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Why is Innovation So Hard At Big Companies?

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Why is Innovation So Hard At Big Companies?

lean startup at big companies
November 13th, 2017 by Laura Klein
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If you’re responsible for launching new products, you’ve probably come across Eric Ries’s best-selling book, The Lean Startup. The Lean Startup methodology—which was created to help founders in Silicon Valley build better products—is incredibly useful for new companies and entrepreneurs who are trying to create innovative products and find product-market fit.

Over the years, however, Lean Startup has gone from something practiced by a few early adopters in very small companies to something that’s made inroads at organizations like GE, Toyota, and the federal government. And when you’re trying to introduce a big change at a large, established organization, you run into some very specific challenges.

I’ve spent years helping organizations of all sizes build new products and, in particular, create product development processes that help them continue to deliver. Here’s what I’ve learned about being an innovator at big companies—and helping them adopt the best of Lean Startup methodology.

This changes everything… doesn’t it?

First, it’s useful to understand some of the challenges you’ll face when trying to innovate at a big company.

1. Success has an entourage

As the name implies, the Lean Startup methodology was created to help startups. Startups, by definition, don’t have a status quo. That’s not true of large organizations with existing products.

The thing to remember is that those products didn’t appear out of nowhere. They were created. By people! And those people have a stake in the status quo that created and maintains those products.

Thinking about the people who are involved with your company’s day-to-day won’t just make you a better co-worker or a nicer human being. It will also help you mitigate the inevitable resistance you’ll meet when you try to introduce something new… and help you understand where people are coming from when they say things like, “this is our process,” and “that’s not how we do things around here,” and “oh, that will never work for our company.”

2. You aren’t the first

Equally important is to remember that you are probably not the first person to try to make your company more innovative. You may not even be the first person to try it this month.

A lot of the people you work with have been through these sorts of big transformations before, and trust me, they are not looking forward to another one. Reorgs are never painless, and every single person you talk to has heard “this is going to change everything for the better!” at least a few times before.

3. Legal is going to hate you

The innovation process is risky, which is not something that’s going to endear you to any big company’s legal department. Also uncomfortable with chaos: HR, procurement, finance, and a dozen other groups whose jobs are to keep everything running smoothly.

One team I coach spent four months of their year of funding trying to figure out which contract to use to hire a data scientist for their team. They had the funding. They just couldn’t figure out how to get the contract through procurement. They work in the government!

What’s more, if your company has a great product, it’s probably got a brand to protect. That puts you in the cross-hairs of global, regional, and country-based marketing, along with general managers, brand managers, and a whole host of very serious people who care deeply about how the brand is represented. These folks will not be amused if you use that brand to produce some hair-brained experiment that gets you a ton of bad press.

The problem is, if you can’t try stuff quickly, and deal with the fact that sometimes you’ll fail in public, you can’t take big enough risks.

4. Everyone wants you to be a psychic

Another issue you’re going to run into when trying to innovate at large companies is that everybody at large companies loves certainty.

One team I worked with asked for a GANTT chart showing exactly when all the features for the brand new product they were building would be delivered over the next two years. I laughed and laughed. And then I realized they were serious!

Like I said, big companies want certainty. They demand it. And they’re used to it, often in the form of a GANTT chart. But as anybody who’s worked on anything new knows, this isn’t how innovation works. If you know exactly what you’re going to build in two years, then the product you’re working on is probably not very new or revolutionary or innovative.

Really innovative products have to search for product-market fit, which generally means constant discovery of new information about both the product and the market. And you can’t put those kinds of discoveries on a GANTT chart.

5. Grownups hate toys

Ninety percent of the time, when people sneer at hot new startups they read about in Techcrunch, what do they say? “That’s just a toy! That’s so stupid! Nobody will ever want that!” And that makes some sense. A lot of innovative new products look like toys to begin with.

A lot of people wondered why anybody needed books delivered to them when there was a Borders on every corner. Or why anybody would get DVDs mailed to them when they could just go to Blockbuster.

And who can blame them? For every Amazon or Netflix, there were a hundred companies that nobody has ever heard of. It can be hard to tell ahead of time which stupid toy is going to turn into a massively successful company.

It’s especially true at large companies that already have successful products that earn millions of dollars. What do they want with some rinky dink little book delivery service? New, innovative ideas at large companies are often killed because they’re not big enough, which means they never have the time to grow into big ideas.

Yes, you can still be the disruption

Of course, if you sit on your hands, somebody’s probably going to come along and disrupt your big company’s lovely, stable business model. Don’t want to wait for that to happen? Here are a few proactive things you can do to prevent your company from getting in the way of its own best interests.

1. Involve stakeholders early and often

The first thing you need to do is to get people who are going to be affected by your product or who might be stakeholders involved as early as possible. Yes, these are the same folks who are going to want to kill your product before it can get started. But they’re less likely to resist it if they’re actually excited about it… or even just involved.

Find ways to involve your coworkers so that they can help you build the new company where they’re going to be working.

2. Get comfortable with the bureaucracy

Talking to legal, HR, marketing, and procurement can be painful. It can also help you set ground rules in advance, rather than when a critical deadline is looming and you’re trying to get something done.

Talk to marketing and figure out what your leeway is with brand guidelines. (Can you establish an alternative brand to test under or test in a small, specific market?) Talk to legal and figure out which rules you can break. (Can you run small experiments on fewer than 1000 people?) Talk to procurement and HR and figure out how to streamline your hiring process.

And make sure to get these guidelines well before you think you need them.

3. Get the money without the strings

Money in big corporations can be taken away at a moment’s notice.

If you really want to be able to innovate, you’ve got to have secure, dedicated funding with specific goals and milestones that you need to hit in order to keep going. They might not be the traditional goals and milestones that a big company is used to or that can be represented on a GANTT chart. They should, however, be real and reasonable standards that will hold your team accountable to more than the whims of upper management.

Eric Ries’s new book, The Startup Way, goes into more detail about setting up growth boards and doing proper innovation accounting, both of which are really about letting people innovate in companies without having a bunch of strings attached.

4. Bring in some high-level support

Innovation works a lot better if everybody in the organization, or at least everybody in a vertical slice of it, understands what Lean Startup is all about and works to create the right environment for new ideas to flourish.

This is why internal startups and innovation teams need powerful protectors within large companies. Protectors who understand that sometimes all those stupid little toys need is time to grow into big, successful products.

This post was adapted from a Keynote speech at Lean Startup Week. Illustration: Kate Rutter.

Laura Klein

Laura Rose Klein is Business Talent Group's VP of Product. She’s worked as an engineer, user experience designer, and product manager in Silicon Valley for companies of all sizes. She’s also written two books, Build Better Products and UX for Lean Startups, and she’s a frequent speaker at tech conferences, including SXSW, Lean Startup Conference, and Mind the Product.

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