Radical innovation is not about playing outside the box; it is the art of changing the box’s shape altogether.
When you’re a large legacy organization, shape-changing can seem almost impossible. But it can be done - if you’re willing to throw out the old, ineffective traditional structure and embrace a whole new model.
For author, advisor, and “foresight machine” Idris Mootee, sustainable large-scale change requires radically different organizational design. As the Global CEO and co-founder of Idea Couture, he has helped countless global leaders with corporate strategy and transformation.
We sat down with him in advance of his keynote at #IntraCnf Toronto to find out why large companies struggle with radical innovation, and what the corporation of the future needs to look like in order to succeed.
At the Toronto conference you’re talking about pushing radical innovation inside the box - and changing the shape of the box altogether. Beyond the buzzwords and the hype, what is radical innovation, really? Is it even possible for big legacy organizations to be and do radical?
That's a really good question; lots of people talk about it and use the word sort of randomly and casually. So, what is radical innovation? Really, it depends - every organization is at a different stage of their life cycle. Some might be at a kind of survival stage, and for them radical literally means something that will actually save them or their industries. And for others, perhaps they're in a good position where they’re simply thinking about the future and trying to come up with radical new ideas that will actually help propel them forward.
Now, those two are at a very different sort of starting point, and each of them is very difficult in different respects. For the survival types, most of the time they're starting too late. If they did happen to be a bit ahead of the game and can mobilize the company fast enough, and they still have some sort of decent cash flow or something they can convert into cash flow, and they can retain the right people and show them the shared vision and the destiny forward - they still have a chance.
I would say that 80-90 percent of the time, the companies I've seen at that stage are either too late, or if it's not too late they can't mobilize their people because the good ones are already gone.
Good people are often the first to jump ship when they see things are not working, particularly in an ultra-competitive environment for top talent. So in that case, it's a very tough one.
The others, these are generally companies that are a little more forward thinking and want to create a playground for radical thinking that doesn't fit in with the current state of the corporate strategy.
The problem for them is that most companies in this situation are not desperate enough. Most of the really radical ideas can't even go through.
They will say the ideas are too small, or don't have any synergistic value with the current asset, or they don't have the capabilities or the market is too far away: all those reasons, or excuses, depends on how you look at it, are forcing them to say that even though they may come up with some radical ideas, they can’t or won’t take action on them. I would say less than five percent of companies jump on the radical - I mean they do things, they explore, but they don't do anything from an action perspective.
So for this latter group of companies, there is ambition but no real meat to it, no substance?
Yes, I think that's the problem with them. It's hard to find a company who is in the early stage of seeing that their survival is at risk, and while they still have the good cash flow, the right people, the right partnership, who jump on it and act very quickly. It’s rare.
Now there are companies who are trying, but they haven't been successful. Like Intel. They have been exploring, but the core paradigm of the company, how they view the market, is still very much based on the old model.
It's hard for them to suddenly see that everything is mobile, and suddenly the world is turning to different types of chips for AI - for them, it's still PC centric. So it’s very difficult to do, it takes a very different kind of management. There are people doing well, but it's hard. Intel had a chairman that was visionary and did it well, but I don't think that was sustainable.
There's always the examples of GE and Amazon, the kind of examples that everyone comes up with all of the time, but do you know of other companies doing this better than the rest?
I think there are a handful of companies, I would say five percent of companies, making a decent effort. Five to ten percent. But on the other hand, probably less than 0.1 percent are actually successful.
To take a case in point, great companies such as GE - they did everything right. Nobody in this world will argue that these people do not have the best talent, the best training, the best structure, the best management discipline, the best assets, you name it they have it. And look at the last 10, 15 years, Jeff Immelt did a great job. But it didn't get anywhere. You look at it today, now he's sort of moving on, stopping projects that didn’t go anywhere. Even though they did everything right, other than getting out of the lighting business, sold off NBC and most of its finance unit, there is nothing radical actually came about. Over the past 10 years GE is down a cumulative 22% while the S&P 500 has gained 58%.
If the chance of success is that low, is it better to just keep doing whatever you have been doing as long as you get cash out of it, and then at some point stop the business and maybe start something else completely different?
I think that's a very critical question. The academics would tell you well, it's not going to work, it's easier to start fresh. But on the other hand, the system and the world of business, the financial markets, what they want from these companies is for them to reinvent themselves. These are big firms. But is it possible?
Historically, there are a few companies that have reinvented themselves, like you think about Samsung who reinvented themselves many times. Nokia reinvented themselves until the last time, when they failed.
There are many companies who did it a few times. But again, those are extremely rare. Most companies can’t reinvent themselves. But it doesn't stop them from trying.
So is your advice to still try and organize for reinvention- to make it happen?
A company has a better chance if they are structured properly. I think there are problems on the board level, where these people are sitting at the board level and asking: how do we preserve yesterday's industries?
Most board members don't look into the future. And most companies don't even have a department that looks into the future.
