Dinosaurs can't climb trees: why your company is failing at innovation and what to do about it

Shortly after acquiring the startup I worked for, an executive at a large financial institution was lamenting the lack of innovation at her company.

"It's just not in our DNA," she said.

The 'DNA' phrase has become a mantra at large organisations trying to innovate their way back to relevance. It's as if big, old companies are dinosaurs lamenting their genetic immutability whilst watching small, young startups move like leopards in a new environment.

Dinosaurs can't climb trees as much as they would like to. Leopards do it with instinctive ease.

It's easy to take advantage of the desire the dinosaurs have. At workshops and conferences business leaders get whipped up about innovation and ready to do whatever it takes to pull it off.

Executives eagerly lap up the Kodak story, repeated for the millionth time by an overpaid consultant who's still lit from the night before as he runs through slides copied and pasted from a colleague that morning. The executives leave the room feeling exuberant, but execution never follows. They return to their companies and the corporate vat of treacle they wade through for a living. A week later it's like they never left the office for that expensive round of golf and bullshit.

Desperate to show any form of progress, some of these big companies claim innovation from small improvements in customer engagement. Having "an app" or redoing a website is enough to qualify for a lot of them.

"We're proof that banks can innovate," one executive told me. The 'innovation' in question was an Apple Watch app that showed account balances. That's it. I work with developers who could've produced the same thing between breakfast and their mid-morning coffee run.

Becoming a leopard requires more than painting spots on a dinosaur. By definition, 'innovating' means to make changes in something established. If you're doing the same old things in a cosmetically new way, you ain't innovating.

At a big corporate it's not innovation unless some one or thing has been disintermediated. Did anyone lose their job because of it? Were one of your existing products displaced? Can customers claim material differences in their lives because of what you've done? It has to be one of the three if you've shifted the needle.

An app that shows an account balance, a new loyalty scheme that rewards customers for buying the same old shitty products, a fresh way of enabling payments between accounts, or even a cutting-edge channel for your old support staff to speak to your users, are not innovative. It's probably good work and necessary, with the exception of loyalty schemes, but it's little more than hygiene.

Simply making more money is NOT innovative.

"But," an actual response went, "this stuff is really hard for big corporates."

No, it's not hard. It's actually impossible. Big, old companies can't do it. Like dinosaurs, they'd have to spend many generations evolving into birds or leopards.

There are a few reasons why big, old companies fail at innovation.

No incentive
Formal incentives are the hidden killers of innovation. The business might have a mandate to change, but if the leaders of that company aren't incentivised to do it, you may as well not bother.

Any business that has been historically successful will be geared to maintain the status quo. Executives' bonuses will depend on them propping up existing revenue streams while unlocking growth from current operations. The annual bonus is a fixation for corporate stooges, and they will do anything to get it.

Focus is applied to sales of existing products, and little more than that.

Doing things that are truly innovative, which means they demolish the way things have been done in the past, is a good way to get fired for upsetting the apple cart. At best it means the executive will be missing out on the next bonus, and at worst it could see them being asked to leave.

It's the paradox of corporate leadership.

So, instead, executives at these businesses replace just the bottom-half of their suits with jeans, make moderate changes on the front-end of the business, don't disrupt anything in the back, and claim to be innovating when they categorically aren't. It's a con, but they get rewarded for it.

Recommended reading: The Innovator's Dilemma by Clayton M. Christensen

Your customers don't want it from you
In 2011 the team I was working with was asked to consult to one of the biggest telecoms networks in Africa. The CEO was a remarkable thinker who had brought great changes in the way his organisation worked, at least in its upper echelons. After assessing the business we declined a contract with the company, however, because our research showed that even if they did pull off a revolution in their products, their customers wouldn't bite.

Old banks and telecoms companies are like reformed sex offenders looking for a date. They might have changed their ways now, but customers are still wary.

As one user in a testing session told me, "They treated us badly in the past, why should we trust them now?"

This is one of the reasons telecoms operators can't compete with startups in the services space, and why banks are losing younger customers despite new apps and branding.

You're too fat and lazy
Big businesses have big overheads, especially when their executive army have fancy holiday houses and vehicles to maintain. The business gets big and expensive, which is the organisational equivalent of fat and lazy. Good luck winning a race against lean and healthy startups.

Innovation trends toward efficiency. A new process that is less efficient will never beat an old process that is better optimised. This is a law of nature.

Watching a fat guy compete against a jedi knight in close combat is painful for everyone. Spare us.

Sucks, right? But there is hope. Just because your company can't innovate, and your customers wouldn't want it from you even if you did, doesn't mean you're not invited to the party. There is a way out of the mess. You have two options.

Get lean and healthy
This is almost impossible, so let's not waste too much time on it, but you can get fit and healthy.

Fire a majority of your executives that are just playing golf and having vacuous meetings anyway. You will not miss them and your customers sure as hell won't. Next in line, get rid of the strategic consultants who have done nothing but bought expensive MBAs and then made slides ever since. They have no useful experience to offer and you don't need them.

You know how many management consultants are contracted at Apple and Facebook? I'll give you a clue: it's a number less than one.

Use the money freed up from firing to hire more support staff that understand customer engagement, and user experience experts that will support an innovation roadmap led by actual customer requirements.

This means using science to do business, making design thinking part of your modus operandi, and acknowledging that you don't know what people want, and neither do your customers themselves. The truth is difficult to find and requires a higher level of humility.

There are several roles that must be filled at the company to make this happen, foremost being that of the anthropologist that will study your customers and their environment to test hypotheses and assumptions.

Highly recommended reading: The Ten Faces of Innovation by Tom Kelley

But since your company will almost certainly fail at step one in this process - that of firing deadwood at the top - let's just move swiftly along to:

Make friends with a leopard
There's no reason why dinosaurs and leopards can't be friends.

In the corporate world that means acquiring or building something that isn't infected by the rest of your business. This is part of the secret that explains how big companies like Google continue to innovate despite their size: the business flies one banner, but within are smaller organisational units that operate as lean startups.

Deploy these teams as far away from the existing business as possible and protect them from your current executive staff, especially those who like the sound of their own voice or use the term, "I'm just playing devil's advocate here..." in meetings. That guy is not invited. Read Tom Kelley's book, recommended above, for why.

Make sure your leopard is able to challenge the status quo unhindered.

No, compliance can't have a meeting with them to approve processes.

No, your marketing people absolutely can't do a review to make sure they're, "on brand".

Fuck off. Go away. Leave the leopard alone. Those discussions can happen later once you've got something too good not to launch. Any business with a hope of succeeding in the internet era has to conduct user testing, implement agile processes, and spend a lot of time trying and failing in experiments to find market fit. It's not pretty, it's counterintuitive, and nothing they taught you at business school will help anyway.

Let the leopard find something to kill and drag up a tree for you. Maybe later, once it has built up its own immunity to your corporate bullshit, you can begin introducing elements of the old business to it and letting them play together. Or you can slowly start shedding off the old and shifting focus to the new as the leopard picks up more strength in the market and the dinosaur shows increased signs of dementia.

Lego, Santander, Toyota, and other corporate behemoths have successfully embarked on this path. It's not easy, but it is imperative. The companies that will be around ten years from now get it. The others... well, we know what happens to dinosaurs, don't we?

I'm a writer and broadcaster who also designs apps and strategies for disruptive startups in the financial world. Find out more on my about page.