By Mariel Alison L. Aguinaldo
Innovation should be placed in the hands of a “two-pizza team,” said Eric Ries, entrepreneur and author of The Lean Startup, a New York Times bestseller on how to “create radically successful businesses.”
A two-pizza team refers to a group of employees that can be comfortably fed with two large American-sized pizzas. Whenever a company or a department wants to conduct an experiment, the two-pizza team is put in charge.
By having a two-pizza team, Mr. Ries continued, innovation is integrated into the corporate structure of a business, and an entity—not necessarily a single “chief innovation officer”—becomes responsible for innovating.
“Innovation should be a function in the org chart. It should have teams and standards, and it should be accountable for innovation and disruption results,” he said during a recent virtual conference.
Once the team is established, a company can then build structures around it, including its source of funding and promotion hierarchy.
When these experiments yield a more efficient internal process or a revolutionary product or service, companies must be prepared and committed to undergo transformation.
“Most organizations use regulatory compliance as an excuse for their own bureaucracy. The truth is… it’s their own internal process that they have built up around the regulations that is causing them to go slow” said Mr. Ries. “Compliance is not improved because there’s so much politics and truth-hiding.”
To deal with inevitable failures—the cost of innovation—Mr. Ries suggested taking the “portfolio of experiments” approach, discussed by business author Eric D. Beinhocker in his book The Origin of Wealth.
In this approach, a company implements a variety of experiments simultaneously to find out which will work best. Some of them will fail, but these missteps will help a company identify the best solution and build their knowledge at the same time.
“Nobody wants to hear that there’s going to be failure involved… [but] you’ve got to be willing to run these experiments and you have to build a big enough portfolio to know if you’re any good at it or not,” said Mr. Ries.
Digicon Omni, a virtual conference organized by the Internet and Mobile Marketing Association of the Philippines, runs until October 9.