Contents
The main problem of large companies that have embarked on the path of innovation is the barrier to transition from pilot to real production. How to create conditions for the realization of the potential of employees without fear of “flying into the pipe”?
About the expert: Yury Misnik, Chief Digital Officer of Magnit retail chain.
Innovation in our minds is strongly associated with improving something: service, product, functionality, customer experience. Therefore, company leaders a priori expect from them a tangible effect and financial returns, preferably in a very short time. But it often happens like this: they made 40 pilots, but there is no result. Or something was introduced – for example, a new service program – but users and customers did not like it. For management, this discourages any desire to spend money on such innovations, and for employees to come up with initiatives and try something new.
But innovation alone cannot be the goal of business processes. This is the “fuel” for the internal and external development of the company, a field for experiments. Therefore, ideally, testing and evaluating the effectiveness of various ideas should become a continuous workflow, in which a sufficiently large process of failures is expected and perceived as a valuable experience. A great illustration of this is startups, the success of which is only 10% dependent on a cool idea, and the remaining 90% is experience, a team, and so on.
Three Ways to Innovate: Risks and Rewards
Responsibility culture: “1 out of 100” and “why we do it”
Creating an innovation culture within a company requires two points of support: one is to give your employees the right to make mistakes, and the other is to let them make their own decisions without going through the office bureaucracy. In fact, it is the foundation for any change in business. A few simple rules can help with this.
Employees should be able to quickly and painlessly access a particular resource and do something other than everyday tasks. Access boundaries (both temporary and functional) can be flexibly configured to suit your business needs.
In practice, this may look like a kind of permanent internal hackathon with a block of real tasks. Or official permission to use part of the working time to develop your own ideas. For example, Google practices this approach: employees are officially allowed one day a week to do what they think will benefit the company, but is not necessarily included in their immediate responsibilities.
Important: the access system should be transparent (for example, access to some computing resources, data, API in real time) and seamless (the principle of self-service automation and «one window»). Because the prospect of getting ten approvals and defending the project in three committees stops many people.
Second: Mistakes are OK
Have you noticed the negative connotation of the word «innovator»? People should not be afraid to express themselves, try to implement their idea and quickly understand whether it works or not. That is, employees will sometimes come up with ideas that won’t work. And that’s okay. On the contrary: it’s great, mistakes should be discussed openly, sharing experience with others, and not hiding unsuccessful projects “on the table”.
After all, mistakes are an invaluable experience for business. Each time they teach something and give an understanding that this particular idea does not work in our business. No wonder Jeff Bezos, the founder of Amazon, said that the success of his company is the result of experience and knowledge gained from dozens and hundreds of failed experiments.
Third: “1 out of 100”
One of the fundamental things that we are now striving to do in Magnit is to distinguish between decisions by category and recurrence / non-returnability (in English there is a very good term one-way door vs two-way door). There are two types of solutions: complex, with very significant investments in people, processes, finances, and the second – most of them that drive innovation – are small, with which we can easily start working, move away from them if necessary and not get significant losses. And in order for the innovation culture to work, we need to make the process of making “return” or two-way decisions quickly and efficiently, without overloading the bureaucracy and committees.
The main idea is not to focus on the figure, how much to invest, but to look at the fact that the price of one innovation is minimized and optimized. We can reduce the cost of “entry” through the same cloud solutions. And, of course, we must understand how much we are ready to lose if some products do not work. If you look at the world’s giants, you can do 100 things, 99 will not work, but the one that works will more than pay for all the costs of innovation in the company.
For example, investing in business development in a new segment, we are clearly aware of the risk that it may not take off and the money will burn out. And the $100 allocated to an employee to connect a certain service can pay off and bring many times more or bring nothing. But you can roll everything back at any time without much loss to your business.
An innovative culture assumes that not everything will work out. Therefore, in parallel with the introduction of a system of access to resources, it is important to train employees in a culture of responsibility: why are we doing this and why the desired result did not work out – this is normal.
This is how they work with innovations at Microsoft, Amazon, Apple, Google. Cultivating inside those ideas that are not on the market. Automating processes, including through cloud technologies. Giving employees access to software, services and databases. And getting a digitized result that is relevant to the needs of the business.
Yes, companies can lose money on innovation. But this is a conscious risk, which can be considered as a targeted investment in the future. Just remember the 1 in 100 rule and look for growth drivers in your employees.