Building an Innovation Organization: Seven Battle-tested Strategies

A paradox of organizations is that as teams grow, their efficiency and rate of innovation often slows down.

Even with the right people in place, the additional scale does not deliver the benefits we expect. While there are many reasons for this, there is one factor in my experience whose importance is overlooked: structure. The success of your team often comes down to how you structure your organization—and specifically whether or not you are organized to promote the innovation you are working to achieve. Over many years of leading some of the most innovative and successful product development teams at Amazon and Zynga, I’ve found several battle-tested strategies to recruit and hire great development resources and to assemble these product avengers into powerful, productive teams.

1. Create a Great Hiring Culture

How you hire is more important than who you hire. A great hiring culture forces you to focus on the kind of people you want at your company and what it means to be successful. Everyone should be involved in the process – your engineers, technology leaders, and product development managers should work hand-in-hand with People Ops to clarify the company culture and play an active role in making the team better. Your existing team should be incentivized to hire the next great team members; if they’re not referring their friends to join them, that’s a sign something is wrong. Interview training is key; avoid the trap of prioritizing technical skills minutia over the right cultural fit, and letting people ask arbitrary questions is a sure way to reject candidates you should hire and hire ones you should reject. Interviewers should know to avoid generic questions (“What do you do well?”) or ones where it’s difficult to clearly distinguish a bad answer from an excellent one. Have interviewers try out new questions on other team members– to openly discuss and determine what constitutes a bad or good response.

2. Build Small, Loosely Coupled Teams

This is the single most important thing you can do to impact the effectiveness of your product development efforts – and you should do this early in your company’s life. Where possible, keep your development teams small, and do everything you can to ensure that each of these teams can work independently. Avoid hierarchical structures that lead to decision-making bottlenecks – situations where decisions must go up one part of an organization (for example, engineering), then down another (product, marketing, etc.) and then back up again to resolve questions. During my time at Amazon we developed the notion of the Two Pizza Team: keeping teams no larger than what two pizzas can feed. These small teams were required to provide interfaces to their services so others could use their efforts without coordination, as well as agreed-upon metrics that allowed each team to pursue their own roadmap with little to no interference. This proved to be an excellent framework for small, loosely-coupled product development teams that encourages productive interaction and communication.

3. Work Backwards

Working backwards from your customer – focusing on products that work for users – is key to building great software, and it’s an approach that we applied consistently and with great success at Amazon. A key first step in this direction is for the product development team to begin with the press release. This should be a clear, simple statement of why this product exists and what it does; it should define the way we expect the outside world to see the product – not our internal goals. Along with the press release, teams should create an FAQ document to answer the questions we imagine the press release will raise and think clearly about the things our customers will question. Teams should then build a simple version of the User Experience with low-res mock-ups for UI or code fragments and examples for services. Finally, teams should write the User Manual. While in many cases, we never use it, this is the best kind of requirements document. Following this process provides a consistent, customer-centric vision of what we want to build, why we want to build it, and how it should work.

4. Focus on the Inputs

Each team needs to understand the inputs to its success, and should be focused on these rather than on the outputs. Consider the case of two recommendation algorithms, each with a different return customer rate, NPS, gross margin and total revenues. An “output approach” would select an algorithm based on gross margin and revenues. The better choice, however, would be the one that outperforms in terms of return customer rate and NPS. This algorithm is customer-focused and controllable. This is not to imply that output measures – revenues, overall earnings growth, stock price performance – are not important. You should take them seriously and watch them, but they should not be used to drive or measure the effectiveness of your day to day work. Focus on the better customer experience, and the outputs will take care of themselves.

5. Encourage Team Movement

While this is easy to say, it turns out to be one of the more difficult things to do. We’ve all experienced the feeling of disappointment when someone wants to leave our team. Too often, that disappointment leads to the temptation of downgrading the person’s skills and talents, or making things hard for them in other ways. However, when you encourage free movement – ideally self-assembly – of teams, you’re promoting the kind of autonomy that unlocks innovation. In fact, it’s often more productive to find ways to get people to change teams when they are ready

6. Be Authentic with Your Core Values

The only thing worse than not having good core values for your company? Having the generic, inauthentic and meaningless ones. What’s a good, authentic core value? The ones that are deeply ingrained, that represent and guide all of your company activities. For example, one of my favorites from Amazon was “vocally self-critical”. From Jeff Bezos on down, this was the way we operated every day, and I was frequently reminded of this myself. This idea resonated strongly inside the Amazon organization (the wording here is a bit more mild than how we usually expressed it internally). It informed how we interacted with our teams and influenced our hiring processes. Having authentic, clearly articulated core values presents clear expectations for current employees and new candidates. You will hire better if you have clear values.

7. Make a Plan

Most of us want to avoid heavyweight processes in our companies. That is a good thing. Unfortunately, it is too common to see a complete lack of planning – and this is much worse. I encourage you to start from your earliest days with a simple strategic planning process that involves everyone on the team. That way, you don’t run the risk of later needing to impose something top-down that everyone will hate. Pick something that lets you clearly state goals and objectives, is easily understood and is visible to everyone. I love using OKRs (Objectives and Key Results) for this process. At Zynga, we used these very effectively – down to the team and individual level – to help drive results. We printed large versions of these OKRS and had them hung in prominent locations in all office areas. Most importantly: make sure that everything on your plan has people working on it – and that no one is working on something not on your plan.

How you structure your organization makes a dramatic difference in the growth trajectory of your business. While this is true with product development teams and engineering talent, it is a learning that applies across functional areas of your company. When you hire, organize and plan around an innovation framework, you unlock the potential of your team and position your business for ultimate success.

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On the Importance of Culture in Driving Innovation

“When building teams, it’s easy to pay lip service to company values and culture. But frankly, I think that what separates the great companies from those that are merely good is a genuine belief in their own story, their own culture and their own values – and that belief is ultimately what drives innovation.”

Neil Roseman

Summit's Technologist-in-Residence