How Industry Titans Can Innovate — and Why They Won't

by Roham Gharegozlou

Your business is at the top, but staying there is a struggle. It’s tempting to think of yourself as the top dog, but most companies in this space have more in common with a lumbering herbivore: big, slow, and on the lookout for threats, not competition. Smaller companies flit around your feet, taking risks you never could. They ride the winds of change, rising high or dipping low as the market fluctuates. They’re predators — reactive and lean.

AOL founder Steve Case writes about “The Third Wave” of disruption, a shift that will bring fresh innovation through the musty halls of healthcare, education, and government. Incumbents in these soon-to-be-disrupted industries successfully rode the Second Wave, but now the third is coming. It’s not too late to change course and crest that wave, but it isn’t easy, either.

When you’re at the top of the food chain, change is scary

Success is a double-edged sword; it’s hard for an established company to redesign their DNA to embrace agility.

To many former incumbents, the new reality will be disorienting — failure to adapt has been the cause of death for dozens of former household names. At the same time, results from corporation innovation programs, internal incubators, corporate venture funds, and intrapreneurship activities have not been as consistent or repeatable as hoped.

So how do smart, forward-thinking companies react? How do they embrace agility without losing the stability their shareholders have come to expect?

Disruption is an overused catchphrase, but whatever you want to call it, the reality is that new technologies are turning industries on their heads. The only way to survive is to find a predator to stand behind.

Don’t be something you’re not; work with someone who is

The solution to this challenge is an innovation team that exists outside of the corporate structure; an arm’s length lab with the resources of their parents but the DNA of the next generation. This smaller team thinks like a predator, but uses the grounding of an incumbent company to achieve what neither could on their own. We apply this thinking to our partnerships, and we’ve seen huge successes.

Why is it that external innovation teams work so much better than internal labs, or launch programs? It comes down to founder mentalities and fresh thinking.

At Axiom Zen, we describe our employees as having founder mentalities. That’s a great slogan, but it’s also a tangible and measurable quality. Break things and fail fast is coded into the DNA of every startup; we can take risks because we don’t invest too much in each experiment. We move, we try, and we move on. This lets us manage, control, and optimize the current problem. Every member of the team needs to be attuned to generating unleashed ideas, and that’s next-to-impossible to ‘breed’ into an existing team. A Design Thinking exercise and a prototype budget isn’t the solution. You need to hire for mindset, and trust those hires to carry the vision of the team.

Don’t confuse looking outward with looking out

Founder mentality is about looking inward; creative thinking is about looking outward, at what others are doing and what you can do too. In order to successfully ride the Third Wave, smart businesses need to pay attention to what the predators are doing. If every startup in the world starts buying bananas, Dole better ask itself why.

But, it can be hard to analyze yourself without bias, which is why an outside partner can be a huge benefit. They can measure the landscape from a place of neutrality, and provide insight and feedback that would otherwise go unspoken. Note that fresh thinking doesn’t mean comparing a business to its competitors. The true lessons are found in those predators who are too small to be a threat, but have valuable lessons to share.

Internal innovation labs are failing. Consultancies are failing to keep up with the changing times. Startups continue to thrive, and big businesses simply can’t (and probably shouldn’t) become as lean as they need to be. Outside innovation is the only solution, and smart businesses are beginning to see that.

Together a big business and a startup are neither predator nor prey — they are the water that forms the Third Wave.

Axioms are early innovators in emerging technologies.

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