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Why corporates can’t innovate like startups

Why corporates can’t innovate like startups

What you need to do to lead innovation efforts across your business

When you meet people who work in startups, you can sometimes sense that they are naïve. This may be correct but this sense of innocence and seeing through fresh eyes is perhaps the reason why they have so many good ideas.

Who has heard of Ryan Allis? He founded iContact in 2003 and sold it for US$169 million in 2012. He's the perfect example of a entrepreneur who had a good idea, made it a commercial reality and sold the end product for a handsome sum.

We are seeing the new startups that are revolutionising industries and existing companies are fighting off these new entrants.

It’s expected that corporates are more likely to take the safe choices and bypass the radical options. For example, it is well documented that senior managers at Kodak dropped the ball on digital cameras, a technology that their company invented.

The rest is history and Kodak, once a market leader in cameras, lost its way. We have seen so many examples of this across many industries and the trend will not stop.

So does this mean that startups are just hungrier for success and by definition have less to lose? Or are people that work in startups just plain smarter than those who work in corporates?

I don’t believe that there’s an intelligence quotient gap, so it’s got to be about their hunger and willingness to take risks compared to the incumbents who feel constrained by existing forces and protocols.

Just like the old saying, ‘you don’t get fired for buying IBM’, there’s an unwritten law in corporations that innovation and agility is inverse to the size of the beast.

There is truth that conformity to the norm is what is dampening the creative juices of smart people in larger enterprises. In many ways, we can assert that neck ties are responsible for this situation.

In defence of large organisations, innovative ideas tend to be overshadowed by existing priorities and sanctioned work that is already in the portfolio. In other words, precedence must be given to initiatives that will benefit the existing customer base.

So how do startups innovate? The process is much simpler when there are less moving parts. It starts with a good idea and germinates into a concept that has use cases. In enterprises, radical yet good ideas are in the mix a backlog of existing work.

There is an overarching difference between startups and corporates. Workers at established enterprises will still be paid regardless of whether or not an idea comes to fruition.

For a startup, having a commercially-viable product will provide a meal ticket and take the proprietors beyond the subsistence existence. These fundamental differences drive behaviors and outcomes.

Innovative enterprises

We typically do not associate enterprises with innovation; this label is reserved for special cases and organisations that really stand out.

Richard Branson’s Virgin is well regarded as an innovator across different industries. During his humble beginnings, Branson sold records from a phone booth. But from day one, he had a radical approach to work and this permeates the culture of the Virgin enterprise.

Organisations are setup to ‘execute’ and this is their focus, unlike startups which are genetically programmed to 'search’. So seek out something new and radically different.

What can you do?

As an executive, your leadership, ability to influence others, and the encouragement you provide to staff makes a huge difference.

Talk to your manager and volunteer to lead innovation efforts. Try to understand how important innovation is to your organisation, then take an idea and drive it to a logical conclusion. (Note that I didn’t say outcome, as failure and learning is part of the process.)

My journey to innovation is starting as an advisor at a new startup accelerator. This organisation was created to find the next-generation of technology solutions for financial services, telecommunications, and technology companies.

Being involved with this organisation provides a great opportunity for me to observe and provide advice to startups as they turn their ideas into products and services they can sell.

And they will do this much faster than I could ever achieve working inside a corporate enterprise. This organisation will no doubt promote technologies that will have potential use cases for companies in industries where I am working.

Corporates are increasingly investing in startups with big ideas and it’s worthwhile getting involved.

David Gee is the former CIO of CUA where he recently completed a core banking transformation. He has more than 18 years' experience as a CIO, and was also previously director at KPMG Consulting..

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