My name is Robyn and I am a recovering Innovation Snob.
I didn’t realize I was an Innovation Snob until a few days ago when I read the following in CB Insights’ report State of Innovation: Survey of 677 Corporate Strategy Executives, “Despite deep fear and talk of disruption, companies invest in the small stuff… 78% of innovation portfolios are allocated to continuous innovation instead of disruptive risks.”
“That’s exactly what they should be doing,” I thought to myself. “After all, the Golden Ratio often preached when discussing innovation portfolios is that 70% should be allocated to Incremental or Sustaining innovations, 20% to Adjacent innovations, and 10% to Disruptive or Breakthrough Innovations.”
That’s when it hit me:
When talking about “Incremental Innovation,” we actually mean “Incremental Improvement.”
Because we mean “Improvement” (even when we say “Innovation”), we don’t value Incremental Innovation in the same way that we value the innovations that introduce truly new things (products, services, technologies, business models) to the world and dismissing it as “less than” those “higher forms” of innovation.
Dismissing Incremental Innovation as “less important/valuable than” other types of innovation is not only snobbish and hypocritical, it is incredibly ignorant. Incremental Innovation is exactly this type of innovation that a company must do in order to stay competitive today AND fund the Adjacent and Breakthrough innovations that will define it’s future.
I am 100% guilty of telling people that Incremental Innovation is important and then rolling my eyes when someone pitches an incremental improvement as innovation
I hate it when I get all self-righteous and judgey about someone or something only to realize that I am just as guilty.
Ooops, my bad
How did we get here?
There’s probably lots of reasons for this gap between what we say (“Incremental Innovation is an essential component of any innovation portfolio”) and what we do (“Incremental innovation isn’t real innovation”) but these are probably the 3 biggest drivers:
Incremental Innovation will not make you famous. No company has ever landed on Fast Company’s “Most Innovative” list because they launched better/faster/cheaper/easier to use versions of their existing products. No one has ever been invited to speak at TED because they made a slight improvement to someone else’s idea.
Incremental Innovation will not make you rich. Entrepreneurs with dreams of starting a unicorn company (and realizing the massive payout that comes with it) don’t look for things they can improve, they look for things they can “disrupt.” Companies know that Incremental Innovation is better suited to helping them maintain their place in their industry, not catapult ahead to the top of the heap. Consultants know that no company will hire them to help with Incremental Innovation, so they publish and preach and sell the promise of cheap and risk-free breakthroughs.
We are so desperate to be seen as Innovative that we’re afraid to be honest. Words matter and, even though it’s a buzz-word, companies love the word “innovation.” Their annual reports and quarterly calls are filled with it, employees are measured on it, valuation premiums are calculated using it. As a result, we know that we are more likely to get budget, people, support, recognitions, raises, and promotions if we say we’re working on “Innovation” even though, in our heart of hearts, we know it’s an improvement.
Where do we go from here?
Captain of the “Incremental is Innovation, Too!” campaign
We have 3 options:
Keep calling incremental changes “innovation
Stop calling incremental changes “innovation” and start calling them “improvements”
Start using more specific language to describe innovation instead of just using “innovation” as a one-size-fits-whatever-I-want-it-to term
Personally, I’m in favor of #3 because it recognizes that doing something new or different is innovation and therefore difficult and forces organizations to be more disciplined in how they make decisions, especially ones related to resources allocation.
For those wanting to pursue option #3, there are lots of ways to go about it and I’ll cover many of them in an upcoming post. But the easiest way to start is by asking three simple questions:
Does what we’re doing improve something that already exists (e.g. make it easier to use, cheaper, more accessible)?
Does what we’re doing change the way we go to market (e.g. from selling through a retailer to going DTC) or make money (e.g. selling subscriptions instead of having the consumer pay for an item when they buy it) or who we’re targeting (e.g. from targeting women to targeting children)?
Does what we’re doing change how we go to market and how we make money and who we target/compete against?
If you answered Yes to #1, you’re doing Incremental Innovation. Yes to #2 is Adjacent. Yes to #3 is Breakthrough.
All 3 are essential components of a health Innovation Portfolio. Each requires different people and processes to make them work. Each deserves recognition and respect from peers, leaders, press, stockholders, and the general public.
Let’s be honest, I’m not sure that I’ll ever be as excited for Incremental Innovation as I am for Breakthrough innovation. I can’t imagine ooohhh-ing and ahhhh-ing over it the way that I do with breakthroughs. But I need to respect, value, and celebrate it, and the people who do it, as much as I respect, value and celebrate other types of innovations and the teams that work on them.
