Why do large organisations get better at process and worse at making something new?

The company is busy. There is a hackathon on the calendar, a design class, a new matrix, and a consultant who has reorganised the boxes. The pipeline of new products is quiet. Steve Blank described this pattern in a 15 October 2019 essay, first published in Harvard Business Review: as organisations get large, they start to value process over the product. Process is how you scale a known problem. It is a poor way to answer a problem you have not seen before.

Blank's distinction is blunt. Product people make the new thing, whether that is hardware, software, a service or a way of operating. Process people run the machinery that keeps today's work repeatable: hiring, legal, finance, security, contracting. Both matter. Over time the process people end up in charge, because the organisation has become allergic to risk, and the product people report to them. Metrics then manage the process, not the creation of a new capability or the speed of getting it into use.

Three kinds of busy

Blank names three responses that look like action and do not deliver.

The first is organisational theatre. Leadership hires consultants. The consultants reorganise, often from functions into a matrix. Everyone is busy for a year. The need for a new product is still there when the reorg ends.

The second is what he calls innovation theatre. Hackathons, design thinking classes, innovation workshops. They can shape a culture. He is explicit that they rarely deliver something you can ship or deploy. A demo day is not a product in a customer's hands.

The third is process theatre. The firm notices that procurement, personnel, security and legal slow new work down, so it launches a reform of those processes. Without a wider plan for how innovation is supposed to work, Blank compares it to building sandcastles. Well meant, and gone with the next tide.

None of the three, on his account, reliably moves revenue, profit or share. He calls them innovation dead ends when they stand in for a doctrine: a shared view of where new work is allowed, how it is funded, and how it gets into the line.

What to count instead

If you only count attendance, ideas logged and workshops run, you will get more attendance, more ideas and more workshops. Count something Blank's product side would recognise.

1. A named bet, with the assumption that would make it false.
2. A test that could change your mind, small enough to run with the people you have.
3. A decision on a date: keep, change or stop.
4. If it is kept, an owner inside the business that has to run it, not a lab that has to present it.

A killed idea is a result. A lab full of live ideas with no kill is a queue. The lean startup and product sprint format is one way teams force that decision on a real bet, instead of adding another activity to the calendar.

The uncomfortable staffing point

Blank's harder claim is about who is in the room. When disruption arrives, process will not save the organisation. The people who can make the new thing will, and in many large firms they have no budget, no authority and no right to obsolete the current system. Contractors who are paid to maintain the old system have a reason to keep it. Staff who are rewarded for a clean audit have a reason not to risk a failed experiment.

You can run the classes. Just do not confuse them with the authority to ship. If the people who create are still reporting to the people who only approve, the calendar will stay full and the product will stay old.

Source: Steve Blank, "Why Companies and Government Do Innovation Theater Instead of Actual Innovation", 15 October 2019. https://steveblank.com/2019/10/15/between-a-rock-and-a-hard-place-organizational-and-innovation-theater/