We’ve all seen mavericks and forward-thinking employees getting frustrated at large companies when their ideas are not taken seriously or are not adequately funded.
They can see the future, but their passion for innovation is met with skepticism, denial, or even outright rejection.
Once these efforts fail, these companies are reassured that there is no reason to change. For many companies, their inability to respond to transformational changes in their markets has dire consequences.
So why don’t companies listen to these innovative thinkers who are oftentimes also intrinsically motivated and loyal employees? Why do companies do such a bad job of getting their companies ready for the future?
Joe Renz, who heads up the New Mobility studio for Rocket Wagon Venture Studios, believes the difference has to do with understanding the difference between disruptive and sustained innovation.
“It makes much sense for corporations to sustain existing business models,” Renz said. “After all, many current business models have helped create highly successful corporations with many decades of profitable growth. Shareholders expect profitable growth and dividends. Sustained innovations aim at improving upon a companies’ existing business model.”
“Existing businesses are primarily driven by sustained innovation,” he said. “Disruptive innovation changes the paradigm, and the way value creation happens in industry. Established markets and proven business models attract most of the investment, whereas new product ideas and new business models carry high risk and uncertain returns.”
For mavericks who seek just a handful of resources to put them in a position to build a new digital service, Renz says it can be extremely frustrating to face constant rejection as scarce resources are invested in low-risk roadmap items, rather than new technologies and business models that have the potential to change the status quo.
Moreover, these passionate innovators end up tying their brand and career to an idea that won’t fly within the four walls of the enterprise. They either end up leaving the company or become a source of negative vibe in the organization.
“In rare cases where disruptive projects are funded within the company, they often lack sufficient capital or organizational backing and fail,” Renz said, “and when they fail, some traditionalists in the company enjoy pointing to that failure as a reason to go back to ‘the core.’”
Companies with an existing business model have a vested interest in maintaining the status quo.
Renz also points out that working as a “digital native” in automotive, energy, telecommunications or insurance companies can be frustrating.
“The culture and DNA of these organizations have typically been established before the digital age, and they operate in highly regulated industries. Companies in these industries have long-established business models and lack digital skills. Because of high barriers of entry, such as high capital requirements and regulatory hurdles most businesses in these industries are caught in old ways of doing things and are ill-prepared to respond to new competitors that boldly reshape entire industries using digital technologies.”
For digital thinkers and forward-thinking employees who see the change coming, Renz said, it can be particularly frustrating to work in such an environment. “Long-time executives often struggle with the digital world, and Mavericks also struggle to find like-minded people to discuss eye to eye. Most people in large companies have been trained to fit in, to be part of sophisticated machinery.”
Big picture, disruptive thinking is not desired; in fact, it is discouraged.
Most companies have a lot of bright minds in their teams, but the organization as a living system does not respond well to organisms that do not fit in. “It rejects people and ideas that do not fit into its view of the world like our bodies fight infections,” Renz explained. “For these companies, the inability to not just innovate incrementally but innovate disruptively is the road to irrelevance.”
How can companies overcome these challenges and prepare for transformational changes in their industry?
Renz believes that, in a venture studio setting, these employees can find like-minded spirits who share a passion for shaping the future using digital technologies. As a separate team, they are not distracting those responsible for operating the core business.
“What we’ve experienced is the liberation that comes when these innovators are no longer spending time-fighting internal politics and restrained by arbitrary organizational boundaries, but are rather dreamers who become doers, finding like-minded people around them with complementary skills, relevant expertise, and a willingness to help each other succeed.”
Most employees in traditional companies have spent most if not all, of their professional life in a single company, Renz observed. Consequently, they lack the perspective of other businesses and industries. However, that perspective becomes ever more critical as traditional value chains are making way for new cross-industry ecosystems where new business models emerge at the intersection of conventional industry boundaries.
“New initiatives often grow out of humble beginnings,” Renz said. “The revenues that new services generate are frequently negligible. What hinders such efforts to get the attention of senior management in large corporations is the entire reason why venture studios exist. The quest to turn a vision into a working business model and to scale it is what makes entrepreneurs get up in the morning. That’s what I love about the Rocket Wagon Venture Studios model.”
Rocket Wagon’s New Mobility Venture Studio was designed to build the Internet of Things offerings that leverage the convergence of technologies including sensors, edge and cloud computing, artificial intelligence, and machine learning as well as blockchains and distributed ledger technologies.
“At Rocket Wagon Venture Studio, we have created an environment where innovation thrives and people share a passion for pushing the limits, removing obstacles through technology and creating the next generation of connected products and services that make it possible for even the most traditional companies to innovate disruptively,” Renz concluded. “They need not go the way of the Fortune 500 companies who failed to see and exploit the financial upside of true digital transformation. Innovation is rocket fuel for large, established enterprises who have created markets with products and services that are now even better given digital enhancements – and they are in a great position to win, but only when they find the path to innovate disruptively, without causing the internal disruption and lack of focus they fear. Venture studios provide a perfect environment for turning great ideas into great business outcomes.”
Originally published in TECHZONE360 by Juhi Fadia on September 19, 2019 and can be seen at https://www.techzone360.com/topics/techzone/articles/2019/09/19/443298-innovation-should-inspire-not-frustrate.htm