Why successful companies think small

Posted by Mike Walsh

9/20/16 11:04 AM

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Why do some companies survive and others simply crumple? And stranger still — for star-crossed brands such as Yahoo and Blackberry — why did major investments in innovation not save them from being blindsided by the future? In my view — it is all a problem of scale. Big leaders favour big solutions for big problems. But just like the search for the Higgs Boson particle, sometimes in order to understand how dramatic transformations happen, you have to start by looking for things that are very small.

 

Top down strategy is sexy. Wall Street gets it, your board gets it, your employees get it — and most importantly if you happen to be the top dog — your ego gets it. But here’s the catch. You can spend a weekend retreat thinking about blue oceans, innovator’s dilemmas, and tipping points — but come Monday, you will be faced with a challenge: how do you get the rest of the organisation to change their thinking along with you?

 

Many traditional companies are tempted to create an innovation department. Resist.

 

Creating a new division where all the fun stuff is going to happen is like declaring to the rest of your team that their contributions are soon to become irrelevant. Trust me — politics and bureacracy will ensue. I call this the Mirror Effect. The bigger your innovation department, the more likely it will revert to the very qualities you are trying to eradicate.

 

Successful companies think small. Amazon CEO Jeff Bezos doesn’t believe in teams or meetings bigger than the number of people you could feed withtwo pizzas (which depending on how hungry they are, is about 5–8 people). When I interviewed her for my podcast, Between Worlds, Canva founder and CEO, Melanie Perkins, talked about the impact of small, empowered teams on creativity and productivity in her business.

 

But it is not only teams that should be small, companies should also crop the size of their ambitions. A big dream is well and good, but in most cases, the basic particle of change in the enterprise, is not the vision statement, but theproject.

 

Finance people like projects. They value them by analysing their cash flows over time. But aside from tidy accounting, they have intrinsic value for change agents too. They are the building blocks of how interesting ideas are tested, gain mass, and become real. More importantly, the diversity and quality of projects in a business is the best litmus test for your company’s survival changes. One plan to engage the future is not enough, you need a portfolio.

 

Here’s a thought experiment for you:

 

Grab a piece of paper and rule a line down the middle. Write a list of all the projects you are managing or involved in at the moment. Now place the ones that are focused on protecting your traditional business on the left. And now, add any of the remaining projects that involve new ways of making money, new markets or challenges to the status quo on the right. Review your results.

  

How much of your time is spent on defending the past as opposed to building for the future?

 

Of course, it is not enough just to get excited about your particles of change without thinking about what makes for a great project. From my research, I’ve observed that great projects are defined by five important characteristics:

 

  • Bottom up: championed by the people closest to the customer’s pain points
  • Horizontal: supported by a cross functional team of people from different parts of the business
  • Visible: transparent and actionable by the rest of the organisation
  • Quantifiable: a clearly defined payback or monetary opportunity
  • Small: nimble, focused, and targeted to a well defined problem

 

The real question at the heart of any real digital transformation debate is not how much money or resources you spend on coming up with new products or ideas — but how quickly can you innovate around your innovation process?

Topics: Innovation

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