Six interesting points on how to make new ideas happen in a big company
I recently sat down with Thomas Wedell, author of “Innovation as Usual” and a partner at the advisory firm The Innovation Architects. We talked about tricks for becoming more creative, on how much risk to take, tips for selling ideas to your boss and the dangers of the Hawaii shirt syndrome. Thomas has experience working with managers from around the globe and has observed innovation at a vast variety of organizations. The focus of their in-depth conversation was how to innovate within the constraints of a rigid corporate structure.
Below are excerpted highlights (full transcript is below):
Listen to the interview here: https://soundcloud.com/prehype/prehype-podcast-how-to-make-new-ideas-happen-in-a-big-company or on iTunes: https://itunes.apple.com/us/podcast/prehype/id983443923?mt=2
Thomas’ preferred definition for innovation:
“Innovation is about creating results by doing something new. And you have to focus on the results part. If it’s creative, great, but if you don’t make an impact in the real world, it doesn’t matter. And that’s where I think people can go wrong by focusing too much on the creative part, rather than the bottom line.”
Henrik’s qualities of an entrepreneur and their greatest adversary:
“If you want to be an innovator, if you want to be considered entrepreneurial, it is your job to move the ball forward. Often that means painting a very good picture of what the future might be, or by using charm or trickery, to get things done. It’s very easy to say things are difficult and might not work, and therefore people default to not doing anything. I think the biggest risk for innovators and innovation in general is not that you do something wrong, but that you do nothing at all.”
Thomas’ advice for getting traction within a large organization for an innovative idea:
“One of the first steps is to get a sponsor on board. With a sponsor, I mean something very specific. A lot of people think innovation is about selling your idea; that’s wrong. It’s about selling yourself. So, the first question you have to ask is: who in this organization, a little bit higher up than me, can help me in some way? Who trusts me, who knows that I’m not going to create a mess or do something bad for their career if I take a few risks here and there? That’s the person who can be your sponsor and who you can approach with your idea and get advice. From the very first step, you start thinking about the political landscape.”
Henrik’s observation of a common fault present within innovation teams:
“We meet a lot of innovation teams that just started and a lot of them don’t seem to be in much of a hurry. They might have three years, so first they want to do a lot of research and discovery and play around, too. I don’t know why that is. Lately, I’ve been thinking that we’ve been talking too much about it being okay to fail. That basically gives everyone a carte blanche, that as long as they’ve learned something, it’s fine. I think that’s a little bit of BS. This is not a game, this is about inventing the future for a business and therefore, you have to really mean it.”
Thomas’ discussion of the often-underestimated value of less-disruptive innovation:
“I think we’re sometimes so blinded by the light of really big ambitious projects, those that we read about on the front page of Wired, that we miss out on the fact that there is a lot less risk and a lot more value to gain from stepping a little bit down with the ambition.”
Henrik’s emphasis on not giving up hope that small projects can succeed in big ways:
“Often, it’s very difficult to predict which one of these projects will turn out to be very big. Sometimes just building a small thing is better than building nothing at all, because, often these small things can turn into something big, if you’re lucky.”
H: Today I’m joined by Thomas Wedell, a friend of Prehype’s but also a pretty extraordinary gentleman and scholar.
T: Mostly scholar, really.
H: Today we are going to talk about how to convince your boss to let you work more as an entrepreneur. What are some of the tricks you can deploy to really get to do some of the stuff that you think you need to do, but there might be an environment or there might be structures that prevent you from doing those things you want or need to do. Joining me is Thomas, I’ll let him introduce himself.
T: I’m an author with Harvard Business Press. I came out with a book called “Innovation as Usual” two years ago. I worked a lot with corporate innovation, trying to figure out, not so much at the CEO level, but further down, how do you actually make this work. And what attracted me, and what is happening at Prehype, is the focus on implementation.
H: You spent the last 10 years or so touring around the globe, working with different companies, studying the art form of innovation, its structures and its tools.
