July 15, 2008

Key challenges to keep INNOVATIVE CULTURE alive

There are many factors that differentiate one company from the other but "Culture" is an integral part of the comparison. e.g. Google which is famous for it's culture where they allow employees to work on their own idea for an entire day in a week.3M, the company most famous for it's Post-It's again falls in the list of innovative companies.

As stated in Business Week
3M (MMM ) has long awarded "Genesis Grants" to scientists who want to work on outside projects. Each year more than 60 researchers submit formal applications to a panel of 20 senior scientists who review the requests, just as a foundation would review academics' proposals. Twelve to 20 grants, ranging from $50,000 and $100,000 apiece, are awarded each year. The researchers can use the money to hire supplemental staff or acquire necessary equipment.
Take the case of ThoughtWorks , which has a good policy to retain people - Allow people to work on their venture as long as our business / deliverables is not affected.A good way to keep the best brains intact in the company biggrin

When we think of a startup, the first thing that comes to our mind is Innovation [except in few cases like social networking websites].But as the staff strength/business increases, many times we see the innovative culture dying down and hence, every company is not considered innovative, though it might be profitable !!!

I was recommended a book Entrepreneur's Toolkit by a friend of mine who is in a startup .The book has a chapter that outlined the "Three key challenges to keep the innovative culture alive", which are mentioned below:

1. SIZE problem :
Size requires specialization of functions, creates communication & coordination problems between functions, and requires review boards & approval requirements; which may frustrate creative people and dampen their creativity.Small problems take more time to get solved due to lengthy discussions.The more people who are involved, the longer it takes to reach agreement on simplest things.And agreements are more likely to be compromises than optimal solutions.

Customer is God for any business but diligent serving of existing customers has two innovation-impeding consequences :
a. Existing customers often discourage innovation by their vendors.For example: A major technical advance in computing can jeopardize the investments customers have made in existing software, hardware and training.Hence, these customers urge vendors to continue supplying them with parts and upgrades in order to stay in their old business.Eventually, the invention of the breakthrough products is left to the rivals sad Many times, these customers will abandon their vendors and switch their business to the innovative rivals.

b. Management shifts it's focus to operations.The job of serving customers profitably requires operational excellence.As the business grows, the management's attention is absorbed by people issues, marketing, finance etc. Hence, Innovation may be last thing in their minds.
Success that propels growth creates an impulse of complacency and self-satisfaction.It may trick people to believe that if they simply continue doing what they are doing, all will be fine.When faced with a new competing technology,for example, the impulse of many successful companies is to invest still further in the technology that made them successful.Consequently, these companies marginally improve their existing technologies as new ones were becoming much better and cheaper day after day !!!

Though startups don't face these problems, a bigger problem is to keep the ENTREPRENEURIAL SPIRIT alive.As we know, not every member of a startup is an Entrepreneur and there are various driving factors to keep the spirit alive.We would discuss them in the next article.

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