Top-down companies: where innovation goes to die

The more top-down stuctured and controlled a company, the less innovative. Why? Because to be innovative you need to leverage networks. Internally, externally, partnerships, industry, government, ecosystems. Networks need trust. Top-down breeds mistrust. 

I was thinking about this when talking to the organizer of the Social Workplace Conference (at WeWork in London, June 10th - I'm facilitating a session!). A social workplace, whether in person or virtual is all about creating connection, building value networks, and knowing how to harness and deliver on that value. It's far more than just "getting along". It is far deeper than "partnerships".

This is crucially important. I've been reading some interesting articles such as this one that say we're at the lowest point of innovation in over two decades. It may be that the digital revolution is getting embedded and we'll see things pick up. But I think the issue is cultural and organizational. Our companies are not set up to deliver on networked or ecosystem innovation.

By ecosystem, I don't mean more apps for a particular platform. I'm talking about the large networks that need leveraging to solve some of the most complex issues facing society (and your company).  

You see, innovation is about people: connecting people and ideas. It's a cultural thing, not a technological problem.

As Steve Case explains in The Third Wave, it's about generating trust. He's talking about the AOL-Time Warner merger in this quote, but the book explains how trust and large-scale collaboration/innovation networks are crucial in order to exploit the digital innovation potential that currently exists:

"The searing failure of the merger of AOL and Time Warner came down to people, relationships, and culture. We had a pretty good sense of what we should do, but we didn’t have the right people, or the right culture, to capitalize on the opportunities in front of us. The lack of trust crippled the company’s ability to be successful."

Sounds like a history of many M&As. And now legacy companies are trying to catch up by creating venture funds, inovation labs. These sometimes hope to co-opt the start-up/entrepreneurial cultures of other companies (or at least hoping it rubs off). But because they are not viewing innovation as a process that includes networks and large scale collaboration, the ripple effect is going to be small. If you can't even harness your organization internally for new ideas, the chances of seeing the bigger picture are pretty low.

The funny thing? Big companies could have network-building economies of scale. They have lots of employees, their products and services invariably involve huge collaborations, they are used to working with government and industry. But becuase of their organizational structure, leadership, purpose and vision, they are LEAST placed to leverage this huge potential.

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I don't know which article of so many to link to from these people, so here's a list of people I ready frequently. Go read the experts: Niels Pflaeging, The Ready, Jack Martin Leith, Harold Jarche, Mark Britz and Jon Husband (my diagram is in homage). And many others.