It was an apt location for a discussion about innovation: last Tuesday evening I was at Wayra London for the latest in a series of events organised by the innovation consultancy The Foundation. The venue they’d chosen - Wayra - is the business incubator run by Telefonica that provides financial, managerial and technological support to digital startups. But we weren’t there to talk about startup innovation; innovation within larger organisations was on the agenda.
I touched on this subject last year in an article I wrote in the Financial Times (‘The Product as Market Research’), where I spoke to the director of innovation at Nordstrom, the big US fashion retailer. I heard how Nordstrom is borrowing approaches from the startup community to rapidly prototype new product ideas.
Of course we know it’s easier for innovation to thrive in smaller companies who are more agile and better at taking risks than large organisations. It’s that much-cited speedboat VS supertanker juxtaposition. Last Tuesday The Foundation assembled a panel at Wayra to discuss the challenge for those ‘supertankers’ [The panel line-up was: Natalie Ceeney, responsible for improving HSBC’s customer service and complaint handling; Dan Salmons managing director of PayPoint Mobile, previously director of global innovation at Barclaycard; and Mark Stansfeld, chairman of Giffgaff, a consumer led mobile operator, previously sales director at O2].
The panel agreed it’s hard for big organisations to balance short term health of the business with innovating whatever’s coming next. They recalled their experiences where innovation often gets stifled by boards, by business plans, by road maps that don’t allow for random left turns.
From the discussion I’ve cherry-picked three factors to consider when encouraging innovation in larger organisations:
Avoid the tyranny of finance. Mark argued that in order to thrive, innovation needs to be liberated from a finance-led culture of forecasts and KPIs. His advice was to grant autonomy to teams tasked with innovating new products and services, to free them from a business-planning culture.
Think about innovation when you’re failing. The best time to look at innovation may not be when a business is succeeding, but when it’s failing. Natalie reminded us that First Direct - which has been a huge success in disrupting consumer banking - was launched by Midland Bank when the bank was failing.
Don't ask the customer what they want. In the Q&A it was asked whether validation by focus groups and customer research is important before taking a new product to market. The consensus said not to rely on customer research. Natalie told the story of AT&T conducting customer research before the introduction of mobile telephony. They asked customers if they were interested in owning a mobile phone. Since the customers didn’t understood the benefits of having one (after all, they’d never seen or heard of one) they said no. Those results meant AT&T didn’t move forward in what proved to be a lucrative sector.
In my own work as a writer/thinker, I’ve encouraged grassroots entrepreneurs to ‘unplan’ their business ideas to make them happen, rather than get paralysed by long-term planning. You might think large organisations aren’t brave enough to embrace such radical thinking. So I was pleasantly surprised by the views of a panel who’ve spent their careers in big business, I was encouraged by their advice to ditch the business plan when it comes to developing new products and services.
Towards the end of the discussion someone voiced the view, ‘straight lines and order are overrated’; i.e. it doesn’t matter if you don’t take a linear path to making innovation happen, it doesn’t matter if you took a circuitous and unconventional route. If you have ‘spaghetti lines’ behind you, that’s okay. All that matters is that you took your innovation to market and that you made it happen.
Amen to spaghetti lines.