This video addresses the question: How can the pharmaceutical industry reskill representatives to be knowledgeable consultants to physicians?
Today, sales expertise is not enough. The pharmaceutical representative needs to be a broker of information. Physicians now have very limited time – and dictate when they can meet with representatives, from whom they need comprehensive information that they can pass along to their increasingly educated patients.
In this video, Jo Ann Saitta, Chief Digital Officer of the CDM Group, Stephan Klaschka, Innovation and Healthcare Consultant, and moderator, Richie Etwaru, Chief Digital Officer at Cegedim, examine this shift and the challenges pharmaceutical companies may face in properly retraining their people. These challenges include: adopting a culture of learning agility; integrating silos of information; having the ability to serve up dynamic content; and training representatives to utilize technologies that will maximize their brief but demanding visits with physicians.
Use this linkto watch all 10 videos in the series on YouTube directly – enjoy!
10 Inevitable Changes in Pharma 2015 – Communication moving to Collaboration
10 Inevitable Changes in Pharma 2015 – Content moving to Context
10 Inevitable Changes in Pharma 2015 – Care moving to Cure
10 Inevitable Changes in Pharma 2015 – Compliance moving to Culture
10 Inevitable Changes in Pharma 2015 – Supply Chains moving to Supply Constellations
10 Inevitable Changes in Pharma 2015 – Customization moving to Configuration
10 Inevitable Changes in Pharma 2015 – Customer moving to Consumer
10 Inevitable Changes in Pharma 2015 – Calls moving to Consults
Jo Ann Saitta
10 Inevitable Changes in Pharma 2015 – Cloud moving to Crowd
10 Inevitable Changes in Pharma 2015- Charity moving to Cause
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.
Google co-founder and CEO, Larry Page, continues to have big expectations for his employees: come up with products and services that are 10 times better than their competitors, hence “10x” – that’s one order of magnitude!
10X vs. 10%
Many entrepreneurs and start-up companies, they 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% in matured companies.
How big dreams changed the world
This challenge effects also other visionaries that changed the face of the world and transformed society in ways nobody has imagined, such as:
Apple building a micro-computer at times when mainframes ruled the digital world and only few could envision a demand for personal computing
eBay establishing a new online sales model that millions around the globe use every day
Google taking 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.
As disruptive and transformative ventures grow and mature, the definition of what is perceived ‘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 Offices 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 yourself that recently 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 the reduction of their innovative rate from 10X to an incremental 10% or so.
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,” becomes appealing to many and quickly takes over the market: the big jump onto the next S-curve gains momentum. Suddenly, the former technology is ‘out’ and revenue streams deflate quickly.
Large and matured 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 seeking 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 in order 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 that influences market dynamics to protect the consumers from overpowering monopolies that jeopardize competition and innovation.
This is a 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. They newbies are expected to replicate what they achieved elsewhere. To 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 different, 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 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 that drove innovation previously lose motivation when innovation and creativity slows. 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 costly when the talent management focus shifts to talent acquisition and leaving talent retention behind.
Procedures for everything– operating procedures regulate every detail of the job. The new ‘red tape’ is not limited to the necessary minimum but rather by 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, ‘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 to fail while chasing to 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 they can. In some cases, the management even acknowledges the strategy shift from ‘leader’ to ‘fast follower’ despite whatever the company motto proudly promotes – and thereby accepting 10% and avoiding to leap 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 themselves. The nagging question remains if they could actually 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 to run the incremental machine predictably and reliably at 10% as long as its profitable, no matter what. – They simply have no resources to spare and dedicate to 10x!
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 pro-actively 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 the disruptive innovators have jumped ship to join the next generation of cutting-edge innovators and risk-taking disrupters that prepare 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 and be banging your head against corporate walls and be 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 thinking which way to turn. If you are looking for predictability, longer-term employment (an illusion these days one way or another) and good night sleep, this is the place you will feel comfortable in.
Otherwise, dare to follow the risk-taking visionaries like Elon Musk (the brain behind PayPal, SpaceX, and Tesla Motors; see his recent great interview) to move on.
To say it with the words of Niccolo Machiavelli, the 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!
