When I was recently invited to speak at Seramount’s Global EmERGe event in London, UK, on the topic of evolving an ERG (Employee Resource Group) into a BRG (Business Resource Group) - it’s a hot topic! (Read this for a Terminology Primer: A Guide to Employee Groups from Affinity to Business.)

During my talk, I offered an outline of a roadmap, and received a lot of questions and valuable feedback from the highly engaged participants. So, if you are leading an ERG or want to build a BRG, I want to share the roadmap here with you, too. Note that this roadmap is not customized and remains generic, as each ERG and each organization is different. It takes more insight to map a path for a specific ERG or a group of ERGs within a specific organization - a multinational company, for example. (Contact me for a conversation and case studies on what the path for your ERG could look like.)

My Path to BRG: NxGen Case Study

As a matter of full disclosure, I did not start the Next Generation BRG (NxGen) at a global pharmaceutical company coming from an affinity angle. Six formal ERGs already existed, covering various diversity aspects with different levels of group maturity, and inclusion and engagement activity under the umbrella of the Diversity & Inclusion Office.

The NxGen BRG was set up differently from the beginning, and while it promoted the ‘next generation’ label, it was all-inclusive, open to all generations at the workplace, and thereby every employee wanting to join was welcome. It was the Millennials who embraced this opportunity most at the time: they were young, well educated, wanted to improve things, and, being at the beginning of their careers, were in no formal position of authority to bring about change.

At NxGen, we took a practical, business-focused, portfolio-oriented approach that proved very impactful for the company, successful for the BRG, and that became the blueprint for other ERGs to follow and evolve towards BRGs too.

How to Build a BRG

So, here are the six key aspects that outline the approach we took with the NxGen BRG and some advice on how to get started. Being a practitioner, I hope you will find this helpful for your purposes. Feel free to contact me for a deeper dive in case you have any questions or share your thoughts and ideas..

1. Strategy

Before you act, be very clear about purpose and intent and ready to communicate it. Develop a strategy as a starting point and a guiding star for your journey.

The starting point for NxGen was a business case that laid out why this new BRG was needed, why it was needed now, and how it would operate. The BRG will require an official mandate with cover and support from an organizational sponsor or function, such as a culture- or diversity-related office.

Get started by answering a few foundational questions, such as:

• Why is this BRG needed in your organization? Is it to support talent, innovation, market growth, or something else?

• What are its objectives, its goals? What measurable value will the BRG generate? Picture the results that the BRG will deliver and how you may approach quantifying them: In the end, you will need robust and convincing metrics for the BRG’s success.

Creating a BRG charter helps to clarify and communicate goals, values, and the mission to BRG members and attract future executive champions within the organization for active support, funding, and protection as needed by the BRG.

Once established, the NxGen Business Plan aligned BRG and company objectives to build a portfolio of cross-functional BRG projects with high business-impact potential, but that individual functions would not take on or just don’t consider themself responsible for.

Find more thoughts on how to start a BRG here: How to start building a business-focused ERG?)

2. People

First of all, a BRG needs a continuous inflow of members, the lifeblood of any BRG. So the question becomes, how do you attract and retain members? What intrinsic motivation can you tap into? Here are some ideas to consider:

• Affinity - Is there an underlying affinity network that aligns with the BRG or may have been the starting point for the BRG? How to keep it going in a BRG framework?

• Pressure to Change - Do BRG members feel a strong need to bring about change, or is there some pressure felt within the organization that warrants some form of change that could be harnessed?

• Personal Development - Can the BRG offer its members opportunities to: Build or improve skills? Gain experience beyond their immediate day job? Receive or supply mentoring opportunities? Provide some sort of ‘career springboard,’ such as giving members more visibility within the organization that may lead to career opportunities, recognition, awards, or promotion?

My approach is to awaken, release, and harness the intrapreneurial passion of BRG members while opening up opportunities, but also making members ambassadors for the BRG, if not active executors of BRG projects. (Here is more on motivators for BRG members: What’s in it for me? (WIIFM)

3. Process

Running a BRG requires building a forum for members to meet, connect, and celebrate rituals, as well as establishing some ground rules and procedures for BRG governance. Ownership for a project or initiative must come with accountability. Overall, it is important to create a safe space for members to engage and build trust.

Meetings should follow a predictable cadence and be transparent to the members. The forum is a place to discuss, strategize, decide, resolve conflicts, and track progress and success. It is also a place to have fun and celebrate the BRG’s successes and acknowledge the achievements of individual members.

At NxGen, for example, we used to explore how to attract and retain executive champions to support and sponsor our projects: after all, alignment with business interests is assured when the business is willing to pay for a project. (Read more on How to attract an executive sponsor? and Job description for an Executive Sponsor.)

Also, consider establishing a fair and transparent process on how to select leaders that is open to anyone, but also for replacing leaders to avoid their burnout over time.

4. Metrics

Solid metrics are a topic of great importance to demonstrate the BRG’s progress and success. While many things can be measured, however, it is important to identify the metrics that are meaningful and focus on metrics that are needed to make decisions, and not just to provide ‘information’ of sorts - less is more.

While the return on investment (ROI) is powerful, there can also be other aspects of high importance for the company, such as employee retention or attrition, for example. (There are some interesting correlations between these parameters and employee groups from some research we did at NxGen - let me know if you are interested in having a chat about this aspect.)
Here is more on How to approach 'metrics'?

5. Communication

“Do good and talk about it” captures the need to communicate about the BRG and its achievements. Make it easy for interested future members to find the BRG, get information about it, and engage with the BRG.

At NxGen, beyond having a presence in the internal company media, we entertained a chat channel to share our goals, projects, and success metrics, as well as celebrating our members and their achievements.

A crucial aspect of your communication is paying attention to the Innovation Killers: The Corporate Immune System Strikes Back! This includes to anticipate and proactively addressing potential areas of organizational resistance. Identifying pitfalls and working around resistance aims to build support for the BRG and to avoid unnecessary conflicts. It may include informing and engaging stakeholders throughout the organization while managing their expectations and addressing their concerns. This is a very tricky area that requires constant attention and recalibration - contact me if you would like to take a deeper dive.

6. Sustainability

Building and running a BRG is not a temporary or one-off endeavor; think of it as a marathon rather than a sprint. A BRG is an innovation ecosystem that self-sustains and keeps running perpetually. It requires enveloping and managing all aspects as laid out above to achieve sustainability.

For repeatable success, build a strong alliance with stakeholders and executive champions that may sponsor or support your BRG in other ways; this may include helping to navigate company politics, for example.

You will also need to cultivate a pipeline of fresh ideas to fuel future projects and initiatives of the BRG. It is not enough to produce new ideas. You also need to provide a safe space for BRG members to raise and discuss ideas, but also to present them to potential executive champions and sponsors in ways that protect the people presenting the ideas, as they may be exposed and vulnerable in ways that could impact their careers.

We used our experiences from the NxGen BRG to build an entire innovation ecosystem that opened up to employees across the entire company. The BRG was just a starting point on that journey, but this is another story, so contact me if you are interested in taking a deeper dive.

Summary

In contrast to a more affinity-rooted ERG, the BRG starts with developing a strategy that is rooted in employee needs and interests and aligns them with business needs in a complementary and holistic way by considering aspects including people, process, metrics, and communication to come to a sustainable and successful BRG.

What is your BRG experience? Please share your thoughts, and let’s have a conversation to learn from each other.

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Recently, I was invited to speak at the Seramount Global EmERGe event in London, UK. What became apparent is that there is a spectrum of words in use to label and differentiate employee groups, with terms varying across countries and organizations.

To get us all on the same page, let’s briefly look at terminology for employee groups that vary between countries and organizations. Since different words are being used in this context, here is how I distinguish groups: less by their label but by their basic characteristics and aspirations.

Affinity Groups (AG)

An ERG often originates from an earlier Affinity Group. AGs are the most informal networks, where employees connect on a personal level for different reasons and socially come together as ‘birds of a feather’.

Like-minded colleagues crystallize around a shared social interest as an AG in a self-governed way. The AG forms a social network for its members and may or may not be linked to the host organization through a formal governance channel, such as a Diversity, Equity, and Inclusion (DEI) office or comparable company culture-related oversight body that, typically, is part of the Human Resources (HR) function.

An obstacle an Affinity Group can face from outsiders beyond indifference is skepticism and questioning why the host organization should support the employee AG. The group and its purpose could be seen as somewhat unrelated and detached from the organization, unaligned with business goals, and, especially to outsiders, may not even appear relevant to the larger organization.

Employee Resource Group (ERG)

As an Affinity Group matures and becomes more formalized and structured, it can turn into an ERG. ERGs are more explicitly aligned with and overseen by the organization’s DEI initiatives, and in return often receive formal organizational support and resources. The members and leaders of the employee-led group are volunteers. In contrast to an AG, the ERG typically aims to influence company goals or policy at least indirectly. ERG goals often aim at softer targets, such as improving employee retention, increasing employee engagement in some way, or requesting reasonable accommodations of sorts for their constituency, for example.

More recently, the open-minded, engaging, and inclusive efforts of cultivating and leveraging diversity within organizations have increasingly come under direct political attack and hostility (at least in the United States). This leads to broad crippling, divesting, and even shutting down diversity-related initiatives and forums, including employee groups, in many organizations. The business impact of this political countermovement is likely to affect employee engagement, customer relations, and revenues across the various marketplaces that may take some time to play out. It is to be seen what the true price will be for organizations, their employees, the economy, and the larger society for bowing to this ideologically motivated political pressure and overreach into business decisions of organizations.

Business Resource Group (BRG)

In contrast to an ERG, a BRG takes a more business-focused approach while remaining connected to its members’ core social affiliation. A BRG defines and aligns its own goals and capabilities with the business needs or acts in support of the business objectives of its host organization. In general, a BRG tends to be more structured and more formal than AGs or ERGs, as it measures its impact and outcomes in business-relevant terms and establishes strong connections with executive sponsors.
(Read more on why companies need a BRG and how to start a BRG.)

The more direct integration into business processes and decision-making of the organization, underlaid with transparent and business-relevant success metrics, provides impactful business relevance for the organization. This positioning moves the BRG somewhat beyond ‘just DEI’ into a business space with measurable outcomes that justify the BRG goals and activities in a larger business context and can, to some degree, help insulate the BRG from the relentless ideological and political onslaught.

Maturing Employee Groups

Several frameworks exist that categorize groups by various criteria and show a maturity curve for employee groups. This can be helpful to identify, classify, or compare groups, but it may also give the impression that all groups should mature and progress on this arc towards maximum maturity. Instead, each group forms and operates in a quite unique environment that is defined by three factors:

1. The motivation, interests, and drive of the group’s members; for BRGs, for example, it is the intrapreneurial passion that is the driving force of the group

2. The company culture that determines the appreciation or resistance the group encounters within the organization

3. The degree of alignment of the employee group’s goals with the company strategy and objectives.

Since these factors differ for each group and each organization, and they define the organization-specific operational landscape, a group may not necessarily want or need to seek the highest level of ‘maturity’ (however it may be defined) to be highly relevant for its members and possibly impactful for the larger organization. (Read more on building a BRG mindset.)

