As managing director at Olam International, I play a key role in the company’s initiative to reimagine global agriculture and food systems.
Technology is often at the center of innovation, disruption and discovery of new business models—so much so many CEOs have predictably shared the infamous tagline “we are in the technology business.”
Startups and technology platform giants have been very successful in pursuing the idea to build businesses at scale and create enormous value for shareholders while at the same time providing unique and often game-changing solutions to customers and end consumers. They are adept in this as they are small, nimble, cross-functional and have a single-minded focus on building their product or offering a service that solves a consumer’s friction. There is nothing else they do.
On the other hand, large corporations with established products/services have not been that successful in playing the disruptive game. These companies have often looked at their future plans only incrementally from current ones with minimal adaptation of cutting-edge technologies and rarely embedding unconventional or bold ideas.
Why does this happen? How can one change this?
Large companies have more or less set up pyramid organizational structures that straddle a common three-dimensional matrix of business units, geographies and functions. It is expected that the leadership under guidance from the Board sets the strategic direction for the group, decides portfolio choices, approves plans and makes capital allocation decisions to achieve them. A corporate strategic exercise involves looking at a company’s business model, competitive landscape, emerging demand and supply trends, new opportunities and available capital, among other things. A three- to five-year business plan is drawn up and capital allocation is done through a process of financial evaluation.
This process has an inherent risk of missing opportunities available for a company that could be exploited with skills and capabilities developed over several years, taking advantage of other latent assets to build new and perhaps even larger value-creating groups within the organization. The pyramid structure is not geared to capture nuances like new ideas, opportunities in and around the core businesses, adjacent business models, noises and frictions arising in servicing customers, suppliers and other stakeholders that could lead to the birth of new business ventures.
Ironically, corporate boardrooms responsible for steering the organization into the future end up being insulated from ground realities, as if a noise-cancellation system is in operation. But it’s these very noises they should hear continuously to adapt, change and evolve with changing times.
The front line in any organization deals firsthand with a company’s products and services and hence are acutely aware of opportunities and risks. They talk to customers, suppliers and all other stakeholders, so they understand issues deeply, and with some help, they may very well come up with the next disruptive idea for the company. But the structure in many organizations does not allow for the seamless flow of information from the front line to the board. It also does not provide a mechanism to enable innovation and experimentation on the ground level.
We involuntarily assume the top of the pyramid thinks and decides while the bottom executes — and we make the people in the pyramid believe so. The result is people rarely think or impose constraints on their thinking process, resulting in a poor innovation track record.
The change has to happen on a few levels.
First, a company has to facilitate a process for rapid knowledge flow from the front line to the C-suite through set forums, discussion groups, business update sessions and off-site workshops where front-line teams have an opportunity to present their perspectives to leadership.
Secondly, leadership should think of setting up reverse mentoring workshops on certain topics such as technology trends, modern productivity hacks and agile workflows, to name a few. A select group of talented young achievers in the organization should mentor C-suite members in these relevant areas. This provides the much-needed refresh for the top of the pyramid and equips them well for changing conditions.
Thirdly, multi-functional teams comprised of members from sales, marketing, design, technology, finance, product and more should be set up as a permanent feature. They should be responsible for continuous innovation and experimentation on the ground. These teams will operate independently with a pre-approved budget and be accountable to one senior executive within the business group.
Lastly, but more importantly. a culture of “thinking without constraints” has to be nurtured. It has to be made very clear to people that when they think of ideas and new solutions to solve problems, they do so in an unconstrained manner. It is not their job to think of constraints and be handicapped in the innovation process. They work on blue-sky thinking, so it is someone else’s job to apply constraints to decide what is possible and what is not.
Nurturing an innovation mindset across the organization is essential in our current times. The very existence of an organization is dependent on how innovative and adaptive it can be in rapidly changing business conditions with very new types of competitors emerging every day. At the very core of building this mindset is to strongly influence people to think without constraints in their everyday jobs. There will always be someone else to say yes or no!