T: Basically, whenever I ran into people who had either really failed or really succeeded, I went in and looked at what they had done. The question that really interested me was: where are our mental models about innovation wrong? We have this idea that innovation should be a free-flowing, Hawaii shirt exercise, but in reality, you have to focus on the corporate environment, you have to consider that your biggest obstacles are not necessarily the customer, or getting the product right, but if you work in a big company, how do you manage that space? And that’s something that I found not a lot of people had focused on.
H: The word innovation is one that is being used for a thousand different things — do you have a definition of innovation?
T: Yes, I love to use a very simple one. Innovation is about creating results by doing something new. And you have to focus on the results part. If it’s creative, great, but if you don’t make an impact in the real world, it doesn’t matter. And that’s where I think people can go wrong by focusing too much on the creative part, rather than the bottom line.
H: So it becomes art if it’s too creative?
T: Because the corporate paradigm of creativity came from the art world, like Alex Osborn back in the 1960s, we got this whole idea of creativity being very artsy and I think that’s a problem if we work in a normal company. I call it the “Hawaii shirt syndrome.” If you’re going to put a Hawaii shirt on in one of your meetings, is that going to further your career, or are you going to look like an idiot? And I think that’s the tension. We’ve inherited a lot of bad ideas about creativity from the art and advertising world.
H: But, let’s go back to innovation and doing something new. A framework that we talk about often is Vijay Govindarajan’s Three Boxes of Innovation.
1. How do you make your existing business better?
2. How do you extend it or create something new on the back of that?
3. How do you create complete and new adjacent businesses?
It seems to me like there are different tools for these different boxes. If you just want to make your existing business better, you need to deploy tools to basically empower your staff to think and do something in a new way. If you want to create something new, a new incubation business line, than you need some different tools. People mix all these different ones. If we start from the left, how do you improve your existing business better, and we try to introduce this concept that you’ve been writing about called stillstorming. First, can you describe what that is and then how it works in the context of being an employee of a big organization with something you want to improve.
T: We coined the word stillstorming to position it differently from brainstorming. The whole brainstorming approach is based on this very visible, very creative process that is seeking buy-in for ideas. If you’re working in Box 1, you’re in the corporate environment, not at some startup in Silicon Valley. And basically, you have to accept that your corporate culture is what it is. You cannot change a corporate culture, so those are the working conditions. And I became really interested in people that succeeded in that space.
I wrote about a guy called Jordan Wechsler sitting inside Pfizer. Pfizer is a really big, super bureaucratic company. The way he dealt with these challenges is by not being very visible, by staying under the radar. He gathered resources on the sly, tested out staff, and used his existing network to get buy-in. I came out with an article about your MTV initiative where you did something similar. You started a thing inside MTV called Top Selection, that was very under the radar. What did you do? Why did that succeed?
H: Well, I think at the time I was young and slightly stupid. It wasn’t thought through that much. The issue I had was that I had an idea to launch a new show, and the gatekeepers, who were the technology team, didn’t really want to use the type of technology that I thought would work really well. I built it on my own dime and brought it to my boss who thought it was kind of cool. But, we met all these people who didn’t want us to do it. So it ended up with me going live at two or three in the morning without getting permission and hijacking the channel that way. It sounds very rock and roll, but now you would probably get fired and escorted from the building. But, at the time, that type of thing was kind of okay. And, so we launched it and it worked very well. I think it was only by taking the risk and doing it under the radar, that it worked.
T: Can you talk more about risk? I know this is one of your philosophies at Prehype. How do you view the prospect of risk? Should the company take it on? Risk is a big thing with innovation and it’s a bad thing.
H: If you want to be an innovator, if you want to be considered entrepreneurial, it is your job to move the ball forward. Often that means painting a very good picture of what the future might be, or by using charm or trickery, to get things done. It’s very easy to say things are difficult and might not work, and therefore people default to not doing anything. I think the biggest risk for innovators and innovation in general is not that you do something wrong, but that you do nothing at all. When it comes to risk, I think organizations need to take balanced risk. For example, make it cheap to fail, so the organization doesn’t lose a lot of money if it doesn’t work. And then try it a lot of times, rather than making it very safe and expensive.