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The Real Drivers Behind the Office Comeback

1. Sunk Costs in Office Space
   Many organizations invested heavily in office buildings, often amortized over a decade or more. With that financial commitment looming, empty desks feel wasteful—even if forcing people back doesn’t improve business outcomes.

2. Poor Remote Management Skills
   Some managers feel adrift without visual oversight. It’s not that remote work doesn’t work—it's that managing remotely demands new skills that many haven’t developed (or don’t want to).

Open Offices: The Illusion of Innovation

Companies swapped private offices for open spaces, claiming it would spark innovation. Reality check: It was about cost-cutting. Fewer walls mean less square footage—and fewer people doing more work with less time for those fabled “water cooler” moments. The result? Fatigue, not creativity.

Startups thrive in tight quarters because everyone’s driving toward innovation. However, applying that startup layout to a bloated enterprise mainly serves the bean counters, not the brainstormers.

The Productivity Myth

The assumption that remote work erodes productivity is unfounded. The truth? Remote teams can excel—if led well. The real gap is in measuring productivity effectively. Too often, it's based on gut feeling, not data. That’s not management; it’s guesswork.

What matters are objective, transparent metrics. Know what moves the needle. Measure it. And yes, be ready to be held accountable.

How to Actually Manage Remotely

Good remote leadership isn’t micromanagement—it’s clarity. Set expectations, communicate well, clear roadblocks, and hold people accountable. It’s not rocket science, and it works regardless of where your team sits.

Location Is Irrelevant. Productivity Is Everything.

Remote work isn’t the enemy—bad management is. Focus on results, not real estate. With the right structure and mindset, teams can thrive from anywhere.

So here’s the question every executive should ask:
Are we managing for appearances—or for outcomes?

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This ‘soft factor’ trust is subtle, hard to build, but easy to lose. Building and keeping it requires consistent behaviors, especially from the manager of a remote or virtual team. So let’s look into what trust is and how to build it in an organization:

Do you trust?

Take a minute to ask yourself two questions honestly and come up with an answer for each question before reading on:

• Do you trust yourself to be as productive working from home as in the office?

Now this:

• Do you trust your coworkers or your direct reports to work as productively from home, too?

My own experiences are consistent with the research: we trust ourselves more than others. - And this is the problem.

Why trust matters

A person we don't trust, we don’t want to work or do business with. On the flipside, a trustworthy personal connection is unsurpassed as a basis to build upon trust for a robust and sustainable business relationship and collaboration.

Trust contributes much to the 'social glue’ that holds teams and organizations together. Trust is critical for the success of remote or virtual teams. With a lack of trust, the willingness to share information dwindles, and so does productivity overall. When this happens, our energy gets wasted every day with concerns and redundant or counterproductive work. Workers focus on avoiding perceived threats from others, which takes over more and more of their work time, focus, and productivity. In contrast, for people we trust, we happily go the 'extra mile.'

Trust (or the absence thereof) has been identified as the pivotal element, ranging from detailed investigations and research into hundreds of organizations to recent bestsellers like "The Five Dysfunctions of a Team" by Patrick Lencioni.

Coming back to the two earlier questions, it proves hard turning the mirror towards ourselves and to accept that we also need to build trust with our co-workers to build and fuel our most robust and valuable business connections and relationships.

What is trust?

Let’s take a closer look – what makes up trustworthy work relationships? Trust is an interpersonal phenomenon. It comes down to three factors that make up trust at the workplace:

• Benevolence: Your co-workers have your best interests at heart.

• Ability: Your co-workers have the knowledge and ability to get the job done.

• Integrity: Your co-workers will do what they promise.

Innovation needs trust

High trust correlates with more successful innovation – why?

When colleagues trust each other, they open up and share information. Besides the obvious benefit of cross-fertilization that leads to more ideas and creative approaches, by giving away our views and knowledge, we become vulnerable as individuals and even more so in a competitive professional environment. This openness comes with a risk of failure that people are only willing to take if failure is acceptable and does not come with repercussions.

Sharing ideas alone is not enough, though. Asking thoughtful questions, constructive criticism, and mutual support lead to better solutions while curbing hostility and competitiveness. Opening up happens when a task-related conflict does not easily deteriorate into a personal conflict. Innovation within an organization relies on trust among colleagues as a key ingredient that cannot be substituted otherwise.

How to build trust

Trust requires communication and is built most effectively face-to-face with another person, which offers the broadest information channels. An MIT study found a 47% higher performance in companies that are highly effective communicators. Team success is consistently tied to robust team communications. (I wonder if this communication-related increase in performance was ever considered by companies focusing on saving cost...?)

Customer-facing businesses know that no technology today can offer the same quality and trust-building dialogue as in-person and face-to-face.

Thus, travel to meet business partners and team members remains essential at least in the beginning of a relationship. Traveling more to meet in person is out of the question for organizations that boarded the popular 'cost-cutting' train: it is considered too expensive. Saving cost here, though, does not pay off over time when it cuts into building trust for good working relationships.

Even more important is trust-building when onboarding new staff. It is a challenge if most or all work is done remotely by team members who already know and trust each other. It comes back to human nature that we tend to rely on the same people we worked with before, which puts newcomers at a natural disadvantage. Here, management must intervene to level the playing field and provide opportunities also for the new staff.

Perhaps, women are at a natural advantage to connect with others, given a higher social sensitivity, i.e., the ability to 'read' other people's emotions face to face better than men. This is also one of the three criteria that increases group intelligence (see "Boost ‘Group Intelligence’ for better decisions!")

Investing in trust and technology

Since it is not possible (and defeats the purpose of having a remote team) to meet in person, especially in remote teams, we use digital technology to bridge the distance. Consequently, we need to invest in effective tools to remove communication barriers and open broad, information-rich channels of communication among all team members.

Rather than relying on one channel or system, it is more effective to enable the team to communicate by offering many channels that cater to the individual team member's preferences; for example, phone, instant messaging, video chat, email, etc. For example, even half a minute waiting to establish a video-conference connection is too long and already poses a significant communication barrier, as an initial positive mindset of participants erodes quickly, and their thoughts start wandering off. (Costly 'tele-presence' systems seem to remain the ‘gold standard’ for remote communication from fixed locations, but even then, it remains -sadly- often reserved only for executive use if this technology is being invested in at all.

Nonetheless, enabling technology can also enhance performance and add value by

• Indicating if people are online and available to communicate

• Finding experts or collaborators easily within large organizations

• Share and exchange information with relevant audiences directly and without delay.

In contrast, here are some examples of communication barriers of organizations with a cost-saving focus that tends to include also 'technological disablement', such as

• Using slow or time-delaying communication or productivity equipment due to underinvestment

• Users are spending more time trying to connect than actually communicating

• Information-poor channels or poor call quality inhibit rich communication

• Resolving technology-related problems consumes a long time or is a cumbersome process.

Too much trust can hurt innovation

As a side note for completeness, there is a risk that too much trust within a team can become an obstacle to innovation, too; see "Why too much trust hurts innovation".

It comes down to management again to be observant and vigilant to detect and counteract such tendencies.

While introducing remote work in virtual teams comes with significant change and challenges for everyone involved, the burden and the responsibility to make it work remain with the manager.

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From my work as a founder and leader of two successful Business Resource Groups (BRGs) in a large, global enterprise, I learned that building a trusting mindset for BRG members is a key success criterion. (See also Part 3 of 3: Starting a BRG as a strategic innovation engine! for some background and motivation.)
What makes up a membership mindset, and how can you build it as a BRG leader?

While in these BRGs, we planned and built out the structures and our culture as a team, I became aware only afterward that we intuitively aligned well with a great book that I came along much later and that I can highly recommend to anyone who wants to lead: Patrick Lencioni’s “5 Dysfunctions of a Team”. Borrowing the author’s terminology and approach for our purpose at hand, here are the five key elements to build a mindset for a high-performing BRG:

1. Trust

First and foremost, members of any BRG (as well as an Affinity Group or another kind of Employee Network Group) need a safe space to meet, share, and respectfully discuss with other members. Feeling secure and comfortable to open up and share your inner thoughts with others requires not only courage but even more so trust as a prerequisite!

Our BRGs established ground rules, an etiquette, or a code for social hygiene, if you like, to set clear expectations for the behavior expected of all members. Besides leveling the playing field, granting equal opportunities to all members, we also disregarded job title or formal organizational authority that a member may hold outside the BRG. All members were held to always communicate and behave respectfully and constructively towards other members.

This provided a haven and refuge for many outside the busy business of their day job, where they could flourish in new ways.

2. Constructive Conflict

Meaningful change comes with conflict. If there is no conflict and everyone agrees easily, then the change is obvious and not truly meaningful. Meaningful change and the conflict that comes with it require discussion to address and to clarify, and to resolve and align positions, opinions, and derived plans of action.

Arguments can get heated and out of hand, so it remains of great importance to maintain collaboration and keep critique constructive. Collegiate harmony should be paramount. Agreeing to disagree can be a viable outcome to a highly controversial topic. Focus on building a highly effective team where its members support each other and challenge ideas just to make them better, but not attack or undercut each other - the results will be rewarding for all members and the BRG overall.

3. Commitment

Getting a ‘yes’ from someone to do something is one thing, but getting their commitment can be a very different and much more valuable thing. Commitment is one of three parts, with Ownership and Accountability completing the trio. Let’s look at commitment first:

Commitment requires an investment by the agreeing party that should not be made lightly or taken for granted. When you commit, in general, you should expect to be held accountable for your actions or inactions as well as to claim the accomplishments and honors coming with the outcomes.

As a word of advice to the BRG leadership: make it easy for members to commit by avoiding establishing standing committees tasked with repeatedly organizing events of sorts for a prolonged time, for example, as this can quickly drain energy and fuel burnout. Instead, allow volunteers to sign up to organize one event at a time, in this example, like stepping in and out of the obligation once the task has been completed. This way, motivation and energy stay high, and the team remains committed to delivering quality results.

4. Ownership

It is important that BRG members (including leaders) are serious about their participation in the BRG and truly take ownership of their chosen or assigned tasks. Otherwise, they are the wrong person in a position that is meant to drive the BRG and its objectives forward.

Ownership goes hand in hand with deep commitment and the feeling of responsibility for a task and to bring this task to completion in the best possible way. Members who do not assume this same sense of ownership are not a good fit and should swiftly be replaced.

5. Accountability

There are people who volunteer easily to take charge but then struggle to get started or show perseverance and tenacity, or -perhaps- skills and experience to deliver on their commitment. It is important for the BRG, however, to hold members accountable for their actions and inactions; not to be malignant but to ensure the BRG’s committed goals are being pursued and achieved.

If a member falls behind on their commitment, it is only fair to track progress and raise concerns when there are gaps opening. Tracking progress periodically and correcting the course as needed is very basic good project management practice. So, if a member bit off a bite too large for them to swallow, the team can offer help as needed to support the member in their effort. Help can come in many forms and include resources, mentoring, skill-building, hands-on support, and so forth.

