Digital Innovation & Entrepreneurship
P eople tend to think that than ever. Organisations need to be
help to get new businesses up and running with relatively little cost. Those that survive this process will be hugely attractive to venture capitalists, which could provide the funding needed to get them through to the next stage. 5 The right culture Creating a culture where people want to be entrepreneurial is vital. It helps to attract the right people in the first place, which might mean paying a premium for top talent. But employees also need to feel their ideas are listened to, and see the benefits of investing time and effort in entrepreneurial activities. Part of this involves removing any stigma associated with failure. Google actually rewards failure – such as short-lived online platform Google Wave – to encourage entrepreneurial risk-taking, while pharmaceutical firm Eli Lilly holds ‘failure parties’. Entrepreneurial companies also create a balance between the organisation and the individual. This includes incentivising middle- managers, who may otherwise be reluctant to see team members diverted from their existing role and targets, and securing full buy-in from senior leaders. For example, 3M insists that a proportion of revenue is generated from products that are less than three years old and assesses managers on that target. These steps can help to turn your organisation into a hotbed of entrepreneurial ideas that will give you an advantage over your rivals.
being entrepreneurial is the preserve of start-ups. But all industries change – and those changes are coming faster
entrepreneurial to keep up and ensure their long-term survival. Entrepreneurial orientation is a willingness to innovate and take risks. Firms with an entrepreneurial spirit tend to be more successful as they are more likely to identify and pursue opportunities. This in turn makes them more likely to deliver attractive products and services, winning more customers who are willing to pay higher prices than they would for more generic products. Apple is a prime example. Its powerful brand allows it to raise prices, but so does its engineering innovation that delivers superior- quality products. Organisations with an entrepreneurial mindset are also better placed to adapt to new technologies such as AI. So how do you create an entrepreneurial environment for innovation to thrive? 1 Radical innovation The first step is to understand your organisation’s core capabilities. Reaching a consensus may be harder than expected, but once you agree on your strengths, you can develop a strategy. Identify opportunities in the market and match them to the company’s core skills. High-tech sectors often have more opportunity for radical innovation. Uber may have been a taxi service, but it always considered itself a tech firm. As its ride-hailing business collapsed due to regulatory intervention and competition, it quickly reconfigured its technologies
to a new sector – the emerging food delivery market. It created Uber Eats and turned an operating profit for the first time in its history in 2023. However, radical innovation means investing in areas that may not be profitable for some time. In more stable sectors, such as consumer goods, innovations tend to be more incremental. For example, Gillette continually adds more blades and features to its razors to Once you are clear on the type of entrepreneurialism you want to encourage, you need to think about how to structure the business. The ‘army of entrepreneurs’ approach encourages all employees to engage in innovation, perhaps giving them time each week to explore non-work and ideas. This kind of innovation famously entice new customers. 2 The right structure
led to the invention of the Post-it note. Chemist Spencer Silver was trying to produce a super-strong adhesive, but created a weak glue. His managers at 3M were unimpressed until fellow inventor Art Fry used that to stop a paper bookmark falling out of his prayer book during choir practice. Other firms create a standalone Research and Development department with ringfenced people, facilities and budget to prevent day- to-day business from crowding out innovation. Xerox set up the Palo Alto Research Center, which developed many computing technologies used today, such as the mouse. Alternatively, each business unit can be given the responsibility to generate new opportunities. An extreme example is Chinese giant Haier, which was a refrigerator manufacturer until CEO Zhang Ruimin realised it
needed to be more entrepreneurial. Mr Zhang created a free market within the company, where employees can create their own self-managed micro-enterprises that compete for resources. 3 The right ideas You can’t wait for the right ideas to appear; you need the right processes to produce them. Some companies organise hackathons, where small teams are given a problem to solve with a prize for the best idea. These can be done in-house, bringing together staff with different skills to tackle a problem, or as open competitions with prizes for anybody to enter. Others establish a business observatory, where employees suggest problems that need addressing within the company or the market. The observatory filters these ideas and finds the right experts
to address the one with the most potential to develop a solution. Or there is ‘crows-nesting’, where a small team is tasked with scanning the industry and beyond for innovation and to identify opportunities. 4 Focus Once you have generated ideas, you need to decide where to focus your efforts. Nine out of 10 ideas are likely to fail, so you need the capability to explore and test them in the marketplace quickly and cost- effectively. Be prepared to kill off ideas that do not work. This is often where organisations go wrong. There is a tendency to persist with ideas for too long. This is akin to the sunk cost fallacy, where people persevere with failing endeavours because they have invested money, effort or time. Lean start-up techniques can
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