Wednesday, August 20, 2008

Empowerment and Innovation

Today I happened to be speaking to one of my team about empowerment and innovation. Probably I was influenced by an article I had picked up in the doctor's office earlier in the day*. The piece, written by management power-duo Jack and Suzy Welch, addresses the culture at Google (and, I hope, many other places), which “freely permits employees to work off-site and encourages them to use one day a week to explore any kind of ‘what-if’ project that interests them.”

Jack Welch, of course, is famous for his tenure at the head of GE, the nice folks who bring you so many Sunday morning talk shows. I've always thought of GE as a stereotypical, big, conservative, stodgy American corporation. But, when I focus on their core business, I realize that they are essentially a giant technology innovation engine (literally – if you don't believe me, check out their cool tutorial on jet engines.) Even their motto – “Imagination at Work” – sounds like it belongs to Disney... or perhaps Google. So it probably shouldn't have surprised me that Jack and Suzy had some interesting insights into empowerment and innovation.

“Empowerment,” they note, “is less likely to happen in bigger companies, which is the opposite of how it should be... Big companies do tend to be risk-averse, keeping decisions near the top, while small ones, and in particular startups—short on resources, formality, and time—tend to unleash every brain.” (Emphasis mine.) They go on to point out that big companies can afford the risk that empowerment represents, while smaller companies can often go under due to a single erroneous decision.

It's fairly obvious that real empowerment – and, frankly, real innovation – is more common in smaller companies. What is new is the recognition by a Fortune 10 CEO that this isn't the way it should be. The challenge for Google is to keep alive the spirit of innovation that got it to where it is now, a challenge shared by any big company that wants to avoid getting pantsed by a couple of PhDs in a garage in Palo Alto, Pasadena, or Cambridge.

Have I seen any evidence that big companies are getting this message? Outside of a few technology firms, no. Instead, thanks in part to Sarbanes-Oxley, individual empowerment is at a nadir. There is little room for creativity when all business problems are supposed to be addressed in the same, regimented manner, using the same, tired techniques, and requiring the same, groupthink approach. Requirements. Development. Unit testing. Integration testing. User acceptance testing. Migration. Celebratory lunch. Repeat.

Small, private firms are exempt from SOX, and have not yet developed the culture of risk avoidance shared by so many large public companies. Employees are less likely to have HR-prescribed, set-in-stone job descriptions, and auditors are unlikely to drop by to ask for copies of approved change controls. As a result, individuals have much more room to innovate; indeed, they are generally strongly incented to do so by stock options whose value they can thereby impact directly.

Until big companies can find a way to create space within their latticework of regulations, policies, and procedures for employees to innovate, they will continue to earn their reputation as places where cool ideas go to die.

*) Quick question: if you have an 8am appointment, and the office opens at 8am, shouldn't you actually see the doctor well before 8:30? Because that's when I saw him. Sheesh.

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