How to Keep Innovation Alive at Scale

As investors in some of the most innovative and high-potential emerging technology companies in the world, we are fortunate to see true innovation in action, from a novel idea being born through to world-shaping technology being rolled out at scale. We partner with our portfolio companies at all stages of the journey, from startup to ScaleUp to grownup, always meeting our founders with what they need to succeed wherever they are. 

It brings us tremendous joy to support and accelerate companies throughout the ScaleUp journey, culminating in public offerings such as those by SentinelOne and monday.com. While innovation is in the very DNA of companies when we first start to work with them, the ScaleUp journey is best turbocharged by deliberate and thoughtful investment of time and resources in the innovation process. Keeping the spirit of innovation alive throughout your organization even as you scale does not happen by accident – here are some lessons we have learned from being the most trusted investor in software for the last 25 years:

1. Little and often: Innovation does not happen in a single meeting, program, or initiative. Truly innovative companies recognize that small and frequent changes, adaptations, and amendments eventually will see a course correction to a better ultimate outcome. Define the core values that will be the north star for your organization, and then allow individuals and teams to make small changes they can learn from to take forward the most successful ideas. This also has a positive impact on the psychology of your organization. In a landmark 1984 paper, organizational theorist Karl E. Weick noted that the motivation to drive large-scale social impact is sparked by the solution to a problem being within reach – i.e., aiming for small wins, little and often. We see this play out in entrepreneurship and highly innovative organizations just as much as tackling the most pressing social challenges of our time.
2. Demand failure: Many companies recognize that failure is a critical part of the innovation process, well summarized by one of the great innovators of the 20th Century (and master of the bounce back) Soichiro Honda: “Success is 99% failure.” And yet, as a company reaches scale, and in a world of ROI, OKRs, and quarterly Board packs, it can be challenging to create an environment where failure is genuinely celebrated. One way to do this is to review all of the projects and initiatives in your innovation pipeline, current and past. For every 100 proposals, how many were developed, designed, implemented, and scaled? In a thriving culture of innovation, you should expect to see a drop-off at each stage of the innovation funnel, just as you see in your sales funnel. If the only ideas being proposed are those that stick permanently, it may be a clue that teams and functions do not feel empowered to suggest and implement ideas unless they are “perfect.”
3. Testing, testing: One way to extract, encourage, and uplift ideas that are yet to be developed or refined is to create an environment across the organization where teams and individuals can test, pilot, and iterate on ideas. You probably already run regular A/B testing for new product and digital marketing ideas – how about equipping your whole organization with the toolkit to apply the same mindset to their own function? Your HR team could run A/B tests for two different groups of new candidates as they are onboarded, or your Finance function might design an A/B-style experiment to trial a new way of internal reporting. Innovation should be powered by data, and encouraging your teams to adopt a testing mindset both fosters a culture of invention and enables data-driven decision-making.
4. Diverse perspectives: Why does cultivating an inclusive and diverse leadership team matter? We know the business case exists – research from the consultancy McKinsey & Co. estimates up to 36% financial outperformance in companies led by diverse executive teams, but many organizations are still in the early stages of identifying how and why diversity fuels a culture of high performance. In the case of innovation, a diverse set of perspectives will surface new and different ideas that can be developed and prosecuted by the organization. And when it comes to the critical moments of decision-making in a healthy innovation process – resource allocation, prioritization of initiatives, and assessing success – the decisions your team makes will be more robust if they are made with the foundation of rigorous debate by a group of leaders with varied perspectives, profiles, and backgrounds.

Innovation takes many forms. The leaders of the startups, ScaleUps, and At-Scale companies we work with have the opportunity to create an environment where innovation happens little and often by all members of the organization. How are you keeping innovation alive in your team?

Further reading
 

• The ScaleUp Revolution: A Force Multiplier of Economic Growth
• Karl E. Weick - Redefining the Scale of Social Problems
• The Founder of Honda Motors and the resilient power of dreams
• The Optimizely guide to AB testing
• McKinsey & Co - Diversity Wins: How inclusion matters