My name is Robyn and I am a RECOVERING innovation snob.
I’ve had more than one conversation recently in which an Intrapreneur will ask me, with downcast eyes and voice barely above a whisper, “Has my career been a lie? Is making innovation happen in a big company actually impossible?”
Intrapreneurs have the hardest jobs in the world so it’s understandable that they often get frustrated and sometimes burned out. After all, they face a massive system of hundreds (thousands?) of people who are not only motivated to defend and extend the status quo but who are rewarded for doing so.
While we can’t give up (never give up!), sometimes we need a break. But what is an Intrapreneur to do when they need a break from corporate innovation?
Happily there are lots of options because Intrapreneurs have many valuable yet rare skills than can easily be applied in other roles. Let’s take a look at just a few alternative professions that draw on an Intrapreneur’s unique skillset.
Intrapreneur Skill #1: Making things happen with very few resources
Remember that time you submitted a budget request for $3M to support a team of 5 working to test 3 new businesses that, if launched, would generate $450M annual revenue? Remember when you actually received $1.5M for a team of 3 to test 6 new businesses that, when launched, would generate $1B in new revenue? Remember when you come this close to actually nailing that crazy goal?
You could be a public school teacher
According to to the OECD, from 2010–2014 education spending per student increased 5% across its 35 member companies. In the US, spending per student decreased 4% over the same time frame thanks to a 3% decrease in spending and a 1% increase in student population. Yes, public school teachers are being asked to teach more with fewer resources.
To add insult to injury, according to a survey by Scholastic, teachers spend $530, on average, out of their own pockets and teachers in high poverty schools spend, on average, $750 out of their own pockets. Now consider that, according to another OECD report, on average, US teachers are paid “less than 60 percent of the salaries of similarly educated professionals…the lowest relative earnings across all OECD countries with data.”
Intrapreneur Skill #2: Maintaining enthusiasm despite being wrong
Remember that time that you ran an experiment to test your customers’ willingness to pay only to find out that it was half of what you needed to be? Then remember how you spun that result into a positive thing because it allowed you to quickly kill the project and start investing in the next one?
You could be a meteorologist.
Have you ever seen a depressed meteorologist? Nope, neither have I. Even though they’re wrong all the time (actually, they are, on average, wrong only 20% of the time according to this Kansas City meteorologist who has absolutely no reason to doctor the data), they get on TV multiple times a day to predict the 1-day, 5-day, 7-day, and even 10-day forecasts.
They spend hours cranking through computer models to tell us at 6am that there’s a 20% chance of rain today. Armed with this information, we leave home without our umbrellas only to get drenched in something that can only be described as a monsoon during our commutes home. Then they pop back up at 11pm happy about the day’s “beneficial rain” and peppily predicting sun tomorrow.
Intrapreneur Skill #3: Optimism in the face of incredible odds
Remember that time you were super excited to be asked to join a new team at your company that would focus in creating new business models and launching new businesses? Remember how excited you were to present your first batch of ideas to management? Remember how you were only momentarily bummed when all your ideas were crushed because they didn’t support the current business or fit the current business model? Remember coming in the next day full of energy and optimism that you’ll get ’em next time?
You could be a lifelong Cleveland Browns’ fan.
OK, I know that being a Browns’ fan isn’t a profession (it’s an identity) but Browns fans are the world’s best example of this trait. Not only did the Browns lose Every Single Game during the 2017 season, they have put together the worst 3 season record in NFL history, “including all existing franchises from 1920 until now. Of the 32 existing franchises, in every season they have played in every city they have played in, with every wacky nickname attached, no one has had a worse three-season run.” Yet, despite being the worst team in history, Browns fans still show up to games, even when the bitter winter wind whips off Lake Erie and swirls around the stadium. They’re so steadfast that The New York Timesactually wrote an article about them and their unwavering belief that “there’s always next year.”
There you go, dear Intrapreneurs, just a few of the thrilling careers where you can apply the skills you’ve honed fighting the good fight in corporate America.
As for me, I’m going to stick with Intrapreneurship because dealing with kids all day is my version of hell, I’m pretty sure meteorology requires math, and my heart is still broken for the 1997 Cleveland Indians so I can’t take on any more Cleveland sports pain. More importantly, I still think Intrapreneurship is a hell of a lot of fun. Most of the time.