When your future is your strategy, then you start thinking about what that future is, what it looks like, how you fit. Without that strategy part, they jump right into the tactical side: let's create a lab, let's do these things, let's fund this business. It's almost like random lottery tickets, you start buying them and hopefully some of them will turn out to be winners. But that is not a strategy.
I don't think that most companies are organized in a way that allows them, in an agile but structured way, to play. Even their investment criteria should be a bit different. I don't think they have overcome that on the financial side and on the corporate governance side. The degree at which a company accepts risk - that's the thing that is different. Most big companies will accept more risk, right. The degree that the company can attract talent that will take those risks is key, because in large corporations, you mess up one time, you're out. Nobody wants to bet their 20-year career with a big firm on that.
So, having that place where people can take risks, a place that people are actually allowed to take risks, and also the right kind of mechanism for them to play within the box - I don't think companies know how to structure it. I think companies will figure that out in the next couple years because, without that, they can't play in this game at all.
The right structure and people are crucial. Do companies need different types of employee to succeed? What type of people should we be looking for?
Today, most innovation has a technology component- it doesn't matter what technology. Most senior executives today, sitting in the C-suite, are not technology friendly. They came from a world where as a general manager they mastered marketing, operations, finance; technology was somewhere in R&D or design, so it's not in their areas. To find people to run new internal ventures, people who have a senior management perspective and understand business as a whole, the ecosystems, and are also very comfortable with technology and the agile way of doing business? That’s extremely difficult.
You can find these 30-year-olds who are very opportunity-driven, passionate, who understand the market easily, but they don't have the managerial sophistication to mobilize something bigger, particularly in industries like banking, insurance, pharmaceutical, that are more complicated.
The gap is very difficult. Sure, we can say we’re looking for someone who has 20 years industry experience and is familiar with x, y and z technologies - it's not possible!
So how do we bring this diverse group together, from different corporate cultures, from different levels of experience, from different disciplines, and create a kind of working group? I think this is the solution; not finding the right people, because there is no “right”.
How do you create that for maybe small teams at first, but then also at scale?
The structure would have to be very different. The conventional all-top structure where you have a business unit, you have a president or CEO running that business unit, it's funded and they have to start operating like a mature business - that's exactly the wrong thing because why do you want a small business to act like a mature business? That's not what you want. You want a small business to be very agile, very adaptable. So you're going to design that based on discipline and interdisciplinary capability. You design that company not based on an org chart, but based on parts of capability, they're very fluid.
So, if you have 50 people in that company you would have these 50 people belong to different parts, and every time they see an opportunity, or every week, or every month, you rotate these people in a fluid fashion so they can come together to tackle a particular problem. It's like technical forces solving wicked problems that large corporations are too slow and too insensitive to solve, or simply can't solve.
It becomes something that can quickly solve customer and industry problems, but then you also have a mature executive in there who knows and understands how to operationalize these things. And then you recreate it with other, bigger groups. So that would be the organization, it would be a very fluid organization. I don’t think they know how to do it like that today.
These groups of people, they share a purpose around what world problem are we trying to solve and why. There's no shortage of world problems that we have today. How do we deal with them?
We need creative use of capitalism, rather than corporatism. Because right now, it's not really capitalism at work, it's corporations at work. And we can funnel capital into groups that align with a passion or purpose, and then bring people together, whether they're from the industries or from outside, to tackle problems. This model is where the future lies for large corporations.
The company can hold many of these positive people and allow them to jump from one part to another, allow them to achieve what they want to achieve, give them meaning and purpose and tools and capabilities to achieve it, and then help them to scale. This is the future of the corporation.
The current state of operations is to find something that's proven, scale it a million times, and run the big machine. Now, when you run a big machine, you can't turn around easily, because you can't tell these 100 thousand machines that are chunking along to just stop and do something else - they're optimized to do one thing, and they do it really, really well. But to do a million things differently, you require a very different kind of setup. I think that will be the future of our corporations.
One final question: Looking back over the last 2-3 years, what's the thing you've achieved with clients that you're most proud of?
We're very proud of showing them the model that I described and that we put together to help them solve problems. It's not a consultancy model. Essentially every organization should be modeled around this more fluid model, instead of keeping people stuck in operations or marketing or finance all their life, or maybe they rotate every 10 years if they’re lucky. Companies should start attracting these millennials, put them in different parts of the company, and then develop new capabilities. We always ask: do you have foresight capability? We're very proud that it's helping companies to think about the future and activae on it.
If a company doesn't have a department to think about the future, then they have a big problem. You need one. You also need a department who thinks about design, not just from a design aesthetic but design from empathetic views: how do we bring humanity into everything we produce, whether its customer experience and products and services?
This is not how most companies see the world, they see the world as: we have customer service, we figure out how to answer your call in 2 seconds, we know how to discriminate customers based on people who can't afford us, and then we treat them very poorly, and then we go and bombard those who don't need our services. These sort of things, these mindsets, have to change and so we're very proud to show clients the future model.
I hope in ten-twenty years every corporation will have some kind of organization design with capabilities that we began nurturing here.