The pharmaceutical industry struggles with the fundamental changes of the healthcare systems worldwide. For many reasons, the traditional mindset and business models of the past are failing today. New approaches are needed for innovation “beyond the pill” to stay profitable and ahead of competitors.
But how to change a large organization bottom up and from within?
Why? The pharmaceutical industry struggles with the fundamental changes of the healthcare systems worldwide. For many reasons, the traditional mindset and the business models of the past are failing. New approaches are needed for innovation “beyond the pill” to stay profitable and ahead of competitors.
But how to change a large organization bottom up and from within?
This session offers you a unique birds-eye and worms-eye view on pharma innovation and its shortcomings under the current paradigm, before diving into real-life case studies of intrapreneuring, disruptive transformation and strategic innovations within and beyond a Global FORTUNE 500 pharma company.
Join this masterclass and learn on how to bring intrapreneuring and transformation to life in a large pharma company.
Meant to raise questions and serving as a learning opportunity for graduate students in academic program around the globe, this case study lifts the corporate curtain a bit to show how innovation through intrapreneuring really happens and decision points along the way.
The newly appointed director of Innovation Management & Strategy at Boehringer Ingelheim, a German-based multinational pharmaceutical company, is finding his way forward in his firm’s new, first-of-its-kind role, which is central to the company’s growth rejuvenation strategy. His job has a threefold mandate: to build internal networks, to establish internal structures and to leverage internal ideas. His biggest challenge, however, may be transforming the organization’s DNA. The blockbuster business model that has characterized the company for decades is no longer appropriate. Instead, the firm needs to develop healthcare products available to end users over the counter. This shift in strategy requires innovative changes in distribution, delivery and customer focus. To accomplish this goal, he needs to institutionalize innovation so that it becomes sustainable. But in doing so, he must also identify the metrics for assessing progress. The case provides an opportunity for students to step into the shoes of an innovation leader, to develop an innovation roadmap for the organization in the face of uncertainty and to understand how to engage in innovation leadership at various levels of a global enterprise.
This case has two key objectives. First, this case provides students an opportunity to grapple with the difficult decisions associated with innovation in an uncertain environment. Second, this case highlights that anyone has the ability to cultivate an entrepreneurial mindset and to lead innovation. The case divides the attributes of an innovation leader into five components: observing, questioning, experimenting, networking and associating. It shows the real-life experiences of a manager doing seemingly routine activities, who evolved into a leader who transformed the DNA of a global enterprise. The case also provides a template of the tasks, responsibilities and value-added changes as an individual moves progressively within an enterprise from an operations manager to a senior manager to an innovation leader. This case can be used either toward the beginning or toward the end of any course that addresses innovation and creative thinking in a large organization. At the beginning of a course, it illustrates the challenges of acting in the face of uncertainty in a large organization. At the end of a course, the case provides an opportunity for students to apply what they have learned about innovation, entrepreneurial thinking and innovation leadership.
The traditional world of corporate Diversity and Inclusion (D&I) is being disrupted by a new take on D&I and combining it with innovation and talent management. What some perceive as a threat to the D&I establishment may just be the next step of evolution that could invigorate and drive D&I to new heights.
Though not an entirely novel approach (see also How to create innovation culture with diversity!) the new thinking gains traction. As this could play out in different ways and only time will tell what worked, here are my thought on where we are heading.
Struggles of the Front Runner
Many traditional D&I programs, let’s call them “version 1.0” of D&I, struggle transitioning beyond a collection of affinity groups, tallying corporate demographics and competing for D&I awards to post on their webpage. In these traditional D&I programs ‘diversity’ is often understood to be reflected by more or less visible differences among individuals at the workplace while ‘inclusion’ translates to supporting defined sub-populations of employees through, for example, establishing affinity groups.
The United States is seen as the front runner of the D&I movement. D&I has been around in the U.S. corporate world for decades. For historic and demographic reasons it hones in on removing obstacles for minorities at the workplace supported also by strict legislature and execution; exercising Affirmative Action, for example.
