In his interaction with Allan Costa, Tendayi Viki advocates making innovation an essential and legitimate part of the organization by giving intrapreneurs a seat at the table.
Post COVID-19, leaders may drive more innovation inside their companies because they are seeing disruption happen. It is also possible that companies go back to doing what they have always done. Both responses are distinctly possible because it is not inevitable that people are going to be able to innovate after a crisis. In a situation where there are strong stakeholders, existing governance structures, and complex processes in place, change is not easy. Change is only possible when stakeholders start supporting and embracing innovators.
Post COVID-19, our leaders will have a lot to deal with. They will have the same bureaucratic hurdles within companies that were there before the crisis. In the middle of this crisis, they will not have had a chance to invest in developing the innovation muscles that they didn’t have before the crisis. It is really hard to innovate when the leaders are busy laying off workers and trying to figure out the next source of revenue. Hence, in a situation of a crisis, it takes more than willingness or goodwill to innovate. Such a circumstance requires deliberate commitment from leaders, collaboration amongst all key stakeholders within the organization, and a really clear decision to give intrapreneurs and innovators a bigger stake at the table and a higher rank at the decision-making table within the organization.
Exploring new opportunities and exploiting current success requires two different styles of working, but these two practices need not be in conflict.
Leaders can leverage the intrapreneurs inside their organizations to re-imagine the future together through a concept called “Pirates in the Navy”. Steve Jobs had once said that it is better to be a pirate than to join the Navy. He meant that startups have a much scrappier mentality, they are much more innovative, and they move faster than established companies. However, this mantra has been taken too far in terms of the way innovators view themselves in an antagonistic fashion with the companies that they work for. At times, there is almost a conflict between innovators and the core business. It is true that exploiting current success and running a core business is different from searching for or exploring new opportunities. Exploring new opportunities and exploiting current success requires two different styles of working, but these two practices need not be in conflict.
To create alignment in the organizations, leaders need to recognize that not all pirates are the same. Historically, a pirate is simply a criminal, a person that roams the high seas, and is unattached to any institution. They pillage and loot and if they’re caught, they will be made to walk the plank. There is another group of pirates referred to as privateers. the difference between a traditional pirate and a privateer is that the latter has a commission from a specific government, and works for a specific government. Their job is to raid the ships of the enemy state. Essentially, the difference is that the privateer has institutional support. Going forward, leaders need to think about how to create these privateers, how to transform their companies, and use their intrapreneurs to re-imagine the future.
To start giving privateers commissions to re-imagine the future, leaders should think about ways they can re-imagine a future where innovation is a core part of how companies do business and is not an afterthought. Future-facing companies can re-imagine the future where innovation is taken seriously as a contributor to revenue and growth. They are able to develop the proper integration muscle to be able to respond to a crisis. These future-facing companies have leaders that support innovation. The leaders understand that it is not just about picking one big idea, but about making multiple small bets because they understand that they cannot pick the winner themselves on day one and that innovation is an iterative process. Leaders in front-facing companies recognize that their role is to create the right context in which the best ideas can emerge, and they provide clear strategic guidance around what innovation teams should be working on. They provide protected resources and time because innovators need to know what their runway is. In such companies, leaders also manage a balanced portfolio between the “explore” and “exploit” business models.
To leverage intrapreneurs, it is essential to institutionalize innovation, and for that, an organization should have great leadership support and a great innovation practice in place.
In the context of driving a future-facing company, it is also the role of leadership to ensure that there is a clear framework for managing how the investments in innovation take place through this iterative process and how ideas move from discovering customer needs, validating business models, and then accelerating and scaling into the future. An example of this is the portfolio management process that has been happening at Bosch. Over the last four years, they have taken a venture capital approach by initially investing in 200 ideas and then taking them through a process where the teams are given time and space to test their ideas. They increase investment in the most promising ideas and stop investing in those ideas that are not showing traction. This is an important way in which companies can start to re-imagine the future. It is also important that innovators are not sitting at the bottom of the organization where they don’t have power and legitimacy. A great organizational design is needed to give legitimacy and power to innovation. It is important to have a bridge between the innovation and the core business such that when the ideas leave the Innovation Lab, they have a way and a methodology for being taken to scale. It is also important to have rewards and incentives aligned and created for the innovation team.
Innovators must realize that being part of a pirate in the Navy implies figuring out how to collaborate with all the stakeholders that are going to be involved in deciding on their idea. Innovators that don’t realize this are much more likely to flame out, are much more likely to end up with projects that are in perpetual pilot mode and never get taken to scale. One of the ways to do this is for innovators to ensure that they are working with all key enabling functions and key stakeholders, that is, legal, finance, human resources, marketing and sales. Creating an alignment with key functions and building an infrastructure that supports innovation from day one is very important.