How to increase group intelligence for better decision-making – or why not to rely on a group of geniuses! New research breaks the ground to understand collaborative intelligence – but how to apply it to the workplace?
Better alone than in a team?
Think about this: What teams make the best decisions?
We all experienced it at some point: Even a group of the best and brightest people often ends up with poor decisions that do not do its individual member’s intelligence justice.
What goes wrong? How does a group of smart individuals, even geniuses, end up with poor decisions when they stick their heads together? What are they missing? Moreover, how can we avoid those obstacles to come to better decisions as a group?
Intelligence of individuals has been well studied for over a 100 years: A solid framework exists to measure the intelligence quotient (IQ). Individuals undergo a series of mental challenges under the premise that someone performing well in one task tends to perform well in most others too. Overall, the IQ is regarded as “a reliable predictor of a wide range of important life outcomes over a long span of time, including grades in school, success in many occupations, and even life expectancy,” as researchers put it.
Modern IQ tests consider an IQ close to 100 as average.
Does ‘Group Intelligence’ exist?
When we look at what it takes to make more intelligent decisions as a group than as individuals, the first question this raises is whether something like a measurable ‘group intelligence’ actually exists. If so, is it measurable and –perhaps‑ higher than the intelligence of its members?
Only recently, scientists took a deeper look at the intelligence of groups and made surprising findings. The joint team included MIT’s Tom Malone, whom we met previous in a post (“Collective Intelligence: The Genomics of Crowds”) as well as others from well-known academic institutions comprising the MIT, Carnegie Mellon, and Union College.
The researchers approached group intelligence following a similar systematic approach as the intelligence metrics for individuals. However, they linked group intelligence to performance as an endpoint, which makes their finding even more valuable for the workplace!
Outsmarting genius as a group
First, the researchers established that group intelligence in performance indeed exists and is measurable. They also found that the group’s intelligence does not add up to the sum of the intelligence of its individual members. In fact, the collective intelligence, or ‘c-factor’, shows only a weak correlation “with the average or maximum individual intelligence of group members” – this is remarkable finding! It means is that you cannot boost a group’s intelligence by composing or spiking the group with genius-level individuals!
Obviously, factors apply other than high individual IQ to increase the intelligence of the group.
The results from two studies consistently and overwhelmingly demonstrate that group intelligence outsmart individual intelligence – by far!
What it comes down to is that a high general intelligence is merely a measurable value in the lab but it does not also translate into a more successful life! An individual IQ above 135 or so can lead to quite the opposite (for reference, ‘genius’ starts at 140 on Terman’s classification). The higher IQ becomes rather a hindrance than an advantage in real life: a very high IQ tends to clutter and confuse a genius’ mind with more irrelevant options, which make it harder for them to see the most applicable one and come to a decision.
In contrast, practical intelligence relates more to social savvy or ‘street smarts’ – a cunning and practical understanding that proves advantageous in the real world more than a high general IQ!
Here is the magic sauce!
Surprisingly, the strongest correlation of group intelligence is with three factors:
The average social sensitivity of the group members, i.e. “reading the mind in the eyes” of another person. There is something to be said for bringing together emotionally intelligent people.
Equality in the distribution of conversational turn-taking meaning an equal share of time to speak. Our society and businesses seem to favor smooth-talkers and attracted to extrovert and outspoken individuals that seem to signal competence, decisiveness, and determination.
Group intelligence, however, does not increase when there is a strong vocal leader, who dominates the discussion to push everyone in his or her direction. Be careful not to leave out the brilliance of individuals who may get steamrolled by the loud and dominating: introverts, in particular, are at a disadvantage. They are easily stuck in an extrovert world.
Given that the introvert/extrovert ratio in the USA is roughly 50/50 (according to the 1998 National Representative Sample), failing to include introverts effectively is a costly mistake, as it excludes their knowledge and valuable input to the decision making process ‑ and lowers the collective intelligence of the group. Introverts, for example, favor structured communication that plays to their strengths by allowing them to research and prepare; they need more time to express their refined response.
The proportion of females in the group composition; the more women the better. This appears to account largely to a higher social sensibility that women have over their male group members in general. However, all three factors have to come together, so building female-only teams does not do the charm either.