This legacy in the U.S. lends itself to an inside focus on organizations that became the backbone of the traditional D&I programs. It comes down to the question ‘what can or should the organization do for specific groups of people’ defined by ethnicity, gender, age, sexual preference, faith, disability, war history and so on. Apparently, it still is work in progress as, for example, Silicon Valley just recently got on the public radar, which stirred up the debate afresh along the lines of D&I 1.0; see Google releases breakdown on the diversity of its workforce.
Stuck in the ‘Diversity Trap’?
The inside focus and minority messaging of D&I 1.0, however, can be limiting when D&I erodes to a process of ‘doing things right’ by pushing for quotas, ‘checking boxes’ and inflating variations of terminology perceived as ‘politically correct’. This can in fact be different from ‘doing the right thing’ for the company overall, its employees as well as the affinity groups and their constituency. It should not surprise that Affinity groups can be (and often get) stigmatized and perceived as self-serving and self-centered social networks without significant and measurable business impact.
Under this paradigm these D&I 1.0 programs struggle to get serious attention, support and funding from executives beyond operating on a minor level to ‘keep the lights on’ more for public image purposes than business drive. The fundamentals seem to get forgotten: in the end, a business exists to generate a profit, so less profitable activities are likely to be discontinued or divested. It’s a symbiosis and to say it bluntly: without healthy business there is no D&I program and no affinity groups. When this symbiosis get lopsided, D&I 1.0 gets stuck in the trap.
“Diversity” is catching on beyond the United States in Europe, for example, where many countries do not have share a highly heterogeneous demographic composition, for example. Here, companies can start with a fresh approach jumping straight to D&I 2.0 – and many do! It reminds me of developing countries installing their first phone system by skipping the landlines and starting right away with mobile phones.
The 2.0 internal focus corresponds to hiring workers that truly think differently and have different backgrounds and life experiences some of which overlaps with D&I 1.0 affinity roots. In addition, there is also an external focus putting the staff to work with a clear business proposition and reaching even beyond the organization. So here a candidate would be hired or employee promoted for their different thinking (2.0) rather than more visible differences (1.0).
While need remains for affinity groups to tend to their members needs within the organization, the “new” D&I 2.0 opens to shift focus to go beyond the organization. It goes along the lines of a statement President John F. Kennedy became famous for and that I tweaked as follows: “Don’t ask what the COMPANY can do for you ask what you can do for the COMPANY AND ITS CUSTOMERS.”
D&I 2.0 gears towards actively contributing and driving new business results in measurable ways for the better of the employees as well as the organization and its customers. A visible indicator for D&I 2.0 affinity groups helping their constituency beyond company walls is affinity groups identifying and seizing business opportunities specific to their constituency. They translate the opportunity and shepherd it trough the processes of the organization to bring it to fruition. For example, affinity groups are uniquely positioned to extending and leveraging their reach to relating customer segments in order to identify ‘small elephant’ business opportunities; see How to grow innovation elephants in large organizations.
The D&I 2.0 approach demonstrates sustainable business value which is why D&I 2.0 sells much easier to executives. It makes a compelling business case that contributes to new business growth, the life blood of every company.
U.S. companies stuck in D&I 1.0 are hard pressed to keep up with the D&I 2.0 developments and overcome their inner struggle and resistance. With decades of legacy, D&I 1.0 programs in many organizations lack the vision and ability to make a compelling business case, to develop a sound strategy as well as capability and skill to implement it effectively. This is the requirement, however, to truly see eye-to-eye with senior executives and get their full support. This can become a serious disadvantage in the markets relating to products and customers but also in attracting talent.
In the end, the saying holds true that “talent attracts talent” and all organizations compete over talent to compete and succeed. Therefore, a D&I 2.0 program combines business focus and talent management while tying it back to the core of diversity and inclusion: Fostering diverse thinkers and leveling the playing field for all employees. This requires a level playing field that offers the same opportunities to all employees, which is the real challenge.
How do you level the playing field effectively in a large organization? How this will be implemented becomes the differentiating success factor for companies transitioning to D&I 2.0!
Here is a example 2.0-style for a level playing filed that has its roots in the D&I affinity group space yet opened up to include the entire workforce. It empowers and actively engages employees while leveraging diversity, inclusion and talent management for innovative solutions with profitable business outcomes. It may take a minute or two to see the connection between D&I, talent and disruptive innovation but it is at work right here in the School for Intrapreneurs: Lessons from a FORTUNE Global 500 company.
