Building an Entrepreneurial Culture in Big Companies
By Pillsbury Institute Advisory Board Member and Chief Commercial Officer of IHG,
Keith Barr '92
One of the great things about entrepreneurs is the passion and creativity that they impart to their business. You can hear it in how they talk about what they do and see it in how they work with their teams. The environment in their companies is often quite exciting, fast paced, full of innovative ideas as well a fair share of missteps which can feel both scary and exciting to many executives working in big, well-established companies when they first see it. These smaller companies and start ups are often unconstrained by bureaucracy, complex decision rights, and low risk tolerance, which can come about when companies get really big and it is the lack of these constraints often lets them move quickly and nimbly to develop new products, services and sometime the next big idea.
In an era of increasing disruption by new technologies and new competitors, the question is how can big companies build a more entrepreneurial culture within certain parts of their organization to achieve better performance? This is not an easy question to answer but is one that is critical for companies that want not only to remain competitive but who want to be a leader in their sector.
Scan the horizon
So what do big companies need to do to be a bit more like these smaller, entrepreneurial companies? The first thing that needs to happen is that a company needs to have a team in the business who are always looking ahead, looking externally and being encouraged to think “if this happens, what would the implication be to our business.” This should be an integral part of their remit. Too many companies principally look internally and at past performance to predict the future when in reality the most important thing a company needs to understand are the things externally that will shape their future. It is a truism for many successful companies that ‘what got them here won’t get them there’.
There needs to be a team looking at changing consumer trends, the competitive landscape and at things that are both core and adjacent to their business, as all of these things have the potential to impact them at some point in the future. These future lookers and strategic thinkers should be encouraged to ask the big questions and empowered to openly challenge the more conventional thinking in the business. Most of all their thinking needs to be unconstrained, at least initially, in order for good ideas to really be explored to their fullest potential.
Turn insight into action…and trust your instincts
Once a good idea has been identified, there needs to be a clear way for this insight to be turned into action.
Too often companies spend a lot of time on research, which leads to great insight but then they fail to find a way to derive value from it by actually doing something about it. In order to solve for this, companies need to make sure that the people doing the insight work have a seat at the table when it comes to the planning for the company. They need to be able to help shape the thinking about resource allocation, prioritization, and the trade offs that may be required to find new sources of growth, profit and competitive advantage. If they don’t have a part to play in the planning process a company’s inherent pragmatism and risk aversion will often ensure that these good ideas are not fully explored because it will seem to overly hard or costly to do so.
Along with the right structures to enable you to turn your insight into action is the importance of finding a way to layer in your own instincts and those of the leadership team. Though harder to judge objectively, by spending time in the fabric of the business, on the frontline, talking to customers and suppliers, experiencing your own products and services, you can support your research with your own instincts and experience about whether a new idea is the right one for the business.
Be prepared to ‘fail fast’
When a company has chosen to pursue an idea or new opportunity then they need to make sure there are resources completely dedicated to these project or initiatives and not make it a few people’s part time job. It may be one person or a small team but companies need to assign the right level and type of resources that can completely focus on quickly solving the problem. These resources should be given clear timelines and budgets and also encouraged to both move fast and whenever possible to “fail fast”. So, in this context, big companies need a small company mentality. While this may sounds strange, big companies have a tendency to go for big, complex projects and to fail slowly which is very costly in terms of resources and money. Small companies don’t have an option to have a project fail slowly as they don’t have the resources, which also prevents them from wasting them on projects that aren’t working. The key to this is to have strong governance around projects to get them delivered quickly, understand key milestones and also to be willing to stop something that is not working.
Lead the change
The final thing that needs to be in place is a clear understanding from the senior leaders of the company that making a big company more entrepreneurial is not an easy thing to do and that they have to champion this. Just saying that we will be “more innovative” or “more entrepreneurial” does not make it so. An organization can allocate more funding for innovation, create new teams, realign organizational designs and redesign your offices to enhance collaboration and creativity but unless the senior team is really behind this then it will fail. The senior leaders in the business need to really understand and support a different way of working and for solving complex issues in order to overcome the organizational inertia that tends to get in the way. Don’t underestimate how hard it can be to overcome this. The companies that do this will find that they are getting more done, faster than ever and will create stronger and more sustainable results.