My passion, apart from the growth and innovation business, is of course firstly my family. I also find great interest in contemporary art, architecture and our nature. I love spending time in the forest, jungle, hillsides or even 80 feet below the surface free-diving. To me, compassion and inspiration have become lead words. I strongly believe in leadership beyond personal winnings.
Fostering entrepreneurial behavior, methods and approaches within an organization, demands a culture for intrapreneurs. How do we really form a systematic approach to corporate entrepreneurship?
A possibility for large organizations is to engage in true Corporate Venturing. Within these programs internal projects can be separated and externally driven projects can be integrated. Developing a strategy with balanced risk and efforts, network, competence and a working structure for this is vital for any organization engaging in venturing.
We find that organizations toggle around the issue of managing Disruptive Innovation as a value creator. Since resources are scarce and short-term results are high in demand, the disruptiveness often gets rounded off, so that it fits into the process of continuous improvements, rather than creating new values. This leads us to an inability to extract competitive changes and new revenues from our creative ingenuity. There are ways around this though.
In an approach of innovation portfolio management, it can be visualized how corporate venturing and corporate entrepreneurship fits our strategy. We need to find ways to govern, lead and allocate resources, while attempting to follow a supporting process. Now, the cultural factors behind this is of utmost importance. From choosing functional incentives to fostering an openness to “new”.
When digging into this, we also find ways to structure and organize for radical innovation and radical collaborations.
It is a bold, but from me not uncommon statement. Ideas are worthless! I would even argue that ideas have a negative value, maybe as much as €50,000 each, or if you are a larger firm even 10 times that amount.
So, the more ideas you have, the worse your situation is? Not really, if you have no ideas, you are in a different position. Even worse. You are doomed.
It is how you select and drive ideas in your ideation process that will determine if you can turn the “idea liability” into value. Skunkwork is a phenomenon that I find relevant in bridging the black abyss of non-project oriented innovation.
The co-workers dilemma
There you are with a big bunch of co-workers that all see opportunities and growth potential in different solutions. They have been to the seminars, they have registered in the state-of-the-art cloud based ideation system on your intranet. They have tried all the colored hats, the Lego building, the business model development courses. They are networking and working in diverse teams. They are doing it. But are you?
They might even, worst case, receive a €200 reward for generating ideas that have great value. Is that the response they want? No! We know it. You know it. Dan Pink shows it in his research. They feel it.
We want to be recognized and we want to participate in the process of realization. If not, we loose interest, drive, lust and passion. Our organizations end up loosing value, value that has financial impact.
An organization, which lacks the ability to foster ideas that are generated, end up loosing more than money and time on the wrong ideas; they end up creating a dysfunctional culture for Innovation. It just ain’t no fun no more. If we at least receive feedback and understand the rational behind what we invest in and not, we can continue to search for the recognition and fulfillment we are after.
Apart from the resources needed to explore an idea, there is another side to it. If unexplored and reasons are not clear, eventually the organization loose interest in the development of new ways to form its future. And worse is, cases will linger around and steal bandwidth from those that might be better suited.
The death by drain dilemma
OK, so do we stop the idea generating process in the organization in order not to build this liability of ideas? Well, do we want to stop amazing our customers and clients? Do we want competitors to out-beat us? Will we destroy value for our owners? Do we want to be part of destruction? No. Simply, No!
An organization that lack the ability to continuously develop, re-model, disrupt, amaze and launch new solutions will also loose its fans and lovers; the customers. Drain an organization of ideas, and you have drained the future of value creation.
So which are the reasons for draining the ideation process of ideas? Are you not seeing good enough ideas? Is cost and time to market to high? Do you lack resources?
My experience is that organizations benefit from sticking their head in new boxes, rather than thinking outside the box. We need to look at what has worked for whom and why, in other areas of business than our own that is. I have no intention to promote path followers or benchmarking. We need to meet people from other industries and with other experience. Through this diversity of influenes, we become creative.
When it comes to open innovation as a means to achieve different, better and faster- that is all good. But open innovation also means you actively have to search for ways to transfer your ideas to others, given you have no intentions to commercialize them in-house.
