If we accept that startups create environments that enable Innovation rather than just happening, it stands to reason bigger organizations can innovate too.
Gary Pisano explored this concept and discovered that the root cause for the lack of Innovation at bigger companies is often due to management practice and leadership. There can be an argument about the right management practices, and the leadership scale can be leveraged because larger organizations have scale.
One way to explore this is to deconstruct the organisation into smaller units replicating the autonomous nature of startups and, potentially, their culture. The approach to risk-taking, action orientation, and accountability is, in effect, a mindset that can be 'tuned.'
Gary explores the opposite idea of deconstructing a large organisation to a Creative Construction process that sustains and rejuvenates the existing organization's capabilities to innovate.
Creative construction has three essential leadership tasks present. These are:
Creating an innovation strategy;
Designing an innovation system; and
Building an innovation culture.
So if we accept Innovation is as much as mindset and culture, how would one go about creating an 'Innovation Strategy"?
A good strategy is critical in helping a company understand the balance between short-term gains and unlocking long-term opportunities.
Pisano outlines the link between the innovation strategy and what is required. He identified four types of Innovation;
Pisano determined each innovation type requires a different system for execution.
However, whatever the Innovation, "the right way to assess the value of an innovation strategy is the value created and captured." That is absolute. One question, though, is over what time frame.
Of course, companies do not operate in a vacuum. There is the competition to contend with that distorts execution. When faced with a potential threat of disruption, consideration of two elements needs to be understood.
The nature of the threat. How certain is the threat, and is it imminent or distant? And,
What impact does it have on your profitability?
Of course, the extension of this consideration, as highlighted above, is the potential impact of a threat on profits and where one would see the positioning of the threat, which also helps determine the innovation response.
© Creative Construction by Gary Pisano.
About the Author
Adam Ryan is a Professor of Practice (Adjunct Professor) at Monash University and is a principal at Watkins Bay. He has over twenty years of start-up experience in Australia and the USA. An expert in company structuring for innovation, high growth strategy and capital for early to growth stage businesses.
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