Innovation is increasingly becoming the differentiator of successful businesses — all businesses. While technology companies have been preaching the gospel of innovation for years, the sermonizing from other sectors is starting to get just as passionate. Boston Consulting Group recently reported that the 500 executives it surveyed in 47 countries in all major industries ranked innovation as one of their company’s top three strategic priorities in 2005.
And why not? What company does not want to be able to identify emerging opportunities (and threats); formulate and assess business solutions against these opportunities; develop actionable plans from disparate and incomplete information; identify, align and/or acquire the necessary resources needed to power a project or program forward; all with the ambition to drive accelerated growth?
Companies that need innovation must somehow find the innovators to bring it about. But where can they be found and how can they be identified? As Peter Drucker noted nearly 20 years ago, innovation is the tool of the entrepreneur.
So the need to innovate means that businesses today, of all sizes and all industries, need entrepreneurs. While many people still think of entrepreneurs solely as proprietors of small businesses, one should approach entrepreneurship as a mindset and set of skills or competencies that can be developed through a combination of traditional coursework and action-based learning programs.
This entrepreneurial skill-set and mindset can be applied to businesses of any size, but they are most readily developed in the fiery crucible of high growth-potential innovative startup businesses. This suggests that a prime source of innovative entrepreneurs is the pool of people that have startup business experience.
Unfortunately, it is not always clear how to interpret the backgrounds of those with small or startup company experiences in a large-company framework. Large corporate managers are comfortable assessing the progress, and therefore the potential, of individuals in organizations like their own. The frustration and misunderstanding in assessing the potential of innovators from different backgrounds makes it challenging for these larger entities to identify the innovators that they so sorely need.
This is where Einstein’s theory of relativity can help. Young, rapidly growing companies can have annual corporate growth rates 20 or more times that of their more established brethren. As the change in a given position’s scope and responsibility over time is impacted by this growth, the relative differences in growth rates must be accounted for in assessing talent from large versus startup companies.
Due in part to the disparate company growth rates, for example, the development pace of an employee who maintains the “same” position at a fast growing startup over a five year period is equivalent, in terms of increasing job complexity and responsibilities, to a counterpart at a moderately growing large corporation who has multiple-level promotions during the same period.
This relativistic nature of growth of positions within these two types of companies can lead to resumes that must be interpreted quite opposite from the norm for a large-corporate evaluator. The following examples show two different types of innovators in two different settings.
• Functional specialists. Inside large organizations, these employees have very recognizable, stable-looking resumes. They tend to stay in positions within organizations for long stretches of time. However, these same individuals in young, fast-growing companies appear to the uninitiated to be unstable job-jumpers. Since the responsibilities for a given job rapidly expand in high-growth companies, these individuals must frequently change companies in order to keep a position with a relatively constant level of responsibility.
• High potential leaders. Those fast-trackers who move frequently to positions of increasing responsibility in a large organization look quite the opposite in smaller high-growth companies. Those same fast-trackers in the smaller, high-growth firms tend to stay in one position longer, but the company’s hyper growth drives their rapidly expanding job scope and responsibilities. When these individuals do move from one small company to the next, however, unlike the specialist, title changes tend to accompany the company change. Their entrepreneurial career path may start as new business development specialist in one firm, then to new business director in the second firm, business development VP in a third firm, etc.
Large corporations need innovative functional specialists as well as innovative high-potential leaders. Being able to correctly interpret the resumes of those with startup company experience should help in their identification.
As in assessing all candidates, it is of course best to focus on competencies and responsibilities versus job titles. Comparisons of skill-sets and mindsets must still bear in mind the large disparity in growth rates between different sized organizations. The maximum use of innovative talent is of interest to all.
The more companies become dependent on innovation, the more individual career paths are likely to migrate between the worlds of large and small businesses. Part of lowering the barrier to this possibility is meeting the challenge of understanding the differences and similarities between the two camps.
Timothy L. Faley is the Managing Director of the University of Michigan’s Samuel Zell and Robert H. Lurie for Entrepreneurial Studies and an Adjunct Professor of Corporate Strategy and International Business at the Ross School of Business.