T: In my time, I’ve seen some companies that were so risk-averse that they delayed the collision with reality until the last possible moment at which point it was a huge collision.
H: I think that’s very common. I think people sit in a board room and think they’re very smart as they come up with ideas. They might try to validate it by doing user testing but the user testing is hiring an agency that is basically paid to agree with you. So, you test it, but you don’t really test it. I think what we advocate at Prehype, not just the corporations, but also with our own projects, is that we just launch stuff and see how users really react. It’s a very humbling exercise. Quite often you’ll do something that doesn’t work at all and you thought it was a very good idea.
T: I saw a fun example, well not so fun for the company. Carlsberg, the Danish beer company, decided to use a different bottle design that was a little taller, meaning the crates had to be a little taller too. They launched this nation-wide in Denmark and then realized that the shelves in bars are a specific height and the taller crates didn’t fit. So a lot of bartenders just put the crates in the back, and their unit sales literally dropped 20 to 25 percent overnight. That happened because they didn’t reality test it faster. What I’m curious about is: why doesn’t that happen? We, as an innovation industry, the experts, have been telling companies this message a lot — you have to fail, you have to test things early. Why do you think that doesn’t happen?
H: That’s a good question. I think many people are inherently lazy and like to think and talk. When you actually have to do this, it’s a lot of grind work. It’s not very fun. Most people have the idea of X, but don’t realize that idea X, actually involves endless amounts of laborious work.
T: I tried to do a startup once, but that suffered an ignominious fate. The interesting thing to me personally was that before doing the startup, I took a class on entrepreneurship. That worked against me because I thought I had it all figured out in my mind. It wasn’t until I got in the trenches and figured out that it wasn’t a logical thing, it’s something you have to go through.
H: So let’s go back to the original question. You belong to a big organization, you have an idea, something you want to do. What are the concrete steps of stillstorming, or is there such a thing?
T: One of the first steps is to get a sponsor on board. With a sponsor, I mean something very specific. A lot of people think innovation is about selling your idea; that’s wrong. It’s about selling yourself. So, the first question you have to ask is: who in this organization, a little bit higher up than me, can help me in some way? Who trusts me, who knows that I’m not going to create a mess or do something bad for their career if I take a few risks here and there? That’s the person who can be your sponsor and who you can approach with your idea and get advice. From the very first step, you start thinking about the political landscape.
H: There’s this joke in the venture community that if you ask for advice, you get money. And if you ask for money, you get advice. Maybe that’s the same thing in the corporate landscape. If you go to someone with an idea, they probably give you free range to do it. If you say, I don’t need money to do this, they’ll probably say you shouldn’t be doing it.
T: Most people like giving advice, most people don’t like to be asked for help. Help is something different, but if they like your idea, they’re going to help you with it anyway. The second thing, then, is: how do we find ways of testing this that are so cheap that we can keep it off the radar? There is such a thing as a corporate radar, and once you’re on that, people will be asking for results and five-year plans. Typically, the less power you have, the better off you are keeping it under the radar as much as possible until you have a little bit of proof of concept. Like, what you did with MTV, you broadcasted it, there were good reactions and then you could go in and say, “Look, it worked.” One thing I love that you work with is this idea of clear cost of closure. Do you want to quickly explain how you work with that?
H: It is a little bit boring. But, I guess one of our main points is the best way to reduce the risk of innovation is to make it cheaper. A lot of corporate innovation teams hire a lot of full-time headcounts to work on a project. And almost, by design, then if you realize it doesn’t work, it’s very difficult to close down, because a bunch of people are trying to come up with new ideas to keep their jobs. We create structures that isolate projects with project teams. If they don’t hit their various milestones, we default close them down, rather than default make them continue.
T: I thought it was interesting because that was one very tangible way of dealing with that question: what is the risk here if this doesn’t work out? I work with Samsung’s European Innovation team and they discovered a few things about how to best sell in various places. For example, they discovered that people in Korea are afraid of losing their jobs at Samsung. It’s a big, big deal there. But, basically, one thing they found out is that they should never present their idea in isolation. They learned to always pitch a high-risk project along with it, that wouldn’t be accepted but would increase the gatekeeper’s appetite, for the less-crazy project, which is the one they wanted to get done anyway.