Conclusion

In summary, building a respectful culture of support, accountability, and offering opportunities for personal growth and development within the BRG is the most rewarding path for its members and the growth and impact of the BRG overall. Cultivating this mindset retains existing members and attracts new ones alike. It builds trust and confidence in the BRG as an organization that is taken seriously within the host company and is valued and continuously supported by leadership and executives.

Founder and CEO of Klaschka and Co. - Stephan Klaschka
Stephan loved computer programming from a young age. He used his talents to climb the corporate ladder, leading him to start his own business transformation consulting practice. Listen to this episode to hear more about Stephan and his career.

Innovation projects are risky explorations. Disruptive innovation projects are even more so, and individual projects can be quite a gamble. So, how can you limit the risk across your portfolio of innovation projects? The goal is to increase the likelihood for the portfolio to succeed overall even if individual projects fail.

(Quick note for project management professionals: I am deliberately not differentiating terms like "portfolio" and "program" here. As my goal is to get the basic idea across, more particular definitions don't seem to add value here.)

In mature organizations, incremental improvement can easily be and often is interpreted as 'innovation', which makes sense when optimizing a production environment, for example. Here, at the back end of operations, big "elephant" projects tend to bind the organization's resources (How to grow innovation elephants in large organizations).

In contrast, the innovation project portfolio I am referring to aims at the disruptive end of the spectrum: the ‘small elephant projects’ with higher risk but also with the potential for extraordinarily high returns if and when they succeed.

Why to manage risk

In large organizations, you hardly get a "carte blanche" to manage just highly risky projects. With a corporate focus on predictable, short-term results there is too much concern about the portfolio easily becoming an unpredictable money pit. You are likely to get shut down after playing around for a while without demonstrating clear success in terms of return on investment (ROI). Thus, you will need to come up with a strategy on how to compose your project portfolio to keep your stakeholders happy and your experimental playground open long-term.

Risk Categories

Managing risk across a project portfolio comes down to finding the right blend of high-risk/high-return projects and lower-risk projects that come with less impressive potential for revenue or savings. You also want to include a few projects that produce returns short-term to demonstrate you are making progress and reaping some quick wins for the less patient stakeholders while the longer-term projects need time to mature.

A common way to approach categorizing projects into Core, Adjacent, and Transformational based on their risk and return profiles:

• Core projects are merely optimizations to improve the existing landscape of systems, processes, assets, or products in existing markets and with existing customers. These incremental improvements are the "safe bet" and "next small step" that, typically, comes with low-risk, predictable outcomes but also limited returns. They do not need much high-level sponsorship vetting and are easy to predict and plan resources for.

  They are the favored playing field of mature, large organizations.
  These projects can often be 'large elephant' projects seen as 'necessary' that the organization rather easily buys into.

• Adjacent projects come with more uncertainty and risks as they usually extend existing product lines into new markets. Though not an entire novelty it may be new territory for your company. Sometimes, 'imitating' a successful model in a different industry does the trick (see also: Imitators beat Innovators!).
  Adjacencies add to the existing business(es), which requires a higher level sponsorship (usually at the Vice President level) to move forward, allocate resources, and accept the risk of failure.

• Transformative projects are experimental and risky. They create new markets and customers with bold, disruptive ‘breakthrough’ products and new business models. While the risk of failure is high, the returns could be huge when you succeed.

  Highest level (C-level) sponsorship and support is crucial for this category to not only persist and get resources during the development phase but also for the mature organization to adopt and support it sustainably, as they disrupt the status quo.

Finding the balance and learn

When you manage a portfolio of disruptive (read: transformative) innovation projects, you should expect projects not to succeed most of the time, instead of calling them "failures" and see it as a learning opportunity. As Thomas Edison put it so famously referring to his experiments leading to the invention of the light bulb: “I have not failed. I've just found 10,000 ways that won't work.”

A common rule for playing a safe portfolio is a 70-20-10 mix, i.e. 70% core, 20% adjacent, and 10% transformative projects. This way, many low-risk/low-return core projects keep the lights on while you play with a few high-risk/high-return transformative projects.

Experiences

From my experience with the portfolio I managed, I leaned towards accepting more risk. This requires being comfortable with a lower success rate as a consequence but also can yield higher returns on the projects that succeed. To my surprise, we completed 55% of our projects successfully and ended up discontinuing 26%.

Fortunately, the average ROI from our "small elephant" projects was so substantial that portfolio returns paid the bills for many years out! Thus, for my portfolio, the 70-20-10 mix turned out as too conservative!

As for how we selected and funded projects, read also Angel Investing within the Company – Insights from an Internal Corporate Venture Capitalist and School for Intrapreneurs: Lessons from a FORTUNE Global 500 company.

Before re-balancing your portfolio in favor of a majority of risky transformative projects, however, make sure you have continued high-level sponsorship and alignment with this strategy as well as a supportive organizational culture in your organization.

If culture, strategy, and sponsorship don't align to support your innovation portfolio efforts, your risk increases for painful learning without sufficient business success.

AI is hyping and Generative AI (GenAI), in particular. It emerged and rose in a short time to offer great opportunities and rewards for practically everyone. Nonetheless, companies struggle to fully embrace and deploy AI strategically and effectively.

Limited GenAI experiments mushroom in various departments but, soon enough, they don’t achieve their full and meaningful potential, and run out of steam, favor, support, and funding. Why is that?

We understand AI, at this stage, to become an augmentation to the workforce, a digital partner to empower and propel employee productivity. Each department seeks AI-worthy applications, low-hanging fruit, for implementing GenAI-based solutions. Many companies jump head-first into the water in this fashion so as not to miss out on a timely competitive advantage. Very few seem to approach AI more level-headed with a sound and comprehensive AI strategy.

Starting at the Wrong End

I offer this explanation: The trouble starts by thinking too small, too isolated, too siloed. The common approach is to integrate AI technology into the existing organizational structures - its divisions, functions, and departments- that are working side-by-side and often enough in silos with little incentive to collaborate closely to achieve the overall mission (see also Why mature organizations can’t innovate and Overcoming the Three Big Hurdles to Innovation in Large Organizations).

After all, that’s what company departments were originally established for. This also extends to the composition of employee incentives and career paths designed to match and progress through the structure of the organization. This design is to meet the departmental and functional goals of the organization. The separated departments, people, systems, and data form silos with the common success metrics focused on within the siloed structures. They offer no paramount incentive for comprehensive and focused collaboration.

Consequently, in today’s organizational structures, hardly any roles exist that are incentivized to deploy AI to its full potential cross-functionally and to open up safe spaces to experiment broadly. Companies tend to remain internally focused with metrics that apply within their wall and employee incentives aligned with this closed-wall perspective.

And so, one organization after the next misses to support and align with the outcomes that matter most for the customer: the value generated along the customer’s journey.

Taking the Path of the Customer Journey

Aligning with the true customer journey to generate value that is important to the customer is key, and data forms the core of the AI-based transformation. The actual customer journey and its outcome are, likely, very different from the often proudly acclaimed ‘customer-centric’ accolades in glossy presentations and pitch decks. It requires stepping back and taking an honest and detailed new view entirely from the customer’s perspective.

It needs to connect the dots of people, data, and processes to measure the value created for the customer at each step along the way. This becomes the blueprint for the data-centric organization in which Gen AI together with other systems and tools become levers that enable the staff to create the value the customer seeks and is willing to pay for. Creating this value for the customer is easier said than done, so how do we get there?

Saddling the Horse

Truly leveraging the data of an enterprise requires bigger and more cross-functional thinking. The challenge is to enable all parts of the organization to achieve the intended objectives and with data-sharing at its core. It may require more than even a unified data model: This most comprehensive approach then lends itself to adjusting the organization structure in support of the new mission.

Sharing the relevant data effectively will likely require restructuring and reorganizing around the new mission to unlock the value creation with the realignment of organizational structures, processes, and incentive schemes.

A new mindset is needed through the organization to achieve all this is supply chain thinking around value disciplines to build the new ‘product’, i.e. the value creation truly for the customer with methods being applied across the organization to map and elevate the customer journey in new ways: from identifying the value drivers, effectively sharing the relevant data, remodeling the organizational structure, aligning the incentive system, and so on.

Yes, this approach is a major, transformational overhaul that, by its very nature, bears its risks. It includes re-inventing the business model, so it may not be for the faint-hearted. Instead of experimenting with proof-of-concept in one or a few departments, the approach entails a company-wide proof-of-value in the operational model along the customer journey. The metrics strictly follow the value generators to guide the way and reshape, where necessary, the very structure of the organization.

While the necessary effort is high, the outcomes are likely the largest differentiators to any competitor and make a real difference for the customer, which the customer is willing to pay for.

Please share your thoughts!

Over time, large organizations tend to lose their innovative edge (see also Why mature organizations can’t innovate). Their research hardly leads to the discovery of new products in their field of business. In search of new assets for their development pipeline to bring new drug products to the market that will help patients with yet unmet medical needs, they increasingly rely on startups and research entrepreneurs to provide discoveries they can buy or in-license or whom to partner with.

However, startups and entrepreneurs can find it challenging to work with large organizations that resemble complex machinery. Lengthy, comprehensive, and sometimes convoluted processes, with red tape and bureaucracy throughout, strain patience and can easily obstruct the much-needed, mutual collaboration.

So, a few years back I was interviewed together with esteemed colleagues from other pharmaceutical companies on a challenging question for the industry:

How can pharma companies ensure they’re first in line when researchers and entrepreneurs come knocking?

Read the interview here on how large pharmaceutical companies strive to position themselves to become attractive ‘partners of choice’.

In my (past) global role as the Director for Global Innovation Management and Strategy in a large global enterprise, one of my favorite and most successful approaches to building a powerful intrapreneuring ecosystem was internal corporate venturing! Another name for it is what is known as ‘Seed Investing’ or ‘Angel Investing’ in the entrepreneurial and start-up world.

Internal corporate venturing is an exquisite tool to cut through the crust of ‘red tape’ that bureaucracy builds up over time. The approach allows for nimble decision-making with a lean process to give disruptive innovation ideas a chance again in a large company (see also How to grow innovation elephants in large organizations and Overcoming the Three Big Hurdles to Innovation in Large Organizations).

Seed-funding promising ideas

How does it work? Think of becoming a venture capitalist within the company: You invest in ventures within the organization and help building ‘intraprises’ in contrast to funding start-up enterprises outside the company. The difference is that you don't venture for your own profit but for the better of your organization.

And similar to a venture capitalist, you don’t have to come up with and risk your own money. While offering small amounts to get things started, I hardly ever had to fund anything! The key is to convince the department(s) that will benefit from the successful idea to fund the project, which also assures strategic alignment with company goals.

The basic idea here is to seed-fund promising disruptive ideas that otherwise would not be implemented or even seriously considered. Often enough, these opportunities were brought up by a bright mind in your organization previously but got rejected by the ‘corporate immune system’, when the employee with the idea approached their line manager or a governance committee of sorts requesting approval to ‘try something out.’
(See also Innovation Killers: The Corporate Immune System Strikes Back!)

