The time of year when people everywhere write up their wish lists, hope to gain favor with those who can bestow gifts, and dream of the bounty that will greet them in a few weeks’ time.
Yes, it’s Annual Planning and Budgeting time.
The process of setting annual goals and budgets can be frustrating and even demoralizing for employees and managers alike as their visions and budgets get slashed in each round of management reviews.
This process can be especially painful for Innovators who feel like they are expected to do more with less and, as a result, can’t even try to do anything new or game-changing because they barely have the resources to operate the current business.
Resource constraints are a reality in every organization. The trick is not to give up when you run into them, but to figure out how to work with them and, more importantly, the people who control them.
1. Acknowledge reality
Yes, we all know that, when funding innovation, corporations should act more like VCs and follow a milestone-based approach to releasing funds. But the reality is that the budgeting processes in most companies are so rigid that you get your budget at the beginning of the year and you don’t get a penny even if circumstances change and additional investment could yield wildly positive results.
Instead of trying to change the system or asking only for what you’ll need in the first quarter or the first half of the year, work with the system and ask for your annual budget up-front.
2.Know where there’s flexibility
During my first year at Harvard Business School, my accounting professor would often run around the room yelling “No Rules! No Rules!” which often left me more confused than when the class started.
I’m still not certain what point he was trying to make but I like to believe that he was trying to shock us out of our rigid black-and-white thinking about accounting and to see that there is room for flexibility (while staying on the right side of the law).
As you draft your budget, understand which line items are more flexible than others. For example, a client of mine had to break her budget request into Fixed (salary, benefits, and overhead) and Flexible (travel and project-specific) costs. Fixed costs were locked in, but she had almost complete autonomy over how Flexible funds were spent. As a result, given the uncertainty of staffing required for innovation projects, she maintained a skeleton crew of FTEs and relied on temps, interns, and consultants to staff up projects when needed.
3. Channel your inner Mick Jagger
The Rolling Stones said it best when they sang, “You can’t always get what you want/ But if you try sometimes, you might find/ You get what you need.”
As you look at your innovation projects, estimate what you want (i.e. the resources you need if everything goes perfectly) and what you need (the bare minimum to required to operate if a project runs for the full year). Assuming that what you want isn’t a laughable number, ask for it. When the inevitable cuts are made, acted pained until you get to about halfway between your Want budget and your Need budget then, once you reach the halfway point, start talking about tradeoffs and highlighting the things that won’t happen if budgets continue to get slashed.
4. Make your case
Even if you do everything listed above, the fact remains that there are only so many dollars to go around. This means that a dollar allocated to your project is a dollar NOT allocated to another project.
Large companies crave certainty and they reward executives who are able to consistently deliver results. This system of rewards and incentives amplifies our already innate tendency to prefer avoiding losses to acquiring gains and drives most managers to fund “Safe Bets” and “Sure Things.”
As a result, it’s not enough to pitch your idea and request for funds, you need to emphasize the potential gains, explain how you’ll minimize losses, and make the case for why your project is a better investment than others.
In conclusion
Annual Planning and Budgeting season is stressful for everyone and, inevitably, there will be brilliant ideas and game-changing projects that go unfunded. But by acknowledging the reality and constraints of the process and learning to work within them and with the people making resource allocation decisions, you can significantly increase the odds that some of the items on your innovation wish list will become a reality.
I am not a soccer fan but my husband is. So why, as a non-soccer fan, would I watch so many World Cup games?
I could spin a high-minded tale about the importance of diverse experiences in driving empathy and creativity and that “getting out of your comfort zone” and experiencing new things can be as simple as watching a new channel or program.
I could go all business guru and pratter on about the fact that sports tend to produce wonderful case studies of what to do and not to do in the areas of leadership, teaming, and all other things management
But the truth is that I spent most of June sick in bed with something that exactly mirrored Whooping Cough (it wasn’t) and, during the Group Phase, I didn’t have the energy to commandeer the remote control and change the channel. By the time we got to the knock-out phase, however, I had a bit more energy, had adopted several teams as my own (Sweden, Denmark, and England) and was peppering my husband with questions about players, teams, rules, and all other things soccer.