H: Have you ever seen that backfire, when it really just didn’t work?
T: That happens, definitely. One company, whose name I cannot mention, launched a big innovation initiative and got sign-off from everybody on it, up to the top level. They thought they had covered their backs, but then it failed, and most of them got fired.
H: I’ve noticed that especially if you’re running a business line already and you try to innovate within that, I very seldom see people get penalized for it. If you do stuff and it doesn’t damage the company too much, I think most people are just excited that you tried something new. It’s interesting though, because if you take an innovation job, you very much put yourself where if there is nothing tangible that comes out quickly, then people wonder what you’re doing. Ironically, we’ve talked about Boxes 1, 2 and 3. Box 1 is how do you make your existing business better, I think you can actually do quite a lot within that framework. The more that you do Box 3, create a new adjacent business, then it’s very visible when you don’t succeed.
T: It is a high-risk position to step into an innovation team exactly for that reason. One interesting thing I saw was done by a guy called Luke Mansfield who ran Samsung’s innovation team. From the beginning, he went and negotiated a deal with his bosses in Korea and said he needed three years. In his case, he got it. But, what also happened, is that a year and a half in, they started asking anyway.
H: We meet a lot of innovation teams that just started and a lot of them don’t seem to be in much of a hurry. They might have three years, so first they want to do a lot of research and discovery and play around, too. I don’t know why that is. Lately, I’ve been thinking that we’ve been talking too much about it being okay to fail. That basically gives everyone a carte blanche, that as long as they’ve learned something, it’s fine. I think that’s a little bit of BS. This is not a game, this is about inventing the future for a business and therefore, you have to really mean it. I think a lot of innovation teams just start out really slow. They always seem to be scrutinized much earlier than they think they will. To your point, most of them know they have three years, but even six months in, their senior management is looking for the billion dollar outcome. As an innovation manager, you have to manage to that. You need to have different projects running in your portfolio — some long-term plays but some have to be a little more shiny. You have to manage your own role within the ecosystem of your company.
T: It’s very difficult, especially to be a highly disruptive team aimed at that because they tend to take more time. But, if you don’t have something that’s a little less disruptive and gets results or at least visibility, then you can get axed. There is an interesting example from Samsung. They were approaching their three-year limit and they hadn’t generated the results. And then there is this project where they decided to take a big risk. They had come up with a better way of syncing data between competitor’s phones and Samsung’s phones. Only, Korea said they didn’t want to launch it because they had a team working on it. But the team in London had a solution that worked, so they launched anyway. Luke Mansfield, who made that decision, launched it and then didn’t pick up his phone for two weeks until they had gotten enough traction with it. It’s a very clear example of someone taking a personal risk, but also because they were under pressure of a deadline.
H: I think you have to create kill-switches for yourself. I think you have such a bias for falling in love with your own ideas. You have to create structures to make yourself do the right thing because your mind will trick yourself. I think that’s important. Even for the stuff I do on my own and the homegrown business we do for Prehype, we very much have kill-switches and structures that keeps ourselves honest, for ourselves.
T: This goes back to the 100-day point. What I like about that is that it influences your selection of projects so you don’t end up picking very ambitious projects, that we know from research have a very high failure rate.
H: At Prehype we do a lot of different things that I wouldn’t say are counterintuitive, but, for example, we have unit economics and business models built into our businesses. That probably caps us off from making a $10 billion Instagram business because we like to have more clarity about what is on both sides of the equations, what are the unit economics that will allow us to scale this business even if we have 30 or 50 thousand accounts.
T: A lot of the research bears this out. One of the points I like to make is that we underestimate the impact of less-than-super-disruptive innovation. This is a bit tragic, but I compare this to data from 9/11. After 9/11 occurred, a lot of people chose to drive, instead of fly, because they were afraid of the visible risk. There is a German economist who figured out in the year following 9/11, an additional 1,500 people were killed in traffic, because it is actually more risky to drive cars. In the same way, I think we’re sometimes so blinded by the light of really big ambitious projects, those that we read about on the front page of Wired, that we miss out on the fact that there is a lot less risk and a lot more value to gain from stepping a little bit down with the ambition.