Nothing drives my husband more insane than when the “80/20 Rule” is invoked. Whenever we’re doing something and I wave my hand and say “Eh, it’s good enough,” I watch, mildly amused, as he takes a deep breath, tenses his shoulders, and tries his very very best to find a way to explain to me that it is either right or wrong and that there is no such thing as “good enough.”
The look on my husband’s face when I say “it’s good enough”
When you consider that he spent 6 years as an officer in the US Navy’s nuclear submarine fleet, learning how to run nuclear reactors, and occasionally sleeping on missiles because they offered more room than his bunk, it’s easy to understand why he approaches the world with an All-of-Nothing mindset.
But most of us don’t live in a metal tube, deep under the ocean, side-by-side with nuclear warheads, knowing that the smallest spark could result in a long, agonizing death from suffocation, starvation, or melting (seriously, he has a story of nearly melting to death. It’s one of my favorites).
So why do we act like it when it comes to innovation?
Don’t believe me?
Every innovator working within a big company has had at least one moment in which they have very promising news — fantastic customer feedback on a new concept, promising early revenue from a small in-market test, genuine interest from a potential partner or acquisition — and it’s time to go to the powers that be and ask for more money and/or people.
They enter the meeting, bursting with optimism because they’ve always been told by the bosses that “We know innovation is more risky than our current business” and “we know we need to fund experiments because that’s how you de-risk innovations” and “we’ll find the money when we need it.”
They sit down, present the great news, share the data, outline the next steps, and make the Ask for the money that they were promised would be found the moment it was needed.
The look on your boss’ face when you ask for more money or people for an innovation project
The bosses are silent. Squirming uncomfortably in their seats, they start talking about the current business. Maybe it’s not doing so well so they need to funnel all the extra resources to it. Or maybe it’s doing great and they want to allocate all the extra resources to capitalize on the momentum. Or maybe it’s going exactly as expected but you never know what could happen so we need to hold on to the extra resources, just in case. And, by the way, you’re scrappy innovators, so see what you can do with what you’ve got.
This is when innovation runs into the Winner-Take-All Effect and, more often than not, it’s not the winner.
In this fascinating Medium article, James Clear asserts that,
“Not everything in life is a Winner-Take-All competition, but nearly every area of life is at least partially affected by limited resources. Any decision that involves using a limited resource like time or money will naturally result in a winner-take-all situation.”
All businesses face the challenge of limited resources. In fact, one could argue that business strategy is fundamentally about resource allocation decisions and that businesses succeed because they allocate resources better than their competitors.
The issue here is not that resources are limited and that they are, more often than not, allocated to existing business operations. The issue is that often they are ALL allocated to existing business operations.
Situations in which small differences in performance lead to outsized rewards are known as Winner-Take-All Effects.
Admittedly, the differences between innovation and core business projects are greater than the 1/100th of a second Olympic medal example Clear gives in his article. But given the context of a world that is transforming ever faster and in more unexpected ways, businesses can scarcely afford to commit all their resources to their existing businesses and treat the creation of new businesses as if it were fun little hobby.
There are countless reasons why this Effect seems to have taken hold — the need to deliver short-term quarterly results even at the expense of long-term investments, performance incentives that encourage people to adhere to the status quo, the ever-present demand to do more with less so the company can show higher profits. What’s important is not tracing the root causes. What’s important is figuring out how to overcome the root causes and shift towards a Results-Get-Rewards model.
This is probably the hardest part of working in innovation. Yes, there is a lot of advice (create a growth strategy, quantify the business results required from innovation, invest like a VC), many frameworks (70/20/10 ratio of innovation investment), and tons of tools and most of them are incredibly useful and very on-point. They are also not sufficient to escape the Winner-Take-All Effect.
The reason is that, ultimately, these frameworks and tools are applied by humans who are juggling more demands, decisions, and pressures than are accounted for in the frameworks and tools. Most business leaders have to juggle the tangible demands of sustaining the current business with the felt need to create new businesses. If they succeed at the former but fail at the latter, they will likely still be rewarded with performance bonuses and maybe even promotion. But if they succeed at the latter and miss on the former, they’ll be questioned, put on probation, and maybe even fired.
Your job, as someone trying to make innovation happen, is to help your boss to move past his or her risk aversion by addressing the risks (real or perceived) to the business AND to your boss individually.
