All organizations are born innovative. Not all organizations stay innovative. And the ones that do don’t stay innovative in the same ways.
This series is about the different ways organizations innovate. The protagonist is the organization that struggles to maintain its relevance in a fast-moving market. This organization faces challenges as it grows up, matures, and faces the pressures of being ‘all growns up’ with responsibilities that make risk taking difficult. In other words, it is a coming-of-age story about how organizations struggle with scaling while still maintaining their innovative spirit.
EARLY INNOVATION: VISIONARIES & TINKERERS
In the first phase of life, the founders of organizations create something new – a new product, a new service, a new revenue model, a new marketing strategy, or something else that creates value for the world. Innovation is the defining characteristic of early-stage organizations. The ideas flow quickly, lots of things are created and tested, the market and stakeholders respond, and the founders learn, shift, and pivot (or else the organization perishes).
Many organizations stay in this stage for a long time. Many visionary founders make the decision not to scale too quickly because they do not want to lose control. But those that do often try to maintain control by building a “Visionary” innovative organization, in which there is one person who is the visionary innovation leader, and the rest of the organization is designed and built to execute on his/her ideas. Successful innovation under a Visionary paradigm can last decades, as long as growth is managed, the leader is charismatic enough to engage the hearts and minds of employees, and as long as the visionary is right a lot more times than s/he’s wrong. This is the case with many of today’s most successful and fastest-growing innovators – Apple, Salesforce, Virgin, Tesla.
But some organizations – particularly those with multiple strong founders – go in a different direction. As they start growing and hiring more people, they distribute power to everyone and ideas start to come from anyone, at any time. Instead of taking on a hierarchical Visionary shape, these organizations are organized as a loose society of “Tinkerers” who have tight-knit relationships and leverage social capital to get new ideas developed and out the door. Google, 3M, and IDEO are examples of organizations that started and spent much of their early years as Tinkerers, with cultures of encouraging all employees to try out, build, and market new ideas.
THE CHALLENGE WITH GROWTH
As they grow, pressure builds up on both of these models. Visionaries inevitably want to distribute the responsibility for innovation. Tinkerers chafe under the inefficiencies of unorganized projects that don’t fit strategic goals. At this point, there are two forks in the road.
Fork 1: Should we try to grow while continuing to push innovation as our #1 priority, or should we focus on optimizing what we do best? In other words, is our long-term trajectory tied to continued innovation - which needs the unwavering attention by our top executives and massive continued investment?
If the organization answer is “yes, we will be an innovator,” there’s a second fork…
Fork 2: How do we manage the need to continue to generate, try out, and market new ideas without relying on just one person (the Visionary) or continuing to absorb the inefficiencies of letting everyone try their own thing (the Tinkerer)?
STAYING INNOVATIVE AT SCALE
There are two basic avenues out of this conundrum. The first is that the organization starts to optimize its own organizational model, squeezing the opportunity for organic innovation and growth out slowly while going out and acquiring ideas to drive innovation. This “Explorer” strategy is a very common one, and after a certain size most visionary leaders see this as a short-cut to executing on their ideas. The problems with acquisitions and their effectiveness have been well-covered, so I won’t do that here. But the bigger issue for this discussion is that once an organization has fully bought into being an Explorer, great innovative talent will either flee the mother ship or become de-moralized -- creating a self-fulfilling prophesy and the inability to innovate organically. Acquisitions can indeed be powerful short-cuts, when done to buttress the efforts of internal innovation efforts. But when they replace internal and organic innovation, this strategy becomes a slippery slope.
The second path is a middle way, harnessing the coordination efficiencies of the Visionary while allowing for ideas to emerge from below like the Tinkerer. This is the “Navigator” organization. Navigators are process-driven innovators who set goals and make bets with a regular cadence, and then organize the work of innovation around small cross-functional teams who can incubate, try out, and market their ideas. Making the bets is risky. Giving up control after making the bets is risky. The biggest issue for these organizations is that executives need to learn to live with the risk of not knowing what outcomes they will get after they have set the course for internal teams. They have to trust the people and trust the process, while continuing to lead and navigate. This is the hardest to execute, but the best course for managing both innovation and growth.
Please let me know what you think, and please add examples of organizations. I’ll be incorporating your thoughts into these posts!
(Special thanks to the contributions of Kate Piper, Bob Sutton, Alex Castellarnau, Bryan Walker, Ilya Prokopoff, Chris Flink, Leslie Witt, Tim Brown, Tom Kelley, Geoffrey Moore, and many others at IDEO and beyond who contributed to this thinking.)