The portfolio dilemma
So here we are, the organization is ready and willing. The needs are there. We might have enjoyed double-digit growth with high margins, but what does the future look like? Even the best artists can fall in their rankings. Their clients just might not want more shipments from them. The ‘mojo’ is lost. The product has gone over the top due to product development galoring the product into what we would compare to a Hollywood spouse; Yes, it has been vibrant and beautiful, but all the technology put into it, all the upgrades all the touch-ups have just killed the ‘mojo’. Customers will look for something that has disrupted or even represents a radical change.
In their recent blog, Swedish super design firm PeoplePeople, approach this from a slightly different but just as important angle; They say “Our recommendation is a process that acknowledges creative tools for generating ideas and tools for rationality for deciding on ideas.” I have participated in finding one very simple solution to this. The solution is simple, but the value is a bit more complex to explain. Googols Decision Tool, not only assist organizations to find that rational reasoning, it also helps form a culture that leans towards the direction of business objectives, and it helps us bridge cultural hurdles in teams that inhibit everything from ‘management by decision’ to ‘not invented here’.
Guru Clayton Christensen, professor at Harvard Business School, touches at this in an article published in Business Journals. He claims even our most loved and promising brands are heading the wrong way. In my opinion he states the similar finding I make, they are at risk of loosing it due to partial inability to focus and understand what is important, things have or will change and we need to DO things. We need to build and manage the portfolio of Innovations and through this make our whole organization understand why we decide to focus on certain projects and not on others.
Thinking different is not enough. You have to DO different to make a difference.
The Non-Projecting dilemma
A common situation is that organizations have a funnel which they treat as a tunnel.. or rather a bucket. They throw everything in there and resist decisions on what to focus on and not. Here is a thought on this;
Random innovation is even more dangerous than indecisive processes. Have ideas that get no feedback and you end up with a discouraged organization. So, let your organization know what you are after.
Form a vision to lead your Innovation Strategy.
Ensure that the Innovation Strategy includes your business goals. Nota bene; Includes, not limits to.
Communicate the strategy and let people know what you need help to fix and what you can’t focus on.
Then, set a portfolio strategy so you balance short-, medium- and long term with continuous improvements and disruptive Innovation. Better yet, open up for the Radical also. Whether this involves a 70/20/10 strategy or a more bold 40/20/40 one; it’s a whole lot better than the commonly seen 95/5/0.
Allocate recourses. The best resources.
Organizations cost of failure tend to be higher when they fail to Innovate, as compared to when projects fail to deliver. So dare to start the projects, pilot, test, iterate and if necessary; Kill’em. And actually here we have a major dilemma; The inability to go into project mode, and the inability to sacrifice other cases and invest resources into the unknown. We call this the Black Abyss. After all the inspiring and welcoming idea generation, there is just an abyss were everything tends to fall into a bucket of waiting.
We have to understand how we go from ideas, into projects. Find what is relevant and get started.
As Googolians ask; Are you Innovating or are you innowaiting?
Funny enough, when dealing with corporate ventures, I have found that the stories of Skunkwork inspire and amuse us all. But let us stop for a second and reflect about this. What is it that make Skunk work?
We could say that it is a self-fulfilling prophesy; if it works it will be called a Skunkwork. If it doesn’t it will be called a failed project.
Skunkworks are projects that work under the radar. They are not burdened with the administrative, managerial and rule bound ways of a large corporation. It is important to understand that Skunkworks may be sanctioned by management, or even should be. Let us say ought to be. It is not by definition that they have to be secret, illegitimate or refused.
To skunk a work, is to form an autonomous unit, with small resources, a dedicated team and letting them work entrepreneurially. They will (have to) seek new and different ways to accomplish results, with very limited resources, and be incentivized to do so. You will have to put best of breed in terms of staffing into this.
Skunkworking is actually a way for an organization to structure their ambidextrousness. I could very well say that Mr. Richard Bransons continious breaking large growing businesses into smaller ones, is a way of using the method to retain drive, innovativeness, entrepreneurship and business focus.
So we know that Skunk works. But not everywhere; recently I sat with people from a leading Swedish firm. They had skunked a new business and at start done everything right. They recruited one of their top dogs to run it, they moved them to a different environment, even geographically, so they would be nearer the industrial center of this new technology. Not long after business started to build, managers of “Mothercorp” demanded reports and budgets and the rest is history. -You better move back to our premises so we can support (read: control) you. -The CEO is so good, can she also do this and that for Mothercorp? -Your business isn’t large enough so we need to… and today a beautiful opportunity is dormant, in yet another big corporation.
