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A funny thing happens to a lot of organizations as they expand — they take what made them succeed in the first place and suffocate it. The infrastructure and procedures that allow a company to hire faster, increase sales, and boost production often crush the creative, entrepreneurial spirit that drove the company’s early success. While there are certainly exceptions, they are just that: exceptions. Many big companies eventually get in their own way.
It’s understandable. As companies expand, it invariably becomes more difficult to create consensus between managers. An established corporation with thousands of employees is often a victim of analysis paralysis, hamstrung by its own internal bureaucracy. Everyone senses it’s needlessly difficult to get anything done, but it’s easy to justify the caution—if a bold choice goes bust, there’s a lot to lose.
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And, particularly during anxious, uncertain times (a.k.a. the ones we’ve been living through for years now), stagnation can be made to seem smart.
Well, almost smart.
Unfortunately, the nimble startup down the street quickly launches products and steals market share. Thanks to new technology and a much lower cost of entry into most industries, it’s easier today for competitors to emerge and grow rapidly. It’s also easier for customers to take their business elsewhere if they’re not happy with a brand. And it’s easier for employees to move on if they don’t feel their employer is keeping up.
As a result, the need for innovation has never been higher for established companies. Here are 7 ways to encourage it.
1. Embrace experimentation at all levels.
When Steve Jobs launched the iPhone, it was a gamble—he pointedly changed the company’s name (from Apple Computers Inc. to Apple Inc.) to indicate their new approach. Or take an even higher stakes wager: When the Wright brothers began their efforts to create flying machines, Orville and Wilbur literally bet their lives on success. In both cases, they were ready, willing, and able to experiment, even if it meant huge risks.
Compare this with a company where people are nervous their boss will get upset at them just for speaking up.
If team members are afraid to offer ideas, innovation is impossible. Similarly, people need to be able to critique proposals—this is how good plans become great ones (and bad strategies are blocked before implementation). Unfortunately, in many companies, the politics of who suggests an idea matters more than the actual merits of the idea, and office politics tends to get more complex as an organization grows.
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Support spirited internal debate and investigation of proposals for new ways of doing things. And follow through on the best ideas – it’s critical for staff to see the company doesn’t just talk the talk, but actually walks the walk and implements strong suggestions.
2. Common sense over specific rules.
Startups aren’t trapped by old rules—they’re in the process of inventing themselves.
Obviously, established companies can’t just completely throw out the rulebook. But remember rules should exist to help, not just because they’ve always been there. Otherwise, people wind up blindly following often annoying processes without thinking about the end goal. For example, if multiple clients ask for a product feature that hasn’t been included, but there isn’t a feature review meeting until the next quarter, does it make sense to follow the rules and wait? Or should staff be empowered to add the feature (or, at least, fast-track a product review)?
Beware of any policy that exists because “We’ve-always-done-things-this-way.”
If you find initiatives that are logical are consistently being blocked by rules that aren’t, it’s time for a rethink.
3. Fire poor performers fast.
This one is a little counterintuitive to many folks. When imagining a great company culture, many inexperienced executives envision a culture of support, a rising tide that lifts all boats, and a happy workforce rolling up their sleeves. And while we obviously all want that, what’s often surprising is how critical it is to get rid of the bad folks as quickly as possible.
When running a startup, personnel decisions are usually made fast – they don’t yet have the hiring and review processes present at more mature organizations. What’s more, even one or two poor performers can not only threaten the survival of the project, they can destroy the whole company.
At larger organizations, a poor performer can hide or be overlooked a lot more easily, and firing someone can be a process that takes months, not days.
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Incompetent workers can take a terrible toll. To start, everything’s harder when the people around you don’t carry their weight. It’s also demoralizing—you’re working so hard and hitting all your goals, while the person next to you fails spectacularly and apparently isn’t penalized for it. Over time, you’re likely to grow bitter or just stop trying so hard since results clearly don’t matter.
And it should go without saying it’s impossible to build a healthy culture in an environment filled with people actively contemptuous of their employer.
Ignoring weak performances and bad behavior chases away talented people and creates a negative feedback loop that, once it begins, is very difficult to reverse.
4. Support small, efficient teams.
Amazon is known for the famed two-pizza rule. (No team should be so large it can’t be fed by two pizzas, to prevent teams from growing so large they become unwieldy.)
It’s a great concept, but also an outdated one. It was eventually refined and replaced by something deeper, albeit with a less catchy name: single-threaded leader teams.