In a nutshell
When we bring it all together, what surprises me most is how little of this solid research has penetrated the workplace. Where employees and management teams make decisions, the survival of organizations is at stake and relies on leveraging the collective intelligence of the group effectively.
A myriad of practical applications for these findings come to mind. Here are just two examples:
Women still struggle to achieve gender equality in many organizations ‑ the amount of women in management positions is a widely used metrics that refers to the female proportion of the workforce. The common approach is to achieve this by ‘swinging the stick’ to establish and enforce quotas and leave it at that – Mission accomplished?!
Wouldn’t it be more compelling to offer the ‘sweet carrot’ of increasing group intelligence in leadership teams for better business results that includes leveraging the natural advantage of females?
Again, the female quota alone does not boost the group intelligence. We also need social sensitivity and equal shares of talking time. Thus, a flanking business application would go beyond how we compose teams based on gender. It considers social sensitivity measures and some structure to how we conduct group discussions or meetings to maximize the collective intelligence by including and engaging all participants. A challenge also for how we recruit, train, and evaluate our workforce.
Job description for an Executive Sponsor Executive sponsorship is an important prerequisite for the success of employee groups. The challenge is finding a great sponsor, so what should you look for? What would a job description for an executive sponsor look like? ‑ Here are some practical ideas that have worked.
Why executive sponsorship is critical
Employee groups consist of volunteers with good intentions. They work, typically, in addition to their day job and after hours driven by the desire to address a need close to their heart. Together with colleagues, they seize opportunities to complement the organization’s objectives and goals and to improve the workplace. In most cases, employee groups are not an integral part of the organization: they don’t show up in organizational charts and have no formal authority.
For most group members, this voluntary work is ‘on top’ of the regular job and not reflected in their professional goals or performance evaluation. What makes a difference is having a strong ally: the executive sponsor.
From the organization’s perspective, some governance is needed to:
Prevent the employee group left to operate in a void or detach from the rest of the organization
Align the goals of the group with the needs and strategy of the company in a complementing and synergistic way
Ensure the group’s practices comply with company policies and other regulations.
The leaders of employee groups owe their members to:
Focus the group’s work to make a meaningful impact on the organization (instead of wasting resources and the member’s time on projects or activities that do not create value, are meaningless or even harmful to the organization)
Get funds, active support, and political backing in the organization.
Both, the organization and the employee group benefits from the connection with an executive sponsor.
No silver bullet
When you are looking for an executive sponsor, what are you looking for? What are the relevant criteria? – Executive sponsorship is a role, just like any other job, so what would a job description for an executive sponsor look like?
Bear in mind that there is no one right answer for the working relationship with an executive sponsor. The sponsor role and level of involvement varies and depends on many factors. It also shifts over time with the changing maturity of the group and its leadership, for example, or levels of involvement and autonomy of the group. A new group may turn to the sponsor for help with forming, direction, and funding where a mature group may seek business insights, refined success metrics, and leadership development opportunities.
Criteria for an Executive Sponsor
A perfect sponsor effectively leverages their personal brand, relationships, resources to enhance the visibility and credibility of the group. Look to ‘recruit’ a well-known leader, who is well-connected within the leadership team and respected throughout the organization. In an earlier post, we briefly touched on “How to attract an executive sponsor?”
Ideally, the sponsor is a top-level executive ‑ you hit the jackpot if you can get the CEO!
Overall, the group’s expectations of the sponsor’s role usually include that the sponsor:
Serves as a champion of the group
Gives strategic direction to align with the organization’s business strategy
Helps to identify measurable success criteria that support business goals
Provides advice and counsel to guide the group’s development
Connects to a broad network of relationships
Liaises with the executive team and accepts accountability
Helps actively to identify and overcome obstacles and resistance within the organization
Supports the group through communication and visibility.
The stronger your sponsor, the stronger the group! A strong sponsor
Shares valuable business knowledge
Demonstrates leadership, and is
Genuinely willing to help others.
A good sponsor encourages people to focus on how to engage others and improve communication, enhances the members’ leadership qualities and developing partnerships while helping to overcome barriers.
