Navigating innovation in large companies

Navigating innovation in large companies

Innovating within a large organization can often feel like navigating a labyrinth.

Over the years, I’ve had the privilege of working as a consultant on some internal innovation projects at larger companies.

Combined with my startup experience these projects have taught me valuable lessons that align well with the principles outlined in Clayton Christensen’s book, “The Innovator’s Dilemma.”

Here are some key takeaways from both my personal experience and Christensen’s insights.

Embrace disruption and start small

One key insight is that successful companies often stumble because they focus too much on their current customers and existing profit margins, missing out on disruptive innovations.

Successful companies tend to focus on sustaining innovations—improvements to existing products or services that cater to current customers.

In my experience, the best way to counter this is by starting with small proof of concepts (POCs).

When you’re trying to introduce a new idea, scaling up too quickly can lead to significant risks and resistance.

Small POCs allow for experimentation and validation without the immediate pressure of large-scale implementation.

This approach can help you iterate quickly and learn from real-world feedback.

Focus on solving one problem for one target group

It’s easy finding yourself trying to solve too many problems at once, catering to a broad audience.

This scattergun approach rarely yields successful outcomes.

I have learned first hand the importance of narrowing my focus to solve one specific problem for a well-defined target group.

This targeted approach not only streamlines the development process but also ensures that the solution is deeply impactful and meets the precise needs of your audience.

Doing this also enables you to test more ideas within the same time frame and budget. Reducing the risk involved.

Prioritize flexibility and adaptability

Large organizations often have rigid processes and structures that stifle innovation.

Companies should be willing to create separate units or teams dedicated to exploring new technologies and business models.

These teams should operate with a degree of autonomy, free from the constraints of the parent organization’s traditional processes.

Use target groups as input, not decision makers

Engaging with your target group is crucial, but it’s important to remember that they shouldn’t dictate the direction of your innovation.

Their feedback should be one of many inputs.

The customer is not always right.

Clayton Christensen, The Innovator’s Dilemma

I have experience from one of my projects, where the stakeholders relied too much on user feedback to shape the product.

It’s essential to balance this with broader strategic insights, expert opinions and input from people with real world experience from related projects.

This balanced approach helps in creating more robust and viable solutions and can also save a lot of time and money.

Prepare for limited organizational support

A hard truth I’ve encountered is that, in large companies, internal innovators often operate in isolation with minimal support from other departments.

Sometimes innovation projects can even be actively opposed by other departments within the company.

It’s vital to be self-sufficient and not expect substantial help from the larger organization.

This reality means you need to build a resilient and independent team and, when necessary, seek external partnerships to move your project forward.

Avoid legal and compliance pitfalls

Legal and compliance issues can be significant roadblocks in the innovation process.

In my experience, these hurdles can slow down progress considerably.

To navigate this, I’ve found that it’s crucial to avoid complex legal entanglements in the early stages.

Focus on developing your idea within a framework that minimizes regulatory issues.

Once the concept is validated, then engage with legal and compliance teams to ensure everything is in order.

If possible I would even recommend putting innovation projects in a separate legal entity to avoid some of the legal issues that can come up.

Ensure financial sustainability from the start

A substantial initial budget can lead you on the wrong path.

Just as your time gets consumed by tasks no matter how much you have, your budget usually gets used up regardless of its size.

Try to have a revenue model in place from the very beginning. At least a clear testable idea of how it would work.

Generating early revenue not only provides a financial safety net but also proves the viability of your innovation.

Demonstrating that your project can make money reassures stakeholders and helps secure continued support.

Listen to emerging markets

Disruptive innovations often find their initial success in emerging markets or underserved segments.

Pay close attention to these markets as they can provide critical insights into future trends and opportunities.

By understanding and addressing the needs of these markets, companies can develop innovations that eventually appeal to a broader audience.

I think this reasoning applies to all startups and not just within larger companies.

Challenge existing business models

One of the most difficult aspects of embracing disruptive innovation is challenging existing business models.

Christensen explains that disruptive technologies often require new business models that can be incompatible with the current way of doing things.

Companies must be willing and even encourage rethinking and possibly overhauling their business models to accommodate and leverage disruptive innovations.

Foster a forward-thinking leadership

Leadership plays a crucial role in driving innovation.

Leaders must be forward-thinking, prepared to take bold bets and willing to champion disruptive innovations, even in the face of resistance.

They should cultivate a vision that embraces change and encourages the entire organization to pursue innovative paths.

From my experience I think leadership is one of the biggest hurdles when it comes to internal innovation as working with high risk, high reward projects also poses a high risk for your career without the incitament and stress to succeed that a founder of an external startup have.

Learning from The Innovator’s Dilemma

Innovating within a large company is challenging, but by starting small, staying focused, remaining adaptable and work with people with startup experience, you can overcome the hurdles and drive meaningful change.

Companies fail because they are focused on satisfying existing customers with existing technologies, instead of adopting new technologies that will meet customers’ unstated or future needs.

Clayton Christensen, The Innovator’s Dilemma

My experience has taught me that while the path is often fraught with obstacles, the rewards of successful innovation can be well worth the effort.

Also read Think like a startup