Working in the tech industry in Boulder, Colorado, I learned how important innovation was to startups, but then it was later in my career that I also found out how essential innovation is to larger and established organizations. At the same time, I also found out just how hard it is for many of these extraordinarily successful established firms to continue innovating.
Auto immune syndrome
Before moving to Boulder, I worked and lived in Detroit, Michigan, where I did consulting and research work with leaders in the auto industry. In one project focused on driving innovation, a member of the leadership team told me they had a saying about trying to innovate. Whenever a new idea cropped up in this organization, the company’s internal “auto immune syndrome” would rapidly take out the new idea.
This was not something that only happened in the auto industry; I found this to be the case with many larger organizations. It is a disease that often is a function of growth. The larger and more successful a company gets, the harder it can be to continue to innovate. That is because employees can dig in and defend their territory or “the old ways” of doing things.
I also saw this innovation avoidance strategy in startups that I worked with as they grew and hit milestones such as initial public offerings or were acquired. These growth firms celebrated their wins so much that they often forgot they had to continue to fight for market share with improved and new product offerings.
Overall, I learned that innovation is critical for every stage in the business cycle, but it seems more difficult to do when an organization is successful, large and established. However, innovation can be part of an organization’s culture, and there are many research studies and examples of when and how continuous innovation can be part of a firm’s DNA.
To flourish, innovation needs to be built into the culture
As part of my overall research and consulting with larger companies driving innovation, I learned that a bottoms-up approach to innovation is vital to make it work. Often, a company starts with only a "tops-down" strategy; I mean starting with a mandate to innovate. Many companies do this by making a declaration that they need to innovate, hiring a chief innovation officer or a VP of innovation, and then stopping there. I personally have not seen this strategy work well and I will share one example.
A large organization with multiple locations and business units was at a point where they needed to innovate both their product and the way they delivered it to customers. However, the company’s success was built on their solid and proven model, which resulted in lower and lower financial results every year. Finally, convinced something had to change, they hired a chief innovation officer. After a year, a colleague asked me to visit the company and engage in research with the organization. I met with senior leaders and visited a few plants. These sites were in smaller cities. In my first plant visit, I met with line employees, and we talked about the company’s prior attempts to innovate. Almost every individual said that they had learned to never innovate or even utter a word about a new idea. Why? These employees worked in a small town with one employer; if they lost their jobs, they would have to leave their homes. They did not want to do this. They loved their jobs, and instead of causing problems, they learned to avoid innovation. The company had tried to be innovative in the past and they asked employees for ideas. They told a story about the one person who did suggest a new idea that was implemented and that did not work. This individual was fired. I do not know if that story was 100% accurate but it also did not matter. What happened was that employees learned not to innovate. This story was repeated by numerous employees in various locations.
Instead of creating a culture of innovation, inadvertently, leaders for years supported a culture of punishing new ideas — just like the auto immune syndrome in the auto industry. You cannot mandate innovation if you don't change the culture to support new ideas. Leaders need to understand their own organizational culture and then work from that point to produce change.
What does work? In this case study, we created a new intervention to involve all employees in moving the culture to one that supports innovation. The first job was to change the story about punishing innovation. To do that we worked with a key cohort of employee influencers, and through numerous communication strategies, changed the story people were telling each other. The influencers engaged in a multi-year program to reward small innovations and in less than three years the company made significant changes that turned around their financials. Success stemmed from using both a bottoms-up approach and not a tops-down strategy.
Other examples of this concept can be found at companies like Exelon, a large power company that has hosted innovation competitions for all employees. In 2019 they ran their all-employee innovation competition in the M&T Bank Stadium in Chicago. Amazon is another company that has built innovation into the culture by encouraging employees at all levels to present ideas through a program they call the PRFAQ; they write up a press release that discusses the results of implementing their innovative ideas. At least one common element in successful established company innovation strategies is having some sort of program to encourage all employees to be innovators.
The University of Alabama rolls out an all-employee innovation initiative and competition
The University of Alabama, as an R1 (top designation) research institution, is in the business of innovation. Of course, the focus of the press about the university is usually on faculty-driven research and innovations. These are large-scale research projects, often funded by external grants, such as those provided by the National Science Foundation.
But over the last few years we have tried something new; we started our own all-employee innovation competition. The idea is consistent with what we saw larger companies doing and in line with one of the university’s goals of driving innovation. Through a partnership with the Alabama Entrepreneurship Institute and the Office for Research and Economic Development, the first all employee, or faculty /staff competition was launched in 2020.
Every year we invite all faculty and staff to submit a three-minute idea pitch, which is recorded before the competition day. In the “live” but virtual competition, the contestants go through a question-and-answer session with judges who viewed their videos ahead of time. In the first years we had less participation from staff and in interviews with employees in non-faculty jobs, I found that those individuals did not really believe the competition was for them. To dispel this myth, the university provided three prizes for staff only.
We have been able to help faculty and staff in numerous colleges get their ideas going. Some businesses you might recognize include Bobo Mania and Druid City Makers Space. In addition, we have several scientists who have gone on to apply for and receive significant grant money to move their ideas forward, including City Detect. To view the newest group of winners, you can go to the 2024 site.
What I have learned from research and presenting this competition at several conferences is that UA is the only university running an all-employee innovation competition.* In addition, The University of Alabama has made a very visible commitment to entrepreneurship, innovation and growth through supporting the Alabama Entrepreneurship Institute and via the partnership with the city of Tuscaloosa and the West Alabama Chamber of Commerce in building and then running The EDGE, which is Tuscaloosa’s incubator and accelerator. In addition to this, UA recently partnered with Techstars to support a new water-focused accelerator in the city. The EDGE is run by the Alabama Entrepreneurship Institute, which also launched the new Growth and Innovation Leaders Forum for established organizations.
Growth and Innovation Leaders Forum
Our goal is not just helping startups but getting larger, established firms together to also learn. If this topic of corporate innovation is of interest to you, join us in the Growth and Innovation Leaders Forum. Our first virtual meeting is July 25, 2024. We will also be hosting a round table event for a smaller group in September 2024 as well as running our first annual conference in February 2025.
Join us for these events and become part of the forum to help grow the large-company and smaller startup entrepreneurial and innovation ecosystems in Alabama. Contact me to learn more.
*According to Alabama Entrepreneurship Institute
