Your Corporate IT Teams Are Not Business Builders, but You Can Still Innovate—Here’s How

Corporate IT teams cannot build or create new businesses by design.

That’s not as harsh as it sounds. Many, if not most, software engineers have the skills and know-how that enable them to innovate for large organizations. Many even have the start-up mindset that is vital to successful venture-building. However, when we look at the whole rather than its parts, one limitation becomes crystal clear: a corporate tech team is designed to support its organization’s business, not to build new ventures.

Your company’s internal IT team may be great at supporting internal customers—that is, colleagues and partners—but they’re most likely twice removed from your end customers. Their scope of work consists of improving and optimizing platforms, products, systems, and tools for use within your company, like customer relationship management (CRM) or enterprise resource planning (ERP) systems.

“Your internal IT teams are iterating on an existing working business model rather than supporting an invention.”

Sean Sheppard, U+ Managing Partner, Americas

So, unlike product owners or business builders, your IT workers deliver to business units, not customers. “If you’re an IT team,” says Sean, “you’re often being asked to, say, customize the CRM, optimize user interfaces, or connect the databases of disparate systems. You’re not ideating, experimenting, iterating, validating, and testing with end customers who are actually going to pay your business to use your product or service.”

As their name indicates, business-oriented IT teams focus on solving business problems. Sometimes, the solutions to these problems actually require less technology, but when we’re talking about internal support teams, the solution requires more time.

In our experience at U+, these teams typically scope the work and put the solution into their agile development process. Then we come in to collaborate with our clients’ internal IT workers.

“As we’re usually facing a business problem, we have to find a solution that creates the simplest path to test our hypothesis about generating more value within a business context.”

Jan Beránek, U+ Founder and CEO

This is where timescales come into play. These differ considerably between startups and corporations—both look at how much more they can push a potential business to product-market fit within a sprint, but a startup’s sprint is one to three weeks, whereas a large organization is typically looking at a three-month sprint.

“Before we start working with our clients,” says Sean, “their release schedules are often something like three or for times as infrequent as ours. Sometimes it can be difficult for us to get them to compress these schedules in a way that allows us to progress.”

We alluded to this at the top of the article, and we’ll say it directly here: the fundamental flaw is not with the IT teams—they're great at what they're hired to do. But if you’re a corporate leader who’s trying to build a new venture within your organization, and get the corresponding new business model to take off, you need a team that has the freedom to experiment. Your internal IT team most likely doesn’t have that freedom, so you should operate outside of it until you need them to support what you’ve already validated. “When our clients operate this way,” says Sean, “we can move a lot faster, and we get to the truth a lot quicker.”

Why you need to innovate, and how to do it

Regardless of your company’s size and prosperity, it must innovate to stay competitive in today’s market. Not only are you up against your industry’s other Goliaths, you’ve also got to contend with its Davids—the small, ambitious, tech-driven startups disrupting your space. This means you need to build your own startup in the form of a business venture or innovation initiative within your company.

“Innovation is the most important way to grow and protect your market share.” Jan Beránek

The revenue creation and cost savings that innovation can bring to your company is colossal, regardless of industry. For example:

• Energy—AI applications will increase energy efficiency and improve power demand forecasting and flexibility, saving investors $1.3 trillion over the next 30 years.¹ (Learn more in the U+ report How AI Can Save the Energy Industry Billions in 2022 and Beyond)

• Finance—Experts predict the fintech market will reach $324 billion by 2026.² (Learn more in the U+ report State of Fintech 2022)

• Automotive—Analysts estimate the global automotive V2X market will reach $2.25 billion in 2025.³ (Learn more in the U+ report Top Automotive Innovators To Watch List) In his excellent Failory blog post about startup failures, Kyril Kotashev writes, “a startup is, in essence, a business experiment with potential.”⁴ To profit from that potential, startups need to test assumptions that are ideally based on market data, and they must account for the riskiness of their assumptions—the more innovative the business, the greater the risk of failure.

Failing early is cheap, failing late is expensive. Therefore, you want your venture-building team to build intelligently so they fail early and iterate quickly. This approach will not only help improve product-market fit, it will keep costs down. However, you’ll have to increase demand on internal resources that are probably stretched thin. As your innovation initiative is most likely outside your IT team’s scope of work, you should look outside your company for the startup-based expertise required to build your new digital business.

A key criterion when vetting any external innovation resource is, of course, its engineering team. Product-minded engineers will do more to help ensure your venture’s success than software engineers.

