CHAPTER 5

WHAT BIG BUSINESS CAN LEARN FROM STARTUPS

When he was chief executive of Asda, the British supermarkets group, Allan Leighton heard about a business-changing innovation. It wasn’t judging customer preferences by tracking their eye movements. Nor was it using artificial intelligence to assess the best shelf positions for popular products. It was a banana button.

The Asda check-out staff told him that, as bananas were the biggest-selling item in the stores, they could speed up purchases through the till if there was a single button they could press every time a bunch of bananas passed the cash register. That single innovation improved check-out productivity by 20 per cent.

‘Oh, and another thing,’ the check-out staff said. ‘The glass on the scanners gets dirty. If you could give us each a cloth and spray, we could keep it clean.’ Allan, who, as well as his Asda role also chaired the Royal Mail and chairs the Co-op group, told an FT Forums meeting that these stories held two important lessons. First, that the best innovations are often small, incremental ones and, second, that the best way to pick up new ideas is to speak to the people on the front line.

Large companies often forget these lessons. They become mired in bureaucracy or forget that the purpose of innovation is to produce a benefit for the customer, or money for the company. Many organisations come up with ideas that never go anywhere and produce no revenue. Innovation, Allan said, is ‘the gap between ideas and invoices’.

For Sahar Hashemi, the inspiration was not banana buttons but skinny lattes. Skinny lattes are a common coffee shop order these days, but in the mid-1990s they were still a novelty in the UK. In a TEDx talk in 2019, Sahar spoke about how the sudden death of her father in 1993 made her realise that her safe but uninspiring legal career was not right for her.1 She was searching for something different.

Her subsequent visit to New York to see her banker brother Bobby introduced her to quality coffee. Jet-lagged after arriving there, she went looking for something to perk her up. Walking down Madison Avenue, she took in the aroma of freshly ground coffee, walked into a coffee bar and asked for a cappuccino. What milk did she want, came the response. ‘Full-fat milk, skim milk, semi-skim milk, soya milk?’ She was overwhelmed by the choice.

Back in London, sitting in a Thai restaurant with Bobby, she talked about how much she missed New York-style coffee bars and wished she could start her day with a skinny latte. They needed to launch a coffee business in London, her brother said. That’s not what she meant, she replied. She wanted someone else to provide the skinny lattes. She just wanted to drink them. In that case, her brother said, he would pay her to do the market research. The next day, Sahar boarded the Circle Line on the London Underground, getting off the train at each stop to investigate what coffee was available. The quality was terrible.

There was clearly a gap in London for New York-style coffee bars. But what did she know about selling coffee? Nothing – and that was her advantage: being clueless. If you don’t know anything, Sahar said, you can teach yourself. So, she went back to New York, and to the coffee bar that inspired her. With disposable cameras (ask a Baby Boomer what those were) she took pictures of everything happening in that coffee bar, until the manager, understandably annoyed, followed her onto the pavement and confiscated the cameras. Undeterred, Sahar contacted cousins in New York, and together they went around, taking what looked like tourist pictures of each other, with the goings-on in the coffee bars in the background. The result of her research was Coffee Republic, the high-street chain that Sahar and Bobby launched in 1995.

Coffee Republic and Asda’s banana buttons were both new ideas, but one was a brand-new company and the other was an apparently small innovation in a huge existing business.

Is there anything that big companies like Asda can learn from startups like Coffee Republic? And, more pertinently, why would they want to? Where is the benefit to large companies in looking at small ones? The obvious answer is that large organisations need to innovate. If they don’t, they get taken over, or die. Many of the famed corporate names that I reported on when I first became a journalist in the 1980s have either disappeared or been absorbed into other companies, including the General Electric Company of the UK (not to be confused with General Electric of the USA, which faded and decided to split itself into three companies), ICI, Trans World Airlines and Pan American. Fewer than half the companies in the FTSE100 at the end of the last millennium were still there by 2021.2

Startups die too. Some estimate the failure rate at 90 per cent, with 20 per cent collapsing in their first year.3

But there is one thing that large organisations can learn from startups that survive: staying close to their customers. That was what gave Sahar her start as a coffee-chain entrepreneur: she came up with something she wanted as a consumer. Asda’s banana button idea came from the check-out staff who spent their entire working day dealing with the customers.

