Intrapreneurs are often set with impossible tasks, and face a ton of obstacles. But, believe it or not, things are starting to look up.
As a lean startup coach and advisor, Kromatic founder Tristan Kromer has helped startups and large corporations build effective innovation ecosystems. From his work in the product team trenches, he knows what it takes to hack corporate bureaucracy. He has seen firsthand how the corporate environment is changing for the better.
We sat down with Tristan to find out what challenges still exist for intrapreneurs, what’s getting better, and where corporate innovation is headed in 2018.
What are corporate innovators struggling with? Why, after doing innovation for several years now, are these struggles still getting in the way?
There are always a lot of obstacles when you’re trying to create something new. In larger companies even the bureaucracy involved to get the budget can be, in some cases, a 3-6 month process. That obviously slows things down.
There are other common obstacles, like simply not having the right skill set. I just got off the phone with a client who simply has no engineers, so if they want to scrape data from a website to get a list of people to do customer discovery with, they simply don’t have that ability – they have to go through every page to cut and paste names. So sometimes, there are these very obvious obstacles.
The one that’s maybe the most relevant to the Intrapreneurship Conference tribe is just the loneliness.
There's this constant feeling for a lot of intrapreneurs of, “Am I crazy? Or does this make no sense? Am I the only one at this company who feels this is the wrong way to proceed? That this is not the right way to innovate?”
That is one of the really nice things about attending the conference. You see people walk in a room and you know: oh, I'm not the only one! I'm not completely insane!
You see that many other people in these corporations recognize that these rules and regulations and processes and silos are hindering them, and that they want to do something about them.
Just being able to stand up and say that, and get the acknowledgement of the crowd, is a very powerful thing that makes a lot of intrapreneurs go back to their day jobs and go, “Ok. It's alright. There is a way forward. This too shall pass. “
I agree- that's actually why we bring all these innovators together. But let's zoom in a little more on these obstacles - is the character, the type of obstacles changing? Are companies more receptive to and supportive of innovation these days? Or maybe not?
Companies are, at least, more generally receptive to the idea of innovation. More and more industries are under extreme threat of disruption, so they’re aware of the issues. Although they are not necessarily dealing with the obstacles that are the most pertinent to them all the time.
More than anything, I think, there’s always a cultural center of gravity that is very firmly rooted in decades and decades of company history, and it’s very hard to move. So even if they manage to establish a small competency of innovation and intrapreneurship, they might make the mistake of saying to that core team of ten people, “Great, everybody go out and go back to your real lives, go back to the finance department, go back to engineering, and make everyone else an innovator.”
Unfortunately, the company’s cultural center of gravity is so much stronger than those individual people that it will just suck them back in.
It’s very important to keep up a sustained effort on innovation, even when it doesn’t benefit your immediate stock price for the next year or two. You have to keep the pressure on to change the company, to continue seed funding projects, because the payoff is in 3, 5, 10 years; it’s not going to be in the next 6 months.
It feels like a catch 22, because if you don't do sustained innovation you probably won't exist. But, is it like smoking: you don't feel the consequences until it's too late?
Yeah, certainly! So much is driven by the stock market for public companies, and mostly what we’re talking about here are public companies. The private companies are much more able to resist that pressure for the immediate reward. So it’s very much like smoking, or very much like the kid trying to resist the marshmallow on the table in exchange for more marshmallows after 10 minutes.
Companies need impulse control and having some sort of sandbox which is protected from the corporate pressure, protected from the urge to immediately generate ROI, is necessary at some level. It takes a strong C-level to do that.
The romantic ideal, if you will, of intrapreneurship is the whole bottom-up thing, but you won't get anywhere without at least some top-down support, and some kind of top-down approach.
I think so. I don’t think it always has to be from the top top – there are some very strong middle business sponsors who are prepared to put a stake in the ground and act as the air support to protect a project they feel strongly is going to benefit the company in the long run. But obviously, the more support you have, the better.
I do think bottom-up plus top-down is the best way to go so far that we’ve seen. Everybody still deals with the sticky middle at some point, but it’s a lot better than just top-down, in which case it becomes a little bit like innovation theatre where everybody sticks the word innovation into their business plan but nothing actually changes; or just a grassroots movement where people are frustrated, think their management doesn’t understand them, and it just degenerates into a bunch of people complaining.
What are some small experiments, things that you see working? Do you see things changing in the right direction?
One thing that’s happening more and more is companies are establishing how to fund innovation, which I think is a huge improvement.
The budgets are getting tranched into a seed round, series a, series c, so they’re learning from venture capital, insofar as we want to learn from venture capital.
It’s a good step in the right direction. If we fund a project for 5 million dollars, then they have no budget concerns, their budget has been approved for the next two years, so why would they iterate quickly? Why would they do any discovery or even attempt to invalidate their business model? They would actually be jeopardizing their job security by proving that their business model might not work. That’s not something that a lot of people want to do.
So, by breaking up that funding into different tranches, to say ‘ok, you only have six months and 500 thousand’ or ‘you only have three months and I’m not going to give you any money, but you have your time.’ – that is a forcing function, it forces those intrapreneurs to come back with evidence.
What’s not working about that process right now is that there are not a lot of business sponsors, or people who are on those portfolio boards, who really understand what that evidence should be.
So they might fund the project for three months for pure discovery, saying "come back and tell us what the project is", and then the portfolio review might come through and say "allright, where's the 5-year financial project" and that's not helpful.
It’s a reasonable question in a different context, but it’s not appropriate after the first three months. So although we’re getting a little bit of the structure in place, sometimes there’s still this lag in the general understanding and mindset of how to invest correctly. I think that needs to change a lot.
It sounds like there are still a lot of questions around what makes a good experiment. How do you know you're doing it right, the whole experiment thing?