If you have your portfolio strategy set. If you have the ideas, based on problems and needs. If the ideas can be selected based on rational as well as gut feeling (i.e. passion), if you have limited resources; well, the skunk working is not a bad way to work.
My personal experience is that failure is less common and less costly inthese cases. Skunkworks need long term view. Skunkworks enthusiasm the staff. Skunkworks build value.
I am an advocate of failures, my mantra being: Failure is not a result; it is part of a process. However there are forms of failure that have fatal impact and these can be avoided through leadership, focus, guts and a bit of good luck.
Failure can have many faces
One typical form of failure is that we do not find a working or acceptable solution to a given challenge or need. When a technology proves to be not working or a solution not to be accepted by the market, often enough we see this as failing projects. We can learn and iterate and solve this, or just move on.
If we move on, usually it is for the benefit of another more promising project, which is part of a contracting process forcing us to select were we spend our resources. If we redevelop and try again, we have pushed ourselves to hopefully finding a better solution, i.e. failure was a success.
Killing a project can be hard, but important. Making the right choice for the right reasons early on, tends to touch the efficiency curve of Innovation Portfolio management.
As we are still looking for a cost to market and revenue at market ratio and since this is to be discounted based on a limited time frame, our ability to be efficient affects the overall performance even more.
The lethal failure
Another category of failures, being that we do not have resources, strategy, stamina or guts to Innovate is the dangerous part. This trap has to be avoided at any cost; else it will cost all your revenues, customer relations and talents working for you.
Failing to innovate will over time be lethal to your organization.
When organizations like Kodak, Swedish Postal Services, printed newspapers or any other stale giant lack leaders that interpret mega trends and weak signals and guide their teams to finding solutions and offerings that fill needs and drive change, then we know we are in for a kill. And it is bloody. People lose their jobs, values are destroyed, investors lose capital, and brands are ruined and on and on… however new thinking entrepreneurs gain ground for competition- and I have to admit that I like this.
The cost of closing down, rather than Innovating, collaborating, thinking in new boxes, redesigning, shaping new business models etc., is however incomparable.
There are so many ways of innovating and it is so energizing, as opposed to the contrary. Through corporate venturing methods involving periscope investments and other innovation strategies, I have seen organizations rejuvenate their business and delivering value to all stakeholders.
Leadership for Innovation
There is no alternative in today’s business environment, than to seek and elaborate, discover new ways and continue to disrupt the common grounds.
This is a matter of leadership. Lead for success, embrace failures, and celebrate passion, engagement and efforts. Dare to build your whole organization to lead, don’t focus only on single leaders. Form your culture and operations to actually support innovation and steer its focus towards the exploration and exploitation of new findings.
All industries are facing radical changes called for by new business models, technology shifts, market requirements and not least the strong super trends and entrepreneurial ways that challenge value chains. We therefore have to manage continued business and continuous changes in parallel with disruptive and entrepreneurial initiatives explored. This is partially what is called ambidextrous organization.
Lead, challenge and disrupt
An organization operating in an industry, which stands in the midst of upheaval, requires insight and drive, vision and implementation, and possibly many others contra-dictating characteristics for survival. It is no longer enough to be adaptive and agile. To deliver lasting customer value, an organization need to be challenging in parallel with the continued safely shipping of their offerings. One must be able to do something with the right hand and another with the left. At the same time. While whistling your favorite song.
Intrapreneurship and Corporate Venturing
I normally suggest to deal with these issues from a leadership and cultural perspective firstly and secondly organizing a structural solution to support each organizations specific situation. We incorporate intrapreneurship and corporate venturing as means to meet some of these situations.
Scandinavian Airlines has been on its knees. And still will be for some time. And so many saw it coming, but very little change was seen. More and more cost and efficiency programs were launched. New marketing campaigns were released. Staff was being taken on-board in even more catchy named change programs. Clients were involved in answering whether they preferred champagne or not. Customers continued going elsewhere. Cervenka asks for more disruptive leadership in our organizations.