Suddenly, someone had the ability to focus on a single task and the authority to take action. At Amazon, it turned out the surest way to doom a project was to make it someone’s part-time assignment. (It’s a philosophy consistent with startups—nothing focuses the mind like knowing you’ve burned through almost all your cash and nothing’s ready for market yet.)
Single-threaded leader teams resulted in multiple massive innovations, like Fulfillment by Amazon (FBA), as third-party retailers gained access to Amazon’s warehouse and shipping services.
If your company has promising initiatives that never seem to reach completion, this might be what you need. It may not make you the world’s biggest retailer, but there should be a bump.
5. Encourage employees to think like owners.
By 36, Los Angeles Rams head coach Sean McVay had already twice led his team to the Super Bowl, winning it all last season. He credits the championship to giving his assistants more control over personnel decisions: “When you have the right types of people, you can empower them to onboard other great people.”
There’s nothing wrong with personal goals. But it’s crucial to create an environment where everyone is focused on the company’s success, and where team members are truly encouraging and helping each other, not competing with each other. At startups, people often have more equity in lieu of fair market salaries, so it’s easier to stay focused on the big picture of the company’s value.
At more established companies, however, people often begin thinking more about their department or their team, rather than what’s best for the larger organization. That can result in corrosive internal competition or even things like stack ranking. That was a system Microsoft implemented where every unit had to declare a certain percentage of employees as top performers, good performers, average performers, and poor performers. One software developer noted it led to “employees focusing on competing with each other rather than competing with other companies.”
The two easy ways to create a winning culture? First, make sure everyone at the company understands the vision and mission. Second, reward cross-department collaboration. That way the whole team feels like they are contributing toward making a dream a reality…. and understands they need to work together to make it happen.
McVay would add a third rule: Be transparent, even during the tough times. When he was considering leaving the Rams after the disappointing follow-up to the Super Bowl season, he told his assistants about his uncertainty and even gave them permission to interview for other positions before he publicly re-committed to the team: “I don’t want to run away from adversity; I want to run through it.” (He also reminded them that results matter: Since that announcement, the Rams parted ways with multiple assistants.)
6. Encourage customer feedback and make real changes based on that feedback.
Startups are deeply aware of the market: If not enough people buy what you’re selling (and soon), you won’t last long. If a first product launch fails, you must pivot or die.
Of course, with a few successes under your belt, it’s easy to get a little cocky. What’s a sure sign of a company about to be humbled?
They don’t worry about those pesky customers.
I have personally witnessed this so many times, as companies came up with gorgeous product designs, utterly ignoring that they were almost impossible for customers to navigate, much less actually use.
If you’re trying to run a successful company, feedback is essential. Not just being open to feedback, but actively requesting (and responding to) feedback makes customers feel engaged, respected, and more like a valued partner.
7. All team members should consider (and ideally anticipate) the future.
This is a fun one. Successful innovators anticipate what consumers will want in the future, and tend to be more open to transformational ideas. As Henry Ford famously said of his vision for widespread car ownership by people around the world: “If I had asked the public what they wanted, they would have said a faster horse.”
Not everyone has this foresight—ask a whole lot of folks in the newspaper or travel agency business.
Startup founders generally prize new concepts about the future because they see opportunity…but many large company executives fear or dismiss these concepts because they can threaten their current success (just look at Blackberry phones).
Your best chance at not being left behind is to encourage your employees to keep their fingers on the pulse, then listen to what they’re learning. Ask your staff for their feedback and ideas not just about company processes within a specific division, but about products and services. Large companies generally make inquiries to people like product managers, designers, and chief innovation officers. It’s less common—indeed, it’s oddly rare—for them to ask their security team or logistics staff for product suggestions and thoughts about the future. That’s a mistake, as you miss out on the treasure trove of great ideas that the entire team might have. Think about having contests, surveys, and more to encourage everyone to think long-term and to discover if anyone is exceptionally talented at trend-watching.
To conclude, in his bestseller Future Shock, Alvin Toffler wrote that technological and social change is accelerating at an ever-increasing pace, making it more and more challenging for people and institutions to adapt.
It came out in 1970.
It’s hard to drive forward if your eyes are fixed on the rearview mirror. Look to the future. At its best, an established company can be as hungry and focused as a startup… only with far more resources and experience to fulfill its ambitions. Big corporations must cut the bureaucratic red tape that slows them and makes them hard to maneuver, like ocean liners. It’s all too easy to wind up a Titanic, which could handle anything except the iceberg directly in front of it.
Aron Ezra is chairman of Plan A Technologies, a global software development company.