Honestly, often you don’t know that you’re doing it right. The point is, if your team is asking themselves that question, if they’re asking: Are we running the right experiment? Then honestly, you’ve kind of won the battle.
When I work with teams, even very new teams, the danger is in them not doing those retrospectives, in not getting together at the end of the experiment and asking ‘was that valid?’ or ‘did we do that correctly?’ and ‘how can we improve next time?’
Are the team and the company getting together, doing a retrospective and looking back at their efforts and deciding, aside from the results: Did we do the right thing? How can we improve that process for the next time? How can we share what we have learned with the rest of the company?
As long as they’re doing that, they are improving, and that is the principle of lean thinking, of continuous improvement. So eventually, the company will improve. The only question then is whether or not they improve fast enough to beat their competition…and the internal inertia.
What else have you seen that is changing in the right direction?
I am seeing less emphasis on the idea contest, the idea challenge. That makes me happy because for a couple of years, everybody was running ideathons or hackathons or something like that, where it’s just ‘let’s generate as many ideas as possible.’ Then all of those ideas were orphaned because nobody had the funding for them, they didn’t align with the company thesis, and so forth. So I’m really glad that is slowing down a little bit.
It's not necessarily always a bad idea to have an idea contest, but until you have some infrastructure in place to catch those ideas and do something with them it's way too much emphasis on ideas for the sake of ideas.
I am seeing less emphasis on the idea contest, the idea challenge. That makes me happy because for a couple of years, everybody was running ideathons or hackathons or something like that, where it’s just ‘let’s generate as many ideas as possible.’ Then all of those ideas were orphaned because nobody had the funding for them, they didn’t align with the company thesis, and so forth. So I’m really glad that is slowing down a little bit.
It’s not necessarily always a bad idea to have an idea contest, but until you have some infrastructure in place to catch those ideas and do something with them it’s way too much emphasis on ideas for the sake of ideas.
Another thing that is starting to go in the right direction is that companies are beginning to develop more of an appreciation of having an innovation thesis. What is it? Why do we need one? How do we actually structure one?
We need an innovation thesis because we want to give some clear guidelines to the intrapreneurs: What would an acceptable idea be? What is a project that is fundable? If we’re a lumber company, are we going to fund the next IOT device? Even if it’s a great idea, we simply may not have the expertise or resources to pull that off. Maybe it’s better just being spun off.
So establishing the thesis of what’s going to be compatible with the core business, or going to voluntarily allow the company to disrupt itself, and rules for allowing these projects to spin off if they turn out to not fit that thesis but still be a good idea – that’s still in its nascent phases. Some teams are doing a little bit better, but honestly I don’t think anybody has the perfect vision of how to do that yet.
A lot of companies are still developing their understanding: in our giant conglomerate of 100 countries and 20 different divisions, is there even agreement among them, or do we need to have multiple theses for multiple business divisions?
Another great development is just the people, the intrapreneurs themselves. They are more prolific, they are more outspoken, they’re energized, they’re willing to go rogue if necessary, they’re willing to stand up and pursue a project – in some cases to their detriment. So that’s always extremely encouraging.
The lessons that we’ve learned from design thinking, from lean startup, from agile, are really being taken to heart. These terms and methodologies are no longer crazy – in some cases, people see them as just common sense. So that’s very good, the fact that the people are really improving their own skill sets and are making progress in terms of their own ability to innovate. I think that’s extremely powerful.
And maybe the last thing that’s going really well: we seem to have a common language, which is great. There is a language now. There are these terms like lean startup, that people in finance understand, and people in engineering understand. And yes, we may still quibble about the fine line between lean startup and design thinking, or where agile fits into this whole thing – there may be semantic arguments among die-hard fans here and there, but at the very least we’re all communicating now.
Fundamentally, it’s really hard to have a conversation about innovation when nobody agrees on what innovation means. So that’s improved dramatically in the past few years.
I'm glad you're seeing these trends, and I'm seeing more and more of them as well. What's up for 2018? Where do you think we, as the field of intrapreneurship, are heading?
I’ll tell you what I’d like to see: innovation getting broken away from the traditional company budgeting cycle. Right now, the budgeting cycle for a lot of these companies is happening once a year, and it’s a two-month argument about who’s going to get what funding.
What I would like to see is that each business unit, or the company as a whole, is reserving a part of its budget for “I don't know”.
To say: We’re going to have some money for innovation, this is our fund for internal innovation, and we’re not going to define what that’s going to be used for. We know we’re going to use it in this innovation funnel, we know we’re going to use it in tranches, but we’re not going to allocate it so that if a project idea comes up in March, it doesn’t have to wait for six months. That’s what I would like to see.
I think many of the people in our audience would agree to that! What's up for you? You're rebranding as a company, what's happening at your end?
Our new name is Kromatic because we actually never had a real company name before. I just named the corporation TriKro LLC after my twitter handle because I couldn’t think of anything else. So we’re not rebranding so much as we’re branding. We’re very fortunate that we’ve had the luxury of being able to work with a vast variety of clients, corporate and government and startup all with a terrible one page website and no real company name. But it’s nice to have a logo now!
We are going to reserve a little bit more of our time in the next year to work with nonprofits and causes that we believe in, so that I’m very excited about. Particularly in the US news the past few weeks a lot of bad things have been happening. Turns out our whole company has things that we all believe in that we need to reserve time to do something about. We’ve been working on a blog post, actually before this whole kerfuffle with Google, to help spark a more coherent discussion about how diversity helps innovation, and how diversity is actually a key metric for innovation.
And, hopefully, we’ll also work more with our international partners to just really cooperate. I don’t want to get in methodological battles with anybody, I want to really work with our partners and come up with the next great ideas. But first and foremost, I look forward to working with you at #IntraCnf Toronto.