The real difficulty as startups grow, Sahar told the FT Forums meeting, is that the cluelessness that was so important to the launch of Coffee Republic is lost. People don’t just become more knowledgeable as companies grow. Bureaucracy builds up. Leaders become entrenched in their jobs. That ability to react swiftly to customer needs is lost.

She saw this happening to Coffee Republic. When the company started in 1995, she didn’t think much about its structure. ‘We didn’t have much bureaucracy. It was all about the customer experience,’ she said. When they reached 110 outlets, that started to change. ‘I suddenly felt the culture completely being transformed. We’d very much started from my mum’s kitchen table. The people we hired never had great CVs or anything like that. They just came because they loved the idea, they loved coffee, and all our meetings were in the stores. But when we got to 110 we thought, OK, this is when companies get big, and maybe entrepreneurs have a sell-by date and that startup phase is over.’

This was the point at which Coffee Republic felt it should change. It was ‘time to get the grown-ups on board because the thinking back then is entrepreneurs can’t run big companies,’ Sahar recalled. They hired a senior manager from a large corporation. The difference was apparent soon after. ‘You could almost physically see silos going up. Suddenly, everyone had to have a title.’

Coffee Republic went from being a try-things culture to one where procedures ruled. Sahar remembered a visit from Innocent, the company started in 1999 to make fruit-based smoothies. Innocent’s founders had begun with an innovative piece of market research. They went to sell their smoothies at a music festival and put up a sign asking customers whether they should give up their jobs to make smoothies full-time. There were two bins – one labelled ‘yes’ and the other ‘no’. As Innocent explained on its website, people were told to vote by throwing their empties into one of the bins. ‘At the end of the weekend the “yes” bin was full, so we resigned from our jobs the next day and got cracking.’4

So, on the face of it, Innocent seemed a good match for a startup like Coffee Republic. ‘This is brilliant. We must sell them in our stores,’ Sahar remembered thinking. But Coffee Republic had just hired a new purchasing manager from a big company, and the new recruit had serious reservations. Innocent had no proper processes. The purchasing manager said: ‘They’re new. There’s nothing. All they’ve got is products. They haven’t got the systems. This is now the grown-up world. This is not you and Bobby around the kitchen table. We’ve got to have proper systems. They can’t even fill out the forms.’ The manager did not favour Coffee Republic stocking Innocent smoothies. It did anyway, but Sahar realised bureaucracy was creeping in. ‘I just remember,’ she said, ‘it was just such a transformation, very painful for me to watch.’

In 2006, the Hashemi family’s involvement in the company ended when shareholders ousted Bobby from his role as executive chairman.5

BUSTING BUSINESS BUREAUCRACY

The Financial Times’ daily fare might include an increase in eurozone inflation, the future of environmental, social and governance (ESG) investing and the UK’s political prospects. There are also cultural articles; the FT Weekend specialises in them, and the paper has long had an admired arts page. But, in September 2020, Dan McCrum, an FT journalist had a different tale to tell – one about 28 private investigators who were hired to follow him, colleagues, investors and hedge fund managers and about BaFin, Germany’s financial regulator, filing (baseless) criminal complaints against him and a colleague.6

This was the story of Wirecard, a payments-processing company and one-time star of the German tech scene. As the FT began to unpick what Wirecard was up to, the company furiously attacked the journalists for their reporting, falsely accusing them of being in league with hedge fund investors betting on a fall in the company’s share price. After protracted denials that its business was built on fraud, Wirecard collapsed, admitting that €1.9 billion it had claimed it had in its bank accounts was ‘missing’.