The sponsor you do NOT want
On the other end of the spectrum, there are also people you should avoid as executive sponsors for the group. This category includes people who:
Provide lip-service over taking action
Use the group for selfish reasons; for example, by claiming and promoting achievements of group members as their own
Do not see the potential and value that the group can add to the organization and its businesses
Do not make enough time to work with the group
Are ineffective or unwilling to support and protect the group from opposing forces.
Finally, if you have the choice, avoid the temptation to have a group of executives ‘share’ responsibility and ‘champion’ the group collectively. This tends to dilute accountability and action while increasing communication and coordination overhead.
There is much truth in the saying: ‘Too many cooks spoil the broth.’
One of us?
Often enough, sponsors are chosen or step up because they originate from the group’s affinity core, i.e. they are of the same ethnicity that ethic-focused group represents, a female for a women’s group, a gay or lesbian for an LGBT group, and so on ‑ you get the picture. I advocate against this practice for two reasons, in particular: First, with an ‘outsider’ you achieve more diversity and mutual learning experiences in the group as well as for the sponsor. Secondly, the group becomes more believable as a business driver that attracts a broader membership base instead of risking to be perceived as an ‘insider club’ limited to members with a certain ‘diversity ticket’.
For the same reasons, you may also consider rotating sponsors every few years.
Quid pro quo
What you want is an involved and effective executive sponsor. Now, this sponsor role comes with additional work, responsibility, and risks for the senior leader’s reputation and career. Therefore, this ‘job opening’ must be compelling enough to attract a senior executive to step forward and sign up.
It is important to offer a value proposition that makes clear what is in it for the executive sponsor to make this symbiosis work. It is quite similar as discussed in “What’s in it for me?” (WIIFM) for the group members.
Know your sponsor
Sponsors are humans too, so here are some thoughts on how to approach them: Get to know your sponsor first, just as you would prepare and approach to meet any other very important customer or external business partner. Find out their goals, interests, beliefs, priorities, constraints of the political and economic environment, and personal work-style. What exactly is the sponsor’s interest in your group?
Clarify your expectations mutually. Once you know your sponsor and built rapport, it becomes easy to offer what is important to them and helping the sponsor to achieve their goals too.
A value proposition that addresses the (financial) bottom line is powerful and convincing. It also enables the sponsor to communicate the benefits with the leadership team in a (business) language that everyone understands. It takes business acumen, though, to specify and articulate the financial impact. If this is not your strong suit, you need to find other compelling upsides or values that the group can bring to the business and that is close to a sponsor’s heart.
Do and Don’t: How to work with the executive sponsor
Here is some practical advice on working with an executive sponsor.
On the Do side, preparation and focus are key. Remember, this is a business meeting. The executive’s time is valuable, so be respectful of it and do not waste it. You want the sponsor to remain approachable and willing to meet with you in the future whenever you need to see them urgently.
Schedule appointments regularly (monthly, for example, if the sponsor agrees) with an agenda of topics to discuss
Provide background information on meeting topics ahead of time and come well prepared
Be on time and keep meetings on schedule
Present any problems with a proposed solution
Inform of issues in the workplace that affect the group and propose what the sponsor can to mitigate or resolve the issues
Be honest with your sponsor – do not sugarcoat, blame others, or cover-up mistakes
Give your sponsor a heads-up also before taking more public and visible action so they will not get caught by surprise – if there is bad news, share it with the sponsor first
Discuss key goals and ask them for guidance, advice or assistance – allow your sponsor to help you and the group
Reserve your requests for sponsor appearances and events to where it counts most. For example, as a speaker at a ‘headline’ event to draw a crowd, attract new members, and demonstrate the group’s value for the business. Ask if the sponsor is willing to recruit other executives or respected business partners and customers as guest speakers or participants.
The sponsor could host a luncheon or dinner for the group’s leadership once or twice a year to meet everyone in person, discuss, and recognize achievements of the group and individual members.
As for the Don’ts, try to avoid these pitfalls:
Don’t come with a hidden personal agenda – it’s strictly about the group
Don’t bother the sponsor with petty day-to-day issues – focus on the meaningful impact on the business and the group
Don’t ask for general funding or support – be specific and have data and facts ready to support your case
Don’t be afraid to ask for guidance and advice – but also don’t come just to commiserate.
