Disruption and innovation are familiar buzzwords today; everyone wants to be the next Tesla, Netflix or Airbnb. But the path from a small startup to a mid-size company to a billion-dollar unicorn is strewn with failures along the way. How do companies remain innovative as they go through the many stages of growth?
When I started my company in 2015, we had one client and a team of three. We were small, agile and able to move quickly to solve problems. As we gained clients, we continued to add employees and develop systems and procedures to manage our growth. We created a set of guiding principles as our roadmap, with innovation as one of the four principles. "Stay nimble; never stop learning. Innovation is how we do things around here. We fix problems, share solutions, and look for ways to improve."
Does Your Company Culture Foster Innovation?
We set out to foster a spirit of innovation by creating a culture that supports it. We have a no-blame environment that sees failure as a learning mechanism. If someone makes a mistake, we learn from it and set up processes so it won't happen again. In a no-blame culture, employees are less risk-averse and more likely to try something innovative.
We set up processes to capture company-wide suggestions on how we can improve things for our team and for our clients. We have a Slack channel called "Can you imagine if" where people offer suggestions such as, "Can you imagine if each of our clients had their own assigned, complete SEO team?" And guess what? Our clients now have their own assigned, complete SEO team.
We take our employee and client net promoter score (NPS) survey feedback very seriously. It directly affects our company policies/benefits and client processes. We also have a long list of in-house technologies we've developed to make us more efficient, such as our proprietary HD Platform, which gives complete visibility into clients' marketing ROI. We are making innovation a cornerstone of our company.
The Challenges of Rapid Growth
Most startups aspire to grow quickly, but there are challenges that come with rapid growth. I recommend growing at a controlled rate, be The Goldilocks of Scaling, not too fast, not too slow, but just right.
The Innovator's Dilemma
One of the challenges of rapid growth is known as the "Innovator's Dilemma," a term coined by Clayton Christensen more than 25 years ago. The innovator's dilemma occurs when established companies fail to address disruptive upstarts and opportunities because the systems and processes they have in place — that have made them successful — can hold them back from investing in developing technologies or products that may have lower margins initially.
As Christensen says in his book, "Successful companies want their resources to be focused on activities that address customers' needs, that promise higher profits, that are technologically feasible, and that help them play in substantial markets. Yet, to expect the processes that accomplish those things also to do something like nurturing disruptive technologies — to focus resources on proposals that customers reject, that offer lower profit, that underperform existing technologies and can only be sold in insignificant markets — is akin to flapping one's arms with wings strapped to them in an attempt to fly. Such expectations involve fighting some fundamental tendencies about the way successful organizations work and about how their performance is evaluated."
The Importance of Staying Nimble
Classic disruption occurs when small upstarts target overlooked customers with new, low-cost technologies. Established companies faced with disruption should continue to invest in sustaining innovation and maintaining strong client relationships. But they also need to recognize the potential for disruption. This is why staying nimble should be a priority. We are all familiar with the analogy of trying to turn around a big ship. As you grow from a small fishing boat into an aircraft carrier, it's imperative to remain agile, so that you are able to see new trends and respond to them. Perhaps creating a "disruption department" that is free to try out new products/technologies or markets without the limitations of profit margins or current customer requirements, would be one way to help your company stay nimble.
If you're a startup looking to disrupt an industry, you likely have the benefit of low overhead and a "nothing to lose" attitude. But eventually, as you grow, you will face the same challenges that established firms have to face. How will you move from low margins to higher ROI? How will you attract new customers who may be hesitant to hop on board a small fishing vessel when there is a cruise ship offering them a lounge chair by the pool? Both startups and established companies face dilemmas; it is how nimble they are in dealing with those challenges that will determine if they are successful.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