The Wirecard saga was an extreme one, involving allegations of criminal behaviour. But it raises an important point: before we talk about how damaging big-company bureaucracy is, we need to acknowledge that, as organisations grow, systems and controls are necessary. There have been other corporate collapses that resulted from a lack of oversight, including the outsourcing company Carillion7 and Patisserie Valerie, the café chain.8

Large companies require procedures, not just to prevent accounting malpractice, but also to deal with mundane corporate matters, such as sick leave, tax codes and the like. Once they reach a certain size, companies also need, whatever their founder’s qualms, to divide themselves into departments. As FT journalist Gillian Tett has written, it is difficult for humans to operate in a group of more than 150.9 Any larger than that and we can’t manage relations with people as individuals.

So, how can large companies, in spite of their necessary bureaucracy, imitate the sparking of ideas they see in startups like Coffee Republic and Innocent? Let’s look at one idea I saw being developed from close-up. In 2017, John Ridding, the FT’s CEO, asked me to spend part of my week working with a new venture the FT had set up in collaboration with IE Business School in Madrid. The venture provided executive education and training to companies around the world and my role was to coordinate the participation of FT journalists on the programmes, where they would talk about subjects like geopolitics, the future of the global economy, Chinese governance or the UK after Brexit.

One day, Virginia Stagni, a recent recruit who was helping organise the education programmes, asked me if I would look at a proposal she was due to present to John Ridding. I was intrigued about how, as a recent arrival, she had won this audience with the FT CEO and what she planned to tell him.

Virginia says she was ‘an FT girl’ long before she got a job with the company. As an economics undergraduate at Bocconi University in her native Italy, she took out a student subscription to the FT, and loved it. When she came to do a master’s degree in marketing and communications at the London School of Economics, she decided to look at the FT’s business model as part of her dissertation. Emailing the FT to ask for information, she was delighted to get a reply from Jon Slade, the chief commercial officer, inviting her in for coffee and a chat.

Eight months later, she sent him a copy of her completed dissertation. Jon replied, suggesting she consider applying for a job at the FT. Virginia says she received a few rejections for FT posts, before landing the one where I met her, helping to organise the FT executive education programmes.

She remembers that, before she arrived at FT HQ, she imagined the company to be remote and elitist. Jon and her new colleagues disproved that. But many outsiders, she thought, shared her original view, and that probably meant the FT was not reaching younger readers or talented potential employees.

As a student in both Italy and the UK, she had taken part in hackathons, where people work intensively in groups to solve business problems, often through the creation of an app or website. These took place mostly in tech companies. She had never participated in a hackathon at a news organisation where she could combine her interests in news, tech and data. Could the FT, she wondered, attract entrepreneurial recruits through a tech company-style hackathon?

I asked Virginia what she had hoped to achieve with the hackathons. Was it to attract talented recruits or win new FT readers? Both, she says. The FT could use the hackathons to spot promising new employees – and the ones it didn’t hire would become ambassadors, taking the experience wherever they went, with their participation in the FT’s hackathon a prestigious addition to their CVs. ‘I wanted to turn these people into brand evangelists,’ she told me.

She called her idea FT Talent Challenge. Successful applicants to the programme would come into the FT for three days where they would hear talks from its journalists, commercial and tech staff, as well as being mentored by them. The mentor could be a journalist, for example, helping them write the description of an idea they wanted to pitch. There would be external speakers too.

How did she get the FT’s CEO to listen to her proposal? Her way to John Ridding’s door was smoothed by Jon Slade. ‘He showed me, again, that he believed in a younger person with an opinion and with an entrepreneurial spirit.’ Jon Slade told Virginia that her presentation wasn’t quite what you would present to a CEO. It had too many gifs and images. ‘He gave me feedback that it needed to be refined a bit.’

She reworked her pitch (which was the point where she asked me to look at it). When she presented it to John Ridding, he liked it and told her to go ahead. There was a catch: she wasn’t given extra time to work on the idea or a salary increase. While doing her existing job in the education venture, she had to find spare hours to make FT Talent Challenge happen. ‘It was something I really believed in as an entrepreneur,’ she told me.

