Can a big company disrupt itself? This was the question at a standing-room only breakfast roundtable discussion Tuesday morning at Fortune’s Brainstorm Tech, underway now in Aspen, Colo.
David Wadhwani, the CEO of AppDynamics, which was acquired by Cisco last March, reframed the issue as one of renewal, rather than disruption. “The old models of how we do things don’t work anymore,” he said.
Fortune 500 companies have lost the ability to drive rapid innovation, partly because they’ve grown into bigger systems that rely on inertia to get things done at scale. Restoring the best elements of what it means to be a startup is going to be different for everyone. “What are the key elements that can bring back that command and control feeling that a founder-led organization has? What are the top three metrics that you’re going to measure people on going forward?,” asked Wadhwani. And companies must give people more time, power and resources, he said: “You have to have internal change agents who are looking for new markets and opportunities.”
That takes real commitment from the C-suite, says Peggy Johnson, executive vice president for Business Development at Microsoft. She recalled the days when the company was known for internecine in-fighting and brutal turf wars. “It’s completely different now,” she says, crediting CEO Satya Nadella for the difference. Nadella was committed to transforming the culture to one of innovation and growth, inspired in part by the philosophy of Carol Dweck, the Stanford University psychologist who championed the idea of the growth mindset.
“[Nadella] was relentless in his idea that we should have freedom to think and work differently,” said Johnson. Not everyone liked the change, “some people chose to leave,” she said to chuckles in the room. “But we’ve become a company that customers trust again.”
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Siobhan McFeeney, vice president for Transformation at Pivotal, says “culture is behavior, it’s not just what you say.” If you want internal innovation, you are going to have to restructure the company, embracing new metrics of growth linked to compensation. “Small teams, highly accountable, but autonomous,” she said. “That requires trust.”
All agreed that fear of failure remains a significant barrier to internal innovation, but so does territorialism, warns Wadwhani. Senior leaders need to understand that hanging on to the status quo is a bigger risk than embracing change. “Beware of the smartest person in the room,” he said. “They’re always the person who says it can’t be done.”