Why do some large organizations still innovate like startups, while others get mired in bureaucracy? A multiyear McKinsey study shows that leaders at pioneering companies exhibit these traits:
1. Express a bold vision. It’s not enough to inspire employees to strive for greatness. You need to combine your ambitious aspirations with a hard-nosed calculation of the value that will accrue from achieving the vision.
2. Know when to say yes. At large companies, employees propose many good ideas. The test is deciding which ones to invest in. That’s why it helps to approve lots of pilot projects, identify which ones bear fruit and jettison the rest.
3. Pick a problem and solve it. Innovation requires three ingredients: an important problem that cries out for a solution, a technology that supports the solution and a business model that profits from the solution.
4. Venture beyond your core. Many large companies don’t like to tamper with their core business for fear of jeopardizing a steady revenue stream. But if they wait to innovate, their core business can erode. It’s better to experiment with new ideas on an ongoing basis to determine when and how to diversify your products and services.
5. Remove bureaucratic roadblocks. It’s easy for large organizations to put the kibosh on innovative initiatives. All it takes is someone from legal, marketing or another department to point out what can go wrong—and refuse to approve continued experimentation. It’s vital to pursue promising ideas even if some people voice bureaucratic concerns.
6. Think in terms of scale. For sweeping innovations with broader applications, make sure you’ve allocated sufficient resources (manufacturing, distribution, etc.) to scale up rapidly if necessary.
— Adapted from “The eight essentials of innovation,” Marc de Jong, Nathan Marston and Erik Roth, www.mckinsey.com.