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AD: If you are an entrepreneur or aspiring to be one, you should check out Entrepreneurship Daily. In the last few years we've recognized that a startup is not a smaller version of a large company. There's been lots written about how companies need to be more innovative, but very little on what stops them from doing so.
Companies looking to be innovative face a conundrum: Every policy and procedure that makes a them efficient execution machines stifles innovation.
This first post will describe some of the structural problems companies have; follow-on posts will offer some solutions. Facing continuous disruption from globalization, China, the Internet, the diminished power of brands, changing workforce, etc., existing enterprises are establishing corporate innovation groups. But paradoxically, in spite of all their seemingly endless resources, innovation inside of an existing company is much harder than inside a startup. We know that a startup is a temporary organization designed to search for a repeatable and scalable business model.
A company is a permanent organization designed to execute a repeatable and scalable business model.
Once you understand that existing companies are designed to execute then you can see why they have a hard time with continuous and disruptive innovation.
Every large company, whether it can articulate it or not, is executing a proven business model(s). Somewhere in the dim past of the company, it, too, was a startup searching for a business model.
It's worth looking at the tools companies have to support successful execution and explain why these same execution policies and processes have become impediments and are antithetical to continuous innovation.


In the 20th century business schools and consulting firms developed an amazing management stack to assist companies to execute.
For example, the Boston Consulting Group 2 x 2 growth-share matrix was an easy to understand strategy tool - a market selection matrix for companies looking for growth opportunities. Strategy Maps are a visualization tool to translate strategy into specific actions and objectives, and to measure the progress of how the strategy gets implemented.
Product management tools like Stage-GateĀ® emerged to systematically manage Waterfall product development. Once the business model is known, the company organizes around that goal and measures efforts to reach the goal, and seeks the most efficient ways to reach the goal.
Paradoxically, these very KPIs and processes, which make companies efficient, are the root cause of corporations' inability to be agile, responsive innovators.
Finance The goals for public companies are driven primarily by financial Key Performance Indicators (KPI's). HR Process Historically Human Resources was responsible for recruiting, retaining and removing employees to execute known business functions with known job spec's. The conundrum is that every policy and procedure that makes a company and efficient execution machine stifles innovation.
While companies intellectually understand innovation, they don't really know how to build innovation into their culture, or how to measure its progress. It may be that the current attempts to build corporate innovation are starting at the wrong end of the problem.
Corporations that want to build continuous innovation realize that innovation happens not by exception but as integral to all parts of the corporation.
To do so they will realize that a company needs innovation KPI's, policies, processes and incentives.


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These groups are adapting or adopting the practices of startups and accelerators - disruption and innovation rather than direct competition, customer development versus more product features, agility and speed versus lowest cost.
For most companies it feels like innovation can only happen by exception and heroic efforts, not by design. But now, as the business model is repeatable and scalable, most employees take the business model as a given, and instead focus on the execution of the model - what is it they are supposed to do every day when they come to work. These tools brought clarity to corporate strategy, product line extension strategies, and made product management a repeatable process.
This systematic process of execution needs to be repeatable and scalable throughout a large organization by employees with a range of skills and competencies. One of the least obvious but most important HR Process, and ultimately the most contentious, issue in corporate innovation is the difference in incentives. They measure their success on metrics that reflect success in execution, and they reward execution.
It represents where employees fit in an execution hierarchy; showing command and control hierarchies - who's responsible, what they are responsible for, and who they manage below them, and report to above them. Staff functions in finance, human resources, legal departments and business units developed Key Performance Indicators, processes, procedures and goals to measure, control and execute.



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