POC over ROI

Often enough, there is no clear return on investment (ROI) predictable at this early idea stage. What you may be looking for is rather risky and experimental, so what you need first is a proof-of-concept (POC). to demonstrate the idea could work and ‘has legs’.

The metrics for payoff and ROI of disruptive ideas do not follow the same approach we are accustomed to when measuring the more predictable returns of common cost reduction and incremental improvement projects. Disruptive POC projects often don’t have an ROI projection when you explore technology of sorts or its application that may become a game-changer for our future business.

In my experience, communicating the POC nature of the project over focusing on ROI can actually help! Trying something out rather than promoting radical changes can prevent the 'organizational immune system' from kicking in early on. - Why? Just ‘trying out’ something small is no threat to and does not compete with the 'big elephant' projects over significant amounts of governed resources following the conventional processes of the company’s machinery.

Instead, hey, we just try something out! It's a little experiment that doesn’t change anything, so it poses no threat to established practices, investments, or the power base of individuals defending their fiefdoms.
(See also How Intrapreneurs avoid “No!”)

Aspired returns

Having said this, there is of course a commercial end to all projects. After all, we have no resources to waste and will have to demonstrate that our ‘experiments’ pay off somehow big down the road. Our working assumption is that the disruption should lead to a ten-fold (10X) payoff - at least.

I prefer aiming at a bold 100X ROI target; two orders of magnitude of the original investment, that is. It sets an ambitious target and if things work out it’s a great success story and cover for initiatives that may fail. It’s a powerful point to make for disruptive innovation as part of our innovation ecosystem and shifting the mindset within an organization. Sharing these success stories with executive stakeholders is crucial for future support as well as with employees for future ideas. In the end, you would want to build a robust and sustainable ‘idea pipeline’.
(See also 10X vs 10% – Are you still ready for breakthrough innovation?)

Governance and Authorization

Interestingly, what employees are looking for more than funds is authorization to do what is right and worthwhile for the company. Often, the obstacles are perceived and only exist in peoples’ minds. These barriers are formed by many factors over time, such as the management style they experienced and organizational silos that mold a company’s culture as well as the employees’ personal mindset.

In this particular company, we established a lean oversight board to make our VC funding decisions. It was composed of a diverse and cross-functional team of more forward-thinking executives and a very lean decision process. The team vetted ideas and acted as an enabling ‘go-keeper’ to accelerate innovations instead of pushing the breaks as a ‘gatekeeper.’

The little money offered for trying something new only helped smoothen the path for functional innovators in the company, i.e. the departments that would benefit from a successful implementation. The most important part is making them feel empowered and ‘authorized’ to take action that overcomes complacency, inertia, and organizational paralysis. On the spectrum of strategic innovation roles, the board serves as a ‘sponsor’ and sometimes as a ‘coach,’ when an idea aims to overcome internal barriers to increase efficiency, for example, and the ideator needs some advice on how to approach the challenge.
(See also Innovation Strategy: Do you innovate or renovate?)

Dealing with Risk in the Project Portfolio

The purpose of our governance board was to enable the exploration of disruptive ideas by giving internal innovators a chance. The focus is on projects that can be characterized as early-stage experiments to explore transformative enabling technologies and value-adding services of higher risk or less predictable outcomes than conventional project portfolios in the mature organization would feel comfortable with.

Naturally, this approach comes with an elevated risk of failure when projects do not produce profitable outcomes or simply prove infeasible or poorly timed. This ‘price’ is accepted as long as it generates learning.

The potential damage is low since we are talking about swift and low-cost experimentation: try often and fail fast. Thus, these risky projects complement regular and more conservative project portfolios in the various businesses of the organization. In addition, the innovation project portfolio is somewhat risk-balanced, which avoids having too many high-risk projects that may jeopardize the likelihood of profitability across the portfolio. The reality is that also the disruptive innovation project portfolio has to demonstrate tangible returns over time, so the mature organization sees the economic benefit of experimenting and does not shut down this ‘playground.'

Branding the projects as experiments with a proof-of-concept (POC) endpoint helps to calm the ‘organizational immune system’ and to argue that these risky ‘small elephant’ projects complement the other ‘big elephant’ project portfolios across the organization.
(see also How to grow innovation elephants in large organizations)

Getting Funds

Here are my experiences as an internal corporate venturer or ‘angel investor’: First of all, I don’t have much money to spend. The budget I had allocated for this kind of venture is pathetically meager by design – and I overcommitted it all the time! Nonetheless, I never exceeded it and usually came in under budget by 46%. It sounds like an oxymoron, and since I don’t have a money tree growing in my backyard, how does this work?

The secret is in the psychology of acting as the ‘first investor.’ Think of it this way: when someone wants you to invest in their idea first with nobody else having made any investment before you, you are skeptical and most hesitant to put down your money, right?

All I do is to commit paying for an idea in full to overcome this initial threshold and to get things started. What happens next is that I approach an executive or decision-maker from the business function affected by or potentially benefiting from the intended project. They hear of my investment, get excited, and usually reconsider and want to get on board too so not ‘to miss the train’ - as a second investor. Once the 'innovation guys' have put money down first, the investment in the idea appears less risky to the business executive, so either we split the bill or the business takes on the cost completely (this was the usual outcome)!

I’ve seen it happen many times with managers turning around 180 degrees after they had rejected the idea previously. This is how to deal with them: to save (their) face, don’t point out their earlier resistance but rather thank and recognize them for their support and foresight as valued contributors to change and success for the organization. Celebrate them as enablers, win them over as allies, and keep the connection open for future collaborations!

Alignment and validation

Don’t be mistaken, funding by the business is not only crucial given the fact that my funds are skimpy. It is even more important because it validates that the idea makes sense to the business. It aligns with the strategy and goals of the organization but also helps implement it once the business has 'skin' in the game! Otherwise, even if I funded a project alone, the intrapreneur running it would have a hard time getting it implemented without the support of a business sponsor and the idea may not be what the business actually needs.

So all it takes is making it easy for business executives and decision-makers to invest in good ideas by making them feel comfortable not to invest first, which reduces their perceived risk and lowers their threshold to act.

Key Learnings

• A lean innovation governance board is an instrument for reasonable oversight that benefits from diverse perspectives.

• The ‘Go-keeper’ instead of ‘Gatekeeper’ process is crucial as is the willingness to accept the risk of failure for disruptive projects.

• The model proves highly effective in getting around a convoluted ‘red-tape’ bureaucracy as well as generating a surprisingly high return on investment (ROI) - even without the latter being the primary focus.

• The ‘first investor’ psychology validates the alignment of ideas with business needs and strategy while opening the flow of funds from the businesses and facilitating the implementation.

• This internal corporate venturing or ‘angel investing’ approach became a beacon of hope for employees and a very profitable innovation engine for the organization that started to change the organizational culture for the better.

Stay tuned for my next post: The Art of Innovation: How to Become a "Partner of Choice" (Interview)

1. Why do companies need business-focused ERGs?

The answer is as simple as this: Because it makes good business sense! But what makes this answer so simple? – Well, because it’s made up of a few simple aspects…

2. Build BRGs as an innovative business resource!

While many companies demand creativity and innovation from their staff few companies seem to know how to make it work. – Is your organization among those hiring new staff all the time to innovate? The hire-to-innovate practice alone is not a sustainable strategy and backfires easily.

3. Part 1 of 3: What does it take to keep innovating?

Can strategic innovation rely on creative chaos? – To make a long story short, the answer is: No! Read here what it takes to innovate consistently and give you a cool example too.

4. Part 2 of 3: How to become the strategic innovation leader?

What is an innovation leader? Is this role similar to an innovator? (The answer is ‘no’.) – Recognize the three key roles in innovation, how to find an approach and avoid critical pitfalls.

5. Part 3 of 3: Starting a BRG as a strategic innovation engine!

While many companies demand creativity and innovation from their staff, few companies seem to know how to make it work. – Is your organization among those hiring new staff all the time to innovate? The hire-to-innovate practice alone is not a sustainable strategy and backfires easily.

6. Q&A - Case study for founding a business-focused ERG

If you are planning to found an ERG or are a new ERG Leader. In that case, you may find the attached Q&A helpful: In interview style, here are the answers to the 10 interview questions below around establishing my first BRG: the award-winning NxGen BRG (Next Generation at the Workplace) at Boehringer Ingelheim (BI).

7. Job description for an Executive Sponsor

Executive sponsorship is a prerequisite and critically important for the success of business business groups (BRGs)! The challenge is finding a great sponsor. So, what should you be looking for? What would a job description for an executive sponsor look like? ‑ Here are some practical ideas that have worked.

8. How to attract an executive sponsor?

With a business case for your BRG at hand, securing executive sponsorship is a prerequisite and critically important for the success of business business groups (BRGs)! But how do you attract an Executive Sponsor?

9. Driving the ROI – where to start your project metrics?

So you have started your Business Resource Group (BRG) and done your homework on what the business strategy of your organization is. You also found areas of need in your organization that you want to address with some serious projects. – But where to start building project metrics? What is important, what makes sense, and what is meaningful?

10. Next-generation BRG learn from U.S. Army recruitment!
It is vital for Business Resource Groups (BRGs) to constantly reach out to attract and recruit new members to join and carry the group forward.
But how do you know what would be different with a new workplace generation and how to approach them to get them involved in a BRG? Why not let the U.S. military do the research!

Don’t miss my Top 10 Innovation posts!

Stay tuned for my next post: Angel Investing within the Company – Insights from an Internal Corporate Venture Capitalist

The Role of a Devil’s Advocate

The term devil’s advocate originated in the Catholic Church in 1587. In this role, an appointed individual critically examined candidates for sainthood to ensure thorough scrutiny.

In business, leadership, and innovation, a devil’s advocate plays a similar role by questioning assumptions, identifying potential pitfalls, and stimulating deeper analysis before committing to a decision.

Key Advantages of a Devil’s Advocate in Discussions

1. Encourages Critical Thinking

A devil’s advocate forces teams to justify their ideas with strong evidence and reasoning rather than relying on groupthink or unchallenged assumptions. By introducing skepticism, this role helps sharpen the clarity and robustness of ideas, ensuring well-thought-out conclusions.

2. Mitigates Risk and Prevents Costly Mistakes

When organizations fail to challenge their strategies adequately, they risk costly oversights. A devil’s advocate helps surface hidden risks and unintended consequences, allowing decision-makers to refine their strategies before implementation. This is especially crucial in high-stakes industries such as finance, healthcare, and technology.

3. Enhances Creativity and Innovation

Contrary to the assumption that disagreement stifles creativity, constructive debate can actually enhance innovation. By challenging the status quo, a devil’s advocate inspires teams to think outside the box, explore unconventional solutions, and refine their ideas into truly novel approaches.

4. Improves Decision-Making Quality

Decisions made in an echo chamber can lack depth and fail to consider alternative viewpoints. A devil’s advocate ensures a more well-rounded evaluation of options, leading to decisions that are not only strategic but also resilient against unforeseen challenges.

