Reality Strikes Back: How to Build Innovation Resilience in Uncertainty

Reality Strikes Back: How to Build Innovation Resilience in Uncertainty

“This time feels different.”  I’ve been hearing this from innovation practitioners and partners for months  We’ve seen innovation resilience tested in times of economic uncertainty and geopolitical volatility.  We’ve seen it flourish when markets soar and capital is abundant.  We’ve seen it all, but this time feels different.

In fact, we feel a great disturbance in the innovation force.

Disturbances aren’t always bad.  They’re often the spark that ignites innovation.  But understand the disturbance you must, before work with it you can.

So, to help us understand and navigate a time that feels, and likely is, different, I present “The Corporate Innovator’s Saga.”

Episode I: The R&D Men (are) Aces

(Sorry, that’s the most tortured one.  The titles get better, I promise)

A long time ago (1876), in a place not so far away (New Jersey), one man established what many consider the first R&D Lab.  A year later, Thomas Edison and his Menlo Park colleagues debuted the phonograph.

In the 20th century, as technology became more complex, invention shifted from individual inventors to corporate R&D labs. By the late 1960s, Bell Labs employed 15,000 people, including 1,200 PhDs.  In 1970, Xerox’s famed Palo Alto Research Center (PARC) opened.

Episode II: Attack of the Disruptors

For most of the twentieth century, R&D labs were the heroes or villains of executives’ innovation stories.  Then, Harvard Business School professor Clayton Christensen published, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. 

He revealed that executives’ myopic focus on serving their best (most profitable) customers caused them to miss new waves of innovation. In example after example, he showed that R&D often worked on disruptive (cheaper, good enough) technologies only to have their efforts shut down by executives worried about cannibalizing their existing businesses.

C-suites listened, and innovation went from an R&D problem to a business one.

Episode III: Revenge of the Designers

Design Thinking’s origins date back to the 1940s, its application to business gained prominence with l Tim Brown’s 2009 book, Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation.

This book introduced frameworks still used today’s: desirability, feasibility, and viability; divergent and convergent thinking; and the process of empathy, problem definition, ideation, prototyping, and testing. 

Innovation now required businesspeople to become designers, question the status quo, and operate untethered from the short-termism of business,

Episode IV: A New Hope (Startups)

The early 2000s were a dizzying time for corporate innovation. Executives feared disruption and poured resources into internal innovation teams and trainings. Meanwhile, a movement was gaining steam in Silicon Valley.

Y Combinator, the first seed accelerator, launched in 2005 and was followed a year later by TechStars. When Eric Ries published The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses in 2011, the US was home to nearly 1o0 startup accelerators.

Now, businesspeople needed to become entrepreneurs capable of building, and scaling startups in environments purpose-built to kill risk and change.

In response, companies spun up internal accelerators, established corporate venture capital teams, and partnered with startup studios.

Episode V: Reality Strikes Back

Today, the combination of a global pandemic, regional wars, and a single year in which elections will affect 49% of the world’s population has everyone reeling. 

Naturally, this uncertainty triggered out need for a sense of control.  The first cut were “hobbies” like innovation and DEI.  Then, “non-essentials” like “extra” people and perks.  For losses continued into the “need to haves,” like operational investments and business expansion.

Recently, the idea of “growth at all costs” has come under scrutiny with advocates for more thoughtful growth strategies emerging There is still room for innovation IF it produces meaningful, measurable value.

Episode VI: Return of the Innovator(?)

I don’t know what’s next, but I hope this is the title.  And, if not, I hope whatever is next has Ewoks.

What do you hope for in the next episode?

The 5 Keys to Corporate Logevity

The 5 Keys to Corporate Logevity

The quest for immortality is as old as humankind.  From King Gilgamesh in 2100 BCE to Jeff Bezos and Larry Page, the only thing that stops our pursuit of longevity is death.   So why don’t we apply this same verve and vigor to building things that last forever?  Why don’t we invest in corporate longevity?

Consider this—in the last 80 years, human life expectancy increased by almost 30% while corporate life expectancy declined by almost 500%. Other research indicates that the average company’s lifespan on the S&P 500 Index dropped from 60 years in 1960 to just under 15 years in 2024.

We spend billions on products to slow, stop, and even reverse aging. Yet, according to the New York Times, there are just seven keys to living longer.

Could achieving corporate longevity possibly be just as simple?

Yes.

Here are 5 keys to corporate longevity.

