The world’s greatest entrepreneurs are constantly coming up with creative new ways to please customers or ways to create new customers. And they permeate every member of the team with that spirit of enterprise. There is one principle that can transform a bloated bureaucracy into an energetic enterprise —entrepreneurial spirit.
In this environment everyone knows the consequences of their behavior. If you do well, something good ought to happen. In a bureaucracy, the spectrum of acceptable performance is too broad. This results in there being too many free boarders, who are a drag on the organisation.
This was sought to be corrected by General Electric with a spruce up of the bottom 5% every year, after the annual appraisals. This giant organisation wanted to maintain its nimbleness.
The system came in for a lot of criticism by those who believed in the notion, “don’t de-motivate anybody, don’t make them lose their self-esteem.” But in the entrepreneurial jungle, if you don’t work hard, you starve. If you work really hard and do a good job, you succeed and there is food on the table.
This is why you see a big difference in the way entrepreneurs operate and the way large corporations operate. A survey done on the cost of innovation in USA showed that the cost as measured by new products and patents, is an astounding 24 times greater at large companies than small ones. This is where young entrepreneurial companies regularly beat the socks off their larger competitors.
What are the two golden rules of high-speed innovation? It is the rip-roaring combination of the urgent necessity to invent and the freedom and ability to do it. The necessity to invent means creating urgency where everyone feels the heat. Few really great things come from careful planning. Most great leaps are on the wings of crisis. Everyone should come to work determined to do something, anything, better each day.
The second golden rule is ‘the freedom to act’. Innovation without action may win you the Nobel prize but it will not get you a customer. It is rightly said that Edison may have discovered electricity, but it was the person who figured out how to distribute it that made the money. Every single action should be aimed at customers and products, which is the second fundamental of great entrepreneurs.
The actions that change your core competitiveness are always the efforts that are made, to make buying, using and servicing your product a faster, better, and perhaps, more economical experience for your customers. And high speed innovation also means knowing that standing still does not keep you in the same spot, it puts you towards the back of the pack. Look at the situation in India. Who were the pioneers of computers and IT in India and where are they now? On the other hand, the core group of people they trained and developed now head successful IT companies.
Take the case of Sir Brian Wolfson, who is a fast moving entrepreneur who converted Wembley from a poor performing unit to one of the most profitable companies in the UK.
He says that he still believes in making money the old fashioned way: on the backs of products and customers with constant innovation and blinding speed.
What keeps him moving? In the energy cycle of business, the most critical thing is the establishment and maintenance of momentum. When you lose momentum, it takes an enormous amount of energy to reclaim it.