In June 2014, 60 members from 46 countries attended YPO’s first “Soul of a Startup” program at Stanford Graduate School of Business in California. The purpose: to meet with top faculty and experts and explore innovative ways to infuse the spirit of a startup in their companies. Faculty chair Huggy Rao, co-author of Scaling Up Excellence: Getting to More Without Settling for Less, shares his thoughts on the who, what, why and where of innovation.
Is innovation a phenomenon or a fact of life?
Innovation is a fact of life. It has been with us ever since we invented the wheel. Innovation is by no means new, but the speed and pace of it have picked up. The speed varies from industry to industry. If you look at social media, the acceleration has been remarkable. But it’s not only the speed of innovation that matters; it’s also the soul of innovation. This is especially true for big companies. One of the challenges for any organization, but especially for big companies, is how to spread innovation from one part of the company to another. Executives are very confident of their decision-making skills but less confident about scaling up excellence.
How can you tell if a company has the soul of a startup?
The company will have a high tolerance for failure. If you are failure averse, it is unlikely you are willing to take risks. The best way to encourage an innovative mindset is to reduce the cost of making a mistake. It is not that one accepts poor performance, but rather that one fails fast (when costs are low) rather than later in the life cycle of a project (when costs balloon). Failing fast is the key.
What is the difference between mindset and footprint?
It’s mindset that allows a footprint to grow. You can’t think solely in terms of a footprint — number of stores, markets, geographic areas, etc. You must think in terms of attitudes and behaviors that are catalysts for growth. Facebook has a very big footprint but actually spends a lot more time worrying about mindset— about what is sacred and what is taboo. Every team member knows that speed is sacred and delays are taboo. At Facebook, it’s “Be bold. Move fast. Focus on impact.” The mindset is vivid, accessible and action-oriented.
Why is innovation rising among a growing number of countries?
Different countries have different national advantages and entrepreneurs are determining how to exploit them. Of course, innovation is more concentrated in some places than others within any country. For example, the entire United States is not innovative, but places like Silicon Valley are. I believe our thinking should shift from countries to cities. It’s cities that matter. Cities have mass, lots of people and more diversity than rural areas. They bring strangers together and become talent magnets. I don’t necessarily mean big cities — just any hub or cluster.
What is the ideal size for a high-performing team?
It’s an empirical fact that the best team size is five. More than five and you introduce inefficiencies and other problems. Even in small startups, there are more delays with larger teams. Business leaders who run large enterprises must recognize that the virtues of smallness are essential to rejuvenation and innovation. And money is not the problem. Many large companies are resource rich and idea poor.
This story is from the May 2014 issue of Ignite magazine, YPO’s exclusive member publication.