As the world gets smaller and competition increases, innovation and idea generation will become the lifeblood for many companies, even if that means taking some risks.
Businesses large and small have one major goal: to meet their numbers, whether that’s annually, quarterly, or monthly. Asking them to accept failure, in any capacity, is unacceptable. Asking them to spend time and money on an idea that may never come to fruition is likely to get a resounding “NO” as the answer. But that’s what being innovative can mean. Innovation requires agility, flexibility, creativity, and, to some extent, unbridled optimism. Those are qualities that today’s young entrepreneurs possess. But companies that are not part of the Silicon Valley culture normally don’t look for those qualities when looking to bring new people on board. Yet as anyone who reads the Wall Street Journal, Forbes, Fortune, or any business publication knows, companies that don’t deal with innovation are companies that may have a dim future.
In April of this year, Fortune magazine featured an article, Startups…inside giant companies which presented interesting examples of how some of the world’s largest corporations are trying to mesh the “freedom to fail” culture needed for innovation with a corporate mantra that states that “failure is not an option.” These corporations have done this in a few different ways: some feel there’s no reason to build what’s already been built and acquire existing startups; others create separate in-house teams or departments as innovation laboratories or internal startups, where employees follow their own unique culture, a culture which may be very different from the main corporate culture.
The Fortune article cites MasterCard, General Electric, and Coca-Cola as companies that have figured out how to bring innovation, agility, and creativity into virtual business behemoths. MasterCard has created MasterCard Labs, a three-floor office in New York City where dozens of mini-startups are given the freedom and funds to develop ideas and products. In this culture, as the article states, “failing fast is encouraged.” That means lots of idea generation, testing, and keeping what works and dumping what doesn’t quickly.
Coca-Cola has decided to deal with many of its internal challenges by teaming with outside entrepreneurs. So far, they’ve invested in eleven such startups. In addition, the company holds “failure conferences” where people describe their biggest mistakes, and workshops where concepts prototypes can be created with a lower infusion of cash. David Butler, Coca-Cola’s vice president of innovation knows that it’s impossible for huge global corporations to move at the speed of a small team of idea-developers. A former entrepreneur himself, Butler notes that “Big companies tend to hire managers, not explorers. You tell them to do this and keep doing it, not explore new ways to do it. Early-stage companies employ nothing but explorers.”
GE has FastWorks funds internal startups, but it’s also attempting to bring this feeling and acceptance of innovation into the whole company. Executives are trained to take risks and constantly be open to learning and new ideas. The company has gone from offices and cube-farms to collaborative open workspaces. According to Viv Goldstein, GE’s global director of innovation acceleration, “It’s about giving people the environment to think in a different way and getting people to take risks. I can say this is the most unbelievable experience, and I’ve been with GE for 20 years.” In just 15 months, the company has funded 500 projects. They give teams the funding they need to develop and test ideas within a three-month period. If the project fails, managers of those teams learn and “change course.”
It’s true that these large corporations can afford to take a hit should their initiatives fail; something smaller companies may feel unable to do. But one thing is clear: whether these examples will create long-term successes or not, big corporations understand that there’s been a sea change when it comes to business development, growth, and risk-taking.