A while later, the FT offered her an opportunity to leave the ­education venture and pursue her idea full-time. But there was another catch. Her education job had been permanent. The chance to develop FT Talent ­Challenge was on a six-month contract. It was a risk. She took it. In ­October 2018, she launched the FT Talent Challenge pilot programme. There were 1,000 applicants from around the world, from which the FT chose 50 ­participants. The next three years took the total number of participants to 450. In 2021, when, because of the coronavirus travel restrictions, the event went virtual, there were participants from 92 countries. Virginia says she has worked at ensuring there is a diverse group of participants, both from the UK and elsewhere, and she has achieved a 50-50 gender balance.

The participants work in teams, representing the FT’s departments, such as editorial – the journalists – and commercial – the advertising and marketing people. The participants are given ideas to work on, such as how to attract more Latin American readers to the FT, along with all the FT’s relevant data. Working with their mentors, participants develop their ideas and turn them into pitches.

Virginia says the participants are getting something more out of it than their association with the FT and its staff. ‘I want them to feel “I’m learning how to be an innovator, how to have an entrepreneurial mind, how to be a change maker. And I can apply these skills in any other industry, even if I don’t want to work in media”.’ The FT Talent Challenge programme includes workshops on how to lead a diverse team, how to pitch an idea to a senior board, or how to draft a business plan. A jury from both the FT and outside then judges the ideas. Some of the participants, about 10 a year, go on to get jobs in different departments of the FT; others’ ideas are picked up by outside investors.

FT Talent Challenge has since expanded, with an event planned every two months in 2022, including ones in New York, Abu Dhabi and Milan. It has grown into a business that can be sold elsewhere too. FTx, along similar lines to TEDx, allows other companies, universities and organisations around the world to use the Talent Challenge idea to attract their own entrepreneurial recruits and brand ambassadors. These organisations pay the FT for a co-branded event, putting their name alongside the FT’s. So, as well as finding new talent and ideas, FT Talent Challenge has turned into a revenue generator for the FT.

I asked Virginia what it was about the FT’s culture that allowed her to develop her idea. The FT, after all, is not a startup. The newspaper began in 1888 and is widely seen as part of the British establishment. Virginia said one of the reasons she was able to get FT Talent Challenge off the ground was that there were some people in the FT who understood that the news business was going through a time of upheaval and that they needed to become the disruptors rather than the disrupted. ‘That meant hiring entrepreneurial minds and turning them into corporate entrepreneurs, intrapreneurs,’ Virginia said.

She added that because they are well-established organisations, big companies have something startups lack: the name recognition that allows them to attract people. A small-town newspaper wouldn’t have been able to appeal to idea-generating young people from around the world in the way the FT could. This is something that big companies can do that small ones might find harder: they can attract talented recruits who want a prestigious name on their resumés.

What about silos, and large organisations’ love, and need, for procedures? Doesn’t that make it difficult to put new ideas into action? Virginia concedes that it can take longer to get an idea off the ground in a big company because more people need to sign off on it. It took her a year of pitching before FT Talent Challenge got going. But there is an upside to this, she says. Having to jump over corporate hurdles means that, when you are ready to launch your idea, it has been thoroughly appraised and tested. The process helps you learn about internal corporate communication, Virginia says. ‘If I’ve learned something out of this experience, it’s about how much being a diplomat and a politician inside a big company counts.’

Virginia had the luck to find receptive people such as Jon Slade, who she describes as a ‘door opener’ – someone who could get her an audience with the CEO who, in turn, proved receptive. She also needed determination, and a willingness to risk her job security – giving up an open-ended contract to take a temporary one. She accepts that not everyone at the FT is as open to ideas as Jon Slade was. ‘I’m not going to lie. Not all FT people have this mindset.’ Others, she says, are content to rest ‘on their allori, as we say in Italian’, although they are outweighed by the positive responses.

