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Innovation Challenges for Established Organizations/
For established organizations, innovation can be a daunting task. The Innovator’s Dilemma suggests that organizational incentives lead large enterprises to prioritize incremental growth in mature business lines, instead of investing in disruptive technologies that may pay off years down the line but are barely a blip on today’s P&L. As a result, executives are well aware of the risk of being left behind.
The current landscape of innovation cycles is shorter than ever, fueled in part by Silicon Valley and its army of startups and technologists with their crosshairs on every industry under the sun. For leaders of mature enterprises, the implications are sobering: the average lifespan of a company on the S&P 500 has decreased from 90 years in 1935 to 18 years today.
In order to ensure sustainable growth, even in the short term, enterprises need to predict where the ball will be and dispatch resources there. However, investing in disruptive ideas can strain an organization’s pool of talent and capital with no guaranteed reward. This is where de-risking innovation with agile teams can be beneficial.
De-Risk Innovation With Agile Teams
To de-risk innovation, enterprises need to assemble the right team for the job. Creating new ventures requires leaders who balance deep customer and business insight with the entrepreneurial horsepower to learn fast, execute faster, and pivot on a dime.
While many large organizations pursue internal innovation by utilizing the abilities of their best employees, this exclusive focus on in-house talent is a missed opportunity. Instead, corporate innovation teams should be augmented by agile talent to create an innovation strike force with the best traits of both worlds.
By incorporating agile talent, organizations can follow best practices and achieve a winning outcome. In this article, we introduce a key insight from Jeff Bezos that forms a proven philosophical basis for a winning innovation strategy and illustrate how incorporating agile talent can enable organizations to follow these best practices.
To Innovate Effectively, Prioritize High-Velocity Decision-Making
Innovation can be challenging for established organizations that prioritize incremental growth in mature business lines over investing in disruptive technologies. This conventional wisdom can lead to risk aversion and a culture of incrementality that obstructs core projects. To overcome these challenges, mature enterprises must learn to make high-quality, high-velocity decisions, and this is where agile talent comes into play.
1. Gather Just Enough Information
Mature enterprises tend to over-correct in the face of uncertainty, spending far too long collecting enough information to reach a high conviction threshold. To avoid this, innovation teams can add agile talent, such as high-caliber freelancers, consultants, and independent workers. Agile team members are less likely to be locked in a high-conviction mindset that ultimately slows down decision-making, and they can apply their precise knowledge to help innovation teams reach the 70% threshold faster.
2. Make Reversible Decisions
The best way to limit the downside risk of picking the wrong horse is by making reversible decisions. Innovation is a feedback loop that helps founders decide when to persevere and when to pivot. To make a new venture more “reversible,” organizations should use agile talent to execute the first few iterations of the build-measure loop, testing assumptions and building MVPs without the cost and disruption of assigning an internal team to the task immediately.
3. Commit and Execute Fast
Once a disruptive idea has been validated, it seems reasonable to staff an internal innovation team to execute it. However, existing employees may not always be equipped to execute on a new venture that is a 180 from existing product lines. High-quality agile talent can fill the gap between a validated idea and a real product, enabling organizations to ship to customers fast enough to beat the competition until a high-quality internal team can be assembled without compromise.
Agile talent, such as high-caliber freelancers, consultants, and independent workers, can help any organization innovate like a startup by reducing the activation energy of pursuing innovation and making decisions with greater reversibility and speed. By employing agile talent, mature organizations will be better positioned to stave off competitive threats from nimble entrants and innovate their way to long-term, sustainable growth.