When corporates try to act like startups - The challenges of aligning innovation with corporate strategy.

Big companies are still struggling to find the right way to align innovation with their corporate strategy. While startups are experimenting and being successful, corporates are trying to imitate them, but with no results.

Creating a culture of innovation and experimentation within a big company is no easy job. But not impossible. This first article will explain why aligning innovation with a corporate strategy and creating an innovation ecosystem is the way to success. Next week we are going to publish a second article, related to experimentation in big companies. So be sure to check in next week if you want to see some cool examples!

Why can’t corporates just act like startups?

In an ideal world, every corporation could reinvent itself, apply startup techniques, innovate and be even more successful. Unfortunately, the reality is completely different.

Big companies can try to act like a startup and implement those techniques but that doesn’t always work. Why? Because startups and corporates are totally different, they function in a totally different way. What might work in a big company won’t work in a startup and vice versa.  

In order to understand why a corporate can’t act like a startup, it is important to remember the following:

  • Corporates and startups speak a different language. Startups speak the language of innovation and experimentation. While corporates might want to speak the same language, they’re unable to do so without a strategy and culture change.
  • A big company has a well-established business strategy – and everything has to align with it. Therefore, making changes takes time. A lot of time. 
  • The management doesn’t always care about innovation – what matters is the revenue. This is the harsh truth. Senior management is going to invest in a project only if the investment in money and resources will lead to a greater impact.

When working on innovation it’s hard to know what is going to succeed and what is going to fail. Because of this, amazing projects get passed on all the time.

  • The leadership team is not always open to changes and, most of the time, it is still hanging onto traditional management practices. This lack of flexibility makes it almost impossible for innovation to happen.

What is left to do? – Create space for innovation

When facing the need for innovation, most companies have 2 solutions: work with startup accelerators or create innovation labs. But, when these two fail to provide the desired outcomes, what can you do?

The long-term solution comes from inside the company and it is creating an innovation ecosystem. This challenging process involves many changes – from creating space to embracing uncertainty, to drastically changing the businesses’ culture.

Tendayi Viki, the author of The Corporate Startup lists out 8 ways to create space for innovation:

  1. Strategic space – making innovation part of the corporate strategy
  2. Portfolio space – creating space in the company’s portfolio of products and services.
  3. Financial space – even though the final goal is to make the most out of the company’s resources, innovation is not cheap. Therefore, a part of the annual budget has to go to innovation.
  4. Management space –  innovation and rigid traditional management practices are not compatible. Thus, intrapreneurs and managers have to work together in order to implement a new way of working.
  5. Time space – innovation doesn’t happen overnight. Leaders need to understand the need for time and give intrapreneurs their necessary space to focus on developing new products and services.
  6. Learning space – innovation requires a new set of skills. Intrapreneurs need the space to train their colleagues on new ways of working. This is all going to pay off later on when they need their colleagues’ support for new projects.
  7. Space to fail – leadership must understand and embrace failure. For innovators, any outcome is valuable, even if it’s not the desired one.
  8. Space to scale – a great idea that is not taken to scale is a loss of time, money and resources. To avoid that, explicit commitment from stakeholders is needed.
Kickstart a startup culture in your company

Challenges when innovating in a big company:

  • Aligning innovation with the business strategy.

This is the biggest challenge corporates who are ready to innovate have to face. As stated before, big companies have rigid business strategies that don’t leave space for change. Therefore, creating this space within the corporate strategy is crucial to success. This is because a clear innovation strategy makes it easy for intrapreneurs to choose to work on projects that they know matter to their company and it also makes it easy for the leaders to understand the value that these projects bring to their business.

  • Speaking different languages.

While leaders are like this:

and talk about  ROI, ARR, annual budgeting cycles and five-year plan; Innovators are big on experiments, uncertainty, and failure.
So, both innovators and leaders have to learn how to understand each other’s languages

  • Lack of fluency – The messages are getting lost in the “translation”.

When people on your innovation team aren’t fluent and they cannot fully understand what innovation is all about, you’re doomed. It is very important to make sure that when we’re doing this work, everyone understands what we’re doing and why. It is imperative for innovators to fully understand their job and be able to clearly explain it to others. Only then they can start teaching this “language” to the rest of the organization.

  • Culture shock – adapting to the new culture.

When adapting the corporate culture to innovation, things change drastically. Of course, you cannot expect everyone to welcome something completely new with open arms and open minds. Of course, you cannot force them to accept it. Try to put yourself in their shoes – would you immediately accept someone else’s culture and directly follow their rituals? Probably not.

Developing a successful innovation ecosystem in a big corporate is hard work, that’s for sure! But, like it or not, the need for innovation is real. If we want to get innovation moving, we need to accept and embrace failure, uncertainty, and work together with the intrapreneurs towards the same goals.

P.S. Look out for our in-depth article on experimentation in big corporates next week. It also contains a case study. So, keep an eye on our blog next week!

Kickstart a startup culture in your company

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