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Is size innovation's enemy?

Who's more likely to create the next technological tool that will disrupt banking? One of South Africa's big five banks, a garage startup, or a technological whizz frustrated with the customer experience delivered by financial brands?

Is size innovation's enemy?
©Dmitriy Shironosov via 123RF
The answer I get most often to this question is that big companies struggle to innovate. The popular thinking is that market entries that change or disrupt entire industries are created by entrepreneurs or technological geniuses outside of the clutch of big business.

After all, Pierre Omidyar created eBay when he wanted to trade Pez dispensers by setting up an online auction site. Travis Kalanick and Garrett Camp founded Uber after struggling to get a cab in Paris in 2008, and thinking it would be great if there was an app that enabled them to get a ride at the touch of a button.

But what about Amazon? Princeton graduate Jeff Bezos had worked in banking on Wall Street, and was at a global investment management firm, when he left to start a web project. Bezos did this so he’d never regret not participating in “that thing called the internet”.

Closer to home, mobile money system M-Pesa is one of Africa’s big disruptors. The market gap for this money transfer service was identified by UK development aid organisations, but the technology was developed by an innovation agency for Vodafone, which has a controlling interest in Safaricom. M-Pesa ('pesa' means money in Swahili, and 'M' connotes mobile] was rolled out in Kenya by Safaricom early in 2007.

What has this innovation delivered? After a couple of years the service had over 10 million users. Today it adds massively to the mobile operator’s bottom line. In its most recent financial results Safaricom reports that M-Pesa generated some Sh41.5 billion (about R5.6-billion) in revenues for the telecommunications firm.

Innovation guide for big business


Based in Cape Town, Urbian works with big banks, telecommunications companies, health retail companies, medical aid firms and other forward-looking brands to innovate market growth, or to disrupt sectors. Our experience shows that it is difficult, but not impossible, for big businesses to innovate successfully. What we know to be true is that success is more certain, and comes quicker, under five specific conditions, listed below:

1. If a big company is going to innovate from the ground up, it is best to create a breakaway team that will operate aloof from that company and its processes. The company needs to grant the innovation team autonomy, ringfence a specific budget for the ‘job to be done’, set a time period, and give the innovators licence to go off and be innovative. Trying to limit innovation teams by demanding that they work within the constraints of a large company’s hierarchy and processes, in my view, is throwing money down the drain.

This is why one sees ambitious brands silo incubators outside their businesses, as Barclays Africa did when it launched http://techlabafrica.com/ tech lab with @ThinkRiseAfrica, a community designed to pioneer the future of financial services in Africa. Tech Lab Africa is one way Barclays is reacting to the massive disruption banks face in the financial sector. The incubator will tackle “Africa’s biggest financial and healthcare challenges”, Barclays says.

2. Big companies who want to innovate can learn from small startups. Corporates often think: “Surely if we throw a lot at innovation, it means it is going to work?” But hurling everything, including the kitchen sink, at the hope of innovating is no recipe for success. Smaller, nimble teams work much faster, and a lean, mean innovation group that is left alone is far more likely to yield success.

3. Working towards the ‘Big Disruptive Idea’ is not a destination, but a journey. It involves being able to bear risk and be open to experiencing early, small failures that can lead to a series small successes. This grows confidence, and generates experience about the innovation process. It enables the team to understand how to learn from the company’s customers and about the problems they are trying to solve.

The more time spent working on – and understanding – a problem the greater the opportunity for solving it well. In short, an agile, lean, experienced innovation team that works well together has the best chance of cracking the ‘Big Disruptive Idea’ big companies dream of achieving.

4. The big question is, do you innovate in-house or is it better to bring in an outside innovation agency? Innovating technology in-house is not impossible, but is difficult, because forces conspire to make innovation tough. Development and coding resources are invariably overcommitted, and big business processes don’t support innovation. A large company that wants to bake a digital innovation or create a disruptive tool needs to pragmatically realise what it can do – and what it cannot do – in-house.

Urbian’s experience is that technology resources in big companies are almost always heavily committed. This means that these departments are invariably devoted to maintaining or improving the technologies that business already has. That’s when outsourcing solves a lot of problems.

5. If you do hire an outside innovation agency, how do you make the right choice? You can’t base the decision on a pretty pitch deck, and everyone has big brand clients in their portfolio. It doesn’t help knowing that the agency has a slew of developers sitting in an office. All that really matters is whether that innovation firm has innovated products and services before. Get the prospects to talk about their successes, and their failures. It is critical that the innovation firm has been through the innovation process from start to finish.

You must ensure that the agency doesn’t learn on your dime, but has demonstrable experience that clearly indicates that they can do what you need them to do. What you don’t want is an advertising agency with development capabilities. What big business does want is an innovation agency with a sure track record of having taken services and products to market with a proven methodology.

Not for the faint-hearted


Innovation is not for the fainthearted. Everyone loves the language – talking about failing forward, pivoting, and growth hacking is exciting – but when the process starts, it can, and should, move fast. Larger businesses tend to move at a slower pace, so it can feel like riding on the back of a speeding Harley. That’s when clients can get cold feet. But that’s when they need to steel themselves and realise that innovation is about seeing things through. No one who’s walked away from a project ever innovated anything.

That companies must embark on digital transformation is not up for debate – the risk of becoming irrelevant, losing market share or being disrupted are too great. The disappointing results that brands increasingly experience from advertising investments make their own case for innovating tools and services that directly connect business to customers. In a world where the digitally transformed are winning, the debate is not whether to transform, but when and how.

Innovation is hard and the risks are high, but there are proven methodologies and tools used by successful startups across the world to mitigate against this risk. To take pain and loss out of innovating, work with people or agencies who understand how to use tools and processes well, and who will help navigate your team through innovation’s challenging course.

About Anton Moulder

Anton Moulder is co-founder and managing partner at digital product studio Urbian.

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