Previous posts relating to innovation and employee affinity groups / employee resource groups (ERG) / business resource groups (BRG):
It’s not only successful innovations that can get shut down (see “Shut down! Why Successful Innovations Die“) but also those that don’t get a chance to take of in the first place: In the small print of Microsoft’s recent announcement to eliminate 18,000 jobs (mainly in the light of the Nokia acquisition) you could also find 200 jobs cut to end the Xbox Hollywood aspirations.
After a history of failures entering the hardware sector, Microsoft struck gold with its powerful Xbox gaming console series powered by popular games such as the epic HALO. Long forgotten seem the times of the “PocketPC” handheld to rival the PalmPilot or the “Zune” MP3 player to dwarf Apple’s iPod. (Let’s keep the Surface tablets with its awful Windows 8 mosaic tile interface out of the equation for now – even a recent promotion is just a sad parody.)
Without doubt, the Xbox is a success, Microsoft’s media flagship. It faces serious competition, so creative and disruptive solutions are needed to dominate the console market.
To expand on this solid Xbox console foundation and fend off competitors, the idea was to produce engaging and original video content. This added value would expand the Xbox platform to broaden Xbox attractiveness and deepen customer loyalty by appealing to its gamer audience in new ways. The gap between gaming and film converged over the past years when new game productions became sophisticated, quality productions with celebrity actors and voice overs, music by top Hollywood composers, high-end visual effects and not only budgets to rival studio movie productions but revenue exceeding blockbuster movies.
Inspired by, for example, Netflix’s success in producing original content such as “Orange” and “House of Cards,” this strategy looked very promising. Well equipped with CBS’ highly accomplished Nancy Tellem and ties to Steven Spielberg, the Microsoft Hollywood team of 200 was up to a great start – or so it seemed.
Two years in, however, the there was very little to show for, so Microsoft finally divested.
– What went wrong?
A key inhibitor for the Hollywood team, so it turned out, was clashing organizational cultures between Microsoft and the quick-paced and decision-friendly media world Tellem was used to from CBS. Nanny Tellem learned the hard way that effectiveness of decision-making at the lower hierarchical levels and fast execution was not the strong suit of the established culture, red-tape processes and deep hierarchy of the Redmond software giant. Down four levels in hierarchy under the CEO, Microsoft’s convoluted processes diluted Tellem’s authority and effectiveness. It slowed down decisions to a point where the ambitious and energetic start-up became practically shackled and impotent to operate effectively in the media world.
Even the best strategy cannot be executed when unaligned with organizational culture or, as Peter Drucker has put it so famously, “Culture eats strategy for breakfast.”
Culture is what most employees say and do routinely. It translates into a company’s processes, structures, systems, etc. This is why failing to understand or outright ignoring culture can be so disastrous for leaders. From my experience, the magic sauce is in aligning corporate culture and strategy with the passion of competent employees.
Microsoft’s Hollywood adventure is just one more example how disruptive innovation struggles when measured and governed by processes of a mature and bureaucratic organization with matrix structure. With reigns held too close and not leaving room to experiment, innovation suffers, as this missed opportunity for Microsoft demonstrates.
“Hindsight is 20/20” people say and in all honesty, other factors may have contributed too, but looking at it from the outside, perhaps this train wreck could have been prevented had Tellem paid closer attention to the culture of her new employer and ‘how we do business around here.’
Cultural fit with conductive structures and processes downstream are serious business factors that often get overlooked and then backfire for the blind-sided executive. – Only perhaps there could have been a proper Hollywood ending.
After all, disruptive innovations is a delicate flower that needs some room to flourish – especially in mature organizations.
Innovation projects are risky explorations. Disruptive innovation projects 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. My goal is to get the basic idea across. More particular definitions don’t 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 organizations resources (How to grow innovation elephants in large organizations). The innovation project portfolio I am referring to, in contrast, aims at the disruptive end: the “small elephant projects” with higher risk but the potential of extraordinarily high returns if 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 of the portfolio easily becoming an unpredictable money pit. You are likely to get shut down after playing around a while without demonstrating clear success in terms of return-of-investment. 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.