Finally, it is also important for future-facing organizations to give their intrapreneurs the right tools that they can use for innovation, tools that support business model design, tools for testing and iterating a process management process that focuses on whether ideas are reducing the risk or ideas are being worked on as an interesting project. It is beneficial to have skills development within organizations where leaders want their innovators to turn into professionals focused on working on innovation. It is important to give innovators the right tools to be able to do their work because the process of searching is different from the process of execution.
To leverage intrapreneurs, it is essential to institutionalize innovation, and for that, an organization should have great leadership support and a great innovation practice in place. Without this, innovation cannot be driven in the right way and companies will not be able to leverage the creativity and power they have in terms of the innovators, towards re-imagining the future. The next question is how to put such a structure in place and make innovation a legitimate part of how an organization runs itself. Before diving headfirst into work, it is suggested that intrapreneurs spend time assessing where their company is in terms of innovation culture, innovation readiness, how much leadership support they have, what barriers and enablers are in place, and what can be done to start removing these barriers. It is because the decision that intrapreneurs make about the way they are going to work will depend on the context they are working with. Context influences the choices they make.
Loads of companies are finding themselves in trouble now because they were focused on technologies and products, but they weren’t diversifying their business model portfolio.
There are two contexts. The first context is when there is strong leadership support, the leaders want to drive innovation, and they care about that. In that situation, intrapreneurs are very fortunate as innovation has already been given legitimacy, and it is then easy to drive the strategic transformation of the organization.
The second context is in most companies, wherein this high level of leadership support is absent. In such circumstances, it is better if intrapreneurs start small, and start working with early adopters. Those are the leaders that understand and are willing to give intrapreneurs a chance. Early Adopters are leaders who understand that the world is changing. They also understand that their company has a big innovation deficit and they want to fix it. They are actively looking for solutions. These are the leaders that intrapreneurs need, but early adopters also need to be able to give their resources and time. Working with early adopters gets an intrapreneur an early win, and this early win creates the legitimacy for innovators to drive the change they want to see. Thus, this helps make innovation a legitimate part of the company. This is how innovators become pirates in the Navy.
After getting an early win, it is important to think about not becoming complacent. Intrapreneurs need to keep their goal in sight. The goal is to make innovation a legitimate part of the company, and use the legitimacy to create a repeatable process and then scale the movement. It can be done by using the success to influence leaders to build a great innovation practice inside the company. Again, leaders have to be intentional about bringing the intrapreneurs out from the cold and giving them a seat at the table that has legitimacy and power, for them to be able to drive the changes that they need to see. If we can that, we will have proven Steve Jobs wrong, that it is better to be a pirate in the Navy than to be a pirate.
Allan Costa in Conversation with Tendayi Viki
Allan Costa: Which companies or industries do you think are going to be the most impacted by the COVID crisis?
Tendayi Viki: There is a wide range of industries that are going to be impacted by the current Coronavirus crisis. Only 2% of flights are taking place right now, which is a very clear impact. Companies whose business models are dependent on travel are suffering. Then, other companies are benefiting from the crisis. Logistics companies are an example. Crises tend to do that; they create a situation where some companies are better able to respond and other companies are really under pressure to do that.
Allan Costa: Could you give us some practical examples of how leaders and managers can shift from old to new mindsets, which is probably the hardest to do when you think about innovation?
Tendayi Viki: Shifting from old to new mindsets is hard. It is almost like a change management process. Sometimes crises force change management, so this crisis could maybe force leaders to change their minds. One thing that leaders need to embrace and understand is that innovation is not at all about technology and new products and services. If you’re competing on technology and new products and services, you are much more likely to get in trouble. What matters is whether the technologies and products and services that we create are creating value for customers and whether customers are willing to pay for that value in a way that gives us a sustainably profitable business model. Therefore, the way we design our business models is much more important than the products and technologies that we’ll create. Loads of companies are finding themselves in trouble now because they were focused on technologies and products, but they weren’t diversifying their business model portfolio. So, when you are in a crisis and you don’t have a diverse business model portfolio, if your kind of business model is disproportionately impacted by the crisis, then you are really in big trouble.
Allan Costa: If you re-imagine leadership for the post-COVID era, what are going to be the critical skills for innovation leaders moving forward?