So, with the Final match scheduled for Sunday, thought I would share what I’ve learned about leadership and innovation from watching 40 soccer games.
#1: Teams need Leaders, not managers
Argentina’s coach, Jorge Sampaoli, yelling from the sidelines (SOURCE: Getty — Contributor)
Untold books have been written on this subject and it played out for the world to see during Argentina’s World Cup run.
Argentina was considered one of the top contenders for the World Cup, having come in 2nd during the 2014 World Cup. The country has some of the world’s greatest players and perhaps none are greater than “The Magician,” Lionel Messi. With such a dominant line-up, it would seem that the coach’s job would be relatively easy — win the trust and respect of the team’s stars, inspire them to play well together as a team and then get out of the way.
But Argentina’s coach, Jorge Sampaoli, couldn’t seem to do that.
During Argentina’s first game, three top players were inexplicably benched and the game, which Argentina should have won easily, ended in a tie (more on that in the next lesson). For the next game, Sampaoli “went with a bizarre 3-man backline” (I don’t know exactly what that means but “bizarre” is never a word you want associated with your starting line-up) and the “disconnect between Aguero, Messi, and the others was apparent from the first minute.”
The result? Argentina lost to Croatia 0–3 and the players staged a coup, holding a meeting with the Argentine FA chiefs (basically the “front office” of the team) to demand that Sampaoli and the entire coaching staff be fired as part of a “pact for life” because “the players want to build a team.”
The coup failed. Sampaoli was allowed to keep his job (but was told he would be fired at the end of the competition). And the players, having no confidence or respect for the coach, resisted, fielding their own starting line-up for the third and final game of the Group Stage, a 2–1 victory over Nigeria.
Argentina struggled in the lead-up to the World Cup and underperformed during its first two games because it didn’t have a Leader (someone the team respects and wants to follow), it had a Manager (someone who demands obedience based on a title or organization hierarchy). When leaders finally rose up, it was too late — Argentina barely qualified for the Knock-out stage and promptly lost 4–3 to France.
#2: Don’t get hung up on job titles. Hire for skills.
Lionel Messi takes his shot at Iceland’s goalie
In the first game of the Group Stage, Iceland, the smallest country ever to qualify for the World Cup, found itself playing Argentina. As if that were not challenging enough, in the 64th minute of a tied game, Argentina was granted a penalty kick and Lionel “The Magician” Messi stepped to the line. All he had to do was send the ball past Iceland’s goalie and his team would have a 2–1 lead.
He missed.
To be more specific, one of the greatest soccer players of all time, one who makes 76% of his penalty kicks, had his kick blocked by a goalie who is better known for directing a Coca-Cola commercial than for playing soccer. When asked how he achieved such an impossible feat, Hannes Halldorsson, a former filmmaker turned goalie, attributed his success to “film study.”
Sure, Halldorsson has soccer skills (basic job requirements) but kudos to Iceland’s coach for seeing value in non-traditional experience and to Halldorsson for using them to prepare for the big game.
#3: If you’re going to talk smack, you better be able to back it up
Denmark’s goalie, Kasper Schmeichel, is PUMPED
Sticking with the theme of Nordic goalies, let’s talk about Denmark’s Kasper Schmeichel. If there were such a thing as Danish soccer royalty, it would be the Schmeichels.
Peter Schmeichel, the family patriarch, was voted world’s best goalkeeper in 1992 and 1993, captained Denmark to a championship in the 1992 UEFA World, AND captained Manchester United to the 1999 Champions League title and the Treble (it’s like the Triple Crown but for English soccer and it happens about as frequently…which is rarely). His son, Kasper made his World Cup debut this year and promptly beat his father’s record of most playing minutes (533 to be exact) for Denmark without conceding a goal.
So yeah, if Kasper talks smack to opposing players, daring them to try to get the ball past him, it’s pretty certain that he can back it up.
Until he can’t.
In Denmark’s match against Australia, Schmeichel came out of the goal to get in the face of a Mile Jedinak while the player was lining up for his penalty kick. Trash talk is nothing new in sports (in fact, I’d argue that it has been honed to a fine and humorous art form) but whatever Schmeichel said apparently went too far for commentators on social media, in the press, and even game officials who warned him about getting too close to the Australian.
