by Saeed Khan
Over the years I’ve working in a number of companies, and I’ve had good working relationships with people in many more. And when looking at those companies — successful and not — there’s one factor that separated the two, that clearly differentiated the innovative companies, vs. those that were not innovative.
Now, before I get into that, I want to make it clear that being innovative and being successful are not always the same. They are closely related, but they are not the same.
Repeatable success?
Many startups find initial success with a new product, but after the grow a bit — i.e. nail their revenue model and scale their business — they find it hard to replicate that success with other products. They may be successful — for example, there’s nothing bad about a profitable ($25 million, $50 million, or even $100 million) company where the majority of revenue comes from a single product — but to me, that is not an innovative company.
Innovation is — as I discussed in this post — about creating things that solve problems AND then getting those things into the hands of the people who can benefit from them, and ultimately improving their lives or experiences.
For a company to do this once — i.e. have one successful product — can mean they have created an innovation, but it doesn’t mean the company is innovative.
Why?
Because to be an innovative company, means to be able to repeatedly identify and create new products and have them succeed in the market. A lot of companies can do it once, but to do it 2, 3, 4 or more times is what it means to be innovative. It’s a characteristic of the company, not simply an activity the company engages in.
How many companies can you name that can claim this? i.e. multiple, successful new products. Think about those companies and think about what differentiates them from companies that are not innovative?
- Is it that they have smarter technologists?
- Is it that they have more savvy business people running them?
- Is it that they had more funding than others?
I doubt it’s consistently any of those.
The importance of culture
IMHO, the biggest differentiating factor that defines an innovative company is culture.
And by culture I mean:
the set of shared beliefs, values and expectations that form the basis of thoughts and actions in an organization
This is something that must be deeply rooted in the people, and is not simply something listed in a document or webpage on an intranet. Like a brand, its only tangible through the behaviour of people. Think of a company like Zappos that focuses on a positive culture so much that it helps other companies achieve the same.
It starts at the top with the CEO and the executive team. Those people MUST communicate and act to create a culture that supports innovation. What does this mean? The following are a few things that can help define a culture that supports innovation.
- allowing people to take risks and not be penalized for “failure”.
- ensuring middle managers are empowered to make decisions, and are not afraid of making the wrong ones.
- having Sr. Management available and open to discussions and not making decisions in the metaphorical Ivory Tower
- hiring people who have the right mindset to grow in and strengthen the culture
- differentiating from the pack, and not simply measuring forward progress in comparison to existing competitors.
- taking some chances on new initiatives and not simply focusing on “de-risking” every initiative that comes along
- being able to look at new business models for new products, and not simply trying to fit everything into the same pricing structure so it is easy for the purchase order process
- having a longer term view of the market place and not always focusing almost exclusively on next quarter’s or at maximum, next year’s sales numbers
- truly listening to the marketplace (not just customers) and having the courage to invest in big new ideas – yes invest with all it’s inherent risks – and not simply “fund” smaller ideas that are easy to digest
If you look at all of these — and these are far from a complete list — they look a lot like the things that attract people to startups. i.e. taking risks, differentiating from the competitors, taking a longer term view.
But something happens to companies after they find some initial success. They start pulling back and focus on preserving their gains. In short, their culture changes. Have you noticed that happen in some startups as they grow? They become more bureaucratic — more “business like” — and thus lose what made them so attractive (and successful) in the first place. And where does this come from? The leadership of course.
I’ve seen it over and over again. Sometimes, a company can find it’s “mojo” and return to it’s innovative ways — Apple certainly did after Steve Jobs returned — remember the Think Different campaign.
Intuit seems to have kept a lot of their innovative culture throughout the years, thanks in large part to the culture fostered by founder Scott Cook.
Dyson – the makers of the “vacuum clean that doesn’t lose suction” – seems to be another similar company, with founder James Dyson setting the culture quite clearly.
In this 2010 interview with Harvard Business Review, Dyson answers the following question:
How do you foster a culture of creativity at Dyson?
I think it’s entirely down to the way you react to things, what you say to people every day, your attitude, your body language, your enthusiasm for coming up with new things and not making compromises and not making decisions based on business reasons alone. That’s a culture that catches on by osmosis.
I love his use of the word “osmosis”. i.e. it implies something living, breathing and dynamic and that the culture penetrates beyond the surface and throughout the organization (or should that be organism?).
Here’s a great video on this topic
Leaders who want to build innovative companies should think hard about how to create and sustain (not simply maintain) that culture in their employees. It’s not easy or simple, but the rewards, both financial and personal, are well worth it.
Saeed
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