• by William Mougayar
    Venture advisor, 4x entrepreneur, marketer & strategist. I live in Toronto, curate a lot, blog a bit, and help startups.

Large Companies Need an Innovation Culture, not an Innovation Department

innovationI’ve been asking myself why do some large companies put in place an innovation department with a VP or Director of innovation.

Shouldn’t innovation be everybody’s job, rather than a small group that is removed from the daily operations of the business?

The reality of these these isolated innovation groups is they end-up spending a good part of their time in internal meetings, trying to understand the business they are supposed to help, while at the same time being tasked of selling their ideas to those same business units.

There is a disconnect here. Business Units know their business and they are the ones that should be conducting the Research and Development required to keep advancing their products and services including incorporating what’s new and what’s latest. So why outsource that task to the innovation department?

I’m all for the creation of “centers of excellence”, when a new technology comes along that needs a dedicated focus and some internal leadership to get it moving, such as the blockchain. But these groups should endeavor to obsolete themselves as soon as possible, and transfer their knowledge quickly to every one in the company. For example, there is no Web department anymore. Everyone knows how to strategize and innovate on the Web. But in the early days, there used to be “Web departments”, or VP’s of Web innovation.

Another activity that large companies entertain themselves with, is getting close to startups, with the hope that by doing that, startups will permeate their culture and change them. Sadly, that doesn’t happen just by symbiosis.

When I worked at HP in the 80’s and 90’s, there were no startup relationships. Innovation was expected to occur inside each and every business unit or product line. Each group was responsible for disrupting themselves, and enter small or big markets, while growing and innovating with their own products.

Large companies that want to do well should be entrepreneurial, and they should allow the veering off of their business models. Every business leader should be tasked to grow their exiting markets and enter new ones. But can they? I know it presents an operational dichotomy, but that is a challenge that can be addressed by putting an emphasis on internal innovation as a requirement, not as an option.

 

  • interestingly, my friend did a bunch of research on mergers. he found that the dominant culture at the beginning was the dominant culture post merger-meaning the buyer’s culture generally wins out.

    • awaldstein

      It always wins out.

      In fact with some exceptions that is one of the criteria for the acquisition itself.

      Need to say I raised money from HP twice in the 90s and didn’t experience anything remotely close to William’s experience there.

    • True. I agree with that.

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