Research on CEO priorities consistently shows that innovation remains a top priority for most corporate leaders. This has been the case for well over a decade. Which company, or company leader, would not want their companies to grow through innovation?
The challenge, when push comes to shove, is how to get to innovation? At what cost? And what do a company’s leading institutional investors think about it?
Too often, at the end of the day, investor pressure demands such high levels of risk mitigation and ‘modelable’ predictability that organic growth through new product and service innovation is not structurally possible. Consider recent reports from a group of leading firms who have publicly commented on what they plan to do with the free cash they will soon receive when this year’s lower corporate tax rates kick in. Among this group of companies, thus far they have earmarked $171B for share buybacks, while only $6B has been earmarked for (re)investment in their firms in the form of R&D or capital expenditures.
This only confirms what we’ve known for a long time. Clayton Christensen and Derek van Bever, and Michael Mankins, Karen Harris, and David Harding been writing about this for years in the Harvard Business Review. These are neither new nor radical ideas.
Managing the Ultimate Constraint
However, the near shut-down in substantive corporate spending on long-term innovation should not be the end of the story. From a design thinking perspective, this is merely a constraint, albeit an epic size one. Even with their hands so tied, can firms embrace (cheap and lean) innovation without showing significant innovation spending on their balance sheets?
At the risk of being overly simplistic, the key here lies in your HR policies. How do your employees work? Where do they work? How much box-ticking busy work are they engaged in? How much of their time is focused on customers and adding value to them, vs. internally focused processes and control systems? How much time are they allowed to spend with colleagues from other departments and functions thinking about end-user value?
Long before Google popularized their 20% Time program, companies such as 3M, W.L. Gore, and SEMCo have been getting low-cost innovations out of their employees for years. True, most of these innovative firms are private and don’t live under the thumb of the CFO of their institutional investors, but this is achievable in public firms too.
1- Unburden Employees: Having an official policy (whether 15% or 20% time) can be a hard sell for most HR managers. Rather, companies can identify and remove wasteful process and procedure tasks from employees’ work loads, thus freeing up some amount of time during which they can work on creating new value for the firm.
2- Prioritize Workspace: Few companies actually build work environments that align with human nature and the known patterns of collaborative interaction. Activity based coworking spaces and choices, rather than expensive and ‘monumental’ corporate interiors, provide the stage-set for encouraging everyday collaborations and potential innovations.
3- Incentives: We know that ownership, either outright or symbolic, is a powerful motivator. It is critical to reward good and actionable ideas with the opportunity to ‘run with them.’ Virgin Group’s long-standing intrapreneurship program has created a stable of new companies that drive the group’s bottom line.
Keeping it Simple
For super busy CEOs these notions are probably a bit abstract. In lieu of tackling all of this at once, there is a simple, inexpensive way that companies can move forward. Send a team or a group of teams coworking! For a limited trial period (maybe 3-4 months), present a challenge to one of your teams have them decamp to a coworking space to work on it. They don’t need to work exclusively on the challenge, just some of the time. See what happens.
In the larger scope of corporate spending, the cost of the coworking experiment will barely register. Invisible and unbeknownst to virtually anyone, you might just end up with a new product/service/business model that can bring value to the company.
This article authored by OpenWork Agency Partner, Drew Jones, PhD.