5. Strengthens Team Dynamics and Confidence

When healthy debate is encouraged, teams become more engaged and invested in their ideas. Employees feel valued for their critical contributions, leading to higher morale, better collaboration, and increased confidence in the final decision.

A recent MIT study measured meeting effectiveness improving by 33% compared with meetings that didn’t include a critical reviewer. Also, the quality of decisions improved by 23%, project delays reduced by 36%, and participation increased by 28%. Employees reported a 29% greater satisfaction in meeting outcomes due to more thoughtful discussions in organizations that adopted this role, who in turn found a 32% increase in the diversity of ideas discussed.

In contrast, groupthink more likely took over in meetings without a critical reviewer role leading. This tended to lead to rushed conclusions and missed risks, based on self-reported participant data, and often required follow-up meetings “to revisit unresolved issues or make additional adjustments, such as revising project timelines, reallocating resources, or addressing overlooked risks, which delayed progress and reduced team morale.”

Implementing the Devil’s Advocate Approach Effectively

To maximize the benefits of a devil’s advocate, organizations should:

• Establish a culture that welcomes dissent rather than penalizing it.

• Rotate the role of devil’s advocate to prevent bias and ensure fresh perspectives. Make sure to invite introverts to this role.

• Balance critique with constructive feedback to maintain a positive, solution-oriented environment.

• Encourage leadership support to reinforce that challenging ideas is a valued part of the process.

Conclusion

Embracing the devil’s advocate approach is a strategic way to drive innovation, enhance critical thinking, and improve decision-making outcomes. By integrating structured skepticism into discussions, organizations can avoid costly mistakes, foster creativity, and build stronger, more resilient strategies. In an era where agility and adaptability define success, having a devil’s advocate is not just an asset — it is a necessity.

Stay tuned for my next post: My Top 10 posts for Intrapreneurs

1. Part 1 of 3: What does it take to keep innovating?

Can strategic innovation rely on creative chaos? – The answer is: No! Read what it takes to consistently innovate with a cool example of a successful product innovation process.

2. Part 2 of 3: How to become the strategic innovation leader?

What is an innovation leader? Is this role similar to an innovator? The answer is ‘No’. Recognize the three key roles in innovation, how to find an innovation approach, and avoid critical pitfalls.

3. Innovation Strategy: Do you innovate or renovate?

Not everything new is an innovation and some is more renovation than innovation. Here is a framework that helps to distinguish an innovator from a renovator. It works for entrepreneurs and intrapreneurs alike, as it is important to understand which role you play and when. It all depends on what you need to achieve and what is critical to reach your goal!

4. Innovate to Implement!

Creating value through new products is not enough. Capturing the value requires equal attention in the innovation process. Focusing on creativity and neglecting execution along the value chain is a costly mistake!

5. Why too much trust hurts innovation
Most managers understand that trust is a key ingredient to effective collaboration and innovation. Yet, few actively try to cultivate and nourish trust in their own organization to achieve the right mix of trust and constructive tension.

6. Imitators beat Innovators!
You thought Facebook was the original? Or YouTube? Or LinkedIn? – Get ready for your wake-up call! Popular breakthrough innovations are overrated. Imitators are successful by combining someone else’s innovation with the imitator’s advantage and by doing so they can become innovators themselves!

7. Boost ‘Group Intelligence’ for better decisions!
Group intelligence can be increased for better decision-making – or why you should not rely on a group of geniuses! New research breaks ground to understand collaborative intelligence. Here is how to apply it to the workplace.

8. Collective Intelligence: The Genomics of Crowds
Group intelligence beats individual brilliance – and businesses are willing to pay for the crowd’s wisdom in the social sphere. MIT’s ‘genetic’ model allows combining social ‘genes’ to harness the collective intelligence of crowd wisdom successfully and sustainably. Areas of application are broad and include, for example, scientific research but also businesses and Business Resource Groups (BRGs).

9. Overcoming the Three Big Hurdles to Innovation in Large Organizations
Driving innovation in large organizations is challenging. Read what (predictable) hurdles to expect and how to overcome them.

10. 10X or 10% - Are you still ready for breakthrough innovation?

How can you maintain the innovative pace of 10X return of investment (ROI) when the innovation rate tends to sink closer to 10% (or less) in matured companies?

Stay tuned for my next post: Strategic Benefits of the Devil's Advocate: How Constructive Dissent Drives Innovation and Better Decision-Making

Our body’s immune system protects our health and defends us against threats entering our body. It identifies intruding germs, isolates them from the surroundings, and flushes them out of the system to prevent further harm. Our immune system also keeps track of intruders formerly identified to reject them even more effectively should they ever reappear.

Large organizations consist of humans who tend to follow behavioral patterns that are not unlike their inner immune systems when it comes to evaluating new ideas brought forward by an aspiring intrapreneur. Especially, if a new idea comes with a ‘wishlist’ of demands to make it happen: typically, time and money.

Preserving the Equilibrium

It’s in our human nature to approve ideas we like or that further our objectives while we tend to reject ideas that don’t match our likings, beliefs, commitments, or that cause disruption to our equilibrium or budget. Disruptive ideas come with uncertainty and may require uncomfortable or additional efforts on our side. The outcome may appear risky, could waste precious resources, or have other undesirable repercussions for us.

The fear of losing something is generally stronger than the incentive of gain. Often enough, we just don’t fully understand the idea or its implications, and don’t take the time or muster the impetus to look into its details - so it seems safer and more convenient to rightout reject it.

Joining the Dark Side

This way, as managers and coworkers, we act as a part of the organizational immune system. We become part of the reasons why mature organizations can’t innovate – we join the ‘dark side,’ so to speak.

Like our body remembers a previous intruder to respond even faster the next time – and so do we. Interestingly, though, we tend to remember better who presented the idea that we rejected rather than what the idea was about. So when the ‘quirky guy’ shows up again after a while with the next idea, our suspicion is already kindled, and we more easily reject this next idea too.

Facing Defeat

For intrapreneurs, it is crucial to avoid the “No” response from the Organizational Immune System because it is hard to turn it into a “Yes” again later on. This is why we teach How Intrapreneurs avoid "No!" at the School for Intrapreneurs: Lessons from a FORTUNE Global 500 company, a highly effective talent and leadership development program and corporate incubator.

Too often an intrapreneur lets their enthusiasm take over and confronts us straight on with their ideas bundled with a request for resources of sorts. Most often, this discussion ends quickly with a “No,” when we perceive this ‘frontal attack’ as a threat to the status quo, the establishment, or the well-oiled machine that we run as a manager - and so it triggers the ‘corporate immune system’ leading to rejection.

Stepping Stones to Success

So, just short of having control of the "The Force" like a Jedi in the famous Star Wars saga, how should an intrapreneur seek support for an idea from managers, potential sponsors, or coworkers? While there is no ‘one-size-fits-all’ or a silver bullet approach, here is a selection of tried approaches for your consideration:

• Seek support: The trick is to ask in ways that build support for driving the idea forward – and not necessarily for the whole implementation project all at once. Even a small step is better than none or hitting a wall early on.
  For example, supporting evidence can help to raise curiosity and deflate resistance. Find out if a similar approach worked out in another company or industry; it helps to emphasize validation elsewhere. It can help to frame and position your offer to a potential sponsor.

• Build trust: Derived from a strategic sales blueprint, a more social approach includes building a personal relationship first: It is much easier to connect from a position of mutual trust and openness to find support building the supportive network by asking for advice or references before you ask for resources.
  The key is, however, to remain authentic with mutual respect and integrity, and not to fake a relationship or trick your counterpart. Remember that if this idea doesn’t find support, perhaps your next idea will, so work on framing true and lasting connections.

• Just a test: Cautious managers may open up more easily when they hear the intrapreneur saying they do not intend to change anything radically. Instead, let’s just ‘try something out,’ so as not to threaten their established processes, investments, or power structures within the organization.
  Emphasizing the ‘experimental’ and non-threatening nature of the idea helps to prevent triggering the immune system at this early stage.

• Gathering Insights: Successful intrapreneurs listen very closely to the responses to learn from them.
  Rather than asking a closed question that forces people into a quick Yes-or-No cul-de-sac, it is much more insightful to carefully phrase questions in a way that the gate-keeper already solves the problem, or provides an answer or approach to the problem the intrapreneur is trying to solve.

• Know the Goals: The larger a support network an intrapreneur can build for their idea, the better. Rather than the direct manager, it may be more informative to work with people who have insights into the organization's goals and priorities, which could be sources of resistance.
  This way, the intrapreneur can learn about possible conflicting goals (for example, “do more with less” or “stability versus creativity”) that need to be known and understood. These goals can then be addressed and dealt with constructively to pave the road to a " Yes.”

• Show Gratitude: Finally, intrapreneurs need to pay respect and express gratitude no matter what the outcome of their conversation may be.
  A ‘thank you’ goes a long way and keeps the door open to talk more and possibly receive support in the future. Even if you didn’t like the answer, the person you talked to has spent time and thought on your idea, and deserves credit for doing so.

Stay tuned for my next post: My Top 10 Strategic Innovation posts

Do you find yourself in a place that struggles with the symptoms of Why mature organizations can’t innovate and Overcoming the Three Big Hurdles to Innovation in Large Organizations?

It is not easy and takes time to turn an organization’s mindset from what is into what if. It is, however, a great and rewarding achievement if you can pull it off! So, here is how it can work: I built a very successful “School for Intrapreneurs” at a large company as part of a larger innovation ecosystem, so I know that it can work, and am happy to share this approach with you!

Building an Ecosystem

If you are an innovator at heart and find yourself in a company that does not provide an environment supportive of intrapreneuring, you may want to consider building an innovation ecosystem within. This means that, practically, you choose to become a midwife the helping ideas of your colleagues to get a chance to come to life. This enables other aspiring intrapreneurs to step up, unite with you, and act together.

It’s a bold step and disruptive approach but necessary to induce the ability to “10X” change in meaningful and fundamental ways again to an organization as part of an ambitious Innovation Strategy: Do you innovate or renovate? - see also 10X vs 10% – Are you still ready for breakthrough innovation?

Following the words of Steve Jobs, “Creativity means connecting things,” here are some key ingredients to succeed based on my personal experience.
A sustainable environment consists, at least, of

• A safe haven for employees to experiment

• A perpetual pipeline of ideas from all areas of the organization,

• A process to develop them without triggering the “organizational immune system” early on and

• A transition mechanism to feed these ideas back into the regular organization to become funded and implemented with strategic alignment to company goals

• Preparing management how deal with intrapreneurs. You will need to build or teach

• A set of relevant intrapreneurial skills for employees

• A supportive team and for you to maintain

• A positive attitude that you will need to persist and push on.

The “School for Intrapreneurs”

A powerful approach and critical puzzle piece in a larger ecosystem I built was the School for Intrapreneurs. We built this school successfully with help from like-minded and supportive colleagues on all organizational levels whom I was fortunate to meet along my intrapreneurial path.

