As someone who runs two businesses, I’ve often wondered why so much innovation is driven by start-ups and entrepreneurs. In the food and beverage industries, for example, many of the most relevant new brands are created by entrepreneurs (and then sometimes acquired and scaled by major corporations, with varying degrees of success). This is true in so many industries – hospitality, technology, cannabis, fashion – all have entrepreneurs to thank for some of their biggest leaps and most creative ideas.
But why does so much innovation come from outside corporate environments? These days many corporations are trying to crack the code on integrating a more ‘entrepreneurial’ approach because they know it’s critical to their long-term business health. Yet I think many are still struggling to get it right. As someone who has worked both inside corporations, as well as on start-ups, I thought I’d share three things I’ve learned from the smaller brands that I think larger companies might adopt in order to be more ‘entrepreneurial’.
1 – The biggest challenge isn’t resources, it’s culture. As a friend of mine said, ‘If it was about resources the corporations would be the leaders of innovation’. But it’s not about resources, it’s about culture. Corporate cultures tend to be results-driven and systems oriented by nature, but that’s not where innovation thrives. Big new ideas happen in environments where people are encouraged to do something great. These ideas aren’t always pretty in the beginning and they can take a while to get off the ground, but in the long run they can disrupt entire industries. Greek yogurt was a relatively small market until Chobani came along, but now most of the big yogurt companies have their own ‘me too’ product. Corporations have long been rewarded for their rigor, systems, and repeatable models, but those aren’t the conditions that cultivate the big breakthroughs. In order to foster innovation they need to create cultures and environments defined by curiosity, patience, and the ambition to do something great.
2 – Identify the people who will take risks. For thousands of years, the protection of the crowd has helped our chances of survival, and so people instinctively follow trends because it feels safer than trying to start a new one. That said, there are people among us who are less risk averse, less afraid of failure and more willing to do something bold because they believe it will have a big impact (hint – they’ve probably worked in a lot of different places and they definitely don’t use the term ‘career suicide’. Aside: if you use that term, please stop.). I think corporations need to identify these people and give them the space they need to experiment. A great example of a corporation getting this right is the legendary Bell Labs in New Jersey. Known as ‘The Idea Factory’ and recognized for being one of the most innovative places in the 20th century, they hired the right scientists and granted them the time, space and funding they needed in order to innovate. Scientists often worked for years on a project before finding success, yet AT&T let their scientists do what they needed to, and in the long run, ended up earning several Nobel prizes while developing over 33,000 patents.
3 – Move Fast – Entrepreneurs don’t spend months waiting for things like ‘buy-in’ from 16 different shareholders, and ‘test and learn’ isn’t a value that needs to be talked about, because, by necessity, it just happens. Entrepreneurs are good at moving fast. They’re also willing to be flexible to make things work, sometimes even going off strategy and ‘pivoting’, which can be the very thing that helps them discover the breakthrough that takes them to the next level.
With consumers’ increasing desire for new products and experiences, corporations need to shift more resources and focus to innovation. In my interactions with corporations I often hear the term ‘entrepreneurial spirit’ spoken about as a company value, but in order to connect with tomorrow’s consumer, they’ll need to make sure those aren’t just words on a page.