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INNOVATE

Innovation Is an Attitude

True innovation has nothing to do with your company's size or industry. It's a way of thinking. Here are three ways to make sure you're on the right track.
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You might think that the business world is split between two camps: companies that innovate and those that don't. And you'd probably be right. However, is the divide between the successful behemoths and the barbarian entrepreneurs pounding at the gates? Not at all.

Successful innovation is a matter of attitude and practice, not of size. There is nothing sacred about being an entrepreneur--many will fumble around without hitting a spark of genius. Large companies? Some manage to keep churning out new products and technologies on a regular basis.

Eric Ries, author of The Lean Startup, has an interesting view. In an interview with McKinsey & Company, he explains how tech startups successfully challenge incumbents. Though some of the mechanics apply specifically to that industry, the places where incumbents fall down are a matter of attitude. They also aren't a simple matter of size.

In other words, there's a chance that you're leading a dinosaur. A little baby dinosaur, to be sure, but one as doomed to extinction as its brethren. Here are the basic problems exhibited by companies that will ultimately lose, no matter their size.

Are You Relying on the Old Answers?

In high tech, it's now possible for a "kid with a credit card--with a $1,000 budget"--to create something that, to a consumer's eye, looks like the polished mature product of large competitors, notes Ries. That's an industry dynamic, to be sure, but it doesn't mean other industries escape the fate.

Everything is running on computers. You can model problems and solve them on computers. Computers can run inbound sales and make a company look big and sophisticated. In addition, service providers run on computers. Want someone to provide fulfillment for your products? Amazon has it down pat, all riding on computation that helps make things affordable. Need to manage a more complicated sales process? There's Salesforce.

So, large technology companies not only face direct competition, but those in areas other than high tech might find competitors using sophisticated simulation, automation, and communications to grind down the barriers to competition.

Now, realize that none of this is restricted to a large versus small view of the world. Ries said, "And so you're not dealing with one potential competitor but with thousands or millions." But the same is true for a small company. Are you up to the level of innovation necessary when everyone in the world is out to eat your lunch?

Are Your Failures Productive?

Businesspeople, whether entrepreneurs or the heads of legacy corporations, don't like to fail. That's a shame, because you don't get anywhere without failure. Failing is the reconciling force in this great laboratory of life. You try something, it doesn't work, and you go on to something else.

Only, as the great Samuel Beckett once wrote: "All of old. Nothing else ever. Ever tried. Ever failed. No matter. Try again. Fail again. Fail better."

Failure is scary, but it's necessary because without it you can't progress. Just make sure you--and the people who work for you--learn from all those mistakes. Your company's culture must welcome failure, even though it can be enormously scary. If a big company slips up, no one may notice it. If you lose a big gamble, it could be the end of your company.

But there is no other approach that can work. Make productive failure part of your corporate culture, even making its smart existence one of the ways you judge employees (and yourself).

Are You Keeping Your Head Above Ground?

When it comes to competition and innovation, the absolutely worst thing to do is to bury your head in the sand. You might not want to hear about all the dangers, or consider the amount of hard work success will take, but it's the only way.

Be ready to face reality, and make sure your employees understand that it's the only thing you want to hear. Any size company can be willfully blind. Make sure it doesn't happen to you.

Last updated: Apr 17, 2014

ERIK SHERMAN | Columnist

Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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