Innovation leadership: Inspiring Your Organization

They say that culture beats strategy every time.??In my experience that is exactly right[1].??Your strategy and supporting innovation plan can be a thing of perfect beauty, the Audrey Hepburn or George Clooney of plans, but if the organization rejects the plan, it might as well be the Phantom of the Opera.?

So, what is our bold leader to do???First, get the basics right.??I’ll start with the assumption that you have done the hard work of creating a structured innovation process along the lines laid out in?Rita McGrath’s?seminal work on Discovery Driven Growth (DDG)[2].??You’ve also started to identify top talent to work on the mission-critical programs you’ve sponsored and, that you have an appropriate governance structure to fund and protect your future.??You may not have completed these steps, but you must at least have a process started to ensure they happen before you go too far down your innovation path.?

First, define success.??It’s critical that the entire company understand what good looks like from an innovation perspective.??Being clear about the objectives, process, and outcomes the company is looking for is the essential first step.??As a leader, you cannot assume that everyone gets what you are envisioning.??

I once worked for a very respected and admired company founder that would rub his hands over color pallets to feel the color as he tried to communicate what his design objectives for a facility were.??It might have been a great exercise for him, but it did nothing to clarify what his team was supposed to do.??No wonder the subsequent construction fell short.??This may sound extreme but it’s not far off how I’ve seen many leaders communicate.?

A better way might look like this:?

“We will invest ten percent of our net income each year into new products, services, and synergistic acquisitions. Over the next five years, these investments will collectively return 20% ROI for our investors.”??“Not everything we invest in or try will work, we expect a high failure rate and a high rate of learning from projects that do not move forward, but some projects will have a very high return and drive our long-term results.”

Let’s unpack our leader's direction.??First, the company is spending a lot of money, 10% of profits, to create new businesses.??That’s an investment commitment that will get people’s attention.??Second, new investments will return 20%.??There is no shock here, but it could take five years to get to that kind of ROI.??Third, this is the big one; not every project will work as expected or even survive the process.??Wow!??Our CEO is saying that failure is an option[3].??She also says that we expect a return on learning from projects that fail, another big idea.

Second, it’s almost impossible to over-communicate.??This is one of the big jobs of leadership.??A leader who can’t communicate clearly about what is essential to the company is not a leader.??In step one, our leader hit all the bases, so that’s good, right???Well, yes, for a start, but many times that’s also where it ends.??Saying it once is not communicating effectively and in fact, may be causing more damage than good.??Repetition of a few core messages is essential – most people aren’t paying attention most of the time.??As the former President of Charles Schwab used to say, plan on repeating your message over 700 times.??He observed, “I’d be on repetition number 668, and some guy in that back of the room would respond, ‘Oh, that’s what you meant!’”[4]??Frustrating, but real.????

It’s also not helpful to assume that signing a memo or other more formal communication is going to get the job done.??A lot of leaders talk with admiration about the memo process Jeff Bezos sponsored at Amazon.[5]??Senior executives discovered that as the company grew, their senior level review meetings were getting bogged down and decisions were made more slowly. The solution was to ban PowerPoint presentations.??Instead, champions for an idea prepare a six-page written document, together with a “press release from the future.” The first 20 minutes of every major meeting are spent reading the documents.??Then a dialogue can start.??Think of how much time you save in formatting the deck alone!??But more importantly, the memo is just the beginning of a process of “working backwards” which Amazonians use to animate their decisions once a project has been endorsed.??

It’s easy to claim you are copying the Amazon process by writing a memo and declaring victory.??But remember – it’s not the memo that matters, it’s the process of defining the future and working backward, with follow-through – that creates the magic.??

At Valize, we kind of groan inwardly when we see some version of the memo process get attributed to being inspired by Amazon, but without the follow-through that is necessary. In fact, sometimes the memo (even ones signed by the CEO!) doesn’t have the commitment of the mid-level leaders whose support is essential to the innovation succeeding.??We don’t have to tell you how that story is likely to end.??The breakdown almost exclusively starts at the top, with the belief that somehow the act of writing and publishing a single memo will result in understanding, agreement, alignment, and action.??It almost never does.??

