It’s 1994. Blockbuster Video is growing like gangbusters, reaching an $8B valuation with 2,800+ locations in under 10 years. They’ve seemingly cracked the code on the video rental business model with a convenient, straightforward customer experience.
Fast forward a few years, and Netflix emerges, disrupting a relatively stable industry and winning over Blockbuster customers who were wowed by the newfound convenience of the rental-by-mail approach. But Netflix didn’t stop there.
While Blockbuster enjoyed a seat atop their money-making empire of video rental stores, Netflix was building an empire of its own that iterated and improved upon video delivery – first by mail, then by streaming. The streaming service continues its reign today, even amidst fierce competition, owing in large part to that willingness to innovate.
The Innovator’s Dilemma
Just like Blockbuster and Netflix, most companies face the decision between execution and innovation.
The majority of organizations are built to support execution on their cash cows. Why? Execution is easy when you offer a proven, well-defined offering. From assembly lines to retail stores, efficient delivery of profitable products or services is easier to manage, more predictable, and less ambiguous.
By contrast, companies seeking to innovate face highly ambiguous, non-linear, and unpredictable paths to success, which require a completely different organizational system.
Simply put, innovation is often difficult for larger and more established companies. They are built to execute, not innovate.
Executors vs. Innovators
Building a well-functioning organization requires structure. This might take the form of SOPs, resource maps, chains of command, and other managerial concepts they teach in business school. By design, these assets are intended for behemoth organizations, prioritizing rules and hierarchy over flexibility. They are designed for efficient, repeated execution of well-defined tasks and processes.
Innovation requires a completely different approach. At the heart of innovation is the ability to learn and quickly explore a different path in response to newly discovered insights, ideas, and opportunities. It isn’t about executing on a well-understood plan; innovation is about exploring and getting lost before finding the way.
But continually questioning and evolving how things are done is hardly an efficient way for larger companies to do business. Their structures - carefully engineered to promote efficient execution - often impede the company from innovating effectively.
This is the Innovator’s Dilemma: though the need for a company to innovate grows in a fast-moving competitive environment, a company’s capacity for innovation declines as a company settles into a more rigid organizational culture.
The Recipe for Innovation
At Gitwit, we’ve identified three key ingredients in the recipe for innovation – Why, What, and How – each equally important to breaking out of the obvious solution.
First, identify the Why.
When we’re presented with a novel problem, we don’t take it at face value. Instead, we conduct extensive research to triangulate a full picture of the problem through interviews, market data, and competitor analysis.
We emerge from this process not only with a better, broader understanding of the problem we originally set out to solve; we also gain a deep knowledge of better problems worth solving.
The whole point is to intentionally prod at blind spots in what feels like a straightforward diagnosis and find pain points or root challenges that weren’t obvious from the start.
If a client comes to us asking for a new website, for example, we don’t just jump straight into build mode. We’re going to dig a little deeper. Sometimes we find that a new website is secondary to a more pressing problem such as poor customer retention. With this understanding, the need evolves from a better website to a better system for engaging existing customers. With this discovery, we can craft a more impactful solution.
Next, focus on the What.
Up to this point, we remain solution-agnostic as we explore problems worth solving, but in this phase, we pivot toward solution ideation. Our goal is to find the best solution, not to just default to the most obvious one.
This means generating and testing a quantity and diversity of ideas for solutions, mirroring the role of natural selection in an evolutionary cycle. That is, we set constraints, allow ideas to evolve within specific niches, kill off the bad ones, and further develop the front runners.
We rarely start with a bias toward, for example, building an app or launching a campaign. Rather, we intentionally identify and shelve the most obvious solution before pushing onwards to explore bolder ideas. We bring in designers, engineers, data scientists, and others to create a hodgepodge of perspectives and ideas. We custom-design every ideation process to maximize novel connections and to ensure we don’t get stuck on the expected path. And we get promising concepts in front of real end users as quickly as possible, ensuring that only the most impactful solutions move forward.
Finally, move into the How.
This is the place where many novice innovators start. These individuals tend to say “there needs to be an app for x, or a company that delivers y” without undergoing the rigorous research of the Why phase or the evolutionary process of the What phase that must precede the How.
This process will feel familiar to many project managers or product owners. We’ll make a plan of attack, assemble the team members needed, and set a timeline. However, a key difference in our approach is in the execution.
We practice what we call Agnostic Agility, which is the mindset that we are never beholden to the rules of the project plan. Rather, anyone on the project team can propose new next steps to change the destiny of the project as we learn new information and encounter unforeseen challenges with our potential solution.
Innovation: It’s in Gitwit’s DNA to Constantly Evolve
While the Recipe for Innovation helps us repeatedly find new ways to pursue innovative, industry-disrupting work, we’ve also structured nearly every element of our organization’s structure, operations, and norms to help us avoid falling into Execution Mode.
We’ve built our organizational strategy loosely around the Entrepreneurial Operating System. Much like your laptop or iPhone’s operating system is periodically updated with new features and compatibility, innovative organizations take the same approach to how they continually evolve.
And in the spirit of innovation, the Gitwit Operating System is purposely not static. We’ve designed Gitwit to act as an innovation engine for companies, so the ability to continuously modify processes, meeting structures, feedback methods, and even our org chart, is baked into our OS (now in version 3.0).
Here are just a few examples of how we’ve designed nearly every element of our culture to improve our capacity for innovation:
- We work mostly within a flat, non-hierarchical structure and cultivate a highly argumentative culture, inviting Nitwits to challenge and modify everything from project next steps to our OS. Research shows organizations allowing individuals to challenge each other and debate ideas achieve better outcomes than those with strict rules and top-down leadership.
- Our fluid org chart allows any Nitwit to voice the areas in which they want to grow and work to develop plans for how to apply newly-learned skills. This brings fresh eyes to roles and promotes innovation across our service lines while preventing burnout. Our unlimited vacation helps, too.
- We put a huge emphasis on our physical space. Every Nitwit has a personal office so they can get heads-down time for focused work. Simultaneously, we strategically placed meeting spaces in public areas, resulting in cross-pollination of innovative ideas and serendipitous conversations. Did we mention all the walls are whiteboards?
- We’ve got a suite of standard go-to tools that help us collaborate, such as Slack, Asana, and Figma, and we’ve spent years establishing the norms and best practices required to use these tools effectively. Plus, every Nitwit has an expense card to try out tools like Loom, Linear, and Retool to help them test and build improved workflows without waiting months for expense approvals.
The original vision of Gitwit has remained largely unchanged since we started in 2007: Build a company designed to help other companies innovate. Over the next few months, we’ll be delivering on this in a new way. We’re launching new content and interactive workshops to share some of our favorite tools and best practices for breaking out of Execution Mode and incorporating more innovation into your everyday work.
We hope you’ll come along for the ride. Stay tuned! 👀