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What separates the companies that change the world from those that fade into obscurity? According to Elon Musk, the answer lies in one critical factor: the speed of innovation.
Photo: Senior Airman Christian Conrad/U.S. Air Force
In this article, we’ll explore Musk’s insights on why innovation per unit time matters, why big companies often struggle to innovate, and how you can create a culture that fosters rapid, continuous improvement.
Why Speed of Innovation Matters
For Elon Musk, innovation isn’t just about coming up with new ideas—it’s about how quickly those ideas are brought to life.
“The speed of innovation is what matters,” Musk says. “Innovation per unit time, as I go innovation per year is what matters, not innovation absent time.”
He illustrates this with a simple example: “A 100% improvement in something that took a hundred years or one year—that’s radically different.”
In other words, it’s not just about what you achieve—it’s about how fast you achieve it.
The Innovation Paradox: Why Big Companies Struggle
Musk points out a troubling trend: as companies grow, they often become less innovative.
“A weird thing happens when companies get big is that most companies or organizations, the bigger they get, they tend to get less innovative,” he says.
This decline isn’t just relative—it’s absolute. Big companies don’t just innovate less per person; they innovate less overall.
Example: Consider Kodak, a once-dominant company that failed to adapt to the digital photography revolution. Despite having the resources and talent to innovate, Kodak’s size and bureaucracy slowed it down, leading to its eventual decline.
The Root Cause: Misaligned Incentives
So, why do big companies struggle with innovation? Musk believes it comes down to incentives.
“It’s not enough to use words to encourage innovation,” he says. “The incentive structure must be aligned with that. That’s fundamental.”
In many large organizations, the focus shifts from innovation to maintaining the status quo. Employees are rewarded for minimizing risk rather than taking bold steps forward.
Example: Blockbuster, the video rental giant, failed to innovate in the face of Netflix’s disruptive model. Blockbuster’s leadership was more focused on protecting its existing business than exploring new opportunities.
How to Foster a Culture of Rapid Innovation
Inspired by Musk’s insights? Here’s how you can create a culture that prioritizes the speed of innovation:
1. Align Incentives with Innovation
Reward employees for taking risks and experimenting with new ideas. Make innovation a core part of your performance metrics.
2. Empower Small, Agile Teams
Break down silos and create small, cross-functional teams that can move quickly and make decisions autonomously.
3. Embrace Failure as a Learning Opportunity
Encourage a mindset where failure is seen as a stepping stone to success. Celebrate lessons learned from experiments that don’t go as planned.
4. Set Ambitious Goals
Push your team to think big and move fast. Musk’s companies, like Tesla and SpaceX, are known for setting audacious goals that force rapid innovation.
Real-World Examples of Rapid Innovation
Let’s look at some companies that have mastered the art of fast innovation:
Example 1: Tesla
Tesla’s ability to rapidly iterate on its electric vehicles has made it a leader in the automotive industry. From the Model S to the Cybertruck, Tesla consistently pushes the boundaries of what’s possible.
Example 2: SpaceX
SpaceX has revolutionized space travel by developing reusable rockets at an unprecedented pace. Its Falcon and Starship programs are testaments to the power of rapid innovation.
Example 3: Apple
Apple’s ability to release groundbreaking products like the iPhone and iPad on a regular basis is a result of its focus on innovation speed.
The Bigger Picture: Innovation as a Competitive Advantage
Elon Musk’s emphasis on the speed of innovation reminds us that in today’s fast-paced world, standing still is not an option. Companies that can innovate quickly will thrive, while those that can’t will be left behind.
As Musk puts it, “Is the rate of innovation accelerating or decelerating?” The answer to that question will determine your success.
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