When I began consulting, my clients were primarily innovators within mid-size organizations. Frequently, I’m drawn into discussions with small and large firms, as well. These consultations have been fascinating lessons in the different approaches to innovation and which approach best fits with which size and stage of business. In any economy, investable organizations are the new scarce resource, and so you need a good, solid innovation plan to become or stay investable. But where you start has a lot to do with how large or small your organization is. To give you a good jumping off point, I’m going to lay out the different processes that fuel innovation in small, medium and large organizations. (For this post, I’m considering small firms to be less than 100 people, medium firms to be around 1000, and large firms to be 2000 people and up.) I especially want to show you the typical sticking points so that you can approach innovation from the right starting context.
Small Firm Innovation: Targeted, Doable and Under Budget
In small firms, the innovation process is personal. The firm typically enjoys high agility, good communication and solid customer intimacy. There is usually a core of three teams — sales/marketing, operations and finance — each with flat management structures. Firms of this size are built around a founder’s vision and shadow. If someone like me is brought in, it usually means that the founder wants to make a direction change. They either need help navigating resistance or developing a surgically targeted next step that leads to results within a clear budget. A typical problem may be that the firm has a thriving product that is under commoditization pressure, and wants to develop a signature service that will allow higher service levels and margins. The innovation effort in this size firm is usually led by the founder and close partners, with a small number of part-time team members and possibly some outside resources.
Critical issues:
- Because resources are scarce, efficient planning and execution key.
- It is easy for reach to exceed grasp in this size group, so making sure the project is grounded in “the doable” is very important.
- Projects will stretch a team like this, so care must be taken to plan incremental wins to maintain momentum.
Mid Size Innovation: Branching Out
In medium-sized firms, there’s usually a cross over into multiple profit centers of products and services. These firms have roots around a core business and have either added new businesses organically or through acquisition. For example, Tom’s of Maine has a great founders’ story, and has since added many lines of business to their original core. The advantage of these firms is that they are still small enough to have reasonable agility, while having considerably more resources to apply to the process. The challenge, is that the process work that has been done to get to scale has been about consistency and risk removal – taking a significant growth step involves designing a process that allows change to be embraced without taking on risk before the new innovation is validated. An innovation effort in these organizations usually starts with a thought leader who has access to both the customer and the middle management, and who gets the ear of a senior leader. In many firms of this size, incrementalism has crept in and the returns on the investment for each product are declining. It takes a significant act of leadership to address these changes. In my role, I help companies in this position reframe, plan and execute a bigger step to rejoin the growth edge of the market demand.
Critical issues:
- To make innovation happen takes a senior sponsor and a small core team of players to make sure progress and pace are established.
- Innovation efforts need to be of a scale that they make it to the C-level governance process, just as an investment in a new plant or equipment.
- Since businesses of this size are forming their cross-connected DNA, completing a few key breakout programs establishes a sustainable positive culture for the future.
Large Firm Innovation: Silos
Large firms have divisions that are medium-sized firms in and of themselves. There are operational leaders who have responsibility for large geographic areas, market clusters or products. The senior executive team is usually around 10 people, the extended senior team comprises around 20, and the mid-senior team may number in the hundreds. The matrices of functional and operational leadership have evolved through a combination of organic growth, acquisition and adaptation. Most firms of this size have entire divisions focused on change and innovation, and managing the investment and integration of these innovation efforts is done through an analytical and political selection process. Innovation champions can emerge from a variety of functions – often the marketing or product teams. A typical problem in this size firm, is that the R&D or sales team has developed what they believe to be a game changer, but is having trouble getting the required senior leader support and investment to put it into practice. More often than not, when I am called in, the various functional leaders are speaking different languages – it’s like a UN meeting without translators. I work to translate the R&D vision into the language and visuals that the rest of the company understands and can digest to get barriers down and real dialogue established.
Critical Issues:
- The change efforts here need to be carefully structured with governance processes that allow for executive air cover and overview, peer level communications, and day-to-day operations of the innovation team.
- These efforts tend to be large, dedicated, cross-functional efforts with teams that may grow to 50 or more, so the need to have strong leadership with good program management processes
- It is particularly easy for this size firm to fall into a “mini me” trap, where rather than investing in validating the business model, they invest in a small copy of the parent organization – which tends to swamp innovation just as it need to occur.
Innovation looks different at small, medium and large companies.
The path of innovation looks very different, depending on the context it occurs in. Like the difference in process between coaching a tennis player, a basketball team or a pro football team, different size organizations require different techniques and approaches to encourage innovation. In the next post, we’ll look at the commonalities across all these organizations, and some tips for you as an innovation leader to use regardless of where you find yourself. If you have a thought or comment, please drop me an email or tweet me.
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