KH Insight Report—06
The KH Conversations are a series of roundtable discussions initiated to discuss innovation and business design between a group of 15-20 decision makers from a wide spectrum of industries. Key takeaways from theses discussions are communicated on the Kurppa Hosk insights section of the website to continue the conversation with others. The inaugural KH Conversations explored what incumbent companies with complex structures can learn from early stage startups about innovation – and vice versa.
Key topics at KH.01 Conversations revolved, for the most part, around innovation, corporate agility, and internal processes. In particular, the group steered towards the reason why so many innovation projects often fail (one reason being that too many resources are spent on attention-grabbing and superficial activities). As disclosed in the presentations and further supported by the 2019 McKinsey report, however, companies that invest in and focus on design-centred activities such as service systems, introducing new customer experiences, or building better business models, enjoy higher profitability and valuation*. Although startups aren’t entirely immune to the same challenges as “legacy” companies face, they are quick to eliminate what impedes growth. One such example mentioned during the KH.01 Conversations, was the fixation on quarterly reports, a common activity that can place any organization at risk of stagnation. As startups need to function with very limited resources, by remaining agile they are very good at eliminating such obstacles. But how can they maintain this stature as they grow, and more urgently, how can larger incumbents adopt this mentality?
Learning from the fast— Business design in the age of the start-up.
What can incumbent companies with complex structures learn from early stage startups about innovation – and vice versa?
Success stories suggest implementing procedures and a mindset of prototyping by thinking big, taking risks, and adopting a broader, more objective view of opportunities based on insights pulled from data. One of the biggest advantages that startups have is that they “can do things that don’t make sense for incumbent companies to do”. And that’s where the Innovation department or innovation partners come in- to try things that don’t make sense for the rest of the organization today.** At the Davos meeting of the World Economic Forum this year, it’s predicted that The Fourth Industrial Revolution will unlock $3.7 trillion in economic value by 2025***. To reap the benefits, organisations can create an environment where they can try and sometimes fail; creating a grounds for prototyping and disruption.
Highlighted here are 3 opportunities from the KH conversations supported by light desk research.
— Uncertainty shift: Innovation takes a lot of time and requires a level of comfort with ambiguity in order for real results to come to fruition. Uncertainty, very often if not always, leads to organisations rejecting complexity out of fear of failure. Here are two ways (from the many) that can help a company’s culture to better deal with and “embrace” change. One way is to better understand the reality of the customer; being more customer-centric. Mapping the customer journey out and identifying the pain-points and opportunities is a great start. Knowing where the pain points are, makes a company accountable, and by default, uncertainty is not so painful. Subsequently, companies are able to adapt and change quickly depending on the situation.
A second way is to create space for innovation and nurture a positive and collaborative culture. Employees need the space, time and resources to innovate, but most importantly, the support from superiors to work across teams and departments.
— Reverse Mentoring: C-suite level executives can benefit from “Reverse Mentoring” to stay on top of trends and to learn from people outside their peer group. Look to external partners or non-partners for regular reporting on trends, insights, and best practices that can be implemented in both short-term and long-term.
— Diversity: Diversity in the workforce comes in two dimensions, functional and cultural. Hiring talent outside the industry can contribute to keeping organisations relevant. As companies’ products and services serve a more and more diverse set of consumers from various backgrounds, so must the company reflect and be able to cater to them. And as companies are aspiring to be more agile and perceptive, a cross-functional and multi-cultural group is required. Regardless of size, companies can create a strong culture and constantly measure and iterate it as the organization grows and evolves. Agile start-ups can quickly turn into ageing behemoths as growth continues. A way to work against this is to focus on culture and constant tweaks to the organisational plan.
Get in touch for the opportunity to be part of the next discussion, KH.02 Conversations!
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KH Conversations roundtable discussion including presentations by Livia Moore, PR Marketing Director, Europe of Antler and Jenny Frey, Senior Service Designer of PwC Experience Center.
*The business value of design, McKinsey & Company
**Bret Waters, Alchemist Accelerator
***World Economic Forum Annual Meeting, Davos 2019