How to Balance Process and Innovation

Process drives repeatable results which protects profit, but innovation is required for discovering new ways to do things. Investors require process but competitors will push you to innovate. How do you balance the two?

Today, Dougal Cameron with GSTVC share with us how he and the GST team view balancing innovation with process.

Problems driving process and other issues

In a lot of our prior companies we used to develop processes in response to problems. While this is tempting, we have found that this stifles innovation. Innovative team members who design the processes are driven away when processes become mature. The culture can become risk averse and processes can become sacred cows. A sentimentality can set in protecting process and rejecting innovation.

Alternatively, we have found that software companies tend to view themselves as innovative. Most of the time these businesses have the word ‘innovative’ or ‘disruptive’ listed as a core value. This can lead to rejecting all process in a misguided sense of being innovative or viewing all processes as areas for innovation.

For instance, I was once on a team that had a task to research an issue and come up with a recommendation. We decided we wanted to recommend an innovative solution and we thought our approach accomplished that. However, one team member got caught up by the term innovation and decided that we ought to innovate in the grammar structures and how we formed our logical argument. At this point, we were clearly biting off more than we could chew. Our ideas were at risk of falling flat because we decided to ‘innovate’ in a non-scoped space.

Create scope for innovation and look to process for the rest

For most companies, the idea of keeping the scope of innovation to the product and service delivery is a good idea. The rest of the company should seek to be fairly ‘normal’. Innovating consumes a lot of capacity and early and seed stage B2B SaaS firms are inherently capacity constrained.

Creating process, however, can work against a culture of innovation. So how do you balance the two. We found success at adopting well defined and non-controversial processes for non-product-oriented areas. For instance, our onboarding, employment packages, financing structure, support structure, and team hierarchy were all conservative and non-controversial.

This allowed us to allocate our limited capacity to innovate on the product. We wanted all team members to think about how our product and solution could better serve our customers instead of how to deal with a different organization structure or way to receiving tasks.

How to build a good process

We found that the best processes started with a good process owner. This owner should be someone who is impacted by the process and is intimately familiar with it. For instance, the head of account management should probably own the account renewal process (which is a requirement for all enterprise software companies). This ensures the process is designed by the team that has to live with it.

The processes are then reviewed by the executive team and presented by the owner. This ensures that the managerial wisdom and lessons learned by the executive team are leveraged. Finally, after a process is designed, it must be distributed and available to the team.

My full thoughts on building effective processes can be found here: Engaging Autopilot: How to Leverage Process to Scale Faster.

Self-checking for innovation

The software industry changes fast. Firms that instantly respond to issues with a process risk becoming set in their ways and missing big shifts. However, firms that ignore all process will not survive to see their innovative ideas mature. It is a balance.

Lean into process for non-product areas and balance that with a self-check of company for innovation. We have done this through a few key areas:

1. review of sales losses,
2. scanning competitors and competitive solutions (especially at the intersection of new technologies), and
3. internal surveys.

Your team will know whether you are slipping behind far earlier than management.

Conclusion

Both process and innovation are good and necessary to scale a B2B SaaS firm. Balancing the two is a game of tradeoffs. We find most success when looking to build traditional processes in the non-core areas of the firm and pouring our innovative capacity where it matters most: the product.