Beyond the job description
Don’t underestimate the importance of the right chemistry between the group leader(s) and the exec sponsor; it is crucial to establish and foster a trustful, constructive, and pleasant work relationship.
For an employee group, executive sponsorship is more than the group’s endorsement by senior management: a strong sponsor becomes the lifeline when times get rough.
So when you go out to ‘hire’ your executive sponsor, also hire for the right attitude.
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.
Typically, the innovation leader is not the innovator but there are exceptions such as founders of innovative companies that start out as innovators and remain innovators; think Steven Jobs of Apple, for example. However, let’s focus on more common organizations that need innovation leaders often more than they are aware of…
Conquering the world from your garage?
We all heard the stories of the sole genius inventing in a garage and a few days later they run one of the most influential companies in the world like Apple or HP. However, strategic innovation cannot rely on a one-time-wonder hoping to be repeated over and over again. Organizations become too large, technology too complex and the competitive clock-speed ever faster to leave innovation to a single genius sitting in an ivory-tower coming up with all the good stuff for the rest of the organization. Nobody is an expert in everything or savvy enough to cover all necessary angles. Even more so, many people have great ideas that can contribute to better innovative products, so make use of this critical resource!
Strategic innovation requires governance and collaboration to succeed continuously. What it takes is a process, a framework, a ‘system’ that delivers innovations consistently, timely and sustainably. ‑ Unless you believe that Steven Jobs developed your iPad all by himself, right?
He understood how to turn Apple into an ‘innovation machine’ and –over time‑ how to effectively capture the value it generates.
What organizations need when they ‘grow up’ beyond the ‘innovation garage’ stage is many innovation leaders in different functions. You can distinguish different innovation leaders or ‘champions’ in an organization by how they contribute to the innovation process.
In general, there are three essential kinds of champions:
The technical champion holds the technical know-how for innovations.
The business champion comes up with the funding to develop an innovation into a product of sorts.
The executive champion “follows the fellow who follows a dream” as a professor of mine put it, and this is what we will focus on shortly.
The roles of the technical and the business champion need little explanation. Let’s assume for now we have identified or (perhaps more likely) unidentified technical champions in our organization somewhere (try the R&D function) and will also find a business champion (in the C-level suite) to fund a great idea that has potential to produce a significant return-on-investment.
Are you an executive champion?
As the leaders we are or want to become, let’s focus on the executive champion as the critical and most complex ingredient in the continued innovation process. Perhaps, this is where you can shine as an executive champion in your organization!
The good news is that anyone can be an executive champion and propel the organization forward! Yet few are aware of what it actually takes to be an effective executive champion. I found it surprising that even people in professional jobs with fancy ‘innovation’ job titles often simply don’t know this! So let’s move on.
Executive champions focus on the value
The executive champion understands the difference between creating value and capturing value of innovations. No worries, it took even Apple years suffering through the consequences of bad decisions to finally get it right…
Creating and capturing value are not the same. A company can create value by developing new technologies, for example. However, at this stage this novelty by itself has no value for the organization unless it can also reap the profits from the novelty.
It takes innovation leaders to ensure this crucial step is taken deliberately and effectively. They ensure the idea or prototype makes it all the way to a marketable product and the company rakes in the profit.
Steps to success
How does the executive champion operate? What does an executive champion do to succeed?
First and foremost the executive champion promotes an innovation broadly, which includes to
Articulate a clear vision
Develop an actionable strategy
Develop capabilities that power the innovative thrust of the organization such as capabilities to build and foster specific skills, behaviors, creativity, values or a mindset.
Steer execution to not only generate the newly created value but also capture it throughout the value chain. This may include analysis of the value chain and its players, initiating projects, controlling project portfolios, driving the commercialization of creative products or services, establishing entry barriers for competitors, measuring performance, etc.
Fuzzy values? – Here are some how-to examples
Do you find all this ‘value talk’ too abstract? Then let’s look at an example how ‘capturing value’ works in real life where Apple, for instance, controls each layer of its vertical value chain to a point where it ‘owns the customer’:
Let’s take the phone and data network for iPhones in the USA: iPhones come only with the AT&T network which is inferior to the Verizon network. ‑ Trust me, I know and experience it every day!
