Mike Katchen is founder and CEO of Wealthsimple.
A couple of weeks ago, Scotiabank opened the doors to its Digital Factory: an innovation-focused space in Toronto's east end. The idea is that the "factory" is supposed to be an in-house version of startup. It even has a ping pong table.
A lot of big companies have launched these internal "startups" recently with a mission to "foster innovation." I think that's a great ambition – Canada's biggest institutions should foster innovation. But as a startup founder myself, I know creating a culture of innovation requires a few really important ingredients – and a ping pong table isn't one of them.
Now I have nothing against ping pong tables (we have one of those, too), but one piece of light recreational equipment does not a startup make. If a company is serious about innovation, I'd ask them a few really important questions to see if they're actually building a culture that fosters it.
Are you treating innovation like a project?
I often speak with business leaders who tell me their companies are making innovation a priority. But I've noticed a pattern. A lot of these companies approach innovation as just another project. Let's create an innovation team! We'll hire X number of innovative people, we'll put them in a building designed to encourage innovation, and then, at deadline time, they'll have created something innovative.
Truly innovative companies don't treat innovation like a project that has a beginning, middle, and end – it's a process central to every aspect of the way a company operates. Take our website, which is the main way our clients interact with us daily. Last year, we won a Webby (think Oscars for the Internet) for the best financial services website in the world. The team had a great time at the awards ceremony – and the next day went to work rethinking everything they'd done. Since winning the award nine months ago, we've rebuilt our website. Twice.
My point isn't to remind you that we won a fancy award. It's to say that continual innovation is purposely woven into the very DNA of how we operate. The whole business is a never-ending innovation project.
Are you solving real problems?
Most startups have a mission centred on a real problem that exists in the world. Listen to a founder's story of how his or her startup came to be, and you'll typically hear something that begins: "I was trying to do X and it was way more difficult/more expensive/less efficient than it should be."
I founded Wealthsimple because I was frustrated by the fact that previously, unless you had a lot of money, you couldn't get access to great financial tools and advice. So that meant lots of people – and younger people like me, in particular – weren't being served by the financial services industry.
Everyone who works at Wealthsimple knows that their main goal is to solve that problem for real people. If everything you're doing doesn't have that purpose, it probably isn't changing anything important.
Are employees empowered to 'ship it'?
Central to how startups operate is the concept of "ship it." The term basically means to make things, release them into the world, and keep doing it day in, day out. Employees at a startup are focused on what they're shipping next, and it's the company's job to put the fewest possible roadblocks in place to getting those things out the door.
A lot of large companies make fixes and updates to their websites or products on a monthly or quarterly cycle. At Wealthsimple, we make updates to our site whenever we need them – sometimes as many as 10 a day. Innovation can't be something you're timid about – and there's no better feeling than seeing something you made get released into the world.
Do employees have a real stake?
There's a stereotype that startup employees work around the clock, living off caffeine and power naps. And while our team doesn't sleep at the office (well, not most of the time), there is some truth – and a lot of cold brew – behind the stereotype.
Our employees do work exceptionally hard and a big reason they do that is because they have a stake in the outcome. For one, they literally own the company. That financial stake, achieved through equity in the company they're building, is crucial. And remember how we're solving real problems? They have a stake in that, too. Which means our relatively small team can accomplish an incredible amount of top-quality work in a short period of time.
Is it core?
Creating a dedicated space for tech geniuses to thrive within a company is a nice idea – but at a startup that space is the company. If these firms have a true commitment to innovation through technology, why not bring it into headquarters? Why don't the executives sit among those innovators instead of walled off in c-suites?
And if that's not realistic, another option is enabling innovation through a partnership with a startup that already knows how to do it. The bottom line is that it's really hard to implement long-term change, and I salute any company that's trying to accomplish it. But innovation only works if it's at the very core of how you operate. Otherwise, it's just a photo op with a ping pong table.
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