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How do you build a world class workplace for innovators? | by Anders Haugeto | Jul, 2

Five years ago, one of our employees told us he was unhappy, although customers gave him top reviews. We asked him what was wrong, and he responded “I’m happy about the feedback, but it feels like I’m working with my left hand”.

He pinpointed a feeling across the company. Despite great clients, with challenging innovation projects, working on behalf of them was becoming a ceiling to innovation and growth.

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We asked all employees how we could go further from being a top performing tech consultancy in our market. Instead of looking at ways to scale that model further, it started dawning on us that the model itself was becoming a problem. We had also started to get a few ideas for software companies we wanted to build ourselves ..

Was there any reason we couldn’t serve customers and build our own ideas at the same time? Yes, plenty it seemed:

1. We’re supposed to focus

Every entrepreneur is told to focus. At best, we’re given superficial reasons to why (often perpetrated by venture capitalists, who themselves are all about diversification), and equally superficial definitions of what focus really is.

Here, we believe there’s lots to learn from how businesses are doing during the current pandemic. Take a look, and you’ll find so many businesses that fail and die because their entire market collapses underneath them. Other businesses survive because they have more legs to stand on. It goes for small startups, as much as it does for big corporations. Focus isn’t always right, it seems (more on this in a bit).

2. We don’t have enough funding

Everybody knows that building a startup is capital intensive. It goes without saying that the surplus from a 50 people consultancy (which we were at the time), wouldn’t be enough to build anything big. Also, pulling people out of client work to build ventures would further reduce that surplus ..

3. We don’t have enough ideas

Yes, they claim ideas are cheap and execution is everything (which we also strongly dispute, but that’s for another post). Still, our ventures had to be based on *something*. Where should all those great, innovative ideas come from? Were we creative enough for this challenge?

Those were some major concerns, and we didn’t have any solution for them. We couldn’t find any reason why following our dreams wasn’t a terrible idea all together.

We were in the perfect place to iterate, in other words. So that’s what we went ahead and did. Here’s a few insights from our new journey, that started five years ago:

For entrepreneurs it’s as important to generate options, as it is to execute on them.

Example: During the first wave of the Corona pandemic in Norway, when businesses where brought to almost a complete halt, many “safe” consulting customers, like big banks, sacked a lot of consultants. It may have made sense for them, but imagine you were there as a tech consultancy focusing on, say, the banking sector? (You would’ve done everything by the books, but you’d also be out of business).

With Iterate, it was different. Our apparent lack of focus, had given us many other legs to stand on during this period, including serving more innovative companies, that were booming as the result of the increased speed of change the pandemic created. Some of these were even companies we had invested in, and helped create in the first place.

When used at the right time, focus can be a powerful tool. As an innovator however, we believe you should never make focus your only modus operandi. You’ll leave too much to chance, you’ll miss out on opportunities along your way, and you’ll most likely not be able benefit from the most important insights you make.

Learn from venture capitalists, who place diversified bets. Build a diverse business. It not only saved us during a crisis — it made us go faster. And mind you, we’re not some multinational conglomerate of companies — we’re 65 creative hearts who built our company from scratch. (Still not convinced? You may also want to recap the story of great diversified businesses like Apple, Microsoft or Amazon, and perhaps also the early history of Airbnb).

What do you do if you barely have the funding to build one company at a time? Easy. Build eight companies instead.

Once we understood we couldn’t spend all our time on one idea, we started building multiple ideas in parallel instead. We put just a little bit of effort into each idea, and thereby we started stretching the calendar time it took to get things to market (not counting initial market experiments, which we’ve always done from day one on all ideas).

This revealed several advantages to the traditional linear entrepreneur approach: With our consulting business as a financial backbone (as opposed to the runway you get from investments), we could in theory spend as much calendar time as we wanted on any idea. We could work on something for a day, a week or perhaps even a month, and then leave it out there to see what happened. In the meantime, we would serve clients (who btw love the insights we bring them from this creative work). Out of thin blue air, we had found an opportunity to experiment with perhaps the most crucial factor for innovation success: Finding the right time to launch.

This was also an opportunity to discover the founding teams themselves. As long as an idea was just an experiment, as opposed to a startup, it was much easier for people to jump in and out with their contributions (design, code, market experiments, and so on). That gave everyone the opportunity to try to work on the idea, and see for themselves whether that work sparked the passion they would need to go all in.

If it didn’t, they’d receive a high five and big thanks for the contribution (much, much easier than that belated founder breakup, that has torn so many great startups apart).

Once the passion was there, the team started to emerge, by self-selection. Those teams have become the strongest teams we’ve seen, both internally, and with our customers. (Interestingly, we now also have a research program looking into this. It’s called “10x teams”, you can expect publications in the coming years.)

Not enough ideas? Really? I have to remind myself this was our greatest worry, yet it seems ridiculous today. Since we set our new course five years ago, we have probably had over a thousand ideas, we’ve experimented with more than 100 of them, and we have ten companies live in our portfolio (mostly our own, some are external startups we’ve helped build and invested in).

Lack of ideas is lack of innovation culture. Here are the most important changes we made to impact our culture:

We aligned the incentives, by making every employee invested in the long-term goal of the company.

We empowered every employee to come up with ideas and execute on them.

We lowered the bar for how stupid an idea could and should sound in the beginning. Truly innovative ideas are new and unfamiliar, and tend to seem just as stupid as the truly stupid ideas. Hence, if you expect every idea to sound impressive right away, you will for sure miss out on the biggest innovation opportunities. It also turns out that our idea culture works as a great catalyst for building more trust in each other. Pitching a bad idea to your co-workers, only to experience them helping you make it good, is an exercise that makes us both more humble, more open minded and ultimately more innovative.

We started nurturing more diversity of opinion. Coming from software / coding originally, it was important to us to start hiring people from other disciplines, like product design, graphical design, branding, business development and more.

The result of all this? We were flooded with ideas. Our motto today is that no idea is so stupid, it doesn’t deserve a pitch (you’d be amazed how many stupid ideas we have ..).

When we finally make an investment decision, we look for teams that are passionate, that are learning, and show that difference of opinions and ways of thinking within the team is an asset, that makes them go faster.

Now, we have a big stretch to make, and we’re surrounded by people and companies that can inspire us and help us grow. Our goal is obvious. We’re going to iterate. To the top of FastCompany’s list.

That road is both treacherous and rewarding. We make forward motion by oscillating between creative madness and focused execution.

History may be a straight line, but the future isn’t. Whatever the future is, it’s for everyone to take.

Follow us, to see where our journey goes!

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