How big businesses can innovate better
Britons are brilliant at inventing, it’s a fact. From Newton and Faraday, to Brunel and Stephenson; from Bell and Logie-Baird to Turing and Berners Lee; for centuries British inventors have changed the world and they continue to do so today.
So it’s no surprise that the UK is invariably one of the top three countries in the Global Innovation Index.
But if we’re that innovative, why is it that Britain has only five entries listed in the world’s 100 most innovative companies, and only one (Cambridge’s ARM Holdings) in the top 50?
The reason is this: our big companies are not good at innovating. Almost all of our innovation comes from start-ups, entrepreneurs and academic offshoots, and very few of them get big enough to register on any global list before they’re consumed or supplanted by someone who is.
Coming up with innovative new ideas, and running a big, efficient business, are two very different things, and in this country at least, we seem to find it incredibly hard do both. But there are solutions. Here are three proven models that can help big organisations innovate better, and potentially help small ones scale up faster.
The temptation for big businesses that want to innovate, is to start a big, top-down innovation programme – a structured process for finding, evaluating and prioritising a few big ideas to invest in and develop – but few organisations actually have the resolve to make a success of it. Global consultants McKinsey recently did a great piece of analysis on what makes the difference between those who do top-down innovation well, and those that don’t, and it all boils down to a single question: “Do you believe that innovation is absolutely critical to your future success?” If the answer is yes, it’s worth investing in outside expertise to get a top-down approach up and running. If not, it isn’t, because it will never get the focus it needs to really succeed. Thankfully, top-down isn’t the only way large businesses can innovate.
Bottom-up innovation is where the people on the front-line are explicitly given the freedom and support to work out better ways to do things. A “quality circle” is the most common way to do it; that’s where groups of people, who are all doing similar roles, are deliberately and regularly brought together to work up their own ideas for improvement. Those ideas are then presented to their management, and implemented across their operations. Toyota pioneered it, almost every manufacturer uses a version of it, and any business that has multiple teams doing similar things can use it to drive innovation.
A third, and increasingly popular way for big businesses to innovate, is outside-in. It’s what FMCG giants like Unilever and Proctor & Gamble have been doing for decades: investing in or buying small outside companies with interesting ideas and technologies that they can bring in, put into their brands, and deploy on a global scale. More recently, the tech sector has taken it further, with the likes of Microsoft, Google and Facebook spending billions of dollars a year incubating and buying up interesting start-ups. If your business doesn’t already do this, you could do a lot worse than giving specific accountability to one of the team to go out and find innovative start-ups with interesting ideas to incubate, develop and scale.
The unique benefit of outside-in innovation, when it’s done well, is that smaller innovators get their ideas taken to scale far faster than they ever could alone. It’s not always easy, but if you’re small, innovative and have great ideas, building a genuine partnership with a larger, like-minded business might be the best way to grow your brand.