CTO Innovation Series: Enterprise innovation fights back

With their organisations and industries under siege from hundreds of thousands of lean, digital start ups many industry leaders are starting to seed creative disruption initiatives within their own organisations in the bold hope of beating the waves of want to be disruptive entrepreneurs at their own game. I sat down at a round table with the CTO of one of Europe’s largest utilities to understand what advice he’d give a Twentieth Century organisation trying to inject Twenty First Century DNA into their organisation.

Over the past decade utilities have seen more disruption than most and the implications on their hitherto centuries old stable businesses has been wide ranging. Local Micro Grids are disintermediating the incumbent utilities infrastructure at the same time that global conflicts and government sponsored climate change agreements like the Kyoto Protocol are forcing them to alter their energy mix, meanwhile on the other side of the coin new emerging technologies like Smart Grids and the Connected Home have given them, and their customers greater insights into the way that energy is consumed, and more importantly how it can be saved.

It is therefore completely understandable to see why innovation is an attractive option for so many utility companies and trying to carve out an agile innovation program within such venerable institutions can be challenging to say the least. Time and time again we see many of their innovation initiatives fail because the mind set and culture of the parent company all too often permeates into the new venture slowly suffocating many of the initiatives that make it stand out – and that’s not just a problem that’s unique to the utility sector.

Some innovation programs fail because people within the core business base their expectations of the new venture on enterprise KPI’s which simply aren’t appropriate in this new move fast fail fast world while other ventures collapse because teams try to build business cases and visions that rely on assumptions and hypotheses drawn from out of date and often irrelevant historical data.

One of the other less obvious traps however that’s all too frequently responsible for tripping up new innovation programs is the fact that many of the new ventures are commanded by their investors and parent companies to share as many core resources as possible such as back office IT to save money and develop standardisation. Experience continues to remind us though that it’s important to nurture the unique DNA of these new ventures and enterprises can help them achieve this by ensuring they remain as independent as possible which includes hiring as much as 70% of the staff from outside of the parent company, citing new offices in the right cultural area away from the core businesses head office and finding out what IT solutions work best for them.

In order to achieve something different – something that’s potentially the future of your business, it’s vital that your new venture is nurtured and allowed to work on its own terms and executives must do all they can to prevent corporate anti bodies from killing it. Anything that ventures outside of the parent company’s comfort zone will automatically create a higher level of risk that will demand a more agile, reactive approach to manage and a strong visionary, independent leader who accepts that there are going to be many more wrong answers than right ones can make all the difference.

Conclusion

If your organisation is serious about innovation then you have to think long and hard about the type of innovation environment you’re creating and it should be more than just trying to set up an ivory tower outpost for research and development. Built out correctly and given the freedom they need these new ventures can be the future of your business but interfered with they can also be expensive failures.