Tendayi Viki: The hard thing coming out of a crisis is that leaders are being asked to lead by coming up with ideas to solve the problem. Leaders are used to giving instructions and being the ones that are able to choose the winning idea, but the problem with innovation is that you don’t know which ideas are going to succeed and which ideas are going to fail. So, innovation leadership is really about creating context; creating the right context for the best ideas to emerge, creating a context in which it is okay to make small bets into many ideas, a context in which it is okay for some of those ideas to fail, a context in which the decisions of which ideas to scale are based on evidence of traction and success, and a context in which the winning ideas actually emerge. Leadership then becomes about providing strategic guidance, creating that playground, and managing that context for the best ideas to emerge. If leaders can do that, rather than focusing on them coming up with ideas or picking the ideas themselves, then they will be much more likely to come out of this crisis with more innovative components.
Allan Costa: What metrics do you use to show the value created by pirates or intrapreneurs?
Tendayi Viki: The ultimate metric is revenue and profit growth. The reason why companies are driving innovation is that we want to launch new products and business models in the market, and have those products generate new growth. The question then becomes, if that is the ultimate metric, what are the signals? What are the leading indicators that we are on track to getting towards that revenue moment? A great indicator that you are on track to get into that revenue moment is finding a real customer need that you can validate and you know that you can serve, finding a group of early adopter customers that are willing to pay and use your value proposition. Another great indicator is if you find the right channels and build the right relationships with customers so that customers are staying on your platform and you are able to repeatedly earn from them. Being able to see that you are now scaling and growing month to month inside the market is surely a great indicator. So, leaders that are leading innovation teams are looking for these indicators to understand that the team is headed in the right direction. The ultimate metric is not learning, it is revenue and profit in the bank.
Allan Costa: The concept of ambidextrous organization captures your point of the need for both exploration and exploitation. How can we develop these types of organizations with remote flexible work, and how does remote work impact the innovation process?
Tendayi Viki: Remote work impacts both innovation and running your core business, because remote work creates interesting challenges around collaboration and communicating, shared spaces, and shared understanding. If people are working remotely, companies need to start picking up the right tools that allow teams to be able to collaborate and work together in real time. It is because what matters in an ambidextrous organization is that you have two practices that live next to each other; one which drives efficiency through great financial management and one that drives the design of great business models, experimentation, and testing and tracking the right metrics. So, if you have the right digital tools, the right virtual tools that allow real-time collaboration for both sides, and then you manage that collaboration and make sure that people are sticking to the principles of driving great innovation, you can succeed working remotely. It is hard, but it is doable.
Allan Costa: Do you think that having innovation labs specifically created for the innovators within the company makes other employees, the ones that are not in the lab, believe that they cannot innovate, or this creates a divide into the company?
Tendayi Viki: There is this notion that everyone in a company should be allowed to innovate or anyone can innovate. I believe that this is not that true. If you’re going to have an ambidextrous organization, you do need people that are focused on running the core business and do that work well. The focus is also on entrepreneurship and creating new business models, so you do need to professionalize these two types of working. The real problem with innovation labs is the otherness problem, where they are off the grid somewhere away from the organization.
An innovation lab also needs a bridge to the core. They should have a relationship with the core business that allows for the things they work on in the innovation lab to be successfully scaled once they get to that point where they need leadership support. Even if innovation labs come up with great ideas that customers want, they will find it difficult to get anyone to take them seriously and scale those ideas if they do not have a bridge to the core. So, otherness can create problems. Some Innovation Lab leaders say that building that bridge does not matter because when they find something that works, they will just spin it out as a separate company. But to spin anything out of a company requires a lot of corporate involvement and a lot of negotiations within the company. So, the bridge to the core is important, regardless of what strategy you are trying to use in terms of building your innovation capability.
Allan Costa: How should companies cope with the challenge of when a CEO suddenly changes and switches from no innovation to innovating everything?
Tendayi Viki: If that is your situation, that is a good problem to have. The second thing is, if you’re in a situation where this is the kind of problem you have, you need to think about deliberately leveraging that opportunity to create real value. It is because when the CEO switches to everything innovation, you get a lot of innovation theater. People leverage the opportunity to do hackathons, have events, do idea jams, do idea competitions, do all the things that don’t work. If you are in that organization and you have an opportunity to do that, it is better to build a truly authentic innovation practice that is focused on creating new ideas, testing those ideas, and scaling them. As everybody’s scrambling around trying to figure out what to do, if you start developing that practice, you will start to stand out as one of the few units or business units or divisions or even leaders inside your organization that can create value from innovation. If we don’t take that opportunity with our CEOs to create real value, the pendulum will swing the other way.
Allan Costa: I would request you to share your closing remarks.
Tendayi Viki: As innovators, we need to think about being authentically interested in leveraging innovation to create new growth within our organization. As much as possible, let us try and avoid engaging in innovation theater because when we engage in innovation theater, we fail to develop the right innovation muscles for our company, and when a crisis arrives, the company is not ready to innovate. As pirates in the Navy, it is our job to authentically create a great innovation practice.