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16 November 2017

Want to foster innovation? Put your money where your mouth is

Written by: David Mercer, Associate Director at Edelman

Innovation, Technology

I was honoured to take a handful of Edelman clients to an author talk with Eric Ries yesterday. If you’re not familiar with Eric, but have ever heard a colleague, boss or customer talk about ‘pivoting’, ‘A/B testing’ or a ‘minimal viable product’ it’ll be because of him. His first book, The Lean Startup, became a bible for Silicon Valley entrepreneurs, but the thinking in its pages equally inspired progressive leaders in organisations of all sizes and sectors. As a result, massive businesses and national governments started knocking on Eric’s door, keen to understand whether tech startup philosophy can help drive innovation and growth in an uncertain environment.

Yesterday, Eric treated us to an account of this journey and the lessons he’s learned in helping monolithic organisations reframe their approach to innovation. It’s what’s inspired his latest book, The Startup Way.

On his travels, Eric witnessed much good intent. Mindful of the innovate-or-die urgency of today’s tech-enabled economy, many big businesses are encouraging their people to be ‘creative’. Posters are put up, beanbags are rolled out, foosball tables abound. But most of these same firms, Eric warns, fail to make the important structural changes that enable iterative innovation – the crucial, fail-learn-adjust-proceed culture that can drive growth. And if individual financial incentives don’t prioritise innovation over quarterly operational targets, such initiatives are destined to failure. Worse still, warns Eric, the leader espousing innovation will be branded a hypocrite in the eyes of their employees – happy to say one thing but unwilling or unable to put his or her money is where his or her mouth is.

Some organisations have gone further, setting up skunkworks teams – well-funded R&D groups given free rein to ‘innovate’ in isolation. Admirable in theory, but too often flawed in practice, Eric observes. He describes seeing such groups being held accountable to a muddy matrix of 50 or so executives, and given an 18-month window of opportunity to strike ‘gold’. After the initial excitement wears off, the group finds itself adrift – lacking focus and direction, and unsure why they exist.

Eric told us he believes in small, cross-functional teams of design, engineering, production and marketing focussed on a specific customer challenge or market opportunity. He marries lean manufacturing and agile software development theory to help focus these teams on very rapid, iterative innovation. They use what’s already in place, create elements from scratch only where necessary, and ultimately get their innovation to market a heck of a lot sooner. Whether that’s an app or a diesel engine.

It was an inspiring and thought-provoking session, much enjoyed by our guests in attendance. I sense that process improvement never stops for Eric – he taught us how to fold our dust cover into the correct title page to speed up book signing after the talk. Speaking to him afterwards, he couldn’t believe how compliant the British crowd is to this process change. I’m not sure whether that’ll count for or against us in the lean future!

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