Critical thinking

Two fundamental pillars to building a responsible innovation company

The most successful companies over the next couple of decades will be those that practice responsible innovation. They will seek to build technology that benefits all stakeholders, and try to foresee and avoid harmful unintended consequences. 

But how? Doing all that requires thinking in ways that refute Silicon Valley’s conventional wisdom. Move fast, break things and hope for the best won’t work anymore. Nor will recklessly releasing minimum viable products and hoping they don’t do any damage – companies instead must think in terms of minimum virtual products. Other tech industry practices that have become problematic include the drive for hyper- scale, a winner-take-all mentality, and prioritizing shareholder value above all other outcomes. 

There are two fundamental pillars to building a responsible innovation company in the 2020s: 

Pillar 1: Mindset. Paramount when setting your company’s mindset is a simple idea: plan to endure. Your motivation should be to create positive consequences and solve important problems over the long haul – so your company will endure for a long time. That idea alone will prod company leaders to think through what problems they might solve for the world, the kind of culture you’ll want to develop, and how things could go wrong. 

Pillar 2: Mechanism. A proper company mindset alone isn’t enough: you need mechanisms that make sure the mindset gets supported. Build a business model that rewards positive consequences and discourages unintended consequences. Embrace a set of KCIs — key consequence indicators (more on that in a bit) — that tell you if you’re on the right track. Such mechanisms are what has been missing from almost every other call for stakeholder capitalism, conscious capitalism, social responsibility and so on. All of those rely almost entirely on good intentions. But the only way to make sure that responsible innovation endures is to align financial and business-model Incentives with intentions. Otherwise, a company will eventually be forced to make a devil’s choice between the two, and in market capitalism, financial results almost always trump good intentions. 

Mindset and mechanism must synchronize and support each other — a responsible innovation company’s yin and yang. The best intentions get nowhere without the mechanisms to make them happen. The best mechanisms won’t matter if the mindset is shallow or the culture is toxic. 

To start down the path of responsible innovation a company must make those two pillars a priority. The leadership team should continuously ask relevant questions like: What do we have to do to endure for decades? Once we set our business model and product in motion, what could go wrong? What kind of culture do we have to create so that coming generations follow through on good intentions?

Written by Hemant Taneja.

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Hemant Taneja
Hemant Taneja is an investor, founder, and author of Intended Consequences: How to Build Market-Leading Companies with Responsible Innovation. He is the managing partner of the venture capital firm General Catalyst. Taneja and General Catalyst are investors in market-leading companies such as Airbnb, Commure, Stripe, Livongo (which was acquired for $18.5 billion, the largest transaction in digital health history to date), Samsara, Snap (NYSE: SNAP), Olive, Applied Intuition, Grammarly, Gusto, Ro, and Warby Parker. He serves on the Stanford School of Medicine Board of Fellows and has worked on climate and energy issues as the cofounder and chairman of Advanced Energy Economy. Excerpt from Intended Consequences: How to Build Market-Leading Companies with Responsible Innovation by Hemant Taneja, pp. 27-28 (McGraw Hill, January 2022).

Hemant Taneja is an opinion columnist for the CEOWORLD magazine. You can follow him on LinkedIn.