Technology empowers today’s companies to innovate quicker than ever, yet few enterprises have the freedom and agility to create and scale new digital products at the speed of their market. While startups enjoy the freedom to quickly launch new products, pivot and grow, large corporations are often handcuffed by the weight of legacy infrastructure, bureaucracy and compliance.
This is part of the natural growth of an enterprise. As organizations mature, inertia often overtakes innovation. The process of maintaining current business lines becomes more important than growing in new areas.
Unfortunately, that isn’t sustainable in today’s marketplace. Across all industries, enterprise companies face disruption and competition from nimble startups with the flexibility and funding to quickly build loveable products and force their way into the market. Operating without corporate red tape (and often without a fear of failure), startups can push the envelope in ways many enterprises cannot match.
In the face of this rising tide of tech, enterprises have two real choices: they can spin up internal innovation labs, or find an technology partner that acts as a “skunkworks” team to rapidly build and validate new digital products while operating free from internal roadblocks.
Overcoming IT Infrastructure
This struggle is nothing new, of course. While many startup CEOs would kill for the development and IT resources of an enterprise, the complexity and depth of responsibility of those resources can weigh enterprises down when it counts the most. For example, startups can leverage emerging open-source platforms and embrace low-cost cloud options, while enterprises normally have to go through extensive efforts and audits to get such options approved for internal use. Despite recognizing the need for agility, most companies have struggled to achieve it.
In 2015, Gartner coined the term “bimodal IT” to describe the two very different types of responsibilities that modern IT groups have to juggle, often unsuccessfully. IT groups need traditional “Mode 1” teams that focus on maintaining and securing existing systems, while agile “Mode 2” teams focus on the exploration and rapid development of new product ideas. But while bimodal IT can help corporate teams respond more quickly to their customers, it’s not always the best answer to overcoming legacy infrastructure red tape and restrictions.
Corporations have tried for years to balance the need for speed to market for new products with maintaining existing infrastructure, but even progressive IT groups with agile Mode 2 teams face the burden of compliance, regulation and development silos. Some companies turn to internal innovation labs to push new products forward, but they often fall short.
The Limits of the Innovation Lab
Undoubtedly, some corporate innovation labs have delivered incredible products. To be successful, enterprises need cross-functional teams solely focused on spinning up new products and isolated from the rest of the company. Yet too often, enterprises fail to fully empower their innovation teams, often by sharing development and design resources across Mode 1 and Mode 2 operations. It’s preferable that innovation labs be given their own development and design resources, but doing so often silos the team and creates real organizational, management and compliance headaches for the rest of the enterprise.
Additionally, internal IT teams rarely enjoy access to dedicated design and user experience resources. They can build and maintain functional products, but UX expertise is proven to often have greater impact on a product’s success than the technology itself. Engaging an agency with cross-functional teams – designers sitting right next to developers – creates a much better end-product, one that delivers peak value to both customers and business.
Here’s a stark reality that many innovators – within both startups and enterprises – face: a team that is great at maintaining products for the long-term may not be the best team for building an MVP, pivoting to find product-market fit and scaling the product.
Mode 2 projects – like new SaaS platforms and applications – require a much different mindset to run lean, build an MVP and begin to incorporate users. Corporate development and IT teams are often well-suited to maintain mature products, yet ill-suited to the lean development cycles necessary to launching a new product in a competitive marketplace.
Our agency, 352, was founded on the belief that to truly innovate, enterprises don’t need to introduce more internal complexity or another silo – rather, they need a truly independent, cross-functional team outside their enterprise that can run with a product idea. Our teams, focused entirely on bringing a new product from ideation to product-market fit, can be a vital complement to the powerful IT infrastructure that corporations enjoy.
Innovation In Action
We recently worked with an internal startup within COX Automotive, developing a new web app to negotiate sales between dealerships and buyers. The product owner at COX knew that building the product internally would take a long time as he would struggle to get dedicated resources. Instead, he approached us to dedicate a team to rapidly build a minimum viable product, test with users and iterate quickly.
As COX’s external agency partner, our teams had the freedom to work quickly outside the restrictions of corporate IT. Working through a single product owner, the rest of the company is shielded from the “risk” of moving quickly, allowing us to prove product-market fit before we realign with the rest of the enterprise.
Without external help, the COX Automotive product may never have been able to pivot and scale as quickly as we were able to do. By removing product design and development from the traditional IT infrastructure, we enabled their team to build a product for its customers first, and still meet all of its compliance and infrastructure requirements.
We know most digital products we build for enterprises will have to return to the friendly confines of corporate IT once they find success. To make this transition easier, we identify “minimum viable IT requirements” early in the project. By building with that eventual enterprise IT alignment in mind, we are able to seamlessly integrate the product back into the enterprise IT apparatus.
Teams Geared for Growth
When I talk to corporate intrapreneurs, I hear a common thread. Many corporate leaders recognize the need for innovation and the threats posed by nimble startup competitors, yet their companies’ still look internally for the solution.
I strongly believe internal teams are normally not the path toward innovation. Corporate change agents and innovators should look externally for agile agency partners, and then bring that innovative mindset back to their company. Proving success outside the enterprise and using it to foster an innovative mindset is the most effective way for companies to achieve the growth they need to stay competitive. We have seen enterprises succeed at innovation with this model time and time again, and we have structured our entire agency to help enterprises push innovation by stepping outside their own walls.