Bridging Innovation: Legacy Organizations in the Digital Age

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Partner & CEO
Sep 28, 2017
Think about what your company does today. Is it greatly different than what it was doing five or ten years ago?
If you are like most companies, probably not.
While you kept your head down refining the business model that made you successful, a few things happened: Facebook, Amazon, Tesla, Uber, Twitter, LinkedIn, Netflix, smartphones and widespread high speed connectivity that everyone and their toddlers and grandparents are using by default. What your consumers, employees and investors expect (demand) has radically changed. In many cases, what they fundamentally value has shifted.
This has quickly divided companies into two groups: those who successfully navigate these rapid changes and those who fall behind, still clinging to a past that will not return. One will grow market share while the other becomes an acquisition target with ever decreasing value.
Many global market leaders today didn’t exist five years ago. How can a legacy organization hope to survive what’s next given the organizational complexity, internal politics and fear of change they must overcome?

Be open to a new approach

When speaking about corporate innovation, Howard Schultz of Starbucks asked, “If we were competing with Starbucks, what would we do?” You must assume someone right now is creating the next big idea, the one that will kill your business. It’s your job to make sure that next big idea is yours.

Focus on the user

I often see legacy companies point to new tools and technologies as their saviors for the future; they are always wrong. Technology by itself creates complexity, confusion and cost (technical debt). What’s next is defined by the humans they serve, supported by whatever is necessary to get them what they need in the manner they prefer. Another way to say it is, “people, process, technology and always in that order.”
Once you get into this frame of mind, you are free to ask some big questions: Are we still solving the right problems? Could we solve the problem better if we approached it a different way? Are we a product, service or both? What should we stop doing altogether? What are we missing?
Getting honest with yourself about who you are today can be difficult, but it must occur before any positive shifts can happen.

New teams for new challenges

Think you’re ready to act like a scrappy startup and build something amazing?
The curse of any successful new innovation is that it eventually becomes a standard supported by risk adverse sustainment machine. More than likely, your company is staffed with a team that is encouraged not to rock the boat and is actively discouraged to invest time into things that might not work. After all, you already have a model that has worked for a really long time.
A new approach requires a different kind of team. Not to replace the team you have (remember, they are all super busy keeping the current business running and that is really important), but to augment it with a skill set you haven’t had for a very long time. One that embraces risk, sees failure as the best teacher and is built for speed. Gartner calls this a “Bimodal Approach,” but you can also think of it as “moving fast without breaking things.”
Hiring, managing and retaining these team members can be extremely difficult for existing corporations. These people could get a job anywhere, are mission oriented and greatly value quality of life. Getting a team of free thinking innovators to fit within your sustainment structure (cubicles, slacks and ties, rigid hierarchy) simply might not be possible. In order to compete for this type of talent, some companies create satellite offices tailor-made for creativity and innovation – provided they have the necessary recruiting resources and senior management for oversight. Other companies have engaged firms “purpose built” to drive technical innovation and serve as an extension of the internal team, helping them to think differently about their business and support identified programs.
Today, its far more common to see large corporations acquire young competitors with an interesting idea and fold them into their sustainment culture. The scrappy, fast moving founders are pushed out within a few months (often unintentionally), wait for their non compete to expire and create a new mousetrap to be acquired by yet another legacy organization ill prepared to retain them.
Regardless if you choose to build, borrow or buy innovation, now is the time to try something. The change your industry has experienced over the past ten years is nothing compared to what’s on the way. Follow your consumer, be open minded about how best to serve them and surround yourself with people who move a lot faster than you. Getting different is unbelievably difficult for large organizations, but it is the price for survival and the clock is ticking.
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