Can Big Traditional Companies Ever Be Truly Innovative?
By: Johnny Simpson
Tags: Company Culture, Change, Startup, Tech, Innovation

Culture of contracts

Big traditional companies outside of silicon valley really suffer from inertia via the power of contractors. In any big traditional company, contractors are how you get things done. When your focus is to market, sell, and deliver a real-life product, a minimal investment in another company with the expertise to drive a new project seems like a no-brainer.

The risk is very low for you since that company takes on the risk of delivering and resourcing a technology project — and the benefit is high. You get the technology you wanted in a neat package delivered to you without you needing to get into the detail. Then you can get back to focusing on selling, marketing, and delivering.

The reality

Someone from a big contracting company is never going to come back with something truly groundbreaking. Never did a blue-chip company reach out to the big 4 with an innovation RFP, and then receive the Apple Watch at the end of 6–12 months. What you get instead are just “good” outcomes, that need to be built upon.

Furthermore excessive contracting creates a culture of diffuse responsibility. You hire people to do a role, but their role then becomes managing a contractor to do the real execution. You end up in meetings about accountability, role matrices, and other time wasters that take up the energy you had for real innovation.

This complexity means your employee’s job was not to deliver, only to manage the contractor delivering. The contractors become accountable, and if that is your culture, then you build a culture where employees become less accountable for the real execution.

What do I mean by real execution?

I mean project planning, coding, risk tracking, firefighting, daily standup running, caring about outcomes, and many other things. Consultants will solve your issues, sure, but will that leave a lasting legacy at your company? Silicon valley talks a lot about the passion of founders, and it really can make a huge difference. Contractors are, by definition, never the ‘founders’.

In a similar vein, I once had a colleague who was an expert in their area. The company they worked for though, wanted the job ‘done right’, so they got a contractor in to do it. The contractor left with the same conclusions as my colleague, and the only difference was a huge bill, but this kind of thinking is common at large traditional companies.

This is at best demoralizing and at worst a waste of money.

Is there a solution?

Going to a contractor is an easy fix — a structured project plan, and a clear return on your investment, but in the meantime, you risk losing the passion of your hired employee, and you get a product designed by someone who didn’t really sign up to work for your company in the first place.

Becoming less dependent on contractors is the solution, but can be a massive culture change. Bringing accountability into your organization rather than outsourcing it, where you control the reporting lines and can mastermind the plan behind your tech strategy, is such a net gain, that it cannot be understated.

No real money

It’s hard to estimate how much it costs to make a truly breakthrough technology. For instance, the Apple iPhone took the investment of thousands of people, and there were lots of mistakes a long the way, including prototypes that did not work. This wasn’t a single team of 20, this was a massive undertaking that required significant investment to deliver end to end. It took the same kind of investment traditional companies put into marketing, sales, and supply chain.

This is not a small amount of money, and therein lies the reason why a lot of traditional companies fail at tech — they invest superficial money — the appearance of innovation. Sure, your initial team might be small and only ideating, but as you progress you need a big team and a big investment.

You, the senior leadership, or the CEO, need to believe that this is going to be a major part of your product portfolio — not just a nice to have since your traditional business will keep steaming along, and not just a showpiece to tell investors that you are thinking about technology. If these are not thoughts you have, then maybe a technology product portfolio is not the direction your business should be heading in.

Risk aversion (and diversion)

This is perhaps the most obvious, but it’s not just about being risk-averse, it’s also risk diversion. Let me give you a typical series of events that dictate what might be a familiar case of ‘risk diversion’.