An underlying premise of the School for Intrapreneurs is that innovation skills can be taught. So, we taught them in this program. In the end, results count; or in the words I adopted from an Accenture advertisement: “It is not how many ideas you have. It’s how many you make happen.”

The Focus of the School for Intrapreneurs

Building intrapreneurial skills systematically, however, is only part of the deal. The true value of the program for the participants is in experiencing for themselves the obstacles an intrapreneur faces in an organization: the rocky road of rejection trying to get an idea on its feet.

As another novelty, any employee could join! While in large organizations, usually, managers select their favorites (‘high potentials’) to participate in innovation or development program participation, we effectively level the playing field. Advancement in the program is solely merit-based and driven only by a participant’s innovative idea and how well they can develop it and move it forward.

The participants, our fellow employees, were taken through a structured process where they formed supportive teams to collaborate to develop ideas together and to experiment to test and improve them. This also includes ways to communicate with management in constructive and non-threatening ways on How Intrapreneurs avoid “No!”, for example. Teams advance with their ideas only on merit.

This development program culminates in pitching ideas to experts and potential executive sponsors for funding, implementation, and support.

Besides support for ideas and teams, executive sponsorship ensures the strategic alignment of ideas with company interests and needs. It also increases the chances dramatically for an idea to transition into the established processes of the regular organization with minimum friction, i.e. the idea becomes a project to be implemented in the existing organization. This is why special emphasis needs to be put on preparing management on how to support and benefit from intrapreneurs; after all, there are risks involved with intrapreneuring for the individual pitching the idea as well as for the executive supporting it; see also The Rise of the Intrapreneur and How intrapreneurs find executive sponsors.

This School for Intrapreneurs program design addresses How to grow innovation elephants in large organizations and deliver big results along the lines of 10X vs 10% – Are you still ready for breakthrough innovation? - During my time with the School for Intrapreneurs program, it generated a 10X return on investment (ROI), so we were right on our 10X target.

Structure of the School for Intrapreneurs

The curriculum of the School for Intrapreneurs is structured in three courses, where the three courses build upon each other. We named them DOORWAY, PATHWAY, and JOURNEY:

• DOORWAY is a two-hour awareness course that outlines how innovation happens in large organizations, typical obstacles, and the characteristics of an intrapreneur. For participants choosing to continue, it also hints at what is offered in the succeeding courses, PATHWAY and JOURNEY.

• PATHWAY, at its core, is an incubator and accelerator. Over 12 weeks of training mixes with group work, experimentation, and idea development. At the end of the course, the teams pitch their developed ideas to a panel of experts and managers representing different business functions for in-depth feedback and advice on how to improve the ideas. – Think “Shark Tank” but without bloody teeth.

  Teams with the most promising ideas then pitch to high-level executives in a second pitch round to pick up sponsorship and support. If successful, the ideas that find support become implementation projects entering the regular organization. Receiving the highest executive sponsorship is another level of validation that confirms strategy alignment with company interests and opens up funding and the path to implementation with executive support.

• JOURNEY is a six-month course designed to accompany the implementation team by providing a mix of skill-building and team-customized coaching. – Why is this needed and important?
  Even with executive sponsorship the project has neither been budgeted for nor are other resources planned and available for its implementation. Therefore, the project still disrupts the establishment and may trigger resistance by the affected middle management and the overall ‘organizational immune system’ (more details on the latter in a future post).

Shaping company culture

By itself, the School for Intrapreneurs is just a first step that immediately affects the intrapreneurs going through the process and graduating. As an innovation leader, I fully embraced and pushed this program forward, I had more in mind: Changing the (mental) DNA of our employees long-term and establishing innovation as a process within the organization.

This requires continuity, persistence, and building a growing change force with School for Intrapreneurs alumni all across the global enterprise. As cohort after cohort goes through the School for Intrapreneurs, this new network connects across business functions and locations while including various levels of the organizational hierarchy. Together, the School for Intrapreneurs is a powerful program for addressing and Overcoming the Three Big Hurdles to Innovation in Large Organizations.

Building a growing change force

Thus, we ask JOURNEY participants to connect with the next cohort completing the PATHWAY course to network, share their experiences, and help guide the “next generation” of graduates. The goal is to sustain the program by increasing the number of like-minded, experienced, and connected employees across the enterprise.

With an increasing number of graduates, over time, you keep the perpetual pipeline of fresh ideas open and flowing. The graduates also grow to become a powerful, far-reaching, and evolving network of active change-makers across all parts of the organization. They connect and pass on their knowledge to the next class going through the School for Intrapreneurs, and even beyond the School for Intrapreneurs.

The School for Intrapreneurs network alumni comprise self-identified, trained, and well-prepared leaders of change who now share common innovation terminology, skill set, and experience. They know whom to reach out to get support or move things forward in future projects and other work matters. Their work and legacy help shape the organizational culture and mindset broadly, making the School for Intrapreneurs not only a sustainable environment but also an effective innovation ecosystem in itself. 

As for lasting success and sustainability, since the inception of the School for Intrapreneurs, Boehringer Ingelheim elevated Intrapreneurship globally to one of its three corporate values. The IT function established a BI X Digital Lab: Scouting for digital innovation as a more targeted engine!

Lessons from the School for Intrapreneurs

Here are my key learnings from the School for Intrapreneurs in a nutshell:

• The individual journey with an ‘intrapreneurial experience’ is of utmost importance for the School’s participants and success. A theoretical, classroom training alone does not do the trick. It has to be hands-on and all the way from inception to implementation.

• Anyone can join - it’s a level playing field.

• This is why the participants value the safe space to operate and experiment.

• Typically, talent in large organizations is selected top-down by management. In contrast, the talent self-identifies bottom-up and progresses in the School for Intrapreneurs on intrapreneurial merits alone.

• The alumni are hardened by their experience and become part of a growing community of capable and engaged change agents who bring the company forward beyond their calling - everyone wins.

• Successful pitches to executives validate the alignment with company strategy – not only for the individual idea but also broader for the entire program of the School for Intrapreneurs.

• The School for Intrapreneurs program gives more disruptive, risky, and outside-the-box ideas a chance that otherwise would not have been brought to executive attention, or so our executive sponsors said in appreciation.

• The School for Intrapreneurs is part of a larger framework to change company culture over time by cultivating discovery and enabling 10x innovation capabilities once again.

Stay tuned for my next post: Innovation Killers: The Corporate Immune System Strikes Back!

Clayton Christensen is an innovation icon and the figurehead of disruptive innovation – he coined the term in the first place! (I am a big fan!)

Professor Christensen concluded that large companies can’t innovate in his famous book “The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators” and I’m out to prove him wrong - at least to some degree!

Why? – In part, driven by my passion for disruptive challenges but mostly out of compassion for my talented colleagues in large organizations I worked in and who deserve better, as we worked hard every day to create innovative products that save and improve the lives of so many patients.

There must be a way of turning around a mature organization. After all, IBM reinvented itself several times and turned from a hardware manufacturer to a services company. What a pivot was that!

Getting back to 10X innovation

So, can a mature company adapt and pivot from within? In life sciences, for example, innovation is commonly understood to find, develop, and bring to market new innovative medicinal drugs, devices, or services as the core business. In a rapidly and fundamentally changing business environment (if you are interested, see “What is Digital Medicine?), however, a “selling pills” model alone runs flat. A life sciences company must find and adapt to new business models to survive and flourish - and the same holds true for most other industries.

Time will tell if 10x vs 10% – Are you still ready for breakthrough innovation? is possible once again. - The question is, can a mature organization turn around? And if so, how?

Shift from Discovery to Delivery

It starts with understanding why innovation slows down in maturing organizations (outliers may confirm the rule) but stay with me here to get the basic principle. The answer lies in the natural business life cycle: in the start-up phase of a new company, the most important skills are around discovery, i.e. exploring a radically new business opportunity.

Delivery skills are most needed as the business gains traction and needs to grow. Management composition needs to change to develop and expand the business professionally. Disruptive input is not in demand but rather becomes a liability that inhibits an operation that needs to focus on reliably and at scale delivering output. Innovation shifts from disruption to incremental improvement, and rightly so—yet it comes at a price, as it also leads to predictable obstacles (see Overcoming the Three Big Hurdles to Innovation in Large Organizations).

Research shows that disruptive innovators are typically not good at delivering and growing the company. As the business matures, they need help and often move on to do what they do best: starting something new, while the company matures in the hands of management that can deliver.

Predictable Downturn

Over time, markets become saturated, the established business model may no longer work, and profits decline. Now we hit an inflection point: the management was hired for its delivery skills. They don’t know how to renew the business, since they never created one. They do know how to prolong the downturn clinging to the dated business model by squeezing out inefficiencies and saving costs. Research confirms with little surprise that these ‘maturity managers’ are good at delivery but mediocre at best when it comes to rejuvenating discovery.

The mature company is like a supertanker that becomes a slowly sinking ship. Groupthink with its mindset and engrained culture prevents disruptions from breaking through. After all, no passionate out-of-the-box thinker or true entrepreneur has been hired for years. Instead, streamlined Ivy League graduates with MBAs are favored to run the business more administratively, and bureaucratically, without taking significant risks – who would ever take the risk and hire the crazy guy instead, right?

Turning to Intrapreneuring

So, where could the turnaround come from? Wait for it… here comes The Rise of the Intrapreneur, who will connect things again in new ways, create and build an innovation-friendly ecosystem, and chip away at the resistance of the “organizational immune system.”

In the following posts, we will explore more intrapreneurial methods, using the example of a large, mature pharmaceutical enterprise and FORTUNE Global 500 company.

Stay tuned for my next post: School for Intrapreneurs: Lessons from a FORTUNE Global 500 company

The Three Big Hurdles

Your task is to spark new energy, employee engagement, or rejuvenate business growth in alignment with business strategy and company culture. Let’s first identify the three common obstacles that large organizations struggle with and that you will likely face before we address how to disrupt and overcome them as an intrapreneur.
- If you are new to intrapreneuring, consider starting with The Rise of the Intrapreneur and then come back here to continue.

These three big hurdles are the

1. Vertical Disconnect: Ideas from the bottom of the organizational hierarchy do not find their way vertically to the top to get picked up, supported, and implemented.

2. Horizontal Divide: Functional silos separate the workforce horizontally which limits effective action to put the full potential of the company’s resources and diversity in a well-concerted way.

3. Inertia: More talking about change than taking action opens a widening implementation gap between ideas and their bringing to life. It is so much easier to lean back and improve incrementally than to take the risks coming with major change. Red tape and ever-mounting bureaucracy do their part to keep the wheels from turning and breeding a mindset of mediocrity.

These obstacles accumulate and pile up to form an unfavorable ecosystem of stagnation by preventing innovative thoughts from growing and ripening. They stand in the way and inhibit innovators from taking the necessary action. They can stall an individual’s courage that is required to drive the organization’s future success - and possibly even the organization’s survival.

