When Jack Zhang decided to launch his cross-border payments start-up Airwallex, he did so without overly validating the idea so he would not talk himself out of it prematurely.

The strategy flies in the face of usual corporate practice, but it has more than paid off for Zhang and his co-founders. In March this year Airwallex became the quickest Australian company to hit unicorn status – a valuation of US$1 billion or more – after being founded in late 2015. It is still rapidly growing, with 320 staff, up from 260 in March.

Zhang says small decisions such as tweaking an existing product or moving into a new market can be driven by data, but larger decisions such as taking a business in a different direction or launching an entirely new product require a “sixth sense”.

“How to build a product that can be sustainable for 10 years or even longer is very, very important when making those big decisions. It’s more like a visionary decision rather than a data-driven or objectively-driven decision,” he says.

George Shinkle, who teaches business model transformation and organisational change at the UNSW Business School, agrees the future is unclear and says this needs to be taken into account in organisations’ approaches to innovation.

“The issue is to recognise that you can’t predict the future,” Shinkle says. “Therefore, you need to learn your way into the future, which is what entrepreneurs do.

”Entrepreneurs have these notions of making a minimum viable product and testing it, and then learning and being willing to either persevere or perish or pivot. Pivot means go to a different idea from what you learned.”

He says large companies tend to try to strategically plan their future for the next five years “and then try to carve that into stone as if it were something of great high knowledge”.

“In reality, you need to have that future vision, but you need to also be able to adapt the course along the way,” he says.

In fact, he puts his executive MBA students into a Boeing 737 flight simulator to get them used to making decisions in uncertain environments and make them more situationally aware and pay attention to what is going on around them and decide what to focus on and what to ignore.

Shinkle advocates what is known as “the agile sprint”. It is a feature of agile development where a focused team works on a particular problem with as little as a few days or weeks to push forward and quickly gather as much information they can to decide if the project is worth pursuing.

A key feature of the lean start-up methodology – which aims to shorten product development cycles and rapidly discover if a proposed business model is viable – is to discover by observing what customers actually do with the product rather than what they say about it, he says.

Companies need to understand and test the assumptions that underlie the plans and projections and accept that some may not play out the way they expected and so be willing to change.

Banks are doing this in their innovation labs, where they can quickly test a new product in a safe environment before rolling it out to wider customer base.

Entrepreneurs have a very high motivation to do this because usually they are at risk of running out of cash and companies need to create this same sense of urgency and entrepreneurial spirit through targeted incentives, Shinkle says.

Zhang says it can be difficult for established companies with established cultures and systems to innovate in-house, so he suggests creating a separate division with its own CEO – essentially a founder who can lead an innovative culture – and its own budget to achieve an outcome.

Bendigo and Adelaide Bank took this approach when it developed Up, its mobile-centric digital bank. “They basically employed a start-up to build a whole new business division,” he says.

“There’s a lot of bureaucracy and a lot of politics in a large organisation, and the objective is not sometimes clearly defined,” he says.

An entrepreneurial mindset needs to be established in the company from the outset, among the people and culture and the systems that are put in place, and staff need to be given autonomy, rather than allowing management and systems to become a bottleneck for innovation.

Employing staff with the right mindset is also central to fostering innovation, Zhang says.

He seeks staff who have a track record of high achievement in a field, be it sport, music or academia because they have the “obsessive intensity” he is looking for.

“They have that problematic approach – really wanting to solve a problem rather than demonstrating that they’re good at their job,” he says.  “They want to create a social impact in their life rather than just how much money they have made or they become a CEO or whatever.”

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