Why would Apple chose AT&T over Verizon? Because customers want an iPhone so badly that they will literally walk out of a Verizon store and straight to AT&T to get the iPhone that Verizon cannot offer. Customers don’t pick another Verizon phone and use the superior Verizon network. Instead, they are willing to swallow the (AT&T) toad because Apple owns the customer! This way Apple holds a much stronger position over AT&T than it could ever have over Verizon, i.e. Apple controls this tier of the value chain. Too bad only for the iPhone customers stuck with AT&T like myself *sigh*… the gamble worked out nicely though for Apple.
The simple rule here is that if you don’t own the customer you don’t make the money!
The message is clear: It is not enough to have an innovative product like an iPhone. You need to know how to capture the value and this goes far beyond a fancy piece of technology! This can be the most challenging task of the executive champion to consider and figure out. And, yes, I know there are mobile phones out there with better technology and features but they don’t have the same ‘love factor’ that continuously attracts Apple customers and locks in their loyalty.
Why innovations fail
We have seen many times that when even the most promising innovation flopped, a flabbergasted management falls short to explain why. Therefore, let’s take another perspective and a quick look at what can go wrong (and did go wrong in Apple’s past too but Apple learned over time).
Innovations can fail for many reasons. Here are the basic pitfalls to look out for in reality:
1. Failure to create value that the customer recognizes.
Often the inventor or manufacturer sees a value in an innovation that is not shared by the customer because the customer does not recognize the value, i.e. the customer is not willing to pay premium for the special feature but only spend for what they clearly see and value.
This is a frequent trap for a technology champion and can lead to products with incremental improvements towards a state of perfection that the future target customers just don’t value.
Also business champions can make the mistake to get inspired too much by the technology and fund the product development without thinking through the value chain.
You have guessed it: the technology champion and the businesses champions are the ones that lack the explanation for the failure – that’s why we need the executive champion!
2. Missing to erect effective entry barriers for competitors.
Entry barriers are an interesting chapter on their own and widely discussed, so I’ll keep this short. Since Apple is such a rich source for examples, here is another one:
The iTunes store sells apps and other content like audio and video in proprietary formats. This is a great example how Apple established an effective entry barrier for its competition by establishing itself as the sole source. It can even control the content while raking in the profits. Other companies try the same approach but find it hard to compete with Apple’s dominance.
Victoria’s Secret, the successful lingerie company, took a different approach: They fended off competition by creating apparently competing lingerie stores under a different brand in the vicinity of Victoria’s Secret stores; this led competitors to believe the market was saturated and entering it was not attractive and attracted more customers to shop in either store adding to Victoria’s Secret bottom line – smart!
3. Failure to capture the value with vertical channel innovation.
Honestly, this is a complex and tricky topic that I might dedicate a future post also extending into strategic marketing. What it comes down to is this: how you can control the vertical value chain with the question to answer at each tier ‘who owns the customer?’ ‑ The right answer is: ‘it better be you!’
For now, let’s just say it requires cooperation and offering incentives for your channel partners to remain loyal and supportive to your strategy. The iPhone network example gives you a flavor or think of the apps providers for iTunes that engage in a symbiosis with Apple.
Leading without mandate
Bottom-line, more innovation leaders tend to be better for an organization than less. An organization cannot leave innovation to individuals or an ‘innovation department’ somewhere. Everyone can and should contribute to innovation! – Take your chance and drive it, it’s fun!
Identifies the key objectives for any business-focused ERG and practical advice how to get started by developing a business case for founding an ERG.
How to start building a business-focused ERG?
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! You will have to make sure that you never run short of
Executive support for your ERG,
Showcasing your achievements and
Communicating effectively to meet the above three goals.
My approach was to build a business case to prove the company’s need for having the ERG. To convince executives, explain to them what is in it for them, i.e. what the benefit is to the company and to them individually by supporting your ERG. Address very basic questions as a first step: Why does the company need this ERG? How will the company benefit from it measurably? What resources do you need to found and sustain the ERG?