A few seconds later, the ball went screaming past Schmeichel, scoring the tying goal for Australia and ending Schmeichel’s record.
#4: Don’t be afraid to experiment (and don’t let anyone tell you that you’re experimenting too much)
Mexico’s Tinkerer-In-Chief, Juan Carlos Osorio
Juan Carlos Osorio, Mexico’s coach, has the highest winning percentage of any Mexican national coach in the past 80 years. So why were 85,000 fans shouting “Fuera!” (Out!) at him during the team’s 1–0 victory over Scotland during a World Cup warm-up game in June?
Because he took the field with a new starting line-up.
It was his 48th different starting line-up in his 48 games as a national coach. That is a new line-up Every. Single. Game.
His tinkering continued into the World Cup where a new line-up beat defending World Cup Champions Germany only to be replaced by a new new line-up for game 2’s match-up against South Korea (which Mexico also won).
In his 52nd game as Mexico’s coach, Osorio changed tactics and did NOT change his line-up. They lost 3–0 to Sweden.
#5: Your performance, not your reputation, matters most
German players Mario Gomez (23) and Mats Hummels (5) react to losing to South Korea and their elimination from the tournament
Speaking of Germany, 2014’s World Cup champs came into the tournament ready to defend their title, ranked #1 in the world by FIFA, and with a 10–0 record in qualifying rounds.
They didn’t even make it out of the Group Stage.
How shocking was this? I think The Guardian summed it up nicely:
This, then, is how the world ends, not with a bang but with a whimper. There are certain events so apocalyptic that it feels they cannot just happen. They should be signalled beneath thunderous skies as owls catch falcons and horses turn and eat themselves. At the very least there should be a sense of fury, of thwarted effort, of energies exhausted. And yet Germany went out of the World Cup in the first round for the first time in 80 years on a pleasantly sunny afternoon with barely a flicker of resistance. There was no Sturm. There was no Drang.
Sports, business, heck, even life, is tough. Past performance should count for something and it usually does — it earns an opportunity. But it’s what you do with that opportunity that determines whether you win or lose.
#6: When all else fails, have a signature hairstyle
After watching 40 games, I have concluded that (1) hair is a big deal in soccer and (2) players must have access to hair product that the general public doesn’t because their hair maintains its original style of 90+ minutes of intense exercise. Some cases in point…
Brazilian star Neymar debuts his World Cup hairstyle against Switzerland. For the next game, delighted fans responded by gluing raw clumps of ramen noodles to their foreheads in support of this style choice (SOURCE: Getty Images)
French player Olivier Giroud’s hair defies gravity. Seriously, this is his hair at the END of a game! How is this even possible?!?!
OK, I know that Portuguese star Christian Ronaldo’s hair doesn’t look as crazy as some others but it’s no less important. Prior to their World Cup match against Uruguay, the story of a 2010 match re-surfaced in which one of Uruguay’s players was asked how the team planned to stop Ronaldo. Plan A was to take him out with a tackle. If that didn’t work, Plan B was to “ruffle his hair to annoy him.” Plan A was enacted in the 6th minute of the game and didn’t work, so Uruguay when with Plan B. Ronaldo responded so furiously he was almost kicked out of the game. In the post-game press conference, Marcelo “Hair Ruffler” Sosa commented with amusement that Ronaldo seemed “more upset by me messing up his hair than the foul!”
There you have it. Every business/innovation/leadership/personal style lesson I learned from watching the World Cup. Now it’s off to the hair salon…
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
A few weeks ago, my 5-year old niece and I spent the afternoon together at a paint-your-own-pottery place. My niece was adamant that she wanted to paint something for her dad and immediately zoned in on a piece — a 3D poop emoji.
Remembering my sister’s parenting advice, I started with a question, “Why do you want to paint that for Daddy?”
Her response was simple enough, “Because it’s chocolate.”
I could have easily left it at that.
But I didn’t.
“Ok….why don’t you paint the pegasus for Daddy instead?”
