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An innovation Cadillac

A few days ago Cadillac announced that they were moving their HQ back from NYC to Detroit — mostly to the sound of ‘wait, what, you were based in NYC?’ Indeed — four years ago they hired an outsider as President and proceeded to set up shop in New York’s SoHo. You could now come hang out at Cadillac House, sip coffee, or work for the day, all next to some of their cars. For all intents and purposes the space looked like a fancy car dealership which doesn’t exactly conjure the type of place most people are known to (willingly) hang out in.

This was part of an attempt to return some luster to the Cadillac brand as the purveyor of desirable luxury vehicles (and not, as any New Yorker will tell you, the chunky SUV that occasionally picks you up at the airport). It was meant to send an overall message to the car-buying market that they were hip and embracing innovation. This last point gave me pause: it’s been a bit of a trend for large, global companies to set up offices tasked with innovation in the Valley, New York, London, or Berlin — somewhere known for being an innovative market and more importantly far enough away physically from the rest of the company in a bid to ensure autonomy. This is, at best, a strange trend: the expectation seems to be that innovation can somehow happen by osmosis, that the only thing a company needs to do to tap into great ideas is to place themselves somewhere where such ideas magically abound; anyone who has ever worked at a large global company can readily tell you that there’s no shortage of good ideas in large companies. More importantly, in companies large or small, ideas rarely fail at the idea stage — but they frequently fail on execution.

So instead of plonking down tens of millions of dollars to move away from home, people tasked with innovation at large companies should:

  1. Formalize what type of innovation you’re interested in — every year, as part of strategic planning, identify areas where you expect innovation to move the needle for you the most. Tie innovation to concrete desired business outcomes.
  2. Incentivize current staff to be innovative — the opportunity that most companies completely miss is to tap their existing talent for key improvements. While this type of innovation may be incremental vs transformative, in the context of a global company with thousands of employees a relatively minor optimization to an inefficient process can carry with it more ROI than an expensive acquisition. Individual compensation should reflect rewards for innovation and thus make innovation everyone’s job.
  3. Make it easy for startups and smaller companies to work with you — the biggest barriers to entry here are access and process. Both can be solved by creating a dedicated internal team to deal with connecting the right external innovators with internal teams already exploring a similar idea, and facilitating a safe exchange of company data, access to facilities, or whatever other type of input an external company needs to be able to showcase their work. Instead of flashy office space in trendy areas invest in the process of how you take an idea and scale its execution at your company.

Innovation, like most things in business, is a discipline than needs to be adopted, crafted to the specifics of your organization, and iterated on to ensure improvement over time. Approaching it any other way will, at best, yield some modest short-term results.

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