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 reap some quick wins for impatient stakeholders while the longer-term projects need time to mature.
A common way to approach categorizing projects into 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 high level sponsorship, are easy to predict and plan resources for, and so they are the favored playing field of mature, large organizations. These can often be ‘large elephant’ projects seen as ‘necessary’ that the organization more 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 is may be new territory for your company. Sometime, ‘imitating’ a successful model in a different industry does the trick (read also: Imitators beat Innovators!).
Adjacencies add to the existing business(es), which requires a higher level sponsorship (such as Vice President level) to move forward, to allocate resources and to accept the risk to fail.
Transformative projects are experimental and risky. They create new markets and customers with bold, disruptive “break-through” products and new business model. While the risk to fail is high, the returns could be huge when you succeed. Highest level (C-level) sponsorship and support is crucial for this category not only to persist and get resources during the development phase but also for the mature organization to adopt and support it sustainably.
Finding the balance
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 it “failure,” 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.”
The 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 few high-risk/high-return transformative projects.
From my personal experience with the portfolio I manage, I leans towards accepting more risk, so you would expect and be comfortable with a lower success rate as a consequence but also higher returns. To my own surprise, we completed 55% of our projects successfully and ended up discontinuing 26%. Fortunately, also the average ROI from our “small elephant” projects is substantial and pays the bills for many years out. Thus, for my portfolio, the 70-20-10 mix is too conservative.
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 strategy and organizational culture of 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.
Our 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 organization consist of humans who tend to follow behavioral patterns 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 is needed from us to make it happen; typically, time and money.
Joining the Dark Side
It’s our human nature: we approve ideas we like or that further our objectives while we tend to reject ideas that don’t match our liking, 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 stronger than the incentive of gain. And often enough, we just don’t fully understand the idea or its implications, don’t take the time or find the impetus to look into its details, so it seems safe and convenient to reject it.
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.
Our body remembers a previous intruder in order 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.
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, and the well-oiled machine that the manager runs; and so it triggers the ‘corporate immune system’ leading to rejection.
Stepping Stones to Success
So, just short of having “The Force” of a Jedi, how should an intrapreneur seek support for an idea from managers, potential sponsors or coworkers? While not ‘one-size-fits-all’ and there is no silver bullet, here is a selection of tried approaches for consideration:
Seek support: The trick is to ask in a ways that build support for driving the idea forward – and not necessarily for the whole implementation project at once. Even a small step is better than none. 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: Additional ‘selling tips’ I picked up from Gifford Pinchot III., the Grand-Master of intrapreneuring himself, suggest a more social approach that 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.
Just a test: Cautious managers may open up when they hear the intrapreneur is not intending to change anything, just ‘trying something out,’ so 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 what the responses to learn from them. Rather than asking a closed question that puts them in a 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 built for their idea, the better. Rather than the direct manager, it may be more informative to work with people who have insights into the goals and priorities of the organization, which may 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 in order to be addressed and dealt with constructively.
Show Gratitude: And finally, it is important for intrapreneurs to pay respect and express gratitude no matter what the outcome is of their conversation. A ‘thank you’ goes a long way and keeps the door open to talk more and possibly receive support in the future.
One of my favorite and most successful approaches to building a powerful intrapreneuring ecosystem is internal corporate venturing!
It is an exquisite tool to cut through the crust of ‘red tape’ that bureaucracy builds up over time. Internal corporate venturing or “Angel investing” allows for nimble decision-making with a lean process to give disruptive innovation ideas a chance again in a large company.
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 a you don’t venture for your own profit but for the better of your organization.
The idea here is to seed-fund promising disruptive ideas that otherwise would not be implemented or even seriously considered. These opportunities –typically‑ were rejected by the ‘corporate immune system’ previously, when an employee with an idea approached their line manager or a governance committee of sorts requesting approval to ‘try something out.’