Sketching a future innovation ecosystem

Here is what it takes to break the crust to reinvigorate and nourish innovation to flourish once again by building an innovation-friendly ecosystem:

1. Vertical cut: Connect grass-root ideas with executive sponsors

Too often, “middle management” gets blamed bluntly for keeping ideas and funds from flowing freely up and down the hierarchy (why? - see also Leadership vs Management? What is wrong with middle management?).

A mechanism is needed to pipe fresh and promising ideas in an appropriate format from the grassroots to executives, where they can be recognized, sponsored, and put into motion for the betterment of the organization. This holds true for disruptive breakthrough ideas in particular and stands in contrast to the more common continuous and incremental improvement (see also 10x vs 10% – Are you still ready for breakthrough innovation?) that typically makes up most of an organization’s work.

Don’t be mistaken, executives worth their salt seek good ideas like the air they breathe. They are generally more open to necessary change and bold course corrections than one may think. Executives also hold the keys to feeding the ideas back into the machinery of the larger organization to get implemented.

We need a mechanism that cuts vertically through red tape and hierarchical boundaries in mature organizations. It requires a pipeline of ideas that connects the top with the bottom of the organization and everything in between with intrapreneurial passion.

2. Horizontal cut: Connect across functions and geographical silos

Large organizations tend to foster functional and geographical silos to increase efficiency, quality, and reliability in their operations (again, see Leadership vs Management? What is wrong with middle management?). This effectively inhibits ideas of a game-changing nature from flowing freely and being developed with input from diverse perspectives to benefit the larger organization.

A wise saying goes: “Innovation happens at the intersection of disciplines.” It takes adding a variety of brains with diverse perspectives to a problem to challenge, improve, and develop an idea to become more robust and innovative and to make it feasible. Thus, a mechanism is needed to effectively cut through organizational walls horizontally that allow employees to effectively collaborate, network, and connect the established silos and islands.

3. Tangible results: Bridge the “Idea to Implementation” gap

What we need to achieve in the end is giving good ideas a chance that otherwise would never get considered or implemented – especially in a mature business environment that favors low-risk incremental improvement over more risky breakthrough experimentation (see also 10x vs 10% – Are you still ready for breakthrough innovation?).

We need a mechanism that frees the intrapreneurial spirit of employees and directs their passion and potential ideas toward tangible results that, ultimately, drive new business growth or effectiveness.

How does it work?

Our arsenal of intrapreneurial instruments and mechanisms for this innovation ecosystem can include, for example:

• School for Intrapreneurs,

• Internal corporate venturing,

• Networks for implementation and

• Opening to outside perspectives.

We will explore these very different but -ideally- reinforcing approaches over the next posts. I know they work since I built such an eco-system successfully and with more than a 100X ROI (return of investment) in a FORTUNE Global 500 company.

Stay tuned for my next post: Why mature organizations can’t innovate

Big Elephants in the Back-Office

In large organizations, departments gravitate to sub-optimize their core business. Silos form under local management to run their department more efficiently – following the old mantra: do more with less.
(Read more about silos forming in organizations in Leadership vs Management? What is wrong with middle management?)

Although all business functions are affected, corporate Information Technology (IT) departments often serve as the best examples of a “big elephant” world: they are critical enablers in every modern organization's pivotal position. Although the success of practically every business function hinges on IT, IT is not immune to this silo-forming phenomenon in large organizations.

Over time and with ‘organizational maturity’, the IT department tends to end up focusing on what they do best: large back-office projects that cannot be funded or run by any business function in isolation since they span across disciplines or impact the entire enterprise. Just one example of a “big elephant” project is implementing a comprehensive Enterprise Resource Planning (ERP) system across multiple locations internationally.

This is the back-office domain and comfort zone of IT with technology know-how, big budgets, long duration, high visibility, rigid governance, and clear processes to follow.

Small Elephants in the Front-Office

In contrast, the front office typically comprises Marketing, Sales, and Product Development. Here, a small tweak or tool or agile change (that requires some IT input) can go a long way and have a significant impact on organizational effectiveness and business results. – These micro-innovations are “small elephants” as Gartner's research coined them.

These little disruptions to the slower-moving big elephant world easily trigger the “corporate immune system” that favors large elephants and suppresses small emerging ones.

Typically, most projects in large organizations constantly aim to reduce costs in some way. Only a minority of projects address new business and growth opportunities that tend to come with uncertainty and greater risk.

While big elephants are typically incremental improvement projects to save cost, it’s the small elephants that are more likely to be disruptive drivers of growth and future business opportunities: the much-needed lifeblood of sustaining business and future prosperity.

Barriers in the Big Elephant World

IT departments tend to struggle the farther they move away from their ‘core competency’ meaning leaving the big-elephant back-office and dealing with the myriad of small needs of the customer-facing units in the small-elephant front-office.

Many reasons contribute to saying “No!” to emerging small elephants:

• Small elephants are disruptive to the big elephant world, perhaps even threatening the establishment

• It is hard for the back office to accept that there cannot be much standardization around these small elephant solutions by the very nature of their scope and scale

• It is cumbersome to plan and manage resources scattered across small projects that pop up left and right without significantly impacting big elephant projects. Unfortunately, pressure to save costs only fuels the focus on fewer, bigger elephants.
  Gartner brings the dilemma to the point: “[..] the focus on optimization, standardization and commoditization that underlies IT’s success in the back office is contrary and even detrimental to the needs of the front office.”

• Insights into front-end processes and customer needs are essential (and not usual IT back-office competencies) to seize small elephant opportunities, which are often disruptive and driven by the agile intrapreneurial spirit that makes full use of the diversity of thought and understanding of customers deeply.
  – See also The Rise of the Intrapreneur.

• On top of it all, the challenge for IT is to understand the potential and pay-off for initiatives that rely on IT in a domain outside of IT’s expertise: In the mature world of big elephants, ROI projections are demanded upfront and based on models that apply to mature organizations. These models typically do not apply well to measure project ROI in the emergent worlds of small elephants, which puts the small elephants at a disadvantage; another disconnect that easily leads big elephant organizations to reject proposed small elephants.

As a bottom line, for large IT departments, it is simple and convenient to say ‘No!’ to requests for “micro-innovations” from employees scattered across the front offices. And, sadly, often enough this is exactly what happens. Despite the lasting impact of “No!” (see also How Intrapreneurs avoid “No!”), turning ideas and proposals down too fast also leaves out opportunities for huge innovation potentials (see also 10x vs 10% – Are you still ready for breakthrough innovation?).

What happens to IT without small elephants?

Ignoring the need for micro-innovations and not supporting them effectively will not serve IT departments well in the long run. With only a big-elephant focus IT departments are at high risk of losing, sight of the needs of their internal customers. Consequently, IT undermines and finally loses its broader usefulness, acceptance, and footing in the business functions it intends to serve.

When small elephants are neglected or blocked, it practically forces the front office to look for other resources sooner or later in order for IT services to provide resources to get their needs taken care of. Over time, the big IT department drifts to become more and more obsolete and is finally replaced by agile and responsive agencies and contractors that deliver on their front-office customer needs.

After all, IT’s general role is one of an enabler for the core businesses rather than being perceived as a stop-gap by its customers.

How to Raise Small Elephants

So, what can a mature yet forward-looking IT organization do to support micro-innovations – or ‘balance the herd,’ so to speak, to include a healthy number of small elephants in the mix?

• Brad Kenney of Ernest&Young recommends limited but dedicated resources (including time) for micro-innovations; for example, to dedicate 10% of the expert’s time to implement micro-innovations

• Test changes in emerging markets first, if possible, where agility is high at a lower risk of jeopardizing the bottom line or threatening the established organization and its investments in mature markets

• Establish effective collaboration platforms that make it easy for employees to openly and conveniently share content internally as well as with external parties.

How Intrapreneuring helps

A systematic approach to Intrapreneuring can go a long way to help push these micro-innovations forward. It starts with systematic intrapreneurial skill-building for employees across all levels of hierarchy and includes:

• Understanding how innovation happens in large organizations, i.e. large and small elephants, and the need for both to exist

• Helping employees become aware of and overcome their own mental barriers and silo-thinking

• Attracting, inspiring, and engaging employees to take their ideas forward knowing there are obstacles in their way

• Training skills that help to frame, develop, and pitch ideas to potential supporters and sponsors

• Building and presenting a business case for review and improvement by peers and management

• Enabling and empowering employees to bring their small elephants to life and sharing the story of their success to inspire others

• Working to gradually change the mindset of the organization, and its culture, as needed, to become more balanced on the elephant scale, to unlock the resources within the own workforce, and to seize opportunities for growth and the future of the business.

Just as out there in the wild, without raising small elephants the life-span of organizations with only big elephants is limited.

Stay tuned for my next post: Overcoming the Three Big Hurdles to Innovation in Large Organizations

10X vs. 10%

Many entrepreneurs and start-up companies seem to ‘shoot for the moon’! Far more than 90% of these ventures fail within just a few years. Few, such as Google, succeeded and grew to dominate internet giants. The question remains though if they can maintain the innovative pace of 10X when the innovation rate tends to sink closer to 10% (or less) in matured companies.

How big dreams changed the world

This challenge also affects other visionaries who changed the face of the world and transformed society in ways nobody has imagined, such as:

• Apple built a micro-computer at times when mainframes ruled the digital world and only a few could envision demand for personal computing: “There is no reason anyone would want a computer in their home” was a prediction that came back to haunt Ken Olsen, founder of Digital Equipment Corporation (DEC), in 1977 – just a few years before the first IBM PC sold and DEC fell apart.

• eBay established a new online sales model that millions around the globe use every day

• Google took over the browser market through simplicity, by giving everyone control to use the most complex machine on Earth, the Internet

• Microsoft cultivated software licensing to sell one piece of software millions of times over effortlessly at minimal cost.

Innovation downshift

As disruptive and transformative ventures grow and mature, the definition of what is perceived as ‘innovate’ changes. Both momentum and focus shifts. With size, companies struggle to continue innovating similar to their nimble start-up origins.

What happens? With size comes a downshift from disruptive to incremental change. Simplicity makes space for adding features. Adding features makes products more complex and ultimately less usable and appealing to the majority of customers.

Look at Microsoft’s Office products, for example: Wouldn’t you wish they came out with a ‘light’ version with reduced feature complexity by let’s say 75%, so the software becomes easy to use again?

It also starts haunting Google, as their established products such as Search or Gmail need to be maintained. Additional “improvements” aka. features creep in over time. Perhaps you noticed that Google search results seem to be less specific and all over the place while the experimentation-happy Gmail interface confuses with ever-new features.

Even the most iconic and transformative companies experience a reduction of their innovative rate from 10X to an incremental 10% or so.

Technology S-curves

The funny thing is that -at least in technology- incremental improvement quickly becomes obsolete with the next disruptive jump. The current technology matures up along the S-curve (see graphics) and generates revenue, but the next disruptive technology emerges. Companies hold on as long as they can keeping revenue flowing by adding features or improvements of sorts to gain or maintain a marginal competitive advantage. Thus, incremental improvement and process optimization found their place here to minimize cost and maximize profit in a market where the product became a commodity, so the competition is based only on price.