1. Take care of yourself today AND invest for tomorrow

We all know what we should do to stay healthy.  But one night, you don’t sleep well, and hearing your 5:00 am alarm is physically painful.  What harm is there in skipping just one workout? At work, you had a bad quarter, so cutting the research project or laying off the innovation team seems necessary.  After all, if you don’t save today, there won’t be a tomorrow, right?

Right.  But skipping workouts becomes a habit that can bring your retirement plans crashing down.   Just like cutting investments in R&D, innovation, and next-gen talent makes keeping up with, adapting, and growing in a rapidly changing world impossible.

2. Build and nurture relationships.  Inside AND outside your company

According to the Harvard Study of Adult Development, strong relationships lead to happier and healthier lives and are the biggest predictor of well-being.  Turns out relationships are also good for business.

Strategic alliances and partnerships directly grow revenue.  For example, 95% of Microsoft’s commercial revenue comes from its partner ecosystem. Starbucks’ collaboration with Nestle allowed the coffee chain to expand its presence in people’s lives while Nestle gained access to a growing category without the cost of building its own brand.  There’s a reason that Andreessen Horowitz declared partnerships a “need to have” in today’s world.

3. Everything in moderation

Toddlers are the only people more distracted by shiny objects than executives.  Total Quality Management.  Yes, please.  Disruptive Innovation.  Absolutely.  Agile.  Thank you, I’ll take two.

Chasing new ideas isn’t wrong. It’s how you chase them that’s dangerous. Uprooting your existing processes and forcing everyone to immediately adopt Agile is the corporate equivalent of a starvation diet. You’ll see immediate improvements, but long-term, you’ll end up worse off.

4. Eliminate bad habits (and bad people)

“The culture of any organization is shaped by the worse behavior the leader is willing to tolerate.”

Read that again.  Slowly. 

To live longer, stop engaging in, tolerating, and justifying bad habits.  To make your company live longer, stop tolerating and justifying people and behaviors that contradict your company’s culture.  Eliminating bad behavior is tough, but it’s the only way to get to your goal.  In life and in business.

5. Rest

Getting 7-8 hours of sleep a night adds years to your life.  Less than five hours doubles your dementia risk.  More sleep also boosts your productivity and creativity at work.

The latest example of rest’s power is the four-day workweek.  In 2022, 61 UK companies adopted it without any changes in pay.  Two years later, 54 still have the policy, and over 30 made it permanent.  Other companies, like Microsoft in Japan, reported productivity increases of more than 40%.

What will you unlock with these keys?

As a leader, you have the power to build a legacy and a company that thrives for generations.  But that only happens if you channel the same energy into achieving corporate longevity that you put into pursuing a longer, healthier life.

By embracing the keys of corporate longevity—caring for today while investing in tomorrow, nurturing relationships, practicing moderation, eliminating bad habits, and prioritizing rest—you’ll build businesses that endure.

The journey to corporate immortality starts with a single step. What’s yours?

Leadership Confidence: Why Executives’ Trust in Their Teams is Plummeting and How to Rebuild It

Leadership Confidence: Why Executives’ Trust in Their Teams is Plummeting and How to Rebuild It

“Trust no one.  Suspect everyone.”  Great advice if you’re an MI6 agent trying to uncover a spy at the height of the Cold War.  Not great advice if you’re a senior executive responsible for leading a team to deliver record results.  So, when a report titled “Leadership Confidence Falls to Three-Year Low” was published, I hoped it was clickbait.  So I clicked.

Things only got worse.

While two-thirds of CEOs believe that their teams role model the right culture and behaviors, work together effectively as a team, and effectively embrace change, everyone else disagrees.  Only about half the C-suite believes their teams work together well, are role models, and embrace change.  The lower in the organization you go, the lower those percentages get.

Why confidence is at an all-time low

In a word – change.  Neither humans nor financial markets like change, and that’s all we’ve experienced for the past four years.  “From the conflicts in Ukraine and the Middle East and their destabilizing effects on the world, to inflation, rising interest rates, and the launch of ChatGPT igniting massive interest in generative AI, the leadership landscape has been far from quiet. What’s more, nearly half of the world’s population is set to head to the polls for what many are calling a ‘super election year.’”

None of this is the executive team’s fault, but the relentless nature of depressing and destabilizing news wears everyone down.  As a result, people have less patience and empathy and are quicker to anger, judge, and blame others.  Senior execs are people, too.  And they’re taking their exhaustion out on the people they spend the most time with – their teams.

What you can do about it

If you have the power to stop the wars, improve the financial markets, quell GenAI fears, and ensure that democracy reigns, please use that power now. (Also, what have you been waiting for?)

If you do not have such powers, there is still something you can do: Build trust.

