Unleashing the Innovators Offers a Template for Partnerships Between Startups and Established Firms

1/30/2018
Michael Krauss
Key Takeaways

What? Both startups and legacy companies come with advantages and disadvantages.

So what? Long-established corporations can benefit from adopting some of the work processes used at startups and vice-versa.

Now what? Whether you're a startup or a legacy business, consider partnering with an opposite-cycle company that is not a direct competitor. Encourage both sets of employees to show each other how work gets done with an eye toward implementing new, better practices. ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

Jim Stengel’s new book, Unleashing the Innovators: How Mature Companies Find New Life with Startups, offers an explanation for the trend of digital startups toppling established players and what the latter should do about it.

Stengel, a former global marketing officer for Procter & Gamble, says, “Upstarts such as Google in its early days reminded me of what life must have been like in the earliest days at the biggest and oldest corporations.” He continues, “P&G, IBM, Levi Strauss, Target, Toyota, Wells Fargo and Motorola Solutions started with a dynamic founder, a brilliant idea and a determination to deliver something extraordinary and transformative.”

Despite these exciting beginnings, as companies grow, Stengel writes, they lose their original excitement, purpose and drive.

Why do these leading global enterprises lose their mojo? According to Stengel, “They become more concerned about how to maintain market share or survive in their space than about how to transform the world. In a word, they go from bold to old.”

Stengel describes how he led a personnel and culture exchange between P&G and Google in 2008, literally swapping staff with Google to see if he could rekindle the fire of nimbleness at P&G while coaching Googlers on P&G’s processes. 

Members of his P&G marketing team were embedded at Google while Googlers came to Cincinnati to live and work at P&G. The impact of that partnership and personnel exchange loom large in Stengel’s mind and in his book. 

Though he retired from P&G shortly after the experiment, he saw the personnel exchange as a microcosm of how established firms and digital transformers can partner and mutually benefit each other. P&G could teach Google about brand management and Google helped the P&G team loosen up and experiment. 

Stengel, now a management consultant and author, sets out in Unleashing the Innovators to explore lessons learned from the mutual engagement of startups and established players. 

Over the course of two years Stengel interviewed leaders at multiple enterprises to form the basis for his insights in the book.

 It is a must-read for any marketer or business executive who wants to catalyze change in an established organization and initiate partnerships with startups.

What I like about Stengel’s book are the anecdotes of the executives he cites.His stories about GE and the failure of its partnership with Quirky and its founder, Ben Kaufman, are instructive. It is helpful to know that Beth Comstock, then the vice chairwoman of GE and president of GE Business Innovations, went into the deal with her eyes open. 

“Ben is just fearless,” Comstock told Stengel. “He trained some of our guys to just think faster and figure it out as you are going forward.” 

Comstock had her doubts. “It may end up being a black eye for GE that we backed something that is not going to work,” Comstock is quoted.

Six months into the partnership Quirky was bankrupt, Stengel writes. Customers were furious at the lack of support for the products the two companies had introduced. In court papers, GE charged that Quirky’s demise “caused substantial damage to the reputation of GE and to its trademark.”

“Not just a black eye,” Stengel writes, “a complete orbital blowout.”

Stengel reminds us of the need for CEO leadership in his discussion of Motorola Solutions, where he was once a corporate director. Unlike many CEOs who strive to deflect hostile investors who have innovative ideas for transforming an established company, Motorola Solutions CEO Greg Brown is known for embracing them and embracing innovation. “None of these [innovative] ideas can take root, much less flourish, without unqualified support from the CEO,” Stengel writes of the communications firm. Stengel’s description of how Brown embraced corporate raider Carl Icahn and investors such as ValueAct Capital Management and Silver Lake Partners is instructive, yet too short. That’s the problem with Unleashing the Innovators—it is wide but not sufficiently deep.

 If you need a roster of the leading actors in the corporate drama of established firms in the face of digital disruption, you’ll find it in Stengel’s book. You won’t find a deeper understanding of why these established enterprises are stuck and what it takes to free them. 

Stengel’s book is a terrific addition to the literature on unleashing innovation. It is an important read for marketers who want to partner with an entrepreneurial entity to create constructive change.

 However, if you are a marketer striving to become a CEO, pick up Microsoft CEO Satya Nadella’s Hit Refresh after reading Stengel’s book. Nadella’s book details the necessary cultural and management changes required to unleash innovation in a gridlocked enterprise.


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ABOUT THE AUTHOR:
Michael Krauss
Michael Krauss is president of Market Strategy Group based in Chicago.

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