She looked up at me with her big brown eyes, “Why?”
“Ummm, well, I just think it’s better.”
She scrunched her nose as she usually does when she doesn’t understand something, looked back at the poop emoji, and then silently picked up the Pegasus and took it over to our table.
With a sigh of relief — I knew my sister would be none to happy with me explaining the poop emoji — I thought the issue was resolved. I was wrong.
An hour later, as we stood hand-in-hand on the sidewalk waiting for her dad to come pick us up, my niece asked, “Aunt Robyn, why didn’t you want me to paint the chocolate for Daddy?”
Crap (pun somewhat intended). I have to do this. I have to be honest and explain this, and I am going to be in SO much trouble when we get home.
“Well, darling, that’s not chocolate. It’s poop.”
She scrunched up her nose, pursed her lips, gave a quick nod, and continued staring out into the parking lot.
Later that night, I confessed the moment to her parents. They burst out laughing.
“That would have been hilarious!” my brother-in-law proclaimed.
“Why didn’t you just let her paint it? It’s not poop to her” my sister sighed.
That thought literally never occurred to me. It never crossed my mind that letting her paint what she thought was chocolate would result in a heart-felt (and amusing) gift to her dad of a rainbow (her favorite color at the moment and thus what everything gets painted) poop emoji to display in his office.
Instead, I thought I was saving her from embarrassment by correcting how she saw something so that her understanding was in-line with the status quo.
I’ve felt horrible about this since it happened but the experience, the ease with which it happened and the smug self-righteousness I felt about “saving” her, taught me a very important lesson about why creativity and innovation are so often killed in organizations.
For the first time, I could understand and empathize with every Dr. No I’ve ever encountered. You know who I’m writing about, the person in your organization who, whenever a new idea pops up, says, “No, we can’t do that because…
…that’s not how it’s done in our company/industry”
…we tried that back in 19XX and it didn’t work.”
…the bosses will never approve it.”
…now is not the right time.”
…it’s took risky/expensive.”
…you’ll get fired if it doesn’t work and I don’t want that to happen to you.”
My whole career, I’ve hated Dr. No and used him/her as motivation to innovate. I would focus all my energy on finding a way to prove them wrong by doing something new AND making sure that new thing was wildly successful.
What I thought I was saving everyone from
But, in that pottery shop, I was Dr. No and I didn’t realize it. In fact, I felt proud of myself.
I felt proud because I was acting out of love. I wanted to protect someone who is innocent and precious. I wanted to spare her the embarrassment and shame that I thought would surely result from giving her dad a rainbow-colored piece of poop pottery.
And maybe that is where other Dr. No’s are coming from. Maybe the are saying “No” as a way to protect you and/or the company. Maybe they tried to do what you’re suggesting and they are still smarting from the pain of it not working out. Maybe they are trying to spare you the embarrassment and shame of pursuing the proverbial corporate rainbow-colored poop pottery.
And no matter how often you try to explain that the new idea is chocolate and not poop, they won’t hear you. Because they are anchored in a status quo reality that demands things be seen in one, and only one, way.
And in that moment you, the innovator, has a choice. You can scrunch your nose and move on to something safer or you can defiantly insist on painting that poop, confident that it will become a rainbow work of art that is treasured by the people that matter the most.
And, hopefully, you can have a bit of compassion for Dr. No who is simply trying to help you because she loves you.
EPILOGUE
A few weeks after the poop pottery incident, my sister told me that my niece asked to send a text message to her dad. My niece’s text messages are entirely comprised of emojis and after a few seconds of tapping out flowers and suns and rainbows, my niece’s finger stopped, hovering briefly over the screen.
“What’s wrong, honey?” my sister asked
“Do you know what this is?” my niece responded, pointing to the poop emoji
“What do you think it is?”
“Aunt Robyn said it’s poop…”
“Well, a lot of people think that’s what it is. but your Daddy told me that he read an article that it was originally designed to be chocolate ice cream on top of an ice cream cone. So you can think of it that way too.” (my sister swears this is a true story).
“Ok. Then it’s chocolate ice cream!” my niece exclaimed before adding at least a dozen chocolate ice creams to her text
