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How to Foster Startup-Like Innovation in Established Companies

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Startup founders expect uncertainty and failure as part of their innovation process. Leaders in established companies need to make sure that people take on risks to build the next big thing. Adding small improvements to products in a constant manner will create a compounding effect over time, and will help you build the exact thing your users are looking for.

Adil Addiya, a software developer, spoke about safe-to-fail and psychological safety in teams at A Day of Organisational Psychological Safety by Aginext.

A lot of the effort aiming to help people take on risky ventures seems to focus more on helping people avoid failure. This creates a paradigm in which employees fail, Addiya mentioned. He explained how startup founders have a different view on failure:

I never saw any of the founders talk about how they are a failure. Yes, they talk about their failed experience and the learning they get out of that, but that is it. The initiative may fail but not the person doing the work. And these failed initiatives are just a part of the innovation process.

Addiya mentioned that the muscles we use become stronger, while the ones we do not use become weaker. This extends beyond our physical muscles:

Our brain also operates the same way; the more we are familiar with some of the stuff that we perceive as dangerous, the more likely it is that we will master the courage and face it when the time comes to do so.

Leaders need to make sure that their employees take on risks and when they fail, that they don't stay down, but they pick themselves up, and take on the next risk because; this is how they will build the next big thing, as Addiya explained:

We need to build some form of resilience to failure when we are innovating. We must train ourselves by failing often, and since we don't want our failure to be deadly, let us start with small ones. Let us bake some form of micro-failure into our innovation process.

Continuous and rapid experimentation is necessary for all companies nowadays, Addiya mentioned. While running the business will keep money flowing, without the proper level of innovation you cannot maintain this flow for long.

InfoQ interviewed Adil Addiya about fostering startup behaviour in established companies.

InfoQ: What can we learn from start-ups when it comes to risk-taking and innovation?

Adil Addiya: In the corporate world today, most conversations about innovation seem to start from the right place. There is this understanding that innovation will not come without risk-taking. But the conversation seems to falter when we move to the implementation. Risk-taking is quickly obscured with all talk around handling failure. This is not bad in itself, since it allows employees to learn how to deal with any unfavourable outcome. But it often comes at the expense of teaching them how to deal with something more prevalent in the innovation process, uncertainty.

Startups’ founders know this. They try to always have an expectation of uncertainty, which leads to the kind of mindset that moves the conversation beyond the momentary success or failure of a project or task to the end goal of having a clear idea of what the next step is.

So established companies should not just glaze over uncertainty to get from risk-taking to failure, as:

  • People are more innovative when they are in a sandbox, a climate where change is happening all the time and the rules are vague i.e., uncertainty
  • No matter how much you try, you can never achieve 0% uncertainty, and the only way to win is not to fight it but to harness its power for innovative endeavours

When established companies talk about the role of innovation, nobody is putting forward the argument that it is not needed; everyone knows that the only way to dominate the market is to build the next big product or service.

This idea of looking at innovation as tools for expansion is not wrong, but is it misleading? It leads us to a false sense of safety. Especially if the company has achieved some market penetration, we come to look at innovation as something great to do but not vital.

Innovation becomes a choice, while it is not. This is also a thing that startups understand very well. For a startup, building the next big thing is not only a measure of success but also the only success. but when it comes to innovation the mantra is simple: innovate fast or die slow.

InfoQ: How can small failures build resilience against big ones?

Addiya: Innovation is often about experimentation to validate some assumption, as such one of the best and easiest ways to fail often and without danger is to have our assumption disproved. Don't get me wrong, this does not mean developing some hypothesis that we know is not true. Honestly, is it just a waste of time; if you know something is not going to work, is it a failure? No, this is about taking risks on those hypotheses we are not sure about, designing small experiences, and testing them.

And here the leader plays an important role:

  • They should keep themselves and their teams true to the spirit of experimentation, a way to validate or disapprove a thesis. They should make sure any biases and preconceived notions about the best outcome are recognized and find a way to move beyond it before the work begins.
  • They need to work with the team to design as small of an experience as possible to test this new presumption.
  • They should be worried about an individual or a team who has all their theories confirmed. This is a red flag, not only because it means that they are not stretching themselves enough by testing new and out-of-the-box ideas that will lead to real innovation, but it also means that they are robbing themselves of all the learning and the experience that lead to resilience to failure.

InfoQ: How can large companies combine running the daily business with innovation?

Addiya: Working iteratively will:

  • Help avoid any alienation your client may feel when you introduce substantial changes to their favourite products
  • Create a climate in which keeping the daily business running and innovating are not two activities, but are the same thing

Adding a small improvement to your product might not be noticeable in the short term. But doing it in a constant manner will create a compounding effect over time and get you to build the exact thing your users are looking for.

If you are selling a physical product made in massive quantities and you have been using the same process for a while, it may be hard to envision how to add incremental improvements to your offering. With the advent of the SAAS/platform economic model and the proliferation of management tools like agile and lean manufacturing, a clever modernization of your production process can move your production to the small batch model.

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