Change is hard. It’s especially hard if what you’re already doing has been even marginally successful. This is why corporate leaders sometimes give the Bionic team a little side-eye when we insist that they start thinking like venture capitalists (VCs). After all, money is being made, stockholders are mostly happy, and nothing is technically broken. Are radical changes really necessary?
They are. They absolutely are.
Because enterprise innovation is dying. For decades, legacy companies have scrambled to save costs and boost shareholder value without actually making anything new or addressing consumer pain points. If that doesn’t change soon, some longtime titans of industry are going to come crashing down. Hard.
So how do you shift the tide, catalyze growth, and reinvigorate these once-great organizations? Well, it’s a multi-step process, as you might imagine, but you can start by training executive leadership to think differently. Growth requires C-level champions who can release their attachment to incremental gains and embrace failure. It needs visionaries who, like VCs, invest in problems, not projects. Ultimately, you need leaders who are ready to chuck much of their hard-won wisdom in favor of some radical mindset shifts.
We’ve identified some key mindsets that help leaders spark innovation revolutions within their companies. Here are three of our favorites:
Embrace Productive Failure
CEOs are shielded from the truth because their employees have been trained to live in fear of making mistakes, betting on the wrong horse, and championing a concept that flops. Big enterprises aren’t set up for failure, and executives aren’t positioned to understand its value. So people tiptoe around leadership or spout best-case scenarios about improbable outcomes rather than fess up to misfires and wrong turns.
Say everyone believes that Product A will be the future of the company. The team members have already procured resources and mapped out a five-year roadmap for A, and they’re six months into the journey. Then they run experiments and learn that although customers don’t want A, they’re pretty psyched about B. From the outside, the obvious choice would be to update the vision, pivot to B, and get cranking on a new direction. But in an enterprise where unselling the dream is fraught with judgment and politics, the cost of learning is too high. So the whole company tacitly agrees to ignore the commercial truth and back A, which they all know will fail. We call these projects zombies.
Embracing Productive Failure means lowering the cost and increasing the speed of learning. It means small, fast, and cheap failures that ultimately point you in the right direction rather than morphing into big, expensive failures (ahem, New Coke). It means cultivating leaders who aren’t afraid to kill zombies and embrace the commercial truth, even when it is counterintuitive or requires a sharp pivot.
A company that “fails to fail” is both missing out on learning opportunities and leaving money on the table. A leader who inhibits productive failure is inhibiting meaningful growth.
Build Ladders to the Moon
The term “moonshot” became buzzy corporate speak when Alphabet’s innovation arm — called simply “X” — described itself as “a moonshot factory.” X has launched wildly ingenious projects such as Waymo self-driving cars and Loon balloons designed to make the internet globally accessible. Jealous? Understandable. The notion of a fully funded think-tank that’s allowed to ponder and experiment with truly transformative ideas is incredibly seductive. However, it’s easy to forget that ideas are presented to the public in their most mature stage; we aren’t privy to the step-by-step evolution that innovative ventures typically take.
Typically a “moonshot” is framed as a big, expensive, risky bet, but most are built on decades of quiet work before that. Backstage activity is what makes audacious achievement truly possible, and we must invest both patience and resources into cultivating it. In other words, when businesses contemplate our own moonshots, we’re far better served by building ladders than catapults.
Building a ladder to the moon may sound tedious and deeply unsexy, but here’s why it works: It allows you to learn and capture competencies out-of-order when necessary. With a catapult, you put all your resources into constructing a device that offers one exhilarating chance to reach the exosphere. With a ladder, you start at the bottom, locking in your rungs as they come available, and doing so even if rung nine shows up long before rung four. The ladder lets the learning process unfold organically, and even if it feels a little messy, it gives you a complete, intimate understanding of how you reached your goal. And it gives you the ability to cruise both up and down multiple times instead of putting all your energy into a single, colossal effort.
There’s nothing wrong with aiming for the moon. Expecting to get there in one shot, however, will just lead to disappointment. Focus instead on step-by-step progress.
Turn Outside In
We regularly ask VCs what percentage of their successes are due to market timing, luck, fate, or whatever you want to call it. Their answers are always sky-high. “I think that being in the right place at the right time is sort of 99% of everything,” says Albert Wenger, partner at Union Square Ventures. Right, and on time. We couldn’t agree more.
VCs know that the real drivers behind their huge wins are outside forces — changing regulations, the diminishing cost of a technology, consumer trends. It’s not about them; it’s about something outside of them, something happening on its own timeline. Which means looking from the Inside Out is a terrible strategy. You have to Turn Outside In.
Starting with an R&D technology and searching for a customer to sell it to? That’s Inside Out. Buying a company because they’re threatening your market share? Inside Out. Searching for a new channel for your existing widgets? Inside Out. (And incremental.)
Outside In means looking at outside forces and asking, “How is the landscape changing? What new enablers allow us to solve this customer problem exponentially better than it’s being solved now? How can we leverage our organization’s unique capabilities to ride this trend?” As leaders, we need to be keenly aware of new and emerging market forces so we can develop extraordinary ideas internally and release them at the ideal moment. We need to see potential and position ourselves to pounce when the time comes.
Leaders who embrace the Outside In mindset have a much better chance of being both right and on time.
To read more about all 10 mindsets for Growth Leaders, check out New to Big, available on Amazon or BN.com.