And not everyone in a large organisation has Virginia’s drive and determination. In fact, few have. How big companies can find and promote new Virginias and their ideas is the subject we turn to next.

SETTING UP A SKUNK WORKS?

In his book Stealth, Peter Westwick tells the story of Clarence ‘Kelly’ ­Johnson, an engineer at the US military manufacturer Lockheed.10 During the Second World War, Lockheed gave Johnson and a small team the task of developing the XP-80, the first operational US jet fighter. Lockheed told Johnson he had the authority to do whatever it took to get the plane built. ‘This allowed Kelly to shortcut the usual detailed procedures needed for mass production by low-skilled employees, and the group designed and built the XP-80 in a nearly miraculous 143 days,’ Westwick writes.

After the war ended, Lockheed kept Johnson’s group intact, operating as what Westwick calls an ‘independent fiefdom’. Formally called Lockheed Advanced Development Programs, it came to be known as the Skunk Works.

The name, Westwick explains, came from the Li’l Abner comic strip, one of whose characters brews alcohol in a still he calls the Skonk Works. There was a malodorous factory near where Kelly’s group worked, and one of the team one day answered the phone by saying ‘Skonk Works’. The name stuck. ‘Lockheed eventually trademarked it – with the proper spelling to appease the cartoonist’s lawyers’, Westwick writes.

Lockheed’s Skunk Works is an idea that other companies have picked up, creating small groups of innovators within the organisation tasked with coming up with new ideas. The term ‘skunk works’ has been used to describe many innovation efforts, including the group that developed HP’s laser printer,11 early investments in cryptocurrency12 and a project by Levi’s and Google to create a denim cycling jacket enhanced with technology that allowed the wearer to do anything from answering the phone to finding the route.13

A skunk works is, on the surface, an attractive concept: a way of bringing the intensity and inventiveness of a startup inside a large company. But Lockheed’s Skunk Works showed both the advantages and limitations of working this way. Westwick’s book is about the race in the 1970s between Lockheed and its competitor Northrop to develop and build stealth fighters and bombers. Designing these radar-evading planes required inventiveness and ingenuity – something Lockheed’s Skunk Works seemed made to do.

That Lockheed developed the F117 stealth fighter jet may have looked like a triumph for its Skunk Works. In fact, says Westwick, the ‘invention of Stealth occurred as much in spite of the Skunk Works as because of it’. Many of those who came up with ideas were not part of the Skunk Works team. Alan Brown, an English engineer at Lockheed and a key figure in the stealth fighter’s development, said he felt, when he went into the Skunk Works, like an outsider in a small town in Maine: ‘You know, if your great-grandfather didn’t live there, you were in trouble.’ The Skunk Work personnel had become inward looking. ‘Like general fighting the last war, Skunk Works veterans wanted to keep doing what had worked for them in the past,’ Westwick wrote.

This is the problem with self-contained innovation units in large companies. They can fail to draw on the organisation’s wider expertise. They can develop an insular culture of their own. And they don’t necessarily seed and encourage innovation in the company as a whole. Sahar Hashemi told the FT Forums meeting that the problem with setting up a skunk works is that innovation should come, not from a specific group, but ‘from the very fabric of the organisation. Innovation can come from very deep in your organisation’.

HOW TO ENCOURAGE INNOVATION FROM YOUR ENTIRE ORGANISATION

There are people left breathless when they meet their favourite footballer or singer. I guess it shows my nerdy interest in companies that I felt a little that way when I met Arthur Fry. Fry is not an athlete or pop star. He is the inventor of small slips of coloured paper that have infiltrated our everyday lives. Fry dreamed up the Post-it Note® – and is the poster boy for what big companies need to do to bring startup-like inventiveness into their organisations.

