Why Big Companies Suck at Innovation
In this third installment of a four-part series, innovation and “growth hacking” consultant, Lockie Andrews outlines the primary forces that drive millennial engagement, and the surprising connection between millennial-friendly cultures and innovation.
Last month I hosted a RiseSmart Webinar and presented 5 Core Principles that Drive Millennial Engagement.
The presentation sparked a lively Q&A session, and an audience member asked this insightful question:
"Please speak about the need for simply better management: Sincere communication and partnership with employees rather than 'command and control' - these ideas matter to all generations - we are faced with the realities of each era that we launch our careers in," Audience Member.
I love this question.
We’ve all been there - suffering through a pointless mandatory meeting, or staring in disbelief at a poorly designed new product. We say to ourselves, did any employee along the way think to tell management this was a bad idea?
Unfortunately, the downside of command and control environments is valuable feedback does not travel upwards. It’s mind-boggling that successful companies continue to use such 20th century organizational structures in this digital age.
Big is better, right?
Of course, we understand why companies evolve into dinosaurs over the years.
When I’m offering innovation advice to my clients, it’s inevitable that the corporate historian will blame the company’s current growth challenges on the organizational structure.
The usual response goes something like this- ‘we need to get back to the company’s roots, when we were entrepreneurial, flat and lean’ (i.e. a startup).
The paradox here is obvious. To successfully manage a large and growing organization, management MUST introduce some level of structure and bureaucracy. Recent examples of growth companies that experimented with different decentralized organizational systems have mostly ended in failure (e.g. Zappos and Medium with Holacracy). The command and control school of management has thrived, precisely because it works.
Or at least, it used to work.
The digital age, and the digital natives it spawned, have ushered in a new set of challenges. And forward-looking companies have begun to re-imagine organizational design to respond to this new era:
- The internet has democratized information, bringing transparency and inclusion to once closed systems.
- The rate of change is accelerating, causing dramatic shifts in consumer expectations (particularly Millennials).
- Digital technologies have enabled rapid growth and streamlined processes, making business automation easier and cheaper.
Yes, the old days are gone, and 21st century enterprises must now focus on continuous improvement, faster product introductions and inclusive work environments.
We want to be Big AND Innovative
Research shows that the command and control management style is an innovation killer. As such, at Catalyst Consulting we encourage our innovation clients to abandon these outdated practices, and adopt modern systems that align with strategic goals.
We do this by introducing “collaborate and curate” techniques that not only drive innovation, but also appeal to Millennials.
We recognize that change must be managed carefully, so we first identify candidate divisions to pilot these new innovation practices.
The ideal testing ground is a high growth division or business unit that relies on innovation. Interestingly, these areas usually employ a high number of Millennials (innovation, design, sales, marketing, etc.)
Collaborative Work Model
Secondly, we flatten the division by introducing a collaborative work model and redesigning processes, reporting structures, workflows, and at times, even floor plans.
With the initial pilot division as a lead, the organization begins to foster cross-functional interactions via meetings. Ideally, there should be at least one member of the pilot division’s mission critical activities present in every high level meeting.
We also encourage sharing responsibilities within the pilot division. The most senior person should NOT be the only person invited to cross-functional meetings. Each manager decides the rotation schedule and the team decides how best to share meeting recaps with their colleagues.
Typically these changes are so well received (e.g. high employee engagement and retention) that the practices cascade throughout the organization.
That said it’s incredibly hard to change culture from within, and be prepared for this transformation process to take YEARS before completion.
Heed the Warning!
Don’t let the hard work and significant investment of time and money prevent you from embracing modern management systems. Because relying on status quo is a sure ticket to bankruptcy. Let Blockbuster be a cautionary tale to inspire you to undertake a modernization initiative. No one wants to be Blockbuster in a Netflix world!
We’d love to hear your feedback on companies or managers with modern management techniques that promote innovation. Please leave your comments below or reach out to me directly (Blog, Twitter, Linkedin).
Lockie Andrews is the CEO of Catalyst Consulting (www.catalystconsult.com), a boutique advisory firm to retail and consumer brands, digital, media and technology companies, as well as venture capital and private equity funds. With 20+ years of general management experience, Lockie has assisted high growth companies (e.g. Nike, Lane Bryant, Limited Stores, and various high growth startups) in diverse areas such as strategy, innovation, digital marketing, revenue enhancement, operational/financial improvement and fundraising. Lockie is a speaker, author of an upcoming book on Innovation, and a sector lead for the HBS Alumni Angels of NYC.