Small companies and start-ups operate a lot like families. The owners must provide an environment that encourages creativity everyday as they face challenges to their very existence. They can’t afford to have strict chains of command. In this series, we examine how big businesses can get the most from their employees by learning from small businesses.
Today, many large companies want their people to be more creative, innovative and entrepreneurial. They want original ideas that result in cost reduction and market advantage. But companies must first understand how creativity thrives, how it’s directed, and why it is more likely to come from the small businesses.
We have actually had clients who have asked us to improve their company culture without changing their structure or compensation system. There are consultants who will attempt to do just that, but ultimately people need to know where their checks really come from, and need opportunities to cultivate creativity. In small companies, employees and owners are much closer to the true source of their income – their customers. This sobering reality forges a team focused on sales and survival rather than turf wars and job preservation.
Here are 4 elements to foster a positive company culture of creativity, innovation and entrepreneurship:
1. Income. Employees at larger companies can easily get the idea that they are paid whether or not they are productive and creative. The pink slip is usually their first indication that something went wrong. Big businesses should start every new employee’s orientation with a thorough education of how the money starts with their customers and goes through all the twists and turns to wind up in their paychecks. This reality lesson is reinforced using visuals such as graphs, as well as bonuses tied to sales and profitability. When employees see the money trail, it is easier to come up with new solutions and ideas.
2. Permission. Experimentation and risk-taking are essential to discovering something new. But it’s not just permission, it’s a procedure where by the mistake or experiment is acknowledged, discussed in open forum, and the documents that need changing are identified and improved. Hiding mistakes and failed experiments because of a culture that doesn’t tolerate them, stifles creativity. With this in mind, big companies should consider giving their people permission to experiment.
3. Encouragement. Pleasing the people we look up to and respect is hardwired into our behavior. Just as when we were children and students, we still look to our superiors for approval that we are doing the right thing. Big companies, rather than expect their people to “just be more creative,” must coach and assure them that they are on the right track.
4. Acknowledgement. Small start-ups know that when they publicly acknowledge a good idea, they not only reward the person who came up with it, but they give the rest of the team a reason to appreciate their coworker. Further, they see what behavior gains public praise, and they want to earn that for themselves. Legal departments in big companies (that generally are paid whether or not the employees are creative, imaginative, or leading edge) often discourage documented praise for fear it could be used against the company in the future.
By looking at the “family atmosphere” of small start-ups, we get some ideas about how big companies can create the progressive company culture necessary to encourage creativity.
Next time we will discuss how owners of small companies get more good ideas from their people when they talk directly to them.
Who Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders