How to Encourage Innovation as a Founder in a Mature Company
Scaling a business from a fledgling startup to a mature company is a significant achievement, but maintaining innovation in this new phase is not a piece of cake. Founders often face the challenge of preserving the motivation and creativity that fueled early growth while managing the complexities of an established organization.
Without intentional efforts to foster innovation, companies risk stagnation, losing their competitive edge in the process. The question arises: how can founders keep the spirit of innovation alive amidst evolving priorities and increasing operational demands?
Why is Innovation Important?
Innovation is the USP of many startups, but it remains equally critical and neglected for mature companies.
Below are some of the reasons why innovation is important for all businesses.
- It gives the companies the competitive edge to stay ahead in the market.
- Innovation in the products improves the quality, providing customers with a better experience.
- Innovation is the current currency to attract top talent and retain existing employees.
- Improving production and productivity innovation can help in increasing profit and revenue.
- With advanced technologies, innovation increases efficiency.
- Leading to betterment in day-to-day work innovation equips the founders and employees to tackle the challenges.
- Understanding the changing behaviors of consumers, innovation saves the company from stagnation – opening ways to adapt and iterate.
Types of Innovation
Not all innovations are the same. We have four types of innovations that are widely used by leading companies to reach broader markets.
The four types are
- Incremental Innovation
- Disruptive Innovation
- Radical Information
- Architectural Innovation
1.Incremental Innovation
Incremental innovation is enhancing and improving the existing products. It does not involve introducing new products or exploring new markets. Rather, adding better features for the consumer to enhance their experience.
Apple is an excellent example of incremental innovation, where each year, the company introduces new features to the existing product without reinventing the wheel.
2.Disruptive Innovation
Disruptive innovation is understanding the market gap and introducing products that could replace the old strategies. This is more about using technology or business models that initially serve a niche market but eventually displace established competitors by offering greater value or convenience.
Airbnb is an excellent example that changed the hospitality industry. By providing a systematic platform, the company provides lodging options to travelers. This gave them a competitive edge over the typical hotel business.
3.Radical Innovation
Radical innovation refers to breakthroughs that create entirely new markets through revolutionary technologies or business models. This is about the impact of transformation that can change the whole consumer experience. 3D printing, or additive manufacturing, is an example of the radical innovation that transformed the manufacturing sector. It streamlines prototyping, slashing costs and time, and enables on-demand, customized production with minimal waste. This technology is reshaping industries such as aerospace, automotive, healthcare, and construction, offering a new era of efficiency and innovation in production.
4.Architectural Innovation
This type involves reconfiguring existing technologies to create new markets or applications. Adding new features and technology to the products without changing the core system is architectural innovation.
The Prius by Toyota is a great example to understand innovation type. The first mass-produced hybrid vehicle with combustion engine technology created a new category of environmentally friendly vehicles.
Obstacles to Innovation
Innovation is not only about finances; it is a mindset that encourages new ideas and explores opportunities. The founders have to address these obstacles head-on to establish an environment where innovation strikes.
1. Bureaucracy
As organizations scale, processes and hierarchies become more structured – a necessity for managing complexity. However, this very structure can stifle creativity and slow decision-making.
Layers of approval, rigid policies, and aversion to deviation from standard practices create an environment where experimentation takes a backseat.
Founders must recognize when bureaucracy begins to hinder rather than help. Adopting a less complicated system and a clear distribution of authority can help in making better and quicker decisions.
2. Risk Aversion
Mature companies often adopt a more conservative approach to risk, prioritizing steady returns over bold, untested ideas. While understandable, this mindset can block the exploration of transformative opportunities.
Founders must balance protecting what works and staying open to new possibilities.
3. Comfort in Routines
Success breeds complacency. Teams accustomed to tried-and-tested methods may resist change, believing that what worked yesterday will suffice for tomorrow. This inertia can be a formidable barrier to fostering innovation. Founders must challenge this mindset, encouraging teams to question assumptions and explore uncharted territory.
4. Short – Term Focus
Many mature organizations prioritize quarterly results over long-term growth. This short-term focus discourages investment in innovation. The immediate growth targets overshadow the transformational innovation. By integrating innovation goals into key performance indicators (KPIs), organizations can align long-term vision with daily execution.
