Fostering a Culture of Innovation: Top-Down Directive, Bottom-Up Initiative

Fostering a Culture of Innovation: Top-Down Directive, Bottom-Up Initiative

In today’s hyper-competitive globalized economy, companies large and small have had to come to terms with the fact that innovation is nowadays crucial to solidifying their place in the market and guaranteeing long-term success. 

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In today’s hyper-competitive globalized economy, companies large and small have had to come to terms with the fact that innovation is nowadays crucial to solidifying their place in the market and guaranteeing long-term success.  From Google’s 20% policy to Toyota and 3M’s encouragement of cross-functional teams, more and more businesses are adopting the strategy of integrating innovation into their company culture. 

In fact, 55% of 1,378 chief executives in more than 90 territories state that the key aspects affecting their growth prospects is an inability to innovate properly, the conclusion being that they need to upskill their corporate culture. Maybe your company is mature on the subject of prioritising a culture of innovation, maybe you already have a said strategy in place, or maybe you have no idea where to start. This article will aim to provide a deployment roadmap on how to foster a culture of innovation within your company.

A Top-Down Directive, a Bottom-Up Initiative

When first attempting to create a culture of innovation within your company there is one key concept that is crucial to keep in mind, and which will frame your deployment roadmap. Simply put, fostering a culture of  innovation must be a top-down directive, while remaining a bottom-up initiative.

Why a Top-Down Directive?

The first step of creating a culture of innovation is getting top management onboard. For innovation initiatives to be successful, they need to stem from and be supported by top management. Innovation needs to be central to the company’s business strategy in order to ensure that it will be encouraged and implemented from top to bottom. Performance goals as well as compensation metrics should also be introduced to further instill a culture of innovation.

Why A Bottom Up Initiative?

It is necessary to change perspectives to see innovation as “not being the result of ‘extraordinary people’, but rather as the outcome of a methodical routine that relies on the capacities of ‘ordinary people’.” (Bolloré, 2018). Although it may be top management piloting the culture of innovation, innovation initiatives need to be driven from the bottom up, meaning all employees should be involved. Reasons why it is crucial to include everyone in the initiative can be boiled down to the following three: 

  1. People on the ground are the most capable to recognize relevant and pertinent opportunities. For example, Customer Support teams have a privileged position in helping shape the future of products as they are constantly hearing the persisting complaints and needs of end-users. 
  2. The broader the range of perspectives you can bring to a project, the more robust is the range of possible solutions to be discovered. In other words, diversity is a necessity.
  3. Lastly, the more experts who are involved in evaluating ideas, the faster the transition from the ideation phase to the operational implementation of solutions will be. 

The Deployment Roadmap

There needs to be a clearly defined strategy around innovation to align the diverse perspectives that will be embarked in innovating. This aids in preventing different parts of the company pursuing conflicting agendas and squandering precious resources, making efforts to innovate mute. This leads us to the first point of the deployment roadmap.

Establish What Innovation Means to the Corporation

Before communicating the initiative, top management needs to be clear on why innovation is crucial to the company’s business model. Innovation can mean completely different things depending on a company’s industry, product, and market. Therefore, before a company can begin motivating employees to innovate, clear goals need to be defined to drive this initiative.  This “why” needs to be the center of all communication around innovation, as it is what will allow a company to focus and drive initiatives around a central theme.

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Define Which Canvas to Throw Paint At

Once top management determines the “why”, they need to determine the “how”: the framework within which collaborators can or should innovate. The goal here should be to inspire collaboration while instilling individual accountability and autonomy. This means creating an environment where collaborators have a designated space and time dedicated to innovation.

Name Your Champions, Locate Your Ambassadors

Once the “why” and “how” of innovation within your corporation has been defined, it is time to get everyone on board. Like with any deployment strategy, one of the easiest ways to diffuse your initiative is to locate your ambassadors or champions: employees who are ready to position themselves as “innovation relays” within each team or department. These “champions” don’t specifically need to be in hierarchical positions of leadership, it is actually preferable if they are not. The most effective champions are those that have an interest in innovation and encourage their fellow team members to participate in innovation initiatives. These champions should also encompass all aspects outlined above in the bottom-up initiative section i.e., individuals on the ground, representing diverse backgrounds and expertise.  

Reward Success, Celebrate Failure

Once a company begins onboarding its departments, it is time to ensure that those embarked in this initiative will stay motivated to contribute to its success. One of the most effective ways of doing this is to create a culture of rewarding success while celebrating failure. Those launching innovative initiatives need to feel that they are heard, supported, and rewarded, regardless of whether an initiative fails. Most companies think of putting in place performance goals and/or compensation metrics to reward best innovation practices. However, recognizing failure and embracing it is just as important as recognizing successes. In fact, companies with the strongest cultures of innovation celebrate failure, from Google to startup’s organising F*ckup Nights. As Einstein so wisely put it “a person who never made a mistake, never tried anything new.”