In addition to pitching all of your great learnings (increased confidence from tests, and early revenue) you also need to tell your boss what’s in it for him or her. Perhaps the CEO has just announced a key strategic priority and this project is an example of how your boss/team/business unit is on the cutting edge (and can get your boss some face-time with the CEO). Perhaps someone was recently promoted because they “exemplify our company’s values of innovation and initiative” and this project positions your boss in a similar way.
To be clear, this is NOT manipulation and you should NOT say anything that is untrue. This is simply knowing your customer (your boss), knowing their important and unmet needs (build the business, feel secure in my job), and pitching a solution that addresses functional, social, and emotional needs.
Admittedly, this doesn’t work all the time but it works more often than you might think. They key is to be thoughtful, honest, and truly committed to advancing your innovation project AND the people working on it (your team) AND the people investing in it (your boss).
How your boss will look when you help him or her invest in building the existing business and creating the net new business
It’s Monday morning, you’re settling into your office. As you sip your coffee and start scanning your email for the newest crisis, you hear a knock on the door. Turning, you see your boss standing there…
“Good morning! Wanted to talk to you about an exciting opportunity. As you know, our CEO wants us to be more innovative. The Executive Committee met last week and we decided you would be the perfect person to lead our new innovation team. We want you to really own this so let us know what you need to make things happen. Any questions?”
If you are like the hundreds of people I’ve worked with over the past 15 years who have found themselves in this situation (or something similar), you’re so surprised that your mind has gone blank.
Fear not! Here are the 4 things you need to know to get off to a strong start:
Question 1: Why now?
Yes, the CEO thinks the company needs to be more innovative, but what happened to spur the company to action? Did a new competitor enter the market? Is your company’s revenue declining? Did the CEO read a book that says innovation is important?
Getting to the “why” behind the request is critical because it gives you insight into how serious the commitment to innovation is. If your business results are suffering, competitors are taking share, or shareholders are demanding better results, odds are there is real commitment to doing something.
If the answer is that your CEO just read the latest books or article on the importance of innovation, then just smile and nod. Odds are, this is the executive whim of the month and will pass soon.
Question 2: What do we expect as a result of our new focus on innovation?
You never start a journey without a destination in mind (even if that destination shifts as you travel) so find out now what you are expected to deliver and when. Do you need to solicit a bunch of ideas from across the company in the next quarter? Launch a new product in the next year? Generate $13B in new revenues in the next 7 years (true story of an actual answer to this question)?
Whatever the answer is, don’t panic. You have time to figure out how to achieve it if it’s possible or propose an alternative if it’s not.
And, if your boss doesn’t have an answer find out who might and schedule meetings with them to ask this question
Question 3: What type of innovation do we want?
Google “types of innovation” and you’ll get 1.86M results in 0.53 seconds. To be fair, there are lots of very useful ways to classify innovation, especially as you start building a portfolio. But you’re not there yet.
Right now, you need to know what “innovation” means to the people asking for it. Does the company make products and it wants more innovative products OR does it want you to create services? Does the company sell to businesses and want to expand the types of businesses it sells to OR sell direct to consumers?
Understanding what “innovation” looks like will give you important insights into the challenge you’re facing and the resources and support you’ll need to be successful
Question 4: What resources are we dedicating to this?
I guarantee that when you ask this question, this will be the response, “Great question. Let us know what you need.”
DO NOT accept this!
Everyone has a limit to how much they’re willing to dedicate to innovation efforts, especially at the start. You need to find those limits now. The best way to do that is to give options:
“Great, is it fair to assume that I should dedicate 100% of my time to this? If so, who should I transfer my current workload to?” (you’ll most likely be told that No, you should not dedicate 100% of your time). “Ok, how many days per week should I spend on this”
“From what I’ve read, successful innovation efforts require fully dedicated teams. Is it fair to assume that, once we have a plan, we’ll dedicate 2–3 people to this full-time?”
“Of course we’ll need money to make things happen. How much is being set aside for this? Since we usually spend $X on new R&D projects, I assume we’ll allocate at least 10% of X on innovation projects.”
Trust me, if you get answers, they won’t feel like good ones and you will make people uncomfortable. But you need to ask these questions now so people realize that innovation is not about creating something out of nothing (you’re an innovator, not a magician) it’s a serious business investment that requires resources just like all the other investments the company makes.
Congratulations!
You’re at the start of an incredible, crazy, terrifying, thrilling, maddening, exhilarating, mind-altering, life-changing journey as your company’s new head of innovation! With the answers to these 4 questions, you’re set-up for success and ready to take the next step — Finding Your Innovation Focus
