How to grow innovation elephants in large organizations

Driving innovation in large organizations is like herding elephants.  Big and small elephants. – How so?

Big Elephants in the Back-Office

In large organizations, departments gravitate to sub-optimize their core business.  Silos form under local management to run their department more efficient – following the old mantra: do more with less.
(Read more about silos forming at Leadership vs Management? What is wrong with middle management?)

Although all business functions are affected, corporate Information Technology (IT) departments often lend themselves as best examples for a “big elephant” world: they are critical enablers in a pivotal position of every modern organization.  Even though the success of practically every business function hinges on IT, also IT is not immune to this silo-forming phenomenon in large organizations.

Over time and with ‘organizational maturity’, the IT department tends to end up focusing on what they do best: large back-office projects that cannot be funded or run by any business function in isolation, since they span across disciplines or impact the entire enterprise.  Just one examples for a “big elephant” project is implementing a comprehensive Enterprise Resource Planning (ERP) system across multiple locations internationally.

This is the back-office domain and comfort zone of IT with technology know-how, big budgets, long duration, high visibility, rigid governance and clear processes to follow.

Small Elephants in the Front-Office

In contrast, the front-office typically comprises Marketing, Sales and Product Development.  Here, a small tweak or agile change (that requires some IT input) can go a long way and have significant impact on organizational effectiveness and business results.  – These micro-innovations are “small elephants” as recent Gartner research coined them.

These little disruptions to the slower-moving big elephant world easily trigger the “corporate immune-system” that favors large elephants and suppressing small emerging ones.

Typically, most projects in large organization aim to reduce cost in some way.  Only a minority of projects address new business and growth opportunities that tend to come with uncertainty and greater risk.

While big elephants are typically incremental improvement project to save cost, it’s the small elephants that are more likely to be disruptive drivers of growth and future business opportunities: the much needed life-blood of sustaining business and future prosperity.

Barriers in the Big Elephant World

IT departments tend to struggle the farther they move away from their ‘core competency’ meaning leaving the big-elephant back-office and dealing with the myriad of small needs of the customer-facing units in the small-elephant front-office.

Many reasons contribute to say “No!” to emerging small elephants:

• Small elephants are disruptive to the big elephant world, perhaps even threatening to the establishment
• It is hard for the back-office to accept that there cannot be much standardization around these small small elephant solutions by the very nature of their scope and scale
• It is cumbersome to plan and manage resources scattered across small projects that pop up left and right without significantly impacting big elephant projects.  Unfortunately, pressure to save cost only fuels the focus on fewer, bigger elephants.
  Gartner brings the dilemma to the point: “[..] the focus on optimization, standardization and commoditization that underlies IT’s success in the back office is contrary and even detrimental to the needs of the front office.”
• Insights in front-end processes and customer needs are essential (and not usual IT back-office competencies) to seize small elephant opportunities, which are often disruptive and driven by the agile intrapreneurial spirit that makes full use of the diversity of thought and understanding customers deeply.
  – See also The Rise of the Intrapreneur
• On top of it all, the challenge for IT is to understand the potential and pay-off for initiatives that rely on IT in a domain outside of IT’s expertise:  In the mature world of big elephants, ROI projections are demanded upfront and based on models that apply to mature organizations.  These models typically do not apply well to measure project ROI in the emergent worlds of small elephants, which puts the small elephants at a disadvantage; another disconnect that easily leads big elephant organizations to reject proposed small elephants.

As a bottom-line, for large IT departments it is simple and convenient to say ‘No!’ to requests for “micro-innovations” coming in from employees scattered across the front-offices.  And, sadly, often enough this is exactly what happens. Despite the lasting impact of “No!” (see also How Intrapreneurs avoid “No!”), turning ideas and proposals down too fast also leaves out opportunity for huge innovation potentials (see also 10x vs 10% – Are you still ready for breakthrough innovation?).

What happens to IT without small elephants?

Ignoring the need for micro-innovations and not supporting them effectively will not serve IT departments well in the long-run.  With only big-elephant focus IT departments are at high risk to lose sight of the needs of their internal customers.  Consequently, IT undermines and finally loses its broader usefulness, acceptance and footing in the business functions they intend to serve.

When small elephants are neglected or blocked, it practically forces the front-office to look for other resources sooner or later in order IT-services providing resources to get their needs taken care of.  Over time, the big IT department drifts to become more and more obsolete, and finally replaced by agile and responsive agencies and contractors that deliver on their front-office customer needs.

After all, IT’s general role is one of an enabler for the core businesses rather than being perceived by its customers as a stop-gap.

How to raise Small Elephants

So, what can a mature yet forward looking IT organization do to support micro-innovations – or ‘balance the herd,’ so to speak, to include a healthy number of small elephants in the mix?

• Brad Kenney of Ernest&Young recommends limited but dedicated resources (including time) for micro-innovations in Ernest&Young’s 2011 report “Progressions – Building Pharma 3.0”;
  for example, dedicate 10% of the expert’s time to implement micro-innovations
• Test changes in emerging markets first, if possible, where agility is high at a lower risk of jeopardizing the bottom line or threatening the established organization and its investments in mature markets
• Establish effective collaboration platforms that make it easy for employees to openly and conveniently share content among each other as well as with external parties.

How Intrapreneuring helps

A systematic approach to Intrapreneuring can go a long way to help move these micro-innovations forward.  It starts with systematic intrapreneurial skill-building for employees across all levels of hierarchy and includes:

• Understanding how innovation happens in large organizations, i.e. large and small elephants and the need for both to exist
• Helping employees become aware of and overcome their own mental barriers and silo-thinking
• Attracting, inspiring and engaging employees to take their idea forward knowing there are obstacles in their way
• Training skills that help to frame, develop and pitch ideas to potential supporters and sponsors
• Building and presenting a business case for review and improvement by peers and management
• Enabling and empowering employees to bring their small elephants to life and sharing the story of their success to inspire others
• Working to gradually change the mindset of the organization, its culture, as needed, to become more balanced on the elephant scale, to unlock the resources within the own workforce and to seize opportunities for growth and the future of the business.

Just as out there in the wild, without raising small elephants the life-span of organizations with only big elephants is limited.