My encounter happened in 1987 when I visited the Saint Paul, Minnesota headquarters of Fry’s employer 3M – and managed to get an interview with him about how the Post-it Note was invented. The story started with Spencer Silver, a fellow 3Mer, who had tried to make a strong adhesive for aircraft production. Instead Silver came up with something that was sticky, but not that sticky. What could 3M do with this glue? It was, Silver said, ‘a solution waiting for a problem to solve’.14

Fry was a member of his church choir and used to mark pages in his hymn book with small pieces of paper – that kept fluttering down to the floor. How to fix this annoying problem? Fry remembered Silver’s sticky-but-not-that-sticky glue. He thought perhaps it could keep his hymnal bookmarks in place – without marking or tearing the page when they were removed. And so the Post-it Note was born. When I talked to Fry, it was clear success hadn’t gone to his head. His most ostentatious lifestyle change had been a yellow Nissan car with the registration plate ‘Post-it’. I asked if he could imagine working anywhere other than at 3M. No, he said. ‘It’s like a basket of coals in a fire. If you removed one – myself – I’d go out.’15

It’s an instructive message. Fry wasn’t an individual inventor. Nor was he part of a team specifically dedicated to looking for new ideas. He was an employee who took a colleague’s apparently failed innovation and made something useful with it. These serendipitous discoveries are typical of 3M. As innovation author Elvin Turner explained of another 3M invention: ‘A lab technician working on a jet fuel hose project accidentally spilled a compound on a shoe and found that it became dirt-proof. Some might have shrugged. 3M turned it into an annual revenue stream worth hundreds of millions of dollars.’ You probably know the product: Scotchgard.16

3M has been around for a long time. It began in 1902 as the Minnesota Mining and Manufacturing Company. Today, it produces 60,000 products, ranging from surgical tape to face masks to dental implants, as well as Post-it Notes in several colours, as well as yellow. A third of the company’s sales come from products invented in the last five years.17

How does 3M maintain this level of inventiveness? It lets employees spend 15 per cent of their time working on new ideas. They don’t have to find spare hours, during the evening or on weekends, to innovate. They do it on the company’s time – and no stigma attaches to failure. (Think of Spencer Silver’s sticky/not sticky glue that was a triumph in the end.)

Innovation at 3M is not something for a select group of inventors; it’s expected of everyone. It is also part of the company’s day-to-day culture. In too many other companies, inventiveness gets in the way. As Elvin Turner wrote: ‘In most organisations, innovation is often an inconvenience to managers: they are typically measured on delivering today’s business without any hitches. In that environment, anything other than predictable, incremental innovation gets squashed.’

Why innovation is a nuisance in other companies merits its own section.

HOW TO AVOID THE KODAK TRAP

When I talk to managers about innovation, I take along a piece of music technology I haven’t used for years. ‘What’s this?’ I ask them. ‘A compact disc,’ they say. (I show them The Essential Bob Dylan, a Boomer favourite). I tell them that when I reported on the music industry in the early 1990s, CDs were the mainstay of the business. But industry bosses were worried about a real threat to the CD. Could they guess what it was?

‘The internet,’ they all chorus. ‘Napster,’ say some. No, I say; it was this. And I hold up another CD. This, I say to their mystified looks, is a blank, recordable CD. What the music industry was worried about was not the internet. Most weren’t thinking about it then, nor, of course, did they imagine music on mobile phones. No, what the music bosses were worried about was the then-developing digital radio, which, they feared, could eliminate the need for CDs. ‘In their place would be a home juke box, from which people could select CD-quality albums or single tracks, and record them whenever they wished,’ I reported in the FT in 1993.18

So that was the threat. Not the internet but people pressing the ‘record’ button when their favourite song came on the radio. But some in the industry sensed there was a bigger danger coming than recordable CDs. Perhaps, they thought, there would be a way for people to pipe music and films directly to their homes. As I wrote: ‘[W]ith music available on request and at the touch of a button, people will not even bother to record it. Similarly, instead of going to the video store to rent a film or waiting for a movie to appear on television, cable subscribers could order whatever film they wanted and it would immediately appear on their screens.’ Who would have thought it?