5. Cultural Resistance
The “This is how we’ve always done it” mentality can stifle innovation in mature organizations. Employees accustomed to established workflows or the right behaviors of founders may resist change. Initiating innovation through small projects with fewer finances can push the organization to develop more projects.
6. Fear of Cannibalizing Existing Revenue Streams
One of the biggest obstacles that funders feel is incremental innovation. The fear of cannibalizing existing revenue streams with any particular product/service creates a barrier to exploring new ideas.
Adopting a forward-thinking approach, recognizing that self-disruption is often necessary to remain competitive, can help founders appreciate innovation. Creating “skunkworks” teams can facilitate the exploration of transformative ideas without disrupting the core business.
Strategies for Fostering Innovation
Innovation isn’t an overnight plan – it’s a continuous process that requires a supportive company culture and an environment that appreciates creative thinking. Equally important is the founder’s mindset – an openness to consider, test, and invest in innovative ideas.
Below are the strategies that encourage innovation in any setup.
1. Create Dedicated Innovation Teams
These teams should operate with relative autonomy, free from the constraints of day-to-day operations, allowing them to experiment and iterate without fear of immediate failure.
The founder’s role in empowering these teams is important, providing the resources and support needed to translate ideas into actionable projects. Regularly celebrating their successes – and even their failures – reinforces a culture that values creative thinking.
2. Encourage Cross-Department Collaboration
Innovation rarely happens in silos. Collaboration across departments allows for the exchange of diverse perspectives, often leading to breakthroughs that wouldn’t emerge within isolated teams. Founders should facilitate opportunities for cross-pollination of ideas through workshops, brainstorming sessions, or even informal meetups.
For instance, pairing R&D with marketing or finance with product development can uncover synergies that might otherwise go unnoticed; when departments view themselves as partners rather than competitors, the organization as a whole benefits.
3. Invest in Research and Development (R&D)
R&D is the lifeblood of innovation. Allocating resources to explore technologies, trends, and customer needs ensures the company stays ahead of the curve. Founders must advocate for robust R&D budgets, recognizing this as a long-term investment rather than a short-term cost.
Equally important is fostering a culture where R&D outcomes are not just confined to labs or technical teams but shared across the organization. When every employee feels connected to the company’s innovative efforts, they’re more likely to contribute their own ideas.
4. Foster a “Fail Fast, Learn Faster” Mentality
Innovation comes with inherent risks, and not every idea will succeed. Founders must appreciate an environment where calculated risks are encouraged, and failures are viewed as learning opportunities. Teams that feel safe to experiment are more likely to propose bold, unconventional ideas.
What can we learn from this failure?
How can it guide our next steps?
Answering these questions collectively helps the organization grow stronger, even when initiatives don’t go as planned.
5. Embrace Continuous Feedback Loops
Gathering feedback from customers, employees, and stakeholders provides invaluable insights that can fuel innovation. Founders should prioritize listening, whether through structured surveys, informal conversations, or external advisory boards.
Acting on this feedback not only improves products and services but also demonstrates to employees and customers alike that the company values their input. This inclusivity can ignite a sense of ownership and spark further innovation.
6. Lead by Example
Founders set the tone for their organizations. By visibly championing innovation, they signal its importance to the entire team. This means being open to new ideas, challenging the status quo, and showing a willingness to adapt.
When employees see their leaders engaging in creative thinking and supporting innovative projects, they’re more likely to follow suit. Authenticity matters – founders must embody the spirit of innovation they wish to see across the company.
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Sustaining innovation within a mature company demands foresight, adaptability, and a commitment to ongoing growth. Founders must counteract bureaucratic inertia and foster an environment encouraging creativity and risk-taking.
By embracing strategies such as dedicated innovation teams, cross-department collaboration, and robust R&D investments, they can ensure their companies remain forward-thinking and agile. Leadership is key – when founders champion innovation through their actions and priorities, they set a precedent that inspires teams to think beyond limits, ensuring sustained success in a competitive market.