April 30, 2014 - FILED UNDER Innovation
Managing Disruptive Innovation in the Enterprise
Earning the “enterprise” label says a lot about the way a company does things (and doesn’t do things).
For one thing, enterprise business strategies are typically based on the results of all segments of the company working together. Employees consider their role and its proper execution to be integral to the overarching success of the business, rather than just the operating unit they belong to. Similarly, underperformance in one area of the organization tends to adversely affect several others. Enterprises are established entities with clear paths of growth, or at least on the way to cornering their markets. Finally, true enterprise companies share common tactics for a variety of activities, like project planning, metrics for measuring data, and general rules of execution across the board.
But because the enterprise approach values structure and repeatability, disruptions in the market are more dangerous for them than they are for smaller-scale operations, making managing breakthroughs even more challenging than usual.
Psychological Empowerment and Disruption
In short, enterprise organizations place a decent amount of focus on collaboration, employee engagement, and managing innovation; they operate within systems and structures, and make changes based on data, patterns, and carefully tested initiatives. So, how can they best manage breakthrough innovations without breaking down?
One key thing to keep in mind here is that, although innovation is regularly united with strategy, they are not the same thing. Notes Forbes’ Greg Satell, “Strategy, after all, is a coherent and substantiated logic for making choices, while innovation is a messy business which creates novel solutions to important problems. Put simply, strategy is about achieving objectives, while innovation is about discovery, we never know exactly where we’re going until we get there.” This is where many enterprise companies miss the mark — they try to facilitate a more innovative culture within the existing business structure, rather than reassessing that structure’s flexibility, and making changes that leave room for disruption. Companies cannot measure their ability to handle breakthrough innovations based on how structured their systems are — rather, it’s the adaptability and scalability of an organizational framework that truly indicates how a business will be able to deal with change.
A big (correction: huge) part of embracing disruption is acknowledging the psychological impact that a fluctuating market has on company culture and individual employees. Moreover, research shows that “psychologically empowering” employees plays a direct and obvious role in whether trying to effect change in an organization will actually work. In a nutshell: leaders that reward competence, provide candid and consistent feedback, invite ideas and discussion, respect varying perspectives, and delegate projects according to individual interest are likely to breed a workforce that deals well with ambiguity, willingly accepts change, and helps drive beneficial disruption. Oh, and don’t forget about transparent communication across teams — as Linked Into Business’s Howard Lewinter points out, everyone is in the business of people. “What you sell are relationships that happen to be connected to the product or service your company offers,” he says. “Once you understand this concept, you will understand the premise of a successful business.”
Turning to Open Innovation
Though it goes against a foundational business principle to suggest it, enterprise companies often find that established customers present considerable challenges when introducing change agents or disruptive innovations. That’s largely because customer advocates develop loyalty to specific commodities, and although they welcome incremental improvements to existing products and services, radical changes don’t tend to sit well with them. To avoid alienating anyone, this requires enterprise companies to continue to serve existing customers with sustained practices and products, while still working towards breakthrough innovations that will attract new users.
To be clear, disruptive innovation doesn’t usually arise quickly enough to blindside established companies and take them down before they know what’s hit them. Rather, it can appear that way when the powers that be are so unwilling to drive internal change — or so convinced that what’s worked in the past will continue to do so — that they miss out on opportunities and fail to see indicators of evolution in the market. That’s where open innovation comes in.
Open innovation is the practice of people or companies joining forces in order to have access to more resources, ideas, talent, and output — not to mention reduced costs. Enterprise companies that implement open innovation internally by crowdsourcing ideas from their employees manage this very well. By utilizing their entire workforce to address product issues, develop new concepts, improve on existing ideas, and collectively brainstorm to solve business challenges, they obliterate silos, encourage engagement, and begin crafting the kind of company culture that actually has room to grow and mature. It allows companies to create a dependable, flexible-but-still-structured pipeline of brilliant ideas and divergent perspectives.
Being able to deal with disruptive innovation at the enterprise level is not a superficial undertaking. Incremental tweaks to go-to-market strategies or a couple of personnel changes aren’t going to get any company to place where they can effectively handle it. However, organizations that take an honest, unbiased look at the structural integrity, flexibility, and core practices of their business — and that actively seek out ways to align them with shifting market patterns — will quickly find that dealing with disruption is simply a matter of allowing it to happen.
Learn more about repeatable, enterprise innovation management by getting familiar with Mindjet’s SpigitEngage.