About a year ago I wrote a post dealing with the reasons Ericsson Mobile Platform (EMP) stopped delivering innovations, which came to my mind as I attended Lean Tribe Gathering in Gothenburg. Driving home I reflected upon the discussions of the day and what I think about the possibilities of well-established, bigger companies to keep delivering not just improvements, but innovations. Numerous small-scaled companies or smaller groups in fairly small-scaled companies are usually responsible for a considerable part of what later becomes an innovation. On Kockum’s Computer Systems and Telelogic I have over the years noticed that a small development department of 5-10 employees often creates more value for the client than development departments of many 100. The similarity between these small develop department and the start-ups of today is a group with competence within everything from sales and marketing to technology, not to mention a good knowledge of the clients’ needs.
Moreover, I have worked with Telia in the late 90s, with an extensive competence in IP telephony and prototypes available. A product was on the market, Telia Piccolo, a PC-application which was used to control the additional services via a modem, handle my contacts etc. The owner of the product struggled to integrate IP telephony in Telia Piccolo, nevertheless Telia chose to introduce “My Pages” on the web, and IP telephony disappeared in its beginning. A few years later Skype was launched, and everything changed. Frequently it was discussed how the new product would compete with Telia’s existing services and what the consequences would be, rather than what would happen if someone else developed the same product.
Currently, the car industry acts in the same way. Electric cars has been in progress within many corporations for years, for instance Volvo assumably developed an electric car in the late 90s. However it is not until now, when Tesla without connections to fossil cars and a risk of driving other parts of the corporation out of competition, that electric cars become a real success. Within traditional motor companies, the electric cars will drive the parts of the company creating fossil cars out of the market, consequently leaving numerous employees in an exposed position. Moreover, not just the corporations internally, but also subcontractors of gas/oil, engines, garages and so on feel threatened by the changes. Tesla is actually constructing an internal network of sales offices and garages for their cars, and has a completely different standpoint on how the car should work. This in contrast from traditional motor companies, capitalizing on selling replacement parts and repairing.
Not to mention the mobile phone market, where Nokia overpowered Ericsson introducing designed cell phones and removing the protruding antenna. Next Apple outshined Nokia with its iPhone and so it continues. Long-established companies struggle to compete with up-comers with new ideas and more governable organizations, or at least the up-and-comers adjust to the market more quickly and have nothing to lose on the market shifting.
So, what is required for bigger corporations, with existing products that might be driven out of the market internally, to take these steps in the development and not only focus on constant improvements? Well, let’s not look at Lean and Japan, since no innovations are delivered, only continual improvements of existing products. On the one hand upgrades are important, but on the other hand we might be overtaken by a startup, such as Tesla, when we least expect it and then it’s already too late. Because why have more than 250 000 people paid 10 000 SEK to be on the reservation list for Tesla’s new car? How many have done the same thing for Chevrolet’s Bolt? I must confess I have no idea, but the ship has probably already sailed for the Bolt, considering it’s more pleasant to drive a Tesla since that’s what everyone wants.
Traditionally, enthusiasts have conducted skunkworks projects in bigger corporations. However, in the future I believe these enthusiasts will leave the company, and establish their own in order to take their innovation all the way. These projects have probably saved big corporations numerous times. Usually, these initiatives are based on a good knowledge of the company and its products, as well as an extensive technical competence and a personal confidence in those. As someone mentioned, it’s an easier alternative to try on your own and then be forgiven since everything went well, than reaching a joint decision on investing in an innovation with an uncertain outcome.
Proposals suggested yesterday was, among others, introducing Slack in the organization to enable brainstorming, introducing specific days reserved for related discussions etc. Someone mentioned that this must take place in the daily work, which I believe more in. Nevertheless, recurrent days can have a symbolic value in showing the importance of the subject to the board. An additional comment was on budget and time tracking. This might be a solution, however I suspect this might delay the company’s production of innovations. Everyone agreed on that the way a company should reward innovations is very individual, but here is a significant connection to small companies. There, everyone depends on each other, and on a daily basis every employee is appreciated for its presence and expertise.
Personally, I believe the key is to have a board that recognizes the significance of innovation in order to make the company survive in the long-term. The company should be the favourite project of the board, and not a career step-stone where the stock market, pension provisions and bonus programs is of highest importance. The other day Ingvar Kamprad turned 90, and I really think he symbolises how the board should take interest in its corporation. The board can lead an example in how all employees should act, and stimulate open discussion between departments during coffee breaks, lunch breaks and conference days (I recommend taking a look at how Steve Jobs built his new Apple offices). Moreover, the board and directors should engage in proposals, and set aside time to evaluate the most relevant ideas, subsequently sharing these with others. Perhaps a specific idea isn’t the most ultimate suggestions, but it can inspire others.
Have in mind that children imitate adults, they don’t obey them. Select directors according to what is of highest importance: execution or innovation. EMP went for only executing leaders.