April 16, 2020
In times of great crisis — like the one we’re in now — it’s easy for business leaders to fall into short-term thinking. But a crisis is a terrible thing to waste.
Economically speaking, what’s happening now is likely going to match or exceed the repercussions of the global financial crisis a decade ago, so it makes sense to think about what needs to be saved and conserved to get through the next year intact.
However, a conservative approach isn’t necessarily what enterprises need right now. Companies that retreat to the safe and predictable instead of pursuing the bold or unusual are trying to do the smart thing, but they could hurt themselves in the long run by holding off on innovation.
Organizations that maintain a steadfast and enthusiastic embrace of innovation will come out of this recession leaps and bounds ahead of those that don’t. Innovation can be uncomfortable for enterprise organizations — especially in uncertain times — but now is the time to harness its power. Act now, when many others are paralyzed.
Even in good times, innovating is often easier said than done. Several factors work against it in large companies: The structure, sheer size, and the culture of hierarchy can make it difficult to encourage risk-taking and forward-thinking. At best, these factors can slow innovation; at worst, they can stop it altogether.
Organizations that maintain a steadfast and enthusiastic embrace of innovation will come out of this recession leaps and bounds ahead of those that don’t.
That said, how do you lead a major company through a crisis like this and still foster innovation when it feels like the ship could sink at any moment? The answer isn’t necessarily to change the structure of your company. Instead, encourage the creation of spinouts and partnerships with startups.
The core concerns of most large enterprises are operational excellence and process optimization. As such, the majority of employees focus on running the day-to-day business. These people are, in many ways, the lifeblood of a company.
Unfortunately, this structure also means that new ideas attempting to rise to the surface often get caught in the gears of the well-oiled machine that is big business. Your employees likely have no shortage of great ideas, but those concepts have nowhere to go without the mechanisms to turn them into reality.
However, implementing a program for creating spinouts enables corporations to take ideas and give them the space and structure they need to grow. As corporate-sponsored startups, spinouts can focus on innovation and experimentation that will benefit the enterprise as a whole. Their smaller size also means this can happen on a significantly faster timeline.
While building spinouts might seem easier said than done — especially in our current crisis — there are ways for leaders to do it successfully and accelerate the rate of innovation within their companies. Here are three suggestions to get you started:
The well-defined policies that hold a large company together can create friction and hinder the ability for spinouts to flourish. Experimentation is often discouraged in corporations because of the high risk of failure. However, experimentation is precisely what a spinout needs to innovate.
Encouraging innovation doesn’t require throwing away all of the rules, but it does require a shift in how you think about product development. Make sure there’s a clear distinction between the metrics for spinouts versus those set for the company as a whole. More importantly, celebrate experimentation and innovation efforts to ensure your employees see that the company is doing more than just business as usual.
During a recession, companies will not only need to find new avenues to secure revenue, but they also will need to find ways to operate efficiently on a smaller scale. A recession offers an opportunity for startups and lean businesses to shine, so it’s important to create programs that will help you compete.
You might try funding a skunkworks team that is free to experiment and invent. Better yet, launch a new venture program for sourcing and turning the best ideas within your organization into a portfolio of corporate spinouts.
This might sound like obvious advice, but it’s remarkably easy to become stuck in your ways — especially when you’re running a successful corporation. Don’t just listen to other executives; pay attention to what your employees and customers are trying to tell you.
Get out of the building and engage in meaningful conversations with your employees, customers, prospects, and business partners. Look under every rock. Open your ears, your mind, and your thoughts about what might be possible.
Make it clear that you want to hear from people in the skunkworks and in spinouts about the direction they see your company taking. This gives you valuable insight and proves that these innovative teams are more than just flights of fancy — they’re crucial to the success of your core business.
Finding ways to innovate has always been crucial to lasting success in business. Now more than ever, however, it’s necessary to find new ways to navigate this unprecedented situation.
By enabling tech spinouts to develop and thrive, you can follow in the footsteps of major businesses like General Motors Co. and increase the rate of innovation within your company. With the right approach, you won’t just make it through to the other side — you’ll be better equipped for whatever comes next.
*This article was originally published on CEOWorld
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