So, what did these music industry leaders do about this threat to their business, one they could dimly perceive even before the internet went into widespread use? Some foresaw what needed to be done. Nic Garnett, then-director general of the International Federation of the Phonographic Industry, said if delivery of entertainment to people’s homes eventually happened, he wanted legislation to ensure they would have to pay for it. ‘In most cases, permission will be granted – but on terms,’ he said.

But others thought they had plenty of time before they needed to worry. Alain Lévy, chief executive of PolyGram, a music giant that has since been absorbed into the Universal Music Group, doubted that home streaming of music would become a serious problem. ‘The technology will exist, but my gut feeling is that changes in people’s behaviour takes a lot longer.’

This is an enduring problem when new innovations threaten companies’ existing business. They are so invested, financially and emotionally, in what they are doing, that they can’t imagine anything changing it.

When, in June 2007, Eastman Kodak demolished buildings 9 and 23 near the company’s headquarters in Rochester, New York, employees wept. Their working lives were bound up with those plants, which now had to come down because Kodak, a name steeped in the history of photography, had failed to adapt to the arrival of digital cameras. As the buildings fell, the FT recorded, those heartbroken employees took pictures – on digital cameras.19

Kodak has become the emblem of what happens when companies fail to see that the technology that has sustained them for decades is being overtaken. Except as FT journalist Andrew Hill wrote in a two-part investigation in 2012, Kodak did not fail to see the digital photo revolution coming. It was fully aware of what was happening. It even developed a crude, ‘toaster-sized’ digital camera in 1975 and laid out a timetable to when Kodak customers would make the transition to digital photography, which it estimated to be in 2010. But while it saw the arrival of digital photography, it felt unable to deal with it – and that failure holds lessons for all large companies wondering how they can develop the nimbleness of small ones.

Why did Kodak not react quickly enough? Because it wanted to hold onto its leading position in traditional photography; the profit margins in its associated products, from film to photographic paper, were, in the words of one former executive quoted by Andrew Hill, ‘luxurious’, with estimates of 75 per cent or more.

In Chapter 3, we referred to Clayton Christensen’s The Innovator’s Dilemma, in which he pointed to existing customer relationships as a reason for companies’ failure to adapt to changing technologies and market conditions. This was true of Kodak too. When the company started investing in digital photo-sharing sites, US pharmacies, which were big processors of Kodak photographers’ films, warned that they would shift their business to Kodak’s rival Fujifilm, which dissuaded it from throwing itself wholly into digital.20

After being overwhelmed by the digital camera, Kodak filed for ­Chapter 11 bankruptcy protection in 2012. It still exists, as a provider of print and other services to business. But its days as a central player in people’s ­pictorial capture of their loves, lives and memories is over. It is also a warning of what happens when large companies fail to react to the changes they see happening around them.

What is the answer? There is no easy one. As we have seen, small companies fail, and more often than large ones. But making small bets, as the FT did with Virginia Stagni’s FT Talent Challenge, and spreading a culture of innovation throughout the organisation, as 3M does, can help ensure a company’s survival. Large organisations may be slower to adapt than startups, and can sometimes find themselves mired in bureaucracy and corporate inertia. But, as we have seen in this chapter, they have significant advantages too. They often have the brand names to attract talent and they are more likely to have the financial wherewithal to make those small bets – and survive if the bets fail.

FURTHER READING

There are many articles about 3M’s 15 per cent culture. Apart from those cited in this chapter, this one from the Harvard Business Review is very useful: ‘The innovation mindset in action: 3M corporation’, available at: https://hbr.org/2013/08/the-innovation-mindset-in-acti-3.

A fascinating insight into what happened to Kodak is by Willy Shih, who headed the company’s consumer digital effort. His article, ‘The real lessons from Kodak’s decline’ appeared in the MIT Sloan Management Review in 2016 and is available at: https://sloanreview.mit.edu/article/the-real-lessons-from-kodaks-decline/.