Disruptive Leadership for Disruptive Behavior
I was kindly reminded of the strikingly spot-on article by Andreas Cervenka in Swedens Svenska Dagbladet. He writes about giants, in this case Scandinavian Airlines System, inability to think and act differently. Cervanka refers to the need for disruptive innovation. I would say in many ways one of my favorite topics.
Now, it is one thing to notice the need for disruptive leadership that drives actions towards disruptive innovation, another to criticize those that don’t. I would even argue that the most important question to ask in any business now, is; How do we ensure this doesn’t happen to us?
We need to work on different aspects of this. Not all to be mentioned here. Culturally we should embrace a bit more curiosity and courage and less satisfaction. We know from previous studies that the organizations that are the most satisfied with their growth represent those with actually the least growth. Those that are constantly dissatisfied, seek new ways to constantly challenge the way they work and seek new ways to improve customers choice to buy – nota bene – not only satisfaction.
We must have leadership that challenges everything. Always. Challenge in an exciting, engaging and inspiring, yet serious way. That is leadership. Get your people to do their best to be outstanding. We all do.
Move away from navigating only in the known. Seek answers in the unknown. What are the mega trends? Is low cost the only mega trend that could make an airline “fly”. No, I don’t think so. Just as “free” was not the way to spread music over internet. Just as much as we like to share, doesn’t mean we need to share the work of others. We just might like to share our thoughts. We want to lure others into our web of choices. Into our club. Our club of personal choices.
Innovation Portfolio Management
As Cervenka states in his article, we need to move away from the short term dilemma. Now, how can this be done? Considering all factors that affect our choices in an organization. I would say that Innovation Project and Portfolio Management is the way to go. We have found as we show this approach to corporations, that the choice to search for optimal net asset value and returns, most often include putting some resources behind the disruptive ideas. Making certain they move from ideas, to the drawing table and on wards toward value creation.
I remain saying that ideas are close to worthless. Ideas that generate value, repetitively and with a margin, they are worth pursuing. They are Innovation. They should partly be disruptive.
Finally I am an advocate for long term leadership. We have to look beyond the most immediate and our personal agenda, to find the solutions that admit change.
As I am participating in a thought leaders Tank meeting with Innovation Pioneers on Disruptive and Radical Innovation, I ask myself; Do these in any way merge or are they parallell, maybe even contradictionary?
On a first note, when disrupting a business we seek to do something that break the usual sustaining processes. We take on risk to not make the most out of a Potential or an Opportunity but rather shift the curve of competetive advantages. We find a solution to a real or percieved quality problem, whilst still offering a solution with a cost adavntage.
Radical, on the other hand, falls more into hand as a way to maximize the reach within an Opportunity or a seemingly reachable Potential. To achieve this we seek new technologies and processes that can bring us to major breakthrough.
While the disruptive still deal with a known product on a known market, the radical will more likely reach for the unknown, allthough the output is most commonly unknown.
Phd Christian Sandström says, Companies are usually able to reconize what will happen. The problem is what to do about it.
He continues by agreeing to my long time saying, the problem large companies have, is that they think big, demand big and fail big. Again, this is where entrepreneurship, or intrapreneurship comes in. Through partial separation and corporate venturing (internal).
I continue to think; Is radical innovation based on a repetetive process, in the long run just a disruptive movement?
We are often so attached to our ideas, concepts and cases, that we loose the ability to holistically evaluate or have them efficiantly developed. This attachement can also work as a strength when it comes to pulling your baby through rough times. However, this is rather persistance.
Are you strong enough to take the ax and discontinue a case that is not proving or will not achieve he right strategic values? Are your strong enough to believe in a case that still has much to prove? And, maybe more importantly, are you strong enough to let go of a case, so that it can mature, develop and refine under other management?
Letting go of a project or an idea, can be as hard as letting your child try their own wings and leave home. You fear all sort of more or less rational outcomes, even that your position as a parent will be deminished and even questioned. This fear is based on one of the strongest forces within us, egoism. However we need to understand that egosism in a short sighted point of view, is very different as to the egosim we find when we look a bit further.
What is good for others is so much better for us. Meaning, we do something for ourselves, we feel ok. At least if it is not at the direct cost of others. Doing good for others, feels very good. Even though it might be at a certain cost to ourselves. Maybe even due to the cost to ourselves.