How Enterprise Leaders Can Create Startup-Like Cultures Of Experimentation

If a company is too averse to failure to innovate, it risks destabilization


The enterprise has a problem: It's stopped experimenting.

My company worked with a security corporation that hadn't built new products in a decade. It was a cash cow and, for a while, that was enough. But as the security world became, well, less secure, its leaders sought to unlock new lines of business. 

So it chose to be proactive. The apps we helped it develop represent the next chapter in its book of business. Thanks to its unwillingness to be complacent, it won't be playing catch-up; it'll be leading the pack.

No product is forever. Not film, not newspapers, and not even apps. Apple ate Blackberry; Instagram out-shot Polaroid; Tesla may soon outpace Ford and GM. When corporations are unwilling to experiment, upstarts drive them to extinction.

How to Teach Old Companies New Tricks

No company wants to stagnate. But how does a brand, already set in its ways, actually unmoor itself from a slowly sinking business model?

1. Play in the sandbox

In some ways, the company life cycle parallels human development. When a company is young, failure is OK — necessary, even, in order to find product-market fit. But as it enters adulthood, failure becomes a threat to its throne.

'To build an environment of breakthrough value creation, organizations need to find a way to remove the shame of failure for identified top producers,' Mike Quindazzi, managing director at PricewaterhouseCoopers, recently told me.

Paradoxically, aversion to failure is often the very reason enterprises fail. Google, the Peter Pan of the enterprise, continues to dominate partially because it refuses to grow up.

Using fail-fast techniques such as design sprints, we've helped Google prototype moonshot technologies. Not all make it to production, but some world-changing ideas — driverless cars, Google Fiber, and more — certainly do.

Moonshotting requires a drastically different mindset than daily operations. Spend a couple days away from the office to help your team shake corporate adulthood's shackles. Present a scenario, a problem, and a goal. Tell employees that if they solve it, they'll transform the business. Ask them to conceptualize 20 ideas and test each for fatal flaws.

Be clear that failure in the sandbox isn't really failure. Portray failure like a startup finding its footing: a learning experience to be built upon.

2. Create tiny labs

Companies like The Intrapreneur Lab have made a business out of helping legacy companies experiment. But rarely are world-changing ideas conceived, tested, and developed in a few weeks.

Instead, create an autonomous intrapreneurship lab in which employees can pursue wild and crazy ideas, all within the safety of a larger company. Staff it with people who love to create new things but aren't interested in founding their own businesses.

Just be sure to look beyond the R&D team. According to a PwC report, three-quarters of self-made billionaires have backgrounds in sales, proving that big ideas can come from any corner of a company.

Are intrapreneurship labs cheap? Of course not. But they've proven wildly successful. Intrapreneurship brought Post-its to 3M, the PlayStation to Sony, and even the Java programming language to Sun Microsystems.

3. Budget for experimentation

An experimentation budget can be a tough sell to stakeholders. But rather than experiment, companies spend millions building untested products only to see them flop.

Think of experimentation as insurance. By testing ideas that could affect your business down the road, you prepare for the future without committing millions to untested products.

For instance, Americans are eating less chocolate, so we've helped Hershey's prepare for a world with fewer sweets. Enterprises such as Hershey's set aside a few million dollars annually to create 10 to 20 experiments, costing about $200,000 each to develop and test.

At Yeti, we reserve 20% of employees' time for building new things, such as Tiny Eye, a mobile virtual reality experience. We don't have the budget a company like Hershey's does, but we know that experimentation is crucial to become a name in our industry.

4. Tap into the scientific method.

Don't make product development a guessing game. Transform it into market research with the scientific method. Ask a question, pose a hypothesis, prototype a solution, and evaluate your work.

Recently, Westfield Labs — the experimental division of Westfield Malls — approached us with two questions: How can we better engage foot traffic in malls, and how can we use technology to better reach retailers?

We used the scientific method to test 10 visions for tomorrow's malls. With our help, Westfield conceptualized concepts, tested them, and collected feedback from customers and vendors. It's now iterating on them to determine which to take to market.

What long-term problem do you need to solve? Spend time generating ideas; then, prototype the most promising ones. Assess interest with paper mock-ups. Spend a few thousand dollars to design the favorite, run it past real customers, and move forward if it's a hit.

5. Cross-pollinate

This may be the simplest suggestion of the five, but don't underestimate the value of interdepartmental communication. Trapping teams in silos where only VPs communicate prevents bright people from feeding off of one another's ideas.

'Around 60% of self-made billionaires we analyzed built their businesses after they found someone with the complementary skills needed to realize the most value from their blockbuster idea,' Quindazzi wrote in the aforementioned PwC report.

For example, IDEO's interdisciplinary approach has yielded a huge range of "Why didn't I think of that?" innovations, including the modern computer mouse, the PalmPilot, and even ergonomic toothbrushes.

An enterprise is like a forest. To someone standing beneath the treetops, it might not seem to grow at all. But it must. To survive the centuries, it needs to deepen its roots — day-to-day operations must carry on — but it also has to change with the seasons.

Each year, old oaks fall, new pines sprout, and the forest is slowly reborn. Short-term thinkers may question the displacement of ancient, magnificent trees by slender, vulnerable saplings — but only with new growth does the forest become stronger each year.

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