Keeping your innovation edge

For decades, startups have been at the center of innovation in the business world, with a reputation for bold ideas and an entrepreneurial, risk-taking culture. But as they mature, can high-growth tech companies retain their innovation edge?

Led by Scot Wingo, CEO of ReFiBuy, the panel explored how companies, from startup to mature enterprises, can avoid the trap described in Clayton Christensen’s The Innovator’s Dilemma — where success breeds inertia and bold ideas give way to bureaucracy. “Companies have a life cycle. They can be innovators for a period of time, then get locked into a business model — and get trapped while another innovator comes behind them,” said Wingo. “How do companies avoid falling into that trap?”

Mitch Heath, co-founder at Durham, N.C.-based Teamworks, said, “Innovation has two must-have pieces. One piece is the operational piece. What does innovation look like in day-to-day operations — and how does a company make space for it? Then the other half is cultural, from a values-based perspective. I see companies fall down usually because they have only one of the two. They say we want to be innovative; that's in our values, that's what we believe in — but they don't tactically set it up in a way that allows their employees to do it.”

Or, on the flip side, Heath said, are “companies that do all the tactical work, but maybe they have a culture of fear at the leadership level, or they have a culture where you don't have permission to actually think out of the box and fail a little bit.”

That notion of “permission to fail” is critical to an innovation mindset, but also a never-ending challenge, said Monica Livingston, Americas AI Platform Leader at Red Hat. “People get really comfortable and very complacent in their roles, and then also just really terrified to do anything different, because they're very happy where they're at. I've seen companies, or groups, that are successful in breaking out of that by providing that psychological safety for failure at the leadership level — because it's almost always the leaders that are so stuck and so happy with where they're at that they're not willing to branch out or try something new,” Livingston said.

She also said companies have an unfortunate tendency to permit failure in the wrong places. “People fail all the time in non-revenue actions, and there are usually no repercussions whatsoever,” she said. “But then you’re not allowed to fail on a revenue product.”

The panelists discussed a variety of best practices to protect and spur a culture of innovation relevant for any size company.

Support from the top: Dave King, retired chair and CEO of LabCorp, shared that it’s critical for leaders at the top of the house to lead by example with embracing innovation. “Innovation has to be protected at the executive level. It has to be incubated, and it has to be put into the organization in a way that there can be success stories around those innovative techniques, before you try to scale it.”

Let innovation permeate the entire organization: While leadership buy-in is critical, Livingston, who runs a dedicated AI team within the Red Hat organization, reminded attendees that every employee is responsible for innovation too: “It’s not anybody’s monopoly on innovation. Innovation has to happen at all levels — the product level, as well as operationally.”

Provide dedicated time: King said if companies ask teams to brainstorm while they’re working hard on regular ongoing business, “innovation gets crushed.” To separate the innovation effort from those day-to-day tasks, panelists recommended familiar tactics like cross-functional groups, Friday afternoon strategy sessions and offsite retreats — all of which break employees out of their regular work patterns. Heath said he specifically doesn’t mix tasks in meetings, either. “I can’t ask you to think creatively about entering a new market when I just hammered you on metrics for 30 minutes. Those are two different mental functions — so just the act of separating those and creating space for both of them is a basic tactical change to allow innovation,” he said.

Staying close to the customer: Heath credits his company’s success in large part to understanding the needs of its customers. “Go talk to customers all the time,” he advised. Agreed Livingston: “One of the big things I’ve learned is to really understand your stakeholders and make sure you give them something they want — like it’s a negotiation. Just because you have the best idea ever does not mean other people are going to think it’s good for them. It has to be intrinsically good for them.”

Finding inspiration in unexpected places: King relayed an anecdote about one of his favorite, and most successful, examples of innovation at LabCorp. Frustrated with the rate of errors in drawing blood samples because of the specific requirements for each test, King and his team took a page from the fast-food playbook. Having seen employees in a fast-food restaurant making the same item flawlessly time after time using a visual guide, King believed that a similar picture-based approach could be used by phlebotomists in the field. This adaptation dramatically improved operational efficiency by converting a text-based process to digital; the error rate dropped by over 90% in the first month after launch. “It’s always cool to launch a new product, to do something really new,” King said. “But innovation can often be something that makes the employees’ or customers’ lives easier.”

Don’t discard ideas: If at first you don’t succeed with an idea…. save it. LabCorp was inspired to create a kit for patients to draw their own blood samples at home, then return to the lab in the mail. It turned out to be challenging — and often messy — for patients to draw their own blood, and the idea was shelved. But when COVID-19 hit, King said, “We pulled out the box we’d created, put in a nasal swab and saline tube — and we were the first to market with a home COVID test kit you could mail in,” he said.

King concluded by urging companies to bet on themselves rather than play it safe, warning that fear of failure often leads to stagnation. “It’s really important when you are thinking about innovation to also think about betting on yourself instead of betting against yourself — because, as I say, the people who get derailed, the companies that get derailed, they play not to lose instead of playing to win,” he said. “They bet against themselves instead of betting on themselves.”

Whether you're a scrappy startup or a scaled enterprise, staying innovative means betting on your people, your culture and your capacity to adapt.