H: I think that’s super interesting, because if I look at the projects that I’ve been involved with that have been successful, a lot of them were somewhat unambitious when we started them. We didn’t know that BarkBox was a huge industry that hadn’t been disrupted, we just thought it was a cool little idea.
T: I remember when you started it, I wondered what the knock-down effect on the economy of happy rottweilers was and the reality is that it’s pretty big, as it turned out.
H: That comes back to advice and tricks for people who sit in roles where they would like to do new projects. Often, it’s very difficult to predict which one of these projects will turn out to be very big. Sometimes just building a small thing is better than building nothing at all, because, often these small things can turn into something big, if you’re lucky. I have a few standard questions that I always ask. If you were to give tangible advice, from your position as an innovation expert, what is an easy trait to apply to everyday life or to everyday work life?
T: I’d probably say two things. One is to focus much more on building trust networks. It’s not so much about ideas, but the ability to work with different people across an organization. That’s what I’ve seen that unites all of the people I’ve worked with. Secondly, always aim for impact. There are many teams that fall into the trap of focusing on the wrong metrics, like generating 500 ideas. You have to force yourself to be measured on real-world stuff like did we create money for the company or extra income or increase customer satisfaction, or whatever you’re going for. And I said two things, but I’m going to say three. I’m not always good at applying this in my own life, but this whole idea of working with structures and becoming an innovation architect, which is different than being an innovator. The idea of going in and working with the architecture and personal structures that are in your own life and using those to get better at what you want to get done. If you want to get better at meeting new people, create a Monday lunch routine where you sit at a different table at the company. You create structures for yourself to get things done.
H: Last question. We are obviously pretty new at making these podcasts and we’re pretty happy that a few people seem to be enjoying the first one and I hope enjoy the second one. I hope people share it and send ideas of what we should talk about. If you had a subject matter you think we should talk about in this podcast, what would it be? Last week, Steven Dean was talking about how we never talk about what is going to happen after we die. It’s a pretty interesting subject matter. What’s an area that you think is really interesting and under discussed?
T: Before you said under discussed, I was about to say the behavior design field, but I feel like a lot of people are actually discussing that. How do you getter better at engineering people’s behavior — your own, customers, coworkers and so on? I feel that there has been a shift from focusing on values and mindsets and getting more tangible. If I had to pick something more unusual, I’d say narratives. Narratives are something I’ve always taken an interest in and it plays such a huge role in how we sell things and how we tell our own stories. I work as a keynote speaker, so from that perspective, how do you get better at actually conveying ideas in a way that really works? A lot of people are afraid of public speaking. There are a lot of courses out there that focus on the presentation, like how to move your hands, but that’s not it. The point you have to focus on, is how you develop your content. And, once you have really strong content, it’s actually okay if you’re not the world’s greatest orator. Content is just more authentic.
And there is a third thing, problem diagnosis. Across every business I’ve worked with, there are people who are very good at solving problems, but really bad at taking the time to diagnose what the problem they are trying to solve is. The consequence is that very often you see these huge, ambitious projects that are just fundamentally barking up the wrong tree. That particular skill, of upgrading the world’s ability to solve problems, is what I’m working on at the moment.
H: Have you written about that already or is that for a new book?
T: I’ve written a little bit about it in my first book “Innovation as Usual.” It’s buried somewhere in chapter three or four. But, a book is not a great vehicle for changing behavior, because it requires you to read 220 pages. So, I’m trying to build a toolkit around teaching people to develop this one specific skill. That could also be an interesting topic to discuss at some point.
H: Thomas, you are a gentleman and a scholar. Always interesting to talk to you.
T: Likewise, Henrik.
More info about prehype on prehype.com, henrik on hellohenrik.com and updates on twitter.com/werdelin