employees, what is their employee experience and therefore, are they really bringing their whole selves to work, giving a 100% in the company – or just being there in body and not in spirit. If you don’t have this information at your disposal, it is highly recommended that you start with this.
Employee engagement is one of the key predictors of organisational psychological safety – a prerequisite for innovation and growth. If your employees feel at work, as if they were in the Hunger Games, forget any intrapreneurial manifestations – they will take their creative ideas elsewhere. If managers are known to appropriating ideas without crediting employees, the same is to be expected.
Look inside and outside
At the same time as putting all the chances on our side in developing an intrapreneurial culture within our organisations, it is also highly recommended to look outside as well. Participating in startup events, pitching competitions, startup awards are also great places to spot creative and innovative budding ventures, that could be bought and brought inside the organisation. There is always a great opportunity at the Zukunft Personal Europe Köln fair, with their massive, and growing Startup-Village, where who knows, you may just as well stumble upon the next big thing for your corporation.