Fortunately, leaders have many communication platforms from which to reinforce their goals, such as:

• Make sure that innovation is on the agenda for every meeting.??This doesn’t need to be anything elaborate or complex.??Simply focusing a few minutes of every staff or team meeting on what progress is being made sends a powerful message.
• Talk about innovation and newness in every critical encounter.??Again, this is not meant to be stifling; simple updates or “How are you doing on your new project?” will send the message.
• Create safe places where a structured project review can happen.??If you are using?Discovery Driven Growth?as your innovation process, there are many opportunities to review a project or milestone in as transparent a way as you like.
• Be transparent.??Share as much as you can without giving up trade secrets or competitive information.??We all know the connected world we live in, so caution is always advisable, but you can find a way to let the broader team understand what you are working on that will ensure a brighter future.??Alan Mulally often famously said, “You can’t manage a secret[6].”
• Create deliberate openings for innovation teams to share what they are learning with you and show interest.??At Microsoft, 20-30 minutes of every major senior meeting is set aside for remote teams from all over the world to beam in and share what they are up to. At global publishing giant Wolters Kluwer, CEO Nancy McKinstry launched an innovation award program in which candidate projects were both crowd-sourced and selected by experts to come to a day of presentations at the company’s New York offices.

Third, this must be a consistent, evolving, and growing management process.??Cultural transformation happens only through a relentless focus on your strategic objectives and the innovation projects that will move the company forward.???

Not only must you talk about innovation and newness at every chance possible, you must reinforce and reward the behaviors that your culture of innovation needs to survive.?

• Always be on the lookout for an opportunity for positive reinforcement of the right behaviors and recognize the person or team quickly.??
• Catch people in the act of doing the right things and acknowledge them on the spot.
• Be an active and encouraging lister.??“Tell me about something new you are working on?” is a powerful question that can also be an opportunity for recognition.
• Your team will listen to what you do, so be careful that your actions don’t contradict your words.??We have all heard of the CEO who says, “Our people are our most valuable asset.”??Then the day he announces a quarterly miss to the bottom line, he also reveals a 10% layoff.??Putting aside the distastefulness of the idea that people are a corporate asset, if you have to say it, you are likely not walking the walk, and your people know it.
• Put it on the reviews and in the compensation plan, or as they say at Columbia Business School, put your money where your mouth is.??Disconnects between innovation objectives and “core” responsibilities in compensation plans are so commonplace in our experience as to be almost cliché.?We have had many managers tell us that 100% of their compensation is based on quarterly or annual budgets, so any “special project” they may be assigned to is de-facto last on the list.?
• Scorecard progress and DDG checkpoints should be as public as possible.??We know that in this hyper-competitive world, many things can’t be shared. Still, there are countless ways to be inclusive with the broader team, such as discussing the number of active projects, the number of projects that have gone commercial, and revenue or profit contribution from innovation programs.??The key is to consistently and transparently reinforce that your company, division, or group is driven by innovation and newness.?

Four, lead from the edge.??This one is so obvious, yet so rare.??Rita McGrath discusses getting to the edges in her book?Seeing Around Corners.??Leading from the edge means getting out into the market and onto the shop floor to spread the good word of innovation and, importantly get feedback from as close to the customer as possible.??

One of the best at this is?Doug McMillion, CEO of Walmart.??When you go to Doug’s social media, you see a CEO out in the market, connecting with customers, team members, and vendors.??I have known Doug for nearly 30 years and can say that everything you see is genuine Doug and Genuine Walmart.??And, if you are wondering about innovation, just take a look at the results from their?digital transformation.?After several failed attempts, McMillion orchestrated the acquisition of Jet.com, and more importantly their founder?Marc Lore.?Lore injected the DNA of a culture of digital engagement across Walmart that took the power of Walmart’s low-cost culture and made it a strategic asset in the e-commerce space.??

Another tremendous retail example of leading from the edge, of course, was Sam Walton, who took a small-town Ben Franklyn store and made it into one of the world's largest companies by being where the action is, in the store.??

One of the few retailers over the past 30 years to give Walmart a run for their money is Costco.??Co-founded by Jim Sinegal, it is not a surprise that Jim was famous for?visiting every Costco?store every year and being on the road as many as 300 days a year.??As he said some years ago, “We have said from the very beginning: 'We're going to be a company that's on a first-name basis with everyone.”??That also includes answering his own phone. "If a customer's calling and they have a gripe, don't you think they kind of enjoy the fact that I picked up the phone and talked to them?"[7]

These leaders knew how to get to the root of their businesses and, at the same time, send powerful messages about the importance of team and evolving the business model.?