Often enough, there is no clear return-of-investment (ROI) predictable for these early ideas. What you may be looking for is rather risky and experimental, a proof-of-concept (POC). The metrics for payoff and ROI of disruptive ideas does not follow the same approach we are used to measure 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! It prevents the ‘organizational immune system’ from kicking in early on, since there is little threat to established practices. Why? It does not come across as competing with ‘big elephant’ projects over significant amounts of governed resources following the conventional processes of the company’s machinery. Instead, 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.
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 down the road that our ‘experiments’ pay off somehow. Our working assumption is that the disruption should lead to a ten-fold (10X) payoff – at least.
Personally, I prefer aiming at a bold 100X ROI target; two orders of magnitude, that is. It sets an ambitious target and -if things work out- a great success story. 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).
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’ mindset.
In this particular company, a lean oversight board makes funding decisions. It is composed of a diverse team of more forward-thinking executives and a very lean decision process. The team acts as enabling ‘go-keeper’ for accelerated innovations instead of pushing the breaks as ‘gate-keeper.’
The little monies offered for trying something new only help smoothen the path for innovators in the company. The most important part is them feeling 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.
The purpose of this governance board is 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. 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 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.
Here are my experiences as an internal corporate venturer or ‘angel investor’ from the past years: First of all, I don’t have much money to spend. The budget I have for this kind of ventures is pathetically meager – and I overcommit it all the time! Nonetheless, I came in under budget once again by 46% last year. It sounds like an oxymoron, and since I don’t have a money tree growing in the backyard, how does this work?
The secret is in the psychology of acting as the “first investor.” Think of this way: when someone wants you to invest into their idea first with nobody else having made an 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 get things started. What typically happens next is that an executive from the business affected by or potentially benefiting from the project hears of my investment, reconsiders and wants to get on board too – 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!
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 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 few. It is even more important because it validates that the idea makes sense to the business. It aligns with strategy and goals of the organization but also helps implementing 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.
So all it takes is making it easy for business executives to invest in a good ideas by making them feel comfortable not to invest first, which reduces their perceived risk and lowers their threshold to act.
The lean innovation governance board is an instrument for reasonable oversight that benefits from diverse perspectives.
The “Go keeper” instead of “Gate keeper” process is crucial as is the willingness to accept risk of failure for disruptive projects.
The model proves highly effective to get around a convoluted “red-tape” bureaucracy as well as generating a surprisingly high return-of-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 starts to change the organizational culture to the better.
It is not easy and takes time turning an organization’s mindset from what is into what if. It’s a great and rewarding achievement, though, if you can pull it off!
Building an Ecosystem
So, let’s continue there: If you find yourself in a company which does not provide an environment that supports intrapreneuring, you may need to build an innovation ecosystem within a large organization. Practically, you choose to become a midwife helping ideas of your colleagues getting a chance to come to life. This enables other aspiring intrapreneurs to step up, unite and act together.
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 intrapreneurialskills for employees
A supportiveteam and for you to maintain
A positive attitude that you will need to persist and push on.
The “School for Intrapreneurs” (SFI)
A very powerful approach and critical puzzle piece in the ecosystem is the School for Intrapreneurs. We achieved to build this school successfully together with help from like-minded and supportive colleagues that I was fortunate to meet along my crooked intrapreneurial career path, if you want to call it that. The underlying premise of the SFI is that innovation skills can be taught, as mentioned in “How you become the next Steve Jobs!” – So, we teach them in this program.
In the end, results count or in the words I adopted from Accenture’s advertisement: “It is not how many ideas you have. It’s how many you make happen.”
Building intrapreneurial skills systematically, however, is only part of the deal. The real value of the program for the participants lays in experiencing the obstacles an intrapreneur faces in an organization themselves: the rocky road of rejection trying to get an idea on its feet.
We prepare our fellow employees in a process where they form supportive teams to collaborate in order to develop their ideas together and experiment. This includes ways to communicate with management in constructive and non-threatening ways on How Intrapreneurs avoid “No!”, for example. It culminates in pitching ideas to experts and potential sponsors for funding, implementation and support.
Executive sponsorship ensures strategic alignment of ideas with company interests. It also increases the chances dramatically for idea transitions into the established processes of the regular organization, i.e. the idea becoming a project to be implemented. This is why special emphasis needs to be put on preparing management how to support and benefit from intrapreneurs; after all, there are risks involved with intrapreneuring for the individual (see also The Rise of the Intrapreneur).
