Six employee responses to internal startups and corporate innovation
This is part 4 of my series on why internal startups often struggle inside large companies. Each post can be read as a standalone piece.
Employees in “innovation groups”, “intrapreneur programs” or “internal startups” are vulnerable to the fact that most other employees (i.e. those with no involvement in the internal startup) will perceive these projects quite differently from their main stakeholders — if they perceive them at all.
These perceptions are important because of the role they can play in determining the internal startup’s success. I’m not claiming this model is universal nor exhaustive. But I think it covers a lot of corporate innovation scenarios, and helps us understand frequent non-stakeholder attitudes towards internal startups.
I’ll introduce the 6 responses below, but first let’s clarify our terminology:
By corporate innovation groups, I mean any and all of: internal startups, intrapreneurs, and teams developing “innovative” products separate from the core business. I do not mean third party startups who’ve been acquired.
By non-stakeholder employees I mean employees who are not directly involved with an innovation project or corporate innovation group, and are not part of the organisation’s executive leadership. This is likely to be the vast majority of employees in the organisation, and most will fit into one of six categories (see below)
I’ll reference ProductX as a new product developed by the innovation group, and BigCorp as the name of the mothership.
Employee #1: Uninterested and apathetic
These employees are, at most, peripherally aware — and potentially unaware — of ProductX. Maybe they glanced at a sentence in an internal email newsletter or heard it referenced in a presentation. They don’t see it as relevant to their jobs, and they’re not interested in learning more.
Internal comms about ProductX fade into the background noise of all the other company news and initiatives presented to them, but about which they care little. They don’t perceive ProductX particularly positively or negatively because they barely perceive it at all. And they may be mentally bundling ProductX into the other innovation initiatives in which they have little interest.
Most people in most companies spend most of their time thinking about their own jobs, problems, incentives and tasks. They know what’s relevant to them and what’s not. And they know most of what they receive from outside their own team is irrelevant and/or unimportant.
Employee type #2: Contemptuous
These employees are more informed about Product X, but think it’s a bit silly.
Some employees may be contemptuous of ProductX specifically, rather than the whole concept of corporate innovation;
Some employees will be contemptuous — more broadly — of the concept of a dedicated ‘Innovation Group’;
Either of the above may overlap with contempt for the people responsible for ProductX or the Innovation Group.
Contemptuous employees might question the whole idea of an Innovation Group on a stick-to-our-knitting” basis: “This isn’t what we do. Why are we trying to build startups?”.
Or, they might doubt the efficacy of the products in development because they may feel they understand the domain or problem-space better than the people in the Innovation Group. An interesting sub-category is the employee who genuinely wants the company and the innovation group to succeed, but thinks Product X is doomed.
And they might assign ego-driven motives or pretensions of grandeur to the leadership: “The Innovation Group VP is out shopping for black turtlenecks”.
The activities of the corporate Innovation Group might be perceived as “not real work” or even more like a “holiday”. This is especially likely when the innovation group is (or is perceived as) receiving substantial investment from the mothership, with no visible sign of material revenue (see next category).
Employee type #3: Resentful
Corporate innovation groups can spend a lot of money while their projects generate little or no incremental revenue for a long time (or ever). In parallel they may also fail (or appear to fail) to deliver much value.
The result is that some non-stakeholder employees will resent the resources allocated to the corporate Innovation Group, which they perceive as excessive or wasteful.
However, there is a line between perceiving corporate innovation as silly (see contemptuous employees above) and actively resenting it.
Resentful employees have their own projects or initiatives which they perceive as more important to the company, or more likely to offer a direct path to revenue or other worthwhile value. They are resentful of funds spent on the Innovation Group, which they feel would be better spent on themselves.
These feelings can be compounded if the resentful employee’s team has recently been downsized, or if the employee’s remuneration is being held down by factors outside his/her control, or if the employee’s own internal initiatives are being thwarted by budgetary constraints.
Employee type #4: Threatened
Some employees will feel threatened by the Innovation Group or an internal startup. There are three major reasons for this:
The Innovation Group is working on solutions which could disrupt the employee’s job, team, or performance metrics which determine the employee’s bonus / promotion prospects.
The Innovation Group is cherry-picking employees from the threatened employee’s team
The Innovation Group is seen as a route to advancement or preferment by the company’s senior leadership.
There can be overlap between resentful employees and threatened employees.
Employee type #5: Ineffectively enthused
These employees are genuinely enthusiastic and even proud or excited about the company’s new initiatives. But they are constrained in their ability to actually help. Employees in this category tend to:
Work in company cost centres
Have skills or experience of limited relevance to the Innovation Group
Have limited interaction with the company’s customers, partners or other relevant external stakeholders
Their enthusiasm is substantial and sincere, but it’s often difficult for them to provide practical support. This could be due to a relative lack of professional network, suitable skills, appropriate job responsibilities or even self-confidence.
Ineffective enthusiasm is frustrating for an internal startup. You want allies and supporters: it’s invigorating to have other people tell you your work excites them. However, it’s maddening to be unable to to harness that enthusiasm.
Occasionally (perhaps too occasionally) these employees’ enthusiasm presents an opportunity for themselves and for the internal startup.
As a corporate innovation group looks to cherry-pick employees from other company teams, they may find ineffectively enthused employees eager to make the move. That move might constitute a career change for the employee, and/or it may be another ‘support’ role. But sometimes extraordinarily talented and creative individuals get ‘stuck’ in roles which don’t afford them the opportunities to fulfil their potential. The presence of an internal startup which is able to make hiring decisions outside the procedures and parameters of the mothership’s normal processes can free these employees move into different, better or higher responsibility roles.
Employee type #6: Effectively enthused
These employees are genuinely enthusiastic and in a position to do something about it. These are the employees who use their internal and external networks to spread the word, and undertake informal business development.
Depending on the relationship between mothership and Innovation Group, these employees might actually be asked by the innovation group to pitch or market ProductX to their customers.
So. Why does this matter?
There are many factors which can drive corporate innovation initiatives to underperformance. This post is not a general ‘how-to’ (which would require a book) but is instead narrowly focused on how other employees inside large organisations tend to react.
It doesn’t necessarily matter if the majority of employees are indifferent or ignorant of the innovation group. And, within a big organisation, it’s hard to do anything without someone objecting.
The impact on innovation groups by apathetic, contemptuous, resentful and threatened employees are likely to be determined by the reliance of the innovation group on employees outside the innovation group for the success of their initiative.
However, even when the cooperation of critical colleagues is not required, ignoring their concerns may not be prudent. Consider especially the views of those who want the company to succeed, but believe a specific initiative will fail.
Creating enthusiasm for ProductX inside BigCorp
BigCorp employees already have their own incentives, priorities and methods when it comes to business development.
Not only is there an opportunity cost for BigCorp employees in pitching ProductX, but they are being asked to pitch an unproven product to their clients. Until case studies are undertaken, and/or until there are a decent number of completed ProductX projects, BigCorp employees will be taking a risk in pitching ProductX. It could be a waste of their time, but at worst it could damage their client relationships.
Also, they might not feel adequately incentivised to really try. This is at the heart of why ProductX’s internal comms are so important. It could be an unsafe assumption to imagine all – or even most – BigCorp employees are effectively enthused about ProductX or the broader innovation agenda.
Successful internal comms for ProductX – which swells the ranks of the effectively enthused – will emphasise employee self-interest rather than just focusing on a broader agenda of innovation or any long-term strategic goals, about which those employees might not care.