The Corporate-Startup Relationship: Why It’s So Hard To Crack

The Corporate-Startup Relationship: Why It Is So Hard To Crack?

It is undisputed that corporate-startup relationships are nowadays inevitable, if not a match made in “business heaven”.

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It is undisputed that corporate-startup relationships are nowadays inevitable, if not a match made in “business heaven”. With success stories such as Diageo and Thinfilm, Coca-Cola and Wonolo, as well as Dell and DocuSign, it is hard to ignore that the corporate-startup relationship is the key to fostering innovation and ensuring mutual success. 

However, regardless of their inevitably, there is a relatively low success rate for partnerships between large companies and startups. In fact, 45% of large companies and 55% of startups in Europe are “very dissatisfied” or “somewhat dissatisfied” with their partnerships according to BCG. This begs the question, if they are so unavoidable, why is the corporate-startup relationship so hard to crack? 

Before jumping into why they fail, let’s take a minute to remind ourselves why they exist in the first place. 

Why Startups Work With Large Corporations: Money, Reputation, and Growth 

  • Aligning themselves with a large corporation allows them to secure the necessary revenue needed to survive and achieve sustainable growth. 
  • It grants them independence from external capital sources, buying them time to build a reputation while collecting success stories for future sales. 
  • Accessing proprietary assets (data) and mentoring from large corporations allows startups to further develop their product while understanding the complexities of the market. 
  • Tapping into existing internal infrastructure and partnering with a large company’s subsidiaries allows a startup to scale faster and internationally.

Why Corporations Work With Startups: If You Can’t Beat Them, Join Them

  • It allows them to innovate externally while protecting their strategic positions. They are able to secure a competitive advantage within their industry and increase revenue without having to completely uproot their own internal structure or business model.
  • Given a startup’s agile working methods, large companies are often provided with a product that is easily adapted and customised to their needs and market trends. 
  • It is a smart investment. As David Fowler from Microsoft puts it, “In the same way that startups are the developers of tomorrow, so startups are the large-scale enterprises of tomorrow.” What may start out as an investment, if successful, may become that corporations next flagship client or customer.
  • Because at the end of the day, a corporation’s only option is to disrupt or be disrupted. In other words, if you can’t beat them, join them.

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Why the Startup-Corporate Relationship Stumbles

Unfortunately, regardless of the benefits outlined above, about half of these collaborations are unsuccessful. In fact, there is a laundry list of possible risks for failure, but the key recurring themes are as follows:

  • Startups have a very limited window to find revenue in order to fund their operations and ensure the survival of their company. This can be problematic as a corporation’s rigid internal processes can lead to long sales cycles that jeopardize a startup’s financial success. 
  • What guarantees the long term success of collaboration between a startup and a corporation is senior management support from the corporation. However, for a startup, navigating the maze of internal corporate structures and their siloed organisations to secure senior management support can prove difficult. In addition, differing expectations from key decision-makers within the large company can cause delays when attempting to launch a partnership or project. 
  • Although startups are known for their agile working methods, some large companies view this as an opportunity to dictate the future product roadmap. As such, a startup may find its product development being dictated by the client who makes the biggest fuss, rather than intentional UX research. A startup may become too influenced by an individual customers needs, limiting their ability to create a scalable product that responds to the global market.
  • Lastly, a clash of cultures surrounding the following: agile vs. static work processes, conflicting work ethics, and varying appetites for risk. These all add complexities for a successful relationship. 

How to Avoid The Stumbling Blocks

Fortunately, recent research has revealed that there is a possible solution to circumvent these stumbling blocks. Overall, the goal should be to simplify the collaboration process, while ensuring a win-win scenario for both parties. Therefore the process is two-fold: 

  1. Large companies should adapt internal processes to shorten sales cycles and simplify rigid decision-making processes. The easiest way of implementing this is for corporations to initially move away from long-term contracts and opt for experiments and pilot projects (POCs). This means putting in place a short term project that allows immediate cash flow for the startup while providing sufficient time for the large corporation to evaluate the potential solution prior to industrialisation.
  2. Although possibly evident, the second part of the process is to prioritise a robust flow of communication between the startup and corporation. Both parties need to have a mutual understanding of each other’s culture, incentives, risks, and differences. Large corporations need defined innovation goals in order to best choose a cooperation/partnership model that reflects their innovation strategy. They need to identify which departments and key decision-makers will be involved in piloting projects with startups and equip them with the necessary resources to make those initiatives successful. Expectations and limitations between the startup and the large corporation need to be transparent and fully aligned to ensure overall success.