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, what typical obstacles are, what is an intrapreneur and already hints towards what is offered in the succeeding courses, PATHWAY and JOURNEY.
PATHWAY is in its core an incubator and accelerator over a 12 weeks with a mix of training and group work. Research suggests that approx. 5% of the workforce have the intrapreneurial spirit, which is consistent with our school’s enrollment numbers. 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 how to improve the ideas. – Think “Shark Tank” but without bloody teeth. Teams with the most promising ideas then pitch to high level executives for sponsorship and support to turn their idea into an implementation project that enters the regular development processes in the organization. Receiving executive sponsorship is another level of validation that confirms strategy alignment with company interests.
JOURNEY is a six-month course designed to accompany the team implementing their ideas 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; so, the project still disrupts the establishment and may trigger resistance.
Shaping company culture
We also ask JOURNEY participants to connect with the next group going through the PATHWAY course to network, share their experiences and help guiding the “next generation” of graduates. The goal is to achieve sustainability of the program by growing the number of like-minded, experienced and connected employees over time.
Over time, an increasing number of graduates keep the perpetualpipeline of fresh ideas open. They also grow to become a powerful, far-reaching and growing network of active change-makers across all parts of the organization as they connect and pass on their knowledge to the next class going through the School for Intrapreneurs.
These are the self-identified leaders of change that share a common innovation terminology, skill-set and experience while they help shaping the organizational culture and mindset on the way towards a sustainable environment, an innovation ecosystem.
Lessons from the School for Intrapreneurs
My key learning from this challenge in a nutshell is as follows:
The personal journey and ‘intrapreneurial experience’ is of utmost importance for the School’s participants – a theoretical training alone does not do the trick. It has to be hands-on and all the way to implementation.
This is why the participants value the safe space to operate and experiment in.
Typically, talent in large organizations is selected top-down by management. In contrast, talent self-identifies bottom-up and based on –intrapreneurial- merits though the School for Intrapreneurs.
Alumni are hardened by their experience and become part of a growing community of capable and engaged change agents.
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 program allows 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.
The School for Intrapreneurs is part of a larger framework to change company culture over time by cultivating discovery and 10x innovation capabilities once again.
Although all business functions are affected, corporate Information Technology (IT) departments often lend themselves as best examples for a “big elephant” world: they are critical enablers in a pivotal position of every modern organization. Even though the success of practically every business function hinges on IT, also 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 examples for 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 agile change (that requires some IT input) can go a long way and have significant impact on organizational effectiveness and business results. – These micro-innovations are “small elephants” as recent Gartner research coined them.
These little disruptions to the slower-moving big elephant world easily trigger the “corporate immune-system” that favors large elephants and suppressing small emerging ones.
Typically, most projects in large organization aim to reduce cost 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 project 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 life-blood 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 say “No!” to emerging small elephants:
Small elephants are disruptive to the big elephant world, perhaps even threatening to the establishment
It is hard for the back-office to accept that there cannot be much standardization around these small 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 cost 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 in 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 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” coming in 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 opportunity 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 notsupporting them effectively will not serve IT departments well in the long-run. With only big-elephant focus IT departments are at high risk to lose sight of the needs of their internal customers. Consequently, IT undermines and finally loses its broader usefulness, acceptance and footing in the business functions they intend 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 IT-services providing resources to get their needs taken care of. Over time, the big IT department drifts to become more and more obsolete, and 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 by its customers as a stop-gap.
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 in Ernest&Young’s 2011 report “Progressions – Building Pharma 3.0”;
for example, 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 among each other as well as with external parties.
How Intrapreneuring helps
A systematic approach to Intrapreneuring can go a long way to help move 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 idea 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, 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.
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 protect 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. (Read also The Rise of the Intrapreneur)
The “No” trap for Intrapreneurs
Intrapreneurs are driven by their passion and belief in the idea 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 received 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, lets say a manager, executive or 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 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 own 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 basically 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, 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 the 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 being asked for their expertise and opinion. 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 to move it forward. Even softer is the question for 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 really rocket-science but rather dealing with human nature in a resourceful and constructive way that keeps the intrapreneurial project moving forward.
