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Back when Tesla began (2003), the company was all in on innovation. Its commitment to creating electric vehicles (EVs) that are also performance cars that could travel longer distances is perhaps one of the reasons the EV market has grown so rapidly this century (EVs have been around a lot longer than that).

But Tesla’s position as EV innovation leader is at risk. The latest breakthroughs are now coming from other companies and Tesla will soon lose its claim of selling more EVs than all competitors combined.

Does growth necessarily inhibit innovation? Probably. In the beginning, basically everything is experimentation as an organization seeks to establish itself and determine market need. Innovation is the air they breathe.
But as a company grows, predictable challenges crop up…
Systems and Processes. In the startup stage, most people in the company need to be good at doing many things well (i.e., generalists) and be willing to wear many hats as the need arises.

But as the organization evolves from testing ideas to building on them, the skillsets within the team may be mismatched. Roles become more specifically defined and processes are implemented to make major activities efficient and repeatable.
Communications. Many years ago, while developing the startup I co-founded, my business partner and I were in constant communication. It was just the two of us, so we knew everything that was going on.
Once we succeeded in raising funding and started to build the team, our casual approach no longer worked. With 36 people in four states, we necessarily introduced more structured ways of keeping everyone engaged and informed.
Orientation and Focus. As Eric Reis (author of The Lean Startup) says, the earliest stage of a startup is a search for product-market fit. Almost by definition, everything you do at that point is an innovation. To be successful, you have to pay attention to how the customers or stakeholders you seek react. You learn what they like and what they wish was different, and you adjust until you “get it right.”
But once you discover the optimal set of features and functions, it becomes important to establish processes to lock down the version and start to scale. At that point, changes to the process (let alone, the offering itself) can interfere and are less welcome.

So, if the innovation/growth tradeoff is inevitable, how do you address it? Some suggestions:

Expect it.

If you understand and acknowledge these normal and inevitable challenges, you can work to ensure you stay on top of market changes — and continue to innovate. Avoid a stark “either-or” by keeping an eye on your strategy and market.

Communicate deliberately.

Innovation requires awareness and shared priorities — across the organization. The entire company needs regular updates on critical, high-level issues: market changes, new customers, new company offerings in the works, etc. This can be done in person, via Zoom, or through company-wide emails and Slack (or whatever tool you choose) — but it can’t be left to chance.

For example, one of my clients held a regular, Monday morning “standing meeting.” They literally stood, so the team would quickly share what was necessary and not settle in for something longer. Everyone knew this meeting was short and essential, and by holding it weekly, everyone stayed on (or close to) the same page.

Leave time for strategic thinking.

It is easy to miss important shifts when your focus is entirely on process efficiency. But the landscape — both internally and externally — is always changing. Are your competitors getting stronger? How are market demands evolving? Where are you most vulnerable?

Companies get into trouble when they dismiss small but continuing challenges. As I have written before, things tend to get worse gradually… and then all at once. Allocating time to consider how upcoming changes may affect your strategy helps keep your brain in the innovation space.

Innovation AND Growth

Clearly, some loss of innovation is inevitable as companies grow, scale, and mature. That’s just the nature of the beast. But it need not be all or nothing; it’s a matter of degree as to how much of the former you give up in pursuit of the latter.

In the long run, the more innovation you can hold onto the more likely you are to achieve your goals for both growth and success.