Face it, the C-Suite speaks its own language. And as a corporate innovator, so do you.
Innovators love change, but working to change the thinking of leadership — dedicated to maximizing the profitability of the core business — is difficult, to say the least. What we need is a way to integrate our needs into the language and systems that dominate in the boardroom.
Brant Cooper has over 16 years experience helping companies bring innovative products to market. As the co-founder and CEO of Moves the Needle, he has seen the consequences of this language barrier play out time and time again - and has learned how to bridge it.
At Innov8rs Tel Aviv, Brant shared his ‘Rosetta Stone’ for the c-suite, and how innovators can use it to not only be heard and understood by senior leaders, but train them to think and act (and invest) more like entrepreneurs themselves.
It’s Not About Innovation...
Brant started by telling people to stop using the word ‘innovation’. Why? Because inside your organization, innovation means different things to different people. If you ask R&D, for example, they’ll tell you innovation means inventing brand new, breakthrough technology.
What’s important is knowing your why - why is your organization doing innovation? What are we trying to achieve?
We’re all aware that large, successful corporations operate in execution mode. They understand their markets, problems, and solutions very well. Multiple markets are clearly defined, and there is a blueprint for multiple products to serve those markets. They hire people who can implement that blueprint, and managers that know how to manage people as they implement the blueprint.
Startups and innovation groups, on the other hand, operate in search mode. They don’t understand their markets, problems, or solutions.
“This is why we hear a lot about the dual operating system, or bimodal innovation where you separate search and execution into parallel tracks,” says Brant. “I’m going to call BS on that.”
...It’s About Uncertainty
While the proverbial lab off in the wilderness is nice to have, and Brant thinks it’s valuable, it isn’t the solution to your innovation challenges. The issue for most organizations, he says, is the continuum of uncertainty.
In the near term, you’ve got products in various stages of maturity - and you’ve also got a certain level of uncertainty that crosses the entire organization. Senior leaders have strategic priorities they are trying to achieve, and they aren’t sure how they are going to achieve them. When they start looking five years or more down the road, that uncertainty multiplies.
Whatever you do in terms of innovation has to be applied across the entire organization, and based on the level of uncertainty. “I used to say the two questions that innovators hear inside of our organizations are ‘what's my return on investment’ and ‘when am I going to see it’. I used to say that derisively because it was killing breakthrough innovation. But now I see it differently - of course that's what they're asking, because they've got uncertainty this year.”
Charting New Horizons
Most of us are at least passingly familiar with McKinsey’s 3 Horizons of Growth Framework. To Brant, this has been bastardized by the idea of innovation to the point that even McKinsey themselves thinks of it in terms of Horizon One being incremental innovation, Horizon Three being breakthrough innovation, and so on.
“There's really no such thing as identifying a team and telling them to go do breakthrough innovation. Innovation does not work that way,” he says. “We look at the startup world through rose tinted glasses and we think wow, look at all of these unicorns out there that are creating billion dollar companies. But one in a thousand companies is a unicorn - 999 startups don’t become a billion dollar business. Are you going to beat those odds?”
We need to think of the Horizons not in terms of levels of innovation, but in terms of when we will see the return on investment. And our innovation focus needs to be on tackling the uncertainty that exists across the organization.
So how do we do that?
The 3 E’s of Lean Value Discovery
While intrapreneurs and innovation groups are the best people to address this uncertainty, we have to redefine our mission. “It's not your job to innovate - it's your job to create new value,” says Brant. “If you're customer facing then yes, you're out discovering what new value you can create for your customers. But, as an innovation group, you have internal customers. And so you have to think like a startup: I'm here to create new value for my internal customers inside the enterprise.”
To start, Brant offers a framework: The 3 E’s of Lean Innovation, or, in his terms, of Value Discovery. The E’s are empathy, experiments, and evidence.
“You have to gain empathy. You have to understand not only what your internal customers want and what they ask for, but why they’re asking for what they're asking for. You have to understand what their pains are, what their aspirations are, what they are trying to achieve. Then you have to run experiments to figure out how you could provide value for those internal customers, and you of course have to generate evidence in order to decide what you're going to do. Any by the way - when you work this way and you provide evidence to the leaders, you're training them how to act like an entrepreneur themselves.”
Empathy For The C-suite
It’s a challenge almost all intrapreneurs face: How do I get my board, or my senior leaders, to take innovation seriously? How do I get the funding, the runway, the time and the resources I need in order to do real value creation? The first thing you have to do is interact with your C-suite as if you are a startup and they are your customer. And to do that, you need to ask a handful of empathy questions.
1. Where do you come from?
The first thing you want to know is where your leaders are coming from, because that will influence how they think and feel about innovation activities in general.
“If you have a CEO who has come up through the CFO track and they were always in finance before they moved on to being CEO, that will be relevant to how they view the capital expenditures on innovation.
If they were Chief Technology Officer or a Chief Innovation Officer before they became CEO, they're going to look at that differently. So you want to understand and ask about their career trajectory.”
2. What keeps you up at night?
When you, as an innovation group, talk to the c-suite about what your needs are, you’re inviting critique about those needs. Instead, ask them what challenges they are facing that you could solve for. Even if what they describe isn’t something you can directly solve for, you’ll at least understand what the priorities are. Perhaps they are concerned about disruption in general; maybe they think the product development and launch process is too long and it worries them; maybe things are going well and they want to double revenues in the next few years.
