Even when great ideas happen at legacy companies, smaller, more nimble players typically can outpace them in the race to market because their internal structures are less hierarchical and built on meritocracy. “Unlike a startup where the best idea can be tested and then rise to the top, that just isn’t true for a large company that’s been in existence for a while, like General Motors,” says Michael Arena, GM’s chief talent officer. Successful innovation is the result of the right people connecting at the right time, and then others buying into and championing the new idea. “The social dynamics matter as much as the idea itself,” Arena says.
Legacy companies must act like startups by creating the right social dynamics and an environment that allows innovation to emerge naturally, rather than creating innovation incubators or siloed groups devoted to innovating. “Innovation hardly ever happens deep inside one team. It almost always happens at the collision point between two different teams, or as one internal team’s network connects with a network outside the company,” says Arena, noting that General Motors has been shifting toward this kind of “social capital” structure and away from a human capital structure.
Arena points to three roles that are critical for innovation to take place at larger, legacy companies:
Brokers introduce new ideas. “These are the wild-thinking people who are out there playing on the fringe. They’re curious and out there trying to discover new things. They’re essential to the process of innovation,” says Arena. But in the larger, legacy company, those people aren’t enough. “We’ve all seen bold beautiful ideas that never saw the light of day.”
Connectors execute on those ideas and get them implemented. They are able to get buy-in from local groups inside the organization because they excel at engendering trust.
Energizers are the individuals that spark the interest of others across the organization and unleash the passion necessary for those innovations to advance, says Arena. “CEOs are almost never energizers. They hold the purse strings and have to say ‘no’ more often than ‘yes’.” But that’s okay, Arena adds. That isn’t their role. “CEOs play less a role in innovation than we think they should. When it comes to innovation, leadership is overrated.”
Instead, CEOs should focus on talent development and making sure all three roles are represented well inside the company. They also should be creating an environment in which people feel comfortable experimenting. “If a CEO is only worried about execution and driving efficiencies and bottom-line results, they create very tight systems,” Arena says. “The CEO has to loosen the system so that people can engage and build new ideas.”