The increasing diversity of employees at the workplace led to employees gathering along affinity dimensions like birds-of-a-feather to form networking groups within organizations. The next step goes beyond affinity and establishes employee resource groups (ERGs) strategically as a business resource and powerful driver for measurable business impact and strategic innovation bottom-up.
Let’s start with what it takes to found a successful ERG on a high level and then drill down to real-life examples and practical advice. What you cannot go without is a strategy that creates a business need before you drum up people, which creates a buzz!
While many companiesdemand 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.
Strategic innovation hands-on: Who hasn’t heard of successful organizations that pride their innovation culture? But the real question is what successful innovators do differently to sharpen their innovative edge over and over again – and how your organization can get there!
What every new employee resource group (ERG) requires most are people: the life-blood for ideas and activities! But how do you reach out to employees, help them understand the value of the ERG and get them involved to engage actively?
What do Generation Y (GenY) oriented Employee Resource Groups (ERG) share with the military? – More than you expect! A constant supply of active members is the life-blood for any ERG to put plans to action and prevent established activists from burning out. The U.S. Army faces a similar challenge every year: how to attract and recruit the youngest adult generation? Next-generation ERGs listen up: Let the U.S. Army work for you and learn some practical lessons!
It’s a long list to describe Generation Y with a commonly unfavorable preconception. This youngest generation at the workworkplacern after 1980, also called Millennial) is said to be: lazy, impatient, needy, entitled, taking up too much of my time, expecting work to be fun, seeking instant gratifications, hop from company to company, want promotions right away, give their opinion all the time and so on. But is it really that easy to characterize a new generation?Don’t miss my Top 10 Innovation posts and Top 10 posts for Intrapreneurs!
Not everything new is an innovation and some is more renovation than in innovation. Here is a framework that helps to distinguish an innovator from a renovator and works for entrepreneurs and intrapreneurs alike. It is important to understand which role to play and when; it all depends on what you need to achieve and what is critical to reach your goal!
Creating value through new products is not enough. Capturing the value requires equal attention on 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 between 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! Break-through innovations are over-rated! 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 and lead to better decision-making – or why not to rely on a group of geniuses! New research breaks the ground to understand collaborative intelligence and the – but 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. The MIT’s ‘genetic’ model allows combining social ‘genes’ to harness the collective intelligence of crowd wisdom successfully and sustainably; areas of application are scientific research or business/employee resource groups, for example.
Have you ever had a great idea and went to your manager for support but found they were just not interested in it? Did nothing come out of it in the end, and you were disappointed? Perhaps, you just turned to the wrong sponsor for your project, a common mistake of intrapreneurs. Here are some thoughts on whom to turn for with ideas to make them happen within an organization.
Let’s look at the ‘business champion’ or executive sponsor. It is crucial to understand the motivation of executive sponsors for a simple reason: only if your idea or proposition fits their agenda are they be willing to listen to you and getting actively involved. Consider that they take on risk too in supporting as poor results also reflect on them. You need to know whom to turn to for what kind of idea to find adequate support.
For an intrapreneur, it is critical to understand the nature of the executive position. More specifically if you approach a manager or leader to find support for an innovative idea.
Managers and leaders look at innovation differently, hence both groups innovate very differently and for different reasons. It translates directly into their understanding of what ‘innovation’ is, its risks and rewards, and consequently their willingness to listen to you. Turing to the wrong executive easily gets your idea rejected and you may not even know why.
Let’s take a look how the views of managers and leaders differ and how this molds their understanding of innovation and what kind of change. On a side note organizations need both, managers and leaders. Each role serves a different yet necessary purpose in the organization; see “Leadership vs. Management? What is wrong with middle management?”
Managers focus on predictability
Managers are charged with running the daily business smoothly. They manage a well-oiled ‘machine’ of people, tools and processes to deliver a certain output, a product or service, reliably and at a fixed cost ceiling.
The paramount goal for managers is business continuity – it is the daily bread and butter of the organization and what pays your employee salary today. Running a fast-food restaurant is a good example, the expectation here is predictability: to deliver food to the customer at a specific quality level with as little variability as possible at a defined cost and within a certain time. A competent manager delivers this predictability reliably over and over again.
