What Can We Learn From Startup Innovation Practices?

by Paul Shepherd
| October 01, 2015
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In the past couple of years innovation has gotten mostly associated with startups. This is completely logical, since innovation and entrepreneurship usually go together. Startups are looking for ways to grow into big businesses, and innovative ideas are their best way to succeed. But, what most companies forget is the fact that innovation is not inherent to startups – it’s a result of hard work. It’s just that startups are more motivated to innovate. Companies of any size can learn a lot from startup innovation practices.

Innovation plays a huge role in all the essential aspects of every business. It affects productivity, efficiency, outputs, and overall business sustainability. However, innovation is oftentimes misunderstood and thus taken very lightly. When talking about innovation, we must keep one thing in mind: change. Change is one of the most important and defining factors of innovation.

In order to come up with innovative ideas and be able to implement them, we need to be ready to make changes on many levels. This means embracing different business processes, such as market customisation and product development mechanisms.

What can we learn from startup innovation policies?

Unlike large companies, startups that want to grow focus all of their efforts on innovation. They are dedicated to solving problems and delivering bigger and better value on the market. And, this is exactly how innovation thrives.

Take a leap of faith

Today’s dynamic market is a serious battlefield for startups. They can’t afford the luxury of playing safe and take a lot of time to think and discuss potential solutions. They have to take a leap of faith and explore possible outcomes on the go. Otherwise, they can easily get “stomped” by large corporations or other, more courageous startups.

If you want to innovate, you have to free yourself and your team from the fear of failure. Innovation is all about taking action, making mistakes, learning from the mistakes through engaging in healthy debates, and trying again.

Make fast changes

Another important thing we can learn from startups, when it comes to innovation, is to constantly challenge the infamous status quo. This is the only way to ensure continuous improvement. Many companies tend to hold on to a specific situation that they find satisfying. They think about innovative ideas for business improvement only when they realise that the situation is no longer satisfying as it once was.

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But, in terms of innovation and entrepreneurship, this is nothing more than settling for what is considered “good enough”. This way of thinking may lead to occasional innovative ideas, but it’s far from having an innovative spirit. Innovation is not a one-time event – it has to live inside each and every pore of your organisation.

Your entire team should constantly evaluate all the business processes that can be improved. This means taking quick action and going beyond the known routines in order to explore all the possible solutions. Companies that fail in innovation are not the ones lacking ideas, but those that do nothing beyond the current business practices and processes.

Forget about hierarchies

One of the main things that are holding back big corporations from making the most out of innovation is the concept of rigid hierarchies. It’s hard to experiment and make fast changes if you have to wait for approval from three people above you in the company’s hierarchy. If your team members do not feel free to take risks, they won’t be able to come up with groundbreaking and innovative ideas.

This, of course, doesn’t mean that you need to embrace chaos. Evaluate your team members first and make sure that you know whom you are leaving the innovation process to. As soon as you are positive that you have the right people that can take your company to a higher level, clearly determine the goals. Then, let your team members express their creativity and watch your business grow.  

Embrace the idea of distributed research and development

Sticking to traditional research and development practices undoubtedly kills innovation. It results in high costs for setup and maintenance, including employment contracts, office rentals, and infrastructure procurement for development and production. Since innovation involves taking risks, the cost of failure that comes with traditional R&D is very high. This means that the first failure may damage your budget so much, that you won’t be able to take other risks anytime soon.

Another issue of traditional R&D is the huge amount of time it takes for realisation. It has long development timeframes due to rigid reporting, performance reviews and partnership negotiations. The multi-layered project management that comes with traditional R&D often causes delays and even abandonment of innovative ideas.

This is why the most important startup innovation practice is to turn from traditional to distributed R&D. This innovation concept usually involves both internal and external thinkers who are focused on the same goals. These people tackle problems by pitching their ideas to company executives or stakeholders for further development.  

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With distributed R&D, you minimise the cost of failure. It requires less employment contracts, low infrastructure procurement, and space rental for a very short period of time Another huge benefit of distributed R&D is the simple project management. It also brings opportunities for company acquisition or product purchase for successful innovative products.

How you can implement distributed R&D

Distributed R&D can take various forms, such as competitive idea pitching, hackathons, curated strategist roundtables, influencer roundtables/hackfests, orthogonal audience and stakeholder engagement, etc. Whatever form you choose, you can solve problems with distributed R&D in two ways.

Tackle one problem using various solutions

When you start with a single problem that needs to be solved, you have the opportunity to allow the participants in the process to innovate by doing. So, when the ideas are pitched to the organisation, the solutions are treated as working prototypes. The assessment has commercial viability, which opens many paths to the market and reduces risks.

As an example, you can assign multiple teams to look for solutions to a challenge through a hackathon. These teams will rapidly work on solving the challenge and come up with initial answers within 24 hours.   

Tackle problems that are worth solving first

This approach starts by determining which problems are worth solving. Then, you can begin rapidly developing ideas and evaluating them. Using this approach, you need to start with the problem, not the innovative ideas. This is usually how startup innovation processes begin.

If the primary need to innovate is a problem worth solving, then distributed R&D is the best way to go. You just need to evaluate the capabilities of both internal and external innovators and entrepreneurs. This way, you can ensure trust between the stakeholders and innovators, which is crucial for this method to work. Innovators should feel free to develop projects, while stakeholders need not hesitate to provide their feedback.