We've been selling and delivering Startup Bootcamps and Accelerators to large enterprises for a while now. One of the key questions in our sales process is:
Is this genuine innovation or innovation theater?
We've learned that we must ask ourselves this question as part of the sales process. This is because there is A LOT of innovation theater going on in established businesses. Here's why I think that is.
1. Everyone loves talking about disruptive innovation, but few have experience doing it
Everyone wants to be more innovative. Innovation means growth. Almost all employees and executives want to deliver growth for the business and its stakeholders. So, to say you aren't innovative or aren't supportive of innovation is like saying you don't like apple pie or American baseball. It's antithetical to our culture to say you aren't innovative. This is a good thing. Our hearts are in the right place.
To enhance your career, it's helpful if the organization considers you an innovator. This is true whether you have real innovation experience or not. We are all learning new things all the time so this isn't a judgment on who is great and who stinks at innovation. Everyone is somewhere in their learning process, including me. To improve your innovation skills, you learn buzzwords like disruptive innovation, MVP's, pivots, business model innovation and more. These terms and concepts are part of the learning process.
However, most employees who have worked in the enterprise for a while have no experience creating disruptive innovations. Because 99% of all enterprises engage in sustaining innovation, if you've worked there for a while then that's all you know. For these aspiring disruptors, the conversation about disruptive innovation is theoretical. They get the concepts but they've never done it. I turns out, having done it before makes a really, really big difference.
All talk + little action = Innovation Theater
2. Disruptive innovation is risky
Unlike sustaining innovation, disruptive innovation is highly, highly risky. When you are trying to create a disruptive platform of growth, most of what you do is going to fail. Failure is part of the process.
Failure in the enterprise usually means termination. Not surprisingly, people are afraid to fail in a traditional enterprise environment. For them, the risk/reward equation suggests they shouldn't take risks. When employees shy away from risk, they are simply acting reasonably and according to their own best interests. How can we blame them?
3. Disruptive innovation requires change
I think this is one of the primary reasons enterprises don't push forward after one of our Startup Bootcamps. Faced with the knowledge that they have to change their org structure and development process, they simply lack the courage necessary to make real change.
Let me share a simple example. After one of our Startup Bootcamps, the innovation teams wanted to continue applying our process to make a real difference in their businesses. Our typical recommendation is to assemble a dedicated team of 4 or 5 people to take one of the disruptive ideas and turn it into a profitable, high-growth business. Our solution is a 90-Day Accelerator, which usually continues for six to 12 months or longer in most cases. But the only initial commitment is 90 days. To be effective, it requires a dedicated effort.
At that's where managers are stopped in their tracks.
Do you mean we have to find five people who are only working on just one thing for 90 days? Wow, we don't normally work this way. Normally, everyone is assigned to 15 or 20 different projects at once, they say.
And that's exactly the point. Part of the change in helping enterprises learn a new way of working is to focus on just one thing. Early stage startups don't work on 15 to 20 different projects. They work on one product with one business model.
Now let's be honest here. You have 100,000 employees. You say you are committed to creating disruptive capabilities at your company. In fact, you say it's absolutely imperative. And you can't assign five people (0.005% of your workforce) to work on an disruptive idea for 90 days? Come on. How can you sit there and tell me you are serious about this?
The truth is, you aren't being serious about it.
If I had a nickel for every company who claimed they are serious yet they aren't willing to make a simple change...I'd be a very rich man. This incongruent behavior continues to amaze me. I understand the reasons why. I think it's my job to point out this obvious contradiction in the hope a few light bulbs turn on.
Committing five people for 90 days is the absolute minimum commitment to make progress on a disruptive idea. Believe me, it's going to take a lot more than that to create a disruptive, scalable, repeatable business model that evolves into a multi-million dollar engine of growth for your enterprise. These businesses don't create themselves.
How Can I Tell If My Company Is Engaged In Innovation Theater?
I think it might be helpful to list the common characteristics of companies that talk a good game, but don't walk the talk when it comes to disruptive innovation.
If you are a practitioner, you can use this list to determine if your current employer is serious about disruptive innovation. If your company is a pretender, you could think about looking for another job. Considering the accelerating churn rate in the S&P 500 over the next 15 years, enterprises that are only pretending to be innovative are going to die. If you don't leave on your own for a better opportunity, you may be forced into termination in the near future.
If you are an executive, you can use this list as a litmus test to determine if your organization is walking the walk. I'm sorry to say, but it's true, executive management is usually the problem here. So, take a close look in the mirror and ask yourself if you are exhibiting any of these characteristics.
Here are some of the characteristics of organizations that are engaged in Innovation Theater.
- Failure to identify projects as sustaining or disruptive and running both types of projects the same way
- Failure to spend at least 30% of R&D on Horizon 2 and 3 projects
- Has no innovation premium in the market (Stock price is near or below fair value), which indicates the stock market doesn't consider your business to be innovative no matter what you say about it
- Has no or very little dedicated personnel assigned to disruptive projects
- Does not actively seek out external input from entrepreneurs, startups and consultants and does everything internally
- Participated in a Startup Bootcamp and then did nothing immediately after
- Has innovation teams led by individuals who have no experience creating startups or disruptive products and services
- Has a C-level or business unit leader who is not personally involved in disruptive projects, getting his or her hands dirty, and who delegates innovation work to lower-level employees
- Company cycles between different innovation frameworks and concepts every six months or so, depending on what philosophy is new or trendy
- Leadership never talks about innovation failures and lessons learned, and generally doesn't make it clear that it's ok to experiment and fail in the learning process
Unfortunately, most enterprises will fail this test. Hopefully, your company is strong is some areas and could use improvement in other areas. Of course, this list can also serve as a to-do list for enterprises who are serious about disruptive innovations and have the courage to make the necessary changes to unlock new engines of growth.
Founder & CEO