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‘We All Think We’re Innovating.’ How to Get Your Company to Ship More Than Just Buzzwords

Eric Ries, author of The Lean Startup and founder and CEO of The Long-Term Stock Exchange discusses innovating like a startup at the Fortune CEO Initiative 2018 Annual Meeting June 25th, 2018 San Francisco, Calif.Eric Ries, author of The Lean Startup and founder and CEO of The Long-Term Stock Exchange discusses innovating like a startup at the Fortune CEO Initiative 2018 Annual Meeting June 25th, 2018 San Francisco, Calif.
Eric Ries, author of The Lean Startup and founder and CEO of The Long-Term Stock Exchange discusses innovating like a startup at the Fortune CEO Initiative 2018 Annual Meeting June 25th, 2018 San Francisco, Calif.Photography by Stuart Isett/Fortune

There’s The Innovator’s Dilemma and there are innovators’ dilemmas. The latter of those is what attendees brought to a discussion on finding your organization’s inner startup at the Fortune CEO Initiative conference Tuesday in San Francisco. Hosted by Fortune executive editor Adam Lashinsky and led by The Lean Startup author Eric Ries and Zuora CEO and co-founder Tien Tzuo, the executive-level chat explored how larger companies can coax entrepreneurship out of their organizations, without being saddled by bureaucratic bulk.

Lashinsky kicked off the discussion by asking how similar newly-aging startups are in comparison to legacy companies. “They’re actually exactly the same,” said Ries. “It’s not a metaphor…. a corporate transformation is essentially the same that a startup goes through when it has to professionalize for the first time. They’re both very difficult, and they both involve training people from legacy habits to new habits.”

But established companies can sometimes find it a challenge to kindle the creative spark that startups seem to have innately. The key, said Tzuo, is not just giving everyone the permission to innovate, but rather the ability to break free from—and get visibility outside of—their silos.

“We’re taught to stick within our functions” said Tzuo. “You see this all the time—the engineering guys just talking about the engineering stuff, and the marketing guys just talking about the marketing stuff. A big premise in this whole thing is that people have the capacity to innovate, but they are in a structure that only allows them to see a slice of it…. how do you break down those organizational silos?”

“You’d love to have everyone innovate, but that’s just chaos,” said one attendee, describing startup-like efforts within his company. Instead, his company created a C-level officer position whose job it was to run the process of turning ideas into potential new products and services that could then be incubated in-house. This executive also led the company in spontaneously forming cross-functional teams to explore the risks—and possibilities—these innovations were creating.

But promoting innovation as a high-profile fixture in a company’s efforts is not without its risks. One attendee said that up to 30% of its portfolio spend was on innovation. “When you say 30% on innovation, are you worried about what signal that sends to the other 70%?” asked Lashinsky.

“That’s a really great point,” he replied. “When we first called it innovation, people came back and said, ‘We all think we’re innovating.’ So, we changed the name…. innovation was not the right thing to call it, because everyone thought they were innovating.”

And isn’t that the case for most companies? As Ries said, it’s all about the specifics. “There are consultants you can hire to spray paint slogans on your wall for you, like Facebook does… but the slogans — the posters — that doesn’t get people anywhere.”