As a public company, you have to answer to investor and analyst concerns and show profitability every quarter. Ideally, increasing profitability. Faced with showing profitability, many public companies may be tempted to pull the plug on innovation and new projects that don't contribute to revenues in the short term. That's a big mistake, according to Beth Hendriks, CTO of procurement software provider SciQuest, which has been public since 2010. In an interview with The Enterprisers Project, she explains why companies that let innovation lag do so at their peril.
The Enterprisers Project (TEP): One reason startups, in general, are good at innovation is that it's relatively easy for them to take significant risks because it's a small, new company. SciQuest is now a public company with more than 500 employees. How has that affected your ability to innovate?
Hendriks: With many startups, they are investor driven versus revenue driven. As a public company, we are accountable for revenue on a quarterly basis, and we are must always balance our investments in innovation that will drive future revenue versus immediate features that drive near-term revenue. We have been diligent to dedicate some cycles to innovation as that is a key aspect of the future success of SciQuest.
TEP: SciQuest has grown a lot by acquisition in the past few years, which must have changed both the size and the character of your company. What have some of those changes been?
Hendriks: Acquisitions have introduced different cultures, various corporate IT practices, and different technology architectures. Start-up cultures often have less pressure around spend versus revenue, less maturity on processes. We have to be careful to shift some of these patterns slowly without risking the loss of the employee base of these companies as they bring substantial value and domain knowledge to our organization.
TEP: Because larger companies require more coordination among more departments, it's usually harder to just go off and try something new. Is that true at SciQuest?
Hendriks: It's true. Bigger organizations do require more coordination. One of the approaches I prefer is to seed an innovative process or idea within a smaller area and create success. At that point, you can deploy this new process, technology, or tool out to a broader part of the organization. The data and proof of success help sell the new idea to more teams. Also, if it doesn't succeed it limits the impact and investment lost in the trial.
TEP: Anything else you do to make sure your company stays innovative?
Hendriks: SciQuest has introduced "Do It Yourself" days. This program allows the technologists to set aside time to experiment and innovate. We have found this very successful as some will focus on innovating product ideas, some process changes, and others items unrelated to our space, but that revives the engineer.
TEP: As more corporations depend on SciQuest for their procurement procedures, is it still as safe to experiment as it once was?
Hendriks: We have an obligation to our customers to experiment and innovate in the procurement space. Our customers have invested in our company not only for today's value to their business but also the vision and expertise in the procurement space that we provide. It is our responsibility to ensure that we put the right checks and balances in place to continue to provide high-quality products as we introduce these innovations.
TEP: In general, what advice would you pass along to other CIOs and CTOs about how to keep innovation alive as a company matures?
Hendriks: It is important to remember that when you as an organization don't innovate, there will always be a start-up or smaller company out there that will. You will lose the position of leadership when you become complacent. There will always be a backlog of features that customers will demand, so it is imperative that you always set aside some percentage of investment for innovation.
