Meet Yossi Feinberg, professor at Stanford Business School specializing in entrepreneurship. He’s the director of the executive program Driving Innovation and New Ventures for Established Organizations and co-director of an online digital transformation program.
We sat down with Professor Feinberg to gather his insights from more than 25 years of working with executives to drive innovation. Watch the video for the highlights, or read on for more insights!
This conversation has been edited for length and clarity
Do you see an increase in innovation in large organizations in recent years? And if so, why?
There's a sense of urgency that I haven't seen in the last five or six years. I think that urgency is coming from the fact that the world is actually changing fast.
Consumers expect things to be faster and newer. They find it easier to switch between technologies or between offerings, which is true also for business customers.
On the other hand, there's also higher expectations for more sustainable products. And at the same time, every industry and every company is under pressure, either from existing rivals or from disruption, because there are many more startups who are now attacking almost every industry.
How do you see companies react to this pressure?
One of the things that we see companies do is react by reorganizing how work is done. An example is companies actually start to organize by product, and they push decision making closer to where the product is created. For example, companies may have product managers who then are in charge of pushing innovation in their own product domains. This brings the customer voice into the process of innovation to provide products faster, and which have a better product market fit
Another example is companies moving to a digital transformation approach where they're trying to digitize the business, create more opportunities and innovation through new business models or through applications of digital technologies.
But unfortunately, what we see from research out there is that many of these approaches are highly challenging to execute. For example, there are surveys that claim that digital transformation projects fail at the rate of 80% or even higher. And the real problem is that once you try something innovative in an organization and it fails, it becomes much more difficult. The organization naturally resists innovation, and people are a little bit jaded when you try to innovate again.
What do you tell leaders coming to you asking for help?
The first thing I tell them is that there's no recipe. There's no one magic formula that you can just execute innovation in every organization and be successful. If we had that, you would have seen it already.
The second thing I tell them is that there is a special recipe for their organization. There are actually insights and tools that help each individual organization find its way into successful innovation.
So how do they find their recipe?
So usually, the starting point is identifying the types of innovation that your organization wants to pursue. And with that, you have to start thinking about where will the ideation happen? Where will the best ideas happen? Sometimes it's inside the organization, sometimes it's outside the organization.
Next, you need to evaluate those ideas.
And obviously, the most important thing is then executing on those innovations. And executing on those innovations means deciding on what organizational model will execute those innovations. Do you want to incubate ideas? Do you want to work with startups? Do you want a corporate venture capital app? Do you want a portfolio of all these things? There are many ways for a company to actually go after those innovative new projects and you have to make your decision on building those.
But there are two things that are fundamental as you start thinking about all these elements of identifying, generating, evaluating, executing, and growing those innovative new projects. And those two things are the following. One is the information flow in your organization. How does information flow to the people who drive innovation? And the second part, and maybe the most fundamental part, is your organizational culture.
Why is information flow so important for organizations?
Well, when you go into almost every large company and you ask leaders, “What's the innovation that's happening in your organization?” It's rarely the case that they have a complete map of every innovation that's happening in the organization.
Information flow is dynamic and important from that perspective. But it's not only inside the organization. There's all the information that needs to come from outside the organization whether it's startups, whether it is new technologies that are coming in, maybe trends with consumers or your customers or things on the supply chain. There's always a changing world in which information is crucial when it comes to innovating in your organization.
But why is this information so crucial? It's because the people who are making those decisions at the innovation level, at the startup level, inside the large organization, they're facing a lot of uncertainty and ambiguity. So having this information and knowing what's going on elsewhere in the organization and outside in the world of the startups or the new technologies or the trends, that is crucial for being able to execute better on innovation projects.
For example, having information on trends or competing startups could be a crucial tool in deciding whether a project is a go or a no-go, whether one project should get more resources than another project, or move faster because this is how we're going to win. Those decisions can help us figure out where to put our resources. And in some cases, what do we need to shut down and prevent having those “walking dead” projects in our organization?
What about the challenge of building a culture that supports innovation?
This challenge has been around for decades; many have researched it and written about it. But we have to remember that organizational culture starts with people. And when we think about the people who are going to drive innovation in the organization and think about what they need.
They not only need assets and best practices and guidance and support, they also need a community. And they also need support from others in the organization. It's not enough to think about culture as an isolated thing for a group of people who are driving innovation. It's much more important to think about it holistically for all of the organization.
The nice thing here is that it actually connects to the previous challenge that we talked about, which is information flow. The same notion of a network, of a connection between people that transfers information, can also help innovators find people who will support them.
It also helps people find opportunities to engage and support and participate in new projects. This helps transfer attitudes and create shared values that will change people's eventual behavior and their underlying assumptions that will lead them to be more innovative personally. That is how to foster a culture of innovation throughout the organization.
Each business function has its own tools and platforms. What is the role of a technology platform for driving and monitoring innovation in larger organizations?
I'm a strong believer that technology can enable and support innovation in large organizations. The main reason is that it's not technology for the sake of technology, but technology can help us with this information flow problem that we have.
It can also be a tool that creates a community. So it helps us with transferring those values that eventually translate into this culture of innovation. More importantly, with technology you can make sure that you have best practices, that you're anchored in the business values that innovation can create, and that you can implement better decision making. And in many cases, technology is what helps you to scale whatever solutions you come up with. And that's an extremely powerful tool.