Finally, all the above leads us to the?creation of your mythology or your origin story.??Most people want to be part of something big and important. Certainly, Walmart and Costco are such organizations.??This is not a chicken or egg issue.??It is very clear from the onset that there was a culture that each of these companies knew was critical to their success over the long term, and they very deliberately built the environment to deliver the culture and behaviors that make them unique.???

Your company's mythology or origin story is a living thing that either inspires or depresses creativity, innovation, and ultimately the long-term health of the firm.??One of my favorite examples of this is from Best Buy.??At Best Buy, every new hire goes through a multi-day orientation, the centerpiece of which is a historical view of how over their nearly 60 years, they have grown from a store that sold sheet music and by “Learning through Challenge and Change” became the largest electronics retailer in the world.??

But, that’s not the important part; the focus is on events that nearly destroyed the company, yet Best Buy emerged even more vital.??Every employee can tell you the “tornado” story about the time their largest store was damaged, the team rallied, saved the product, put up a tent in the parking lot, and ran a tornado sale so successful that cars lined up around the block.??Or, the time they opened in Chicago and Sony would not allow them to sell products in their newest market.??No problem, regional managers took out their credit cards went to local Sears and other retailers, and bought Sony products for their stores.??Eventually, Sony capitulated?[8]and sold to Best Buy in Chicago.?

The use of these origin stories becomes the foundation for shared behaviors and language.??In the case of Best Buy, it’s, “We can overcome anything.”, and they have.?

If culture will beat strategy every time, your focus must be on creating a culture that will be an accelerant to your strategy.

Ron is a globally experienced organizational transformation expert sought out by boards to help them navigate some of the toughest operating environments within the consumer products, technology, and retail sectors. He has held C-level roles as CEO of Barnes & Noble, Sears Canada, and Brookstone, as well as senior leadership positions at Sony, Toys R Us, Sears Holdings, and Best Buy. He also coaches top-tier C-suite executives with a focus on personal, team and community growth strategies.

Feel free to reach out to me at?[email protected]?or connect with me on Twitter (@ronboire) or LinkedIn (?www.dhirubhai.net/in/ronboire/?)

Below are a few references that might be helpful as you think about your innovation strategy and how to drive positive transformation.??There are many more free resources at?www.valize.com?and?www.ritamcgrath.com

https://rgmcgrath.medium.com/the-inside-baseball-of-corporate-transformation-7a0000d3d222

https://www.ritamcgrath.com/sparks/2022/06/counting-down-our-top-ten-list-of-discovery-driven-planning-misses-part-2-5-through-1/

https://www.ritamcgrath.com/sparks/2022/05/counting-down-our-top-ten-list-of-discovery-driven-planning-misses-part-1-10-through-6/

[1]?https://www.forbes.com/sites/brentgleeson/2017/09/11/why-culture-doesnt-just-beat-strategy-it-must-be-the-strategy/?sh=2eb5e39d7b93

[2]?https://www.ritamcgrath.com/wp-content/uploads/2021/02/Innovation-Leader-Portfolio-Revisit.pdf

[3]?Not for nothing, but I think glamorizing the phrase “failure is not an option” in the movie Apollo 13 is one of the worst “management lessons” ever foisted on leaders.??And have you ever noticed that the person playing the video and explaining that YOU can’t fail is always two or three levels above you where presumably YOUR failure won't take him out???Cool trick huh??

[4]?https://www.communitynews.org/princetoninfo/coverstories/seven-commandments-of-marketbusting/article_190ba9f7-b1b6-5f4d-b721-aa4ba6b7325c.html

[5]?https://www.forbes.com/sites/carminegallo/2019/06/18/how-the-first-15-minutes-of-amazons-leadership-meetings-sparks-great-ideas-and-better-conversations/?sh=175af73454ca

[6]?Check out American Icon by Bryce G. Hoffman, it’s an excellent leadership story with a lot of inside baseball at Ford Motor Company.

[7]?https://abcnews.go.com/2020/Business/story?id=1362779

[8]?Best buy eventually became Sony’s largest customer in the world.?

#sony #Best Buy #walmart #cosco #leadeship #innovaion #transformation