Researchers found that leaders of high-performing organizations are 8x more likely to feel that their teams practice and role model high levels of trust in all their interactions across the organization. But the teams won’t practice and role model trust if you don’t set the example through:

  1. Inclusive, transparent, and vulnerable communication – Most of us grew up in cultures where information is power, so it is hard to build a habit of sharing information with everyone on the team, especially if it isn’t good news. But if you want your people to work together as a team, you can’t create cliques or pick and choose the information you share.  There is no trust where there are Haves and Have Nots.
  2. Lead by listening and collaborating – In case you haven’t noticed, command and control styles of management don’t work anymore.  The people on your teams are experienced adults with good ideas.  Treat them like adults, value their experience, and listen to their ideas.  You’ll be pleasantly surprised by what you hear and earn.
  3. Be consistent – If one of the causes of the problem is change and you want to be part of the solution, do the opposite – be consistent.  Yes, things can change, but who you are, the values you role model, and how you treat people shouldn’t.  When things change (and they will), remember that decisions made with data should only be unmade with data.  Then, communicate those changes broadly, transparently, and honestly (see #1)

What will you do about it?

Rebuilding trust within your team isn’t a quick fix; it’s an ongoing process that requires commitment and consistency. By being transparent, authentic, and reliable, fostering open communication, and empowering your team, you can create a high-trust environment that drives success.

What steps are you taking to (re)build trust within your teams? Share your thoughts and let’s navigate this journey together. Remember, trust is the glue that holds your team together and propels your organization forward.

Why Adjacent Innovation is Your Key to Managing Risk and Accelerating Growth

Why Adjacent Innovation is Your Key to Managing Risk and Accelerating Growth

It’s not easy leading innovation.  Especially these days.  You need to do more with less.  Take risks while guaranteeing results.  Keep up with competition through incremental innovation and redefine the industry with radical and disruptive innovation.  It’s maddening.  Until you find the Goldilocks Zone of adjacent innovation.

Adjacent Innovation: From Middle Child to Just Right

As HBS Professor Regina E. Herzlinger and her co-authors point out in a recent HBR article, the US is in the midst of an innovation crisis. The cost of lost productivity, estimated at over $10 trillion between 2006 and 2018, is a stark reminder of the economic consequences of a lack of innovation. This figure, equivalent to $95,000 per US worker, should serve as a wake-up call to the importance of innovation in driving economic growth.

The authors identify the root cause of this loss as the ‘polarized approach companies take to innovation.’ While companies focus on incremental innovation, the safe and reliable oldest child of the innovation family, the VCs chase after radical, transformative innovations, the wild, charismatic, free-spirited youngest child.  Meanwhile, adjacent innovation – new offerings and business models fo existing customers or new customers for existing offerings and business models – is, like the middle child, too often overlooked.

It’s time to rediscover it.  In fact, it’s also time to embrace and pursue it as the most promising path back to growth.   While incremental innovation is safe and reliable, it’s also the equivalent of cold porridge. Radical or transformative innovation is sexy, but, like hot porridge, it’s more likely to scorch than sustain you. Adjacent innovation, however, is just right – daring enough to change the game and leapfrog the competition and safe enough to merit investment and generate short-term growth.

Proof in the Porridge: 4x the returns in ½ the time

Last year, I worked with an industrial goods company. Their products aren’t sexy, and their brands are far from household names, but they make the things that make America run and keep workers (and the public) safe. The pandemic’s supply chain disruptions battered their business, and their backlog ballooned from weeks to months and even years.  Yet amidst these challenges, they continued to look ahead, and what they saw was a $6M revenue cliff that had to be filled in three years and a product and innovation pipeline covered in dust and cobwebs.

From Day 1, we agreed to focus on adjacent innovation.  For four weeks, we brainstormed, interviewed customers, and analyzed their existing offerings and capabilities, ultimately developing three concepts – two new products for existing customers and one existing product repositioned to serve a new customer.  After eight more weeks of work, we had gathered enough data to reject one of the concepts and double down on the other two.  Three months later, the teams had developed business cases to support piloting two of the concepts.

It took 6 months to go from a blank piece of paper to pilot approval.

It took just another 12 months to record nearly $25M in new revenue.

Those results are more than “just right.”

Be Goldilocks. Pursue Adjacent Innovation

Every organization can pursue adjacent innovation.  In fact, most of the companies we consider amongst the world’s “Most Innovative” have that reputation because of adjacent innovation. 

How will you become your organization’s Innovation Goldilocks and use adjacent innovation to create “just right” growth?