Corporate engineers are not allowed to be product engineers

We’re not generalizing here—many corporate engineers, especially those with a startup background, have the knowledge and skills to be product-minded. However, large organizations operate in a way that hinders their IT teams from planning, developing, executing, measuring, and iterating innovations efficiently and effectively. Corporate software engineers traditionally complete assigned work, and aren’t expected to come up with solutions to customer problems.

“In a large organization’s highly structured environment, engineers are typically two or three layers removed from product decisions that get cascaded down to them.”

Jamie Morgon, U+ Head of Scrum

With some exceptions, a corporate setting is not conducive to successful innovation. “Usually, along the way,” says Jamie, “each individual manager that touches a product is going to put their own little spin on it, and their own agenda, and what their team can bring to the table. So quite often you start off with a recipe and then people touch it and fiddle with it, and what you get at the end of it is very often not quite what you need. The actual problem has been very often changed and diluted and reinterpreted. It can be a strength, like if you have a lot of people looking at it and touching it. Sometimes it can go very well, but the challenges of designing by committee are well established.”

A corporation that wants to create and support effective and efficient product-oriented IT teams will most likely need to undergo a major organizational overhaul. This could easily impact the company’s core business to the point where the costs of shifting to a product engineering mindset far outweigh the benefits.

A 2020 PMI survey revealed that 56 percent of projects use the Waterfall development methodology compared to 22 percent that use the Agile approach. It’s not too much of a stretch to see the correlation between this statistic and the corporate innovation failure rate.

“Large corporations traditionally create software in a very waterfall fashion. This means they plan a product for two years, build for two more years, then test it. By the time their product meets all specs, it’s usually beyond obsolete.”

Jakub Kovář, U+ CTO

How to help your corporate IT team innovate

Solving the corporate innovation problem internally requires considerable change that is most likely unsustainable in the context of a large organization. Nevertheless, Sean Sheppard believes that larger organizations have a distinct advantage over startups. “While we all see a lot of wonderful disruptive technologies come out of the startup world,” says Sean, “Large organizations would generally have the same opportunity to disrupt themselves and their industries if they just had the right stage-relevant teams to execute on these concepts and ideas, because they have the subject matter expertise. They have the brand, they have the customers, they have the resources, and they have the ecosystem, but what they typically lack are the right teams organized in the right way to actually execute against these things.”

So instead of trying to turn your corporate IT team into a startup IT team, you can partner them with external product engineers that can build and iterate on new ventures. Once your product is delivering real value to your customers, your partner should be ready to hand the project off to your internal engineers.

“We intelligently design the handoff in a way that doesn't impact either side of the business. It doesn't have to be all at once—sometimes it makes sense for it to be all at once, and sometimes it doesn't.”

Sean Sheppard

Above all else, bear in mind that your customers sit at the head of your innovation table. As important as product engineers’ voices may be, your product should solve customer problems. Ideally, you have data that validates these problems, but if you’re working with assumptions to get your product off the ground, you’ll need to run tests quickly and cheaply. The Startup Graveyard is full of ventures that grew out of their founders’ gut feelings.

“Start listening to your users. Start prototyping. Start testing. Make sure you're focusing on what is bringing value, rather than just developing something for the novelty of it.”

Jakub Kovář

Finally, your innovation projects will benefit from results-oriented engineers. “The basic thing you need to do in order to do what we at U+ do well is remove people from being given tasks and try to give them outcomes,” says Jamie Morgon, “Inevitably there will be tasks in any team, but you want to try and put a problem in front of the dev team—it doesn't have to be just developers, it can be, say, designers—and tell them, ‘Hey we need to solve this.’ Then you give them the support that they need to go and do it. That isn't unique to all startups but it's very common in successful ones.”

U+ can help your company become a leading innovator

The U+ Method can successfully lead the development, implementation, and improvement of digital innovations in any industry, from fintech through automotive to healthcare. U+ takes a sector-agnostic approach to venture-building—specific products and markets matter less than the high-level process of taking a business somewhere new.

To date, we have used this method to bring more than 90 innovative ideas and products to market, creating over $1 billion in value for Fortune 1000 companies.

Footnotes

• Seb Henbest et al., New Energy Outlook 2021, BloombergNEF ↩

• Carlos Dafauce & Lourdes Lopez, A View of Fintech Trends Post COVID, Boyden ↩

• The Business Research Company, Automotive V2X Global Market Report 2021: COVID-19 Growth And Change, December 2021 ↩

• Kyril Kotashev, Startup Failure Rate: How Many Startups Fail and Why?, Failory Blog, January 2022 ↩