Do businesses lose their innovation when they grow?
Few businesses would admit to this, but there’s a fair amount of data to suggest this is the case.
Large businesses often start as dynamic, disruptive forces in their industries; they challenge the status quo and introduce fresh ideas. However, as these companies grow and become household names, the processes and layers of management that ensure operational efficiency often come at the cost of creativity and innovation.
Take Sky.com: a company that revolutionised television and telecommunications, but which has struggled to maintain the same level of agility in recent years.
In 2023, the company reported an operating loss of £224 million, a significant increase from the £111 million loss recorded in 2022.
Sky, a pioneer in digital television and satellite broadcasting, set the standard for innovation in the 1990s and early 2000s. Its introduction of on-demand content, multi-room viewing, and integrated packages reshaped how audiences consumed media.
However, as the company grew, the focus shifted from innovation to maintaining and expanding its market dominance. Today, it faces stiff competition from agile streaming platforms like Netflix and Disney+, which are quicker to adopt new technologies and respond to changing consumer preferences.
The decline in Sky's innovative edge can be attributed to its organisational complexity. Layers of management, entrenched processes, and a risk-averse culture have slowed the organisation’s decision-making and hindered the company’s ability to experiment. While its investments in technology and systems have kept it operationally robust, the neglect of its workforce has limited its capacity to ideate and execute groundbreaking projects.
Why you shouldn’t prioritise systems over people
As businesses scale, they often prioritise investment in technology and systems over their workforce. Whilst technology is essential for efficiency and scalability, over-reliance on it can stifle the creative potential of employees. The pitfalls of this approach include:
Decreased employee engagement: Employees who feel undervalued or trapped in rigid roles are less likely to contribute innovative ideas. When a company invests more in its systems than in its people, it risks alienating its workforce.
Limited adaptability: A workforce that isn’t continuously upskilled will struggle to adapt to new challenges. Though technology can streamline processes, it cannot replace the human capacity for critical thinking, problem-solving, and creativity.
Stagnant culture: A focus on systems often leads to a top-down management style, where employees are expected to follow processes rather than question them. This creates a culture resistant to change, further diminishing the company’s innovative potential.
Talent drain: High-performing employees are likely to seek opportunities elsewhere if they perceive a lack of growth or recognition within the organisation. This exacerbates the company’s inability to innovate, as it loses its most creative minds.
The importance of investing in people
Continuous investment in a company’s workforce is crucial to sustaining innovation, particularly in the later stages of a business’s lifecycle. Strategies such as upskilling, reskilling, and fostering internal mobility can revitalise a company and prevent stagnation. Here’s how:
Upskilling for future needs: As industries evolve, so do the skills required to remain competitive. Regular training and development programmes ensure that employees are equipped to tackle emerging challenges and seize new opportunities.
Encouraging internal mobility: Allowing employees to move across departments or take on new roles fosters a deeper understanding of the business and encourages cross-functional collaboration. This broadens their perspectives and enhances their ability to contribute innovative ideas.
Empowering creativity: By creating an environment where employees feel safe to experiment and fail, companies can tap into the collective ingenuity of their workforce. Google’s ‘20% time’ policy, which allows employees to dedicate a portion of their work hours to passion projects, is a prime example of this approach.
Building loyalty: Employees who feel valued and see a clear path for growth within the company are more likely to remain loyal. This reduces turnover and ensures that the company retains its institutional knowledge and talent.
Avoiding a downturn
For companies like Sky, a renewed focus on their workforce could be the key to regaining their innovative edge. By balancing investments in technology with those in people, businesses can:
Enhance agility: A well-trained, adaptable workforce can respond more effectively to market shifts, giving the company a competitive advantage.
Drive innovation: Empowered employees are more likely to think creatively and propose solutions that technology alone cannot deliver.
Sustain growth: Continuous learning and development ensure that the company remains relevant and capable of navigating the complexities of its industry.
While the journey from startup to household name is a testament to a company’s success, it also introduces challenges such as those detailed above.
Evolve3 CIC creates #betterhumans in the workplace, ones that are able to innovate, offer critical thinking, and who are able to voice their opinions respectfully – avoiding the groupthink mentality that can be sometimes be found at the root of a deteriorating business.
Contact us at info@evolve3.org.uk for more information.