The new technology does not yet make significant money in the beginning at the beginning of the next S-curve. The few early units produced are expensive, need refinement, and are bought by enthusiasts and early adopters who are willing to pay a steep premium to get the product first. Nonetheless, development reached the point of “breakthrough,” became appealing to many, and quickly took over the market: the big jump onto the next S-curve gains momentum. Suddenly, the former technology is ‘out’ and revenue streams deflate quickly.

(source: http://www.carteblancheleeway.wordpress.com)

Large and mature organizations ride on an S-curve as long as possible. They focus top-down on optimizing operations. Little effort is made to address the underlying limitation of the current technology and seek out risky new successors. Maturing companies tend to transform into a ‘machine’ that is supposed to run smoothly. A mind shift happens to avoid risk to produce output predictably and reliably at a specific quality level to keep operations running and margins profitable. Incremental process improvement becomes the new mantra and efficiency is the common interpretation of what now is considered ‘innovative’.

10X has turned into 10%. To keep up with the ambitious 10X goal, companies would have to constantly re-invent themselves to replicate their previous disruptive successes.

How Goliath helps David

Even our recent iconic ‘giants’ find themselves in a tighter spot today:

• Google struggles to integrate a fragmented product landscape and maintain the ambitious 10X pace of innovation

• Microsoft suffocates loaded with features that make products bulky and increasingly unusable while consistently failing to launch new technologies in the growing mobile segment successfully

• Apple waters down their appealing simple user interface by adding features and clinging to defend their proprietary standards from outside innovations.

On top of it, all giants tend to face the stiffening wind of governmental scrutiny and regulation which influence market dynamics to protect consumers from overpowering monopolies that jeopardize competition and innovation.

This is fertile ground for the next wave of innovators, small Davids, to conquer markets from the Goliaths with fresh ideas, agility, and appealing simplicity. Where does your organization stand on the S-curve, riding the current curve with 10% or aiming high at the next with 10X?

Observing the down-shift

What can you observe when the down-shift happens? How do you know you are not on the transformative boat anymore? Here are just some examples:

• Small Jobs – job descriptions appear that narrow down the field of each employee’s responsibility while limiting the scope by incentivizing employees to succeed within the given frame.

• Safe Recruiting – practices shift to playing it safe by hiring specialists from a well-known school with a streamlined career path to fit the narrowly defined mold of the job description. The newbies are expected to replicate what they achieved elsewhere. Risk is taken to getting the ‘odd man out’ for the job, a person who took a more adventurous path in life and thinks completely differently, as this may disrupt the process and jeopardize the routine output by shifting the focus away from operations.

• Homogenized workforce – as a consequence of hiring ‘safely’, the workforce is homogenized thereby lowering the innovative potential that comes with the diversity of thought and experience.

• Visionaries leave – with the scope of business shifting, the visionary employees who drove innovation previously lose motivation when innovation and creativity slow. Now they are held to operate in a business space where they do pretty much the same thing as their competition. Naturally, these go-getters move on, as it is easy for them to find a challenging and more exciting new job in a more dynamic place. – This ‘leaky talent pipeline’ gets only worse and more costly when the talent management focus shifts to talent acquisition and leaving talent retention behind.

• Complexity creeps in – the temptation to constantly add features increases the complexity and starts a spiral that is hard to leave again.

• Procedures for everything – operating procedures regulate every detail of the job. The new ‘red tape’ is not limited to the necessary minimum but rather to the possible maximum.

• Short-term focus – work output becomes mediocre and focuses on short-term goals and sales targets; the next quarter’s numbers or annual results take priority over following the big dream.

• Sanitized communications – broader communications within the company become ‘managed’, monitored, and ‘sanitized.’ A constant stream of (incremental) success stories pushes aside an open discussion to target the bigger problems. Opportunities are missed for open dialogue and creative disruption that fuels the quantum leaps forward to outpace the competition. Peer-to-peer communication is monitored to remain ‘appropriate’ and can even be actively censored. Trust in management and subsequently also among employees erodes.

Management fear of being the first

The real problem is the shift of mindset in top management that quickly works its way down: not wanting to take the risk of being first, which includes avoiding the risk of failure while chasing the next big opportunity or technology. Instead, they sail the calmer waters among more predictable competition fighting for small advantages and holding on to the status quo opportunistically as long as possible. In some cases, the management even acknowledges the strategy shift from ‘leader’ to ‘fast follower’ despite whatever the company motto proudly promotes – thereby accepting 10% and avoiding leaping ahead of their competition by bold and game-changing 10X moves.

Interestingly, these same managers still love to look over the fence to awe the iconic leaders but steer away to take charge and work to become the leader again. The nagging question remains if they could pull it off getting into first place.

Outside-of-the-box thinking may still be encouraged in their organization but is not acted upon anymore. Internal creativity or ideation contests become more of an exercise to keep employees entertained and feeling engaged, but the ideas are hardly being funded and executed. Instead, company resources are concentrated on running the incremental machine predictably and reliably at 10% as long as it’s profitable, no matter what.
– They simply have no resources to spare and dedicate to 10X!

Business Darwinism

These businesses undergo a cycle of breaking through by successful disruption in a narrow or completely new segment, then continued growth to a size where the organization slows down to an incremental pace and somewhat stagnating innovation. It may then get driven out of business by the next disruptor or proactively break up into more competitive fragments that allow for agility and risk-taking once again to become leaders in their more closely defined space of business. This closes the cycle they are to go through next. There is a strong parallel between evolution and Charles Darwin’s survival of the fittest.

Keeping this cycle in mind, it becomes easier to see why management undergoes the mind shift to predictable and incremental improvement during the massive growth phase of the company in the center of the S-curve. It is also the time when disruptive innovators have jumped ship to join the next generation of cutting-edge innovators and risk-taking disrupters who are preparing to take the leap working on the next S-curve.

Which way to turn?

The question is where you want to be: the true risk-taker or the incremental improver? Understanding the trajectory and current location of your company helps to make the right decision for you. It can save you from frustration, banging your head against corporate walls, and wasting your energy in a dinosaur organization that is just not ready anymore for your ‘big ideas’ and quick moves outside its production-house comfort zone.

This leaves some of us wondering which way to turn. If you are looking for predictability, longer-term employment (an illusion these days, one way or another), and a good night's sleep, this is the place you will feel comfortable in.

And then there is ‘intrapreneuring’ as a third direction that tries to change the company from within. (See also The Rise of the Intrapreneur)

To say it with the words of Niccolo Machiavelli, a wise and sober realist: “All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.”

Shoot for the moon (or Mars, if you are Elon Musk), change the world no matter what, and enjoy what you do!

Stay tuned for my next post: How Intrapreneurs avoid “No!”

Books teach us how to say “No!” – They fill up entire shelves in bookstores to help us achieve professional success and personal freedom. Rejecting requests from others helps us de-clutter our busy day and protects us from time-suckers and commitments we immediately regret.

On the other end, we are asked to delegate more to boost our productivity. This comes easier for your client or boss, who has a mandate or authority over what we work on and what process to follow. And then there are Intrapreneurs: champions of ideas they want to turn into reality within large organizations without mandate or authority (see also The Rise of the Intrapreneur).

The “No” trap for Intrapreneurs

Intrapreneurs are driven by their passion and belief in the ideas they develop and seek support for. They also often stand outside the ordinary structure and processes of the organization. Intrapreneurs need to pull voluntary favors from people they have no control over in order to find support, funding, protection, expertise, or whatever else their project requires to get off the ground or move forward.

For Intrapreneurs, avoiding the “No” becomes even more crucial: once they receive a “No” to their proposal or request, it is hard to change their mind no matter how much sense the project makes. – Why is that?

Why it’s hard to say “Yes” again

Put yourself in the shoes of a potential sponsor, let’s say a manager, an executive, or a technical expert: this Intrapreneur, a person you may or may not know well, walks into your office and requests resources, money, time, or whatever to fuel an uncalled for project with an uncertain outcome that was not budgeted for and that disrupts your operations.

The safe and easy thing is to say “No.” When rationalizing in retrospect, you just saved the company from diverting and possibly wasting resources on this crazy project that may even have felt like a surprise attack! – And so you feel good, right?

Now, when the Intrapreneur comes back later to try his or her luck again, perhaps equipped with more data, what can you do? If you said “Yes” this time around, wouldn’t you be inconsistent with your previous position and possibly even undermine your authority?

Subconsciously, you may already be biased and seeking a face-saving way to get over this discussion. So it’s safe again to stay with “No,” and remain consistent – and feel good! After all, it’s human nature!

“No” doesn’t turn to “Yes” easily

As an Intrapreneur, coming back to ask for a “Yes” again is an uphill battle, a double sell. You are wasting your energy fighting human nature rather than helping your cause effectively. Chances are you will not be able to turn around a previous “No” into a “Yes,” no matter how much more data and other good arguments you throw at the aspired sponsor. When seeking voluntary support from others, hearing a “No” is a huge obstacle that is hard to overcome.

So, for an Intrapreneur, the million-dollar question (perhaps literally!) is, how to avoid the “No” in the first place and get support for the idea.

How to avoid “No” and thrive your project

For an Intrapreneur, it is most important to listen closely and be open to the questions and concerns the sponsor-to-be brings up: they may just as well uncover valid flaws or complementing areas to be addressed to make the idea succeed in the end.

Gifford Pinchot III, the author of the best-selling book ‘Intrapreneuring’, suggests these nifty tactics for Intrapreneurs to approach helpers or sponsors in a non-threatening or overly demanding way that would trigger a negative response. A small step forward is better than a full stop of the ‘organizational immune system’ kicking in. Don’t ask bluntly for resources of sorts. Instead, ask for advice or a reference to a co-worker!

People love to talk about themselves and are asked for their expertise and opinions. This works with employees on all levels of the hierarchy no matter if you seek a sponsor or advice from an expert.

By asking for advice, there is no Yes-or-No dead-end involved. It’s just a factual discussion among professionals about an idea and what it would take to improve it and move it forward. Even softer is the question of help to find someone else, who could help or whom the Intrapreneur should talk to next. Even if not interested in the idea themselves, it allows the potential sponsor or expert to refer to another person, who is possibly better suited or more interested without losing face or appearing unsupportive.

Thumbs up all around

In case the idea or project tanks, as the expert/sponsor you didn’t waste any resources nor will you be held accountable. If, in contrast, the idea has a positive outcome down the road, you may even claim having supported it at an early stage or have made a key introduction that led to the project’s success. Now, that feels good no matter what happens with the Intrapreneur’s idea or project, right? That’s human nature too.

From the Intrapreneur’s perspective, for starters, you achieved to avoid the “No” kiss of death. You may have even got another lead or hint on what to improve or consider, something you overlooked or were not aware of before. Addressing this may require some more research, data, or conversations, but for now, it drives your idea forward to take the next step, which is good and helpful.

It’s not rocket science, really, but finding ways to deal with human nature in a resourceful and constructive way that keeps the intrapreneurial project moving forward.

Stay tuned for my next post: How to grow innovation elephants in large organizations