With operational targets clearly defined, the appetite for improvements focuses on speeding up the process or cut cost here and there without compromising quality. Favorable changes to the status quo are small, gradual tweaks. This is the world of optimization and continuous improvement.
Little risk, little gain
Managers need to keep the risk small to fail or to jeopardize the production process with its predictable output. The low risk of disruption comes at a price though as it limits also returns.
Here innovations are primarily of non-disruptive nature, they are incremental or evolutionary. This approach is process driven. It lends itself to automation as it aims to make the process repeatable, reliable, predictable. No senior executive needs to be closely involved in operations to keep this ‘machine’ running; it comes down to the floor manager executing.
This is also the environment of a conventional development project, the ‘next version’ of something and ‘getting it right the first time.’
With an incremental change in focus, managers tend to look for ideas in their own organization, think ‘suggestion box’. It means following a clearly defined and detailed process with development stage-gates or other review mechanisms that filter ideas typically the criteria of cost, time, quality and, more recently, variations thereof such as customer satisfaction and being ‘green’ and sustainable.
Managers are interested in learning about ‘best practices’ from outside the organization but are often enough reluctant to adopt and implement them if they appear to be risky and disruptive.
Leading in uncertainty
Leaders face a different challenge. They ask: what needs to be done to prepare the organization for success several years down the road with much uncertainty ahead? – Well knowing that the answer may disrupt the established organization.
It is this uncertainty that opens up the so-called ‘fuzzy front-end’ (FFE) to develop entirely new products or services: It is too early to know exact specifications of a solution at this time, the future markets and technologies are yet unknown. Leaders focus is on getting a deep understanding of the problems that customers face to develop the technology and capability to address and monetize them.
What we talk about here is, for example, a completely new product line, a major (adjacent) product line extension or a new (transformative) business model entirely. Think how Apple’s iTunes Store started selling digital media and apps has changed the way we use technology and whose devices we use (hint, hint) – this gamble worked out for Apple and was based on a deep understanding what customers are willing to pay for.
With nebulous solutions in far sight, a tightly governed development process with stage-gates makes little sense because this development model is designed for incremental change and tuned for refinement. It stifles the creative and broad view necessary to create something completely new in an unpredictable and yet undefined scenario of the FFE where much imagination, creativity, and flexibility is needed.
Creative with discipline
However, flexibility and creativity do not thrive only in the absence of discipline or some sense of order. The early-stage research or design process does not need to be chaotic – it’s quite the opposite. A company like IDEO, for example, operates successfully in this space and is famous for their disciplined process and methodology in producing creative and tangible prototypes over and over again.
This transitional step narrows down the broad funnel of uncertainty to develop a range of concepts towards increasingly detailed specifications of the final product. The development of the final product itself is better left to the established development organization – back to the managers to cross the t’s and dot the i’s, if you will.
Active sponsorship needed
With disruption and revolutionary change comes high risk. The outcome is unpredictable and the reward uncertain, failure is likely. Yet, if the gamble works out the rewards can be enormous and the key players ‘rainmaker’.
When exploring which direction to go, the serial intrapreneur’s approach is trying many things. Expect to fail most of the time. See what ‘sticks’ and explore this option more.
Rather than rigid procedural guardrails, intrapreneurs need to secure top executive sponsorship for their continued active support, political weight and funding. Thus, for a unique and exploratory venture what you look for is a leader, not a manager. There is no staged process to follow really, only success determines what was right or wrong.
In general, leaders act more as strategic innovators and game-changers assuming the role of a Sponsor or an Architect while managers take more renovation-associate roles such as a Coach or an Orchestrator. Follow the above link for a more detailed description of these roles and when to chose which role.
What is my idea again?
Start by taking a hard look at your idea first to find out which category it falls into. Then decide what kind of sponsor, a manager or a leader, is best suited to approach and is, therefore, most likely to listen and catch interest.
Even better if you can already identify the role associated with the nature of your project (Coach, Orchestrator, etc.) which helps you framing and pitching the idea or a specific project to the appropriate executive sponsor in your organization.