“If we don't define these things and find out what is driving their decision making, then we don't understand what innovation is for inside the organization,” says Brant. “We're just making assumptions based upon what we believe innovation is about.”
3. What are your near-term strategic priorities?
All of your senior leaders have strategic initiatives they are working on, and certain impacts they are expected to deliver. If they are having trouble meeting these near-term goals, what’s the likelihood they will be enthusiastic about some pie-in-the-sky, long-term breakthrough innovation project? Pretty close to zero.
If you can help them with their immediate concerns, and help remove some of the uncertainty around them, you’ll have an immediate impact - and justify your existence as an innovation group. Finding out what these priorities are is essential, as is the immediate follow-up question:
4. What are your uncertainties?
All of their near-term priorities come with uncertainties - and the best way to gather support for your group is to show them how you can reduce those uncertainties. “Large organizations are optimized for execution, so their normal path is to try to break through uncertainty with execution. But if you try to execute inside of uncertainty you're essentially giving it one shot. There's no such thing as iterating. You're just going to go for it and you're most likely going to fail.”
Once you know what their strategic priorities are, find out the level of uncertainty around each one. Brant suggest you use a simple tool, consisting of a horizontal and vertical axis, to map it out. The vertical axis goes from low to high impact - how much an initiative contributes to overall strategic objectives - and the horizontal measures uncertainty - how high or low the confidence level is that the organization can deliver that impact. Anything that falls into the high-impact and high-uncertainty zone should be handled by an entrepreneurial approach.
“Companies we've used this with have realigned,” says Brant. “They start giving some of the strategic priorities that were normally part of their PMO group to the innovation team.
The innovation team is then responsible for reducing the uncertainty before it's put into the execution engine. And so you can think about this across a whole portfolio: where is the uncertainty, or what's the level of uncertainty, and who should handle reducing the uncertainty before it's put into execution mode?”
This approach reaps big rewards for you as an innovation group. “If you can get a team to run like a startup where you're removing the uncertainty for a strategic priority of a senior leader, you're basically demonstrating how the process works to reduce uncertainty. And then, the priorities you'll be tackling in the future will be the ones where the return on investment isn’t expected until three years down the line, or four years or five years - the more exciting breakthrough stuff that you really want to work on.”
5. What is a 3-year initiative you would invest in?
Brant refers to this question as “a little judo - you're introducing right from the outset that this is not an immediate return on investment. So what you're trying to do is preclude the idea that they're going to start asking you for a return right away.”
In talking to CFOs, Brant learned that most innovation comes out of one budget, usually the operational budget, that is demands a quick ROI. But, there are other, longer-term budgets that can be tapped. There may be a CapEx budget that expects ROI in three years, or an R&D or Foundational budget that expects ROI in five years. He realized that if you simply asked the right questions, the light bulbs would go off - CFOs would realize that you weren’t asking for a bunch of money from the operational budget, but one of the longer-term budgets.
“The trick is that in order to get them to take the money from those buckets, they have to feel like you're a good steward for that money.
You can actually say you're trying to learn how they would see you as a good steward of the money. And after you've been able to prove that, they start pulling money from the longer term budgets, which relieves the pressure for ROI immediately.”
6. What metrics on progress would engender trust, and at what cadence?
Since you are now talking about a project with a longer-term ROI, it’s important to understand what metrics are important to them that would demonstrate you are, in fact, a good steward of the money and are moving toward an ROI.
You will want to define what metrics demonstrate that movement. For example, look at Silicon Valley venture capital firm Andreessen Horowitz’ 16 Startup Metrics for guidance here, and measure things like recurring vs total revenue, month-on-month growth, and lifetime value.
Also, don’t accept the usual yearly review, where you present results and they decide whether or not to allocate budget to you. Instead, push for quarterly, so they can gain confidence throughout the year and reallocate funds if necessary. “This is a way building trust with the CFO. You've been given a certain budget to manage your innovation group, and what you're dividing that budget up into internal startup ideas. When you develop evidence that suggest the ideas are wrong, you're returning the money.
Now of course, what you want is for them to return the money back to you so you can invest it in the next idea. But right now, your responsibility is to train the C-suite in how to operate this way.
So by returning the money because you stumbled across failure, you're encouraging that lightbulb moment where they see: oh, I understand now. This isn't just about how we're going to spend an operational budget year over year, this is about investing in future growth, and when we don't achieve that, when we get to failure, we're going to take that money, invest it in something else.”
7. Who on your team should join us?
Asking the c-suite to identify someone to join your internal startup team puts them at ease, because it gives them an ally - eyes on the ground, so to speak. But it also works in your favor, because it begins to create empathy for your team as well. “Which member of the finance team, for example, could actually join your startup team so that they can see how you operate? You're actually getting them to do empathy work without them knowing it.”
Developing empathy for the C-suite doesn’t necessarily mean doing what they say.
It's understanding why they're saying what they're saying, what's motivating them, what's driving their activities and decisions on a daily basis. Then you can develop a solution to what's ailing them by running experiments and seeing actually what works. Then you develop evidence - data plus insights - and present that as part of the justification for further investment in whatever ideas you're working on.
And the end result of all this is that you demonstrate the value and purpose of investing in internal innovation, and in the process, train your c-suite on how to act more like entrepreneurs themselves.