Leaders, Prepare For A Networked Organization

by Stefan Lindegaard

What a company knows is inside the heads of its people, and distributing this knowledge has always been a challenge. Yet, now more than ever, being able to leverage a company’s collective knowledge and experience through virtual and face-to-face networks and communities is critical to innovation. So why do such efforts fail so frequently? Here are some of the reasons I’ve identified as I’ve worked with companies on this issue:

1. Time and skills

Many of us simply do not have the time or skills to network and build relationships. Leaders, you need to give your people time to acquire networking skills and the time to invest in and maintain relationships.

2. Focus

A community will only work if it connects people who share a common experience, passion, interest, affiliation or goal. Create and/or find a group that’s right for you. You should also keep in mind only to network or build relationships if you have a reason to do so. Random networking rarely results in anything but wasted time.

3. We are too old…

Most people above 30 years old just don’t see the value of tools such as Facebook and LinkedIn. We have a real generation gap here. We, the older and wiser ones, are still in charge, but this will begin to change in five years time as we get the first leaders from the Facebook generation. Ten years on, they will define the rules. Why not try to figure out how it works now instead of waiting?

4. Lack of commitment, structure and culture

As companies embrace open innovation, internal and external networks will explode. This includes peer-to-peer, value or supply chain networks and networks that feed ideas and/or technology. Company leaders must commit to a networked organization and create the structure and culture needed for this to work. 

5. Lack of a dedicated facilitator

Almost any network can benefit from having a dedicated facilitator who really cares about the topic and the participants. Although this might add to the costs of networking, the return on the investment will be higher.

Open Innovation And Intrapreneurship For Small And Medium Sized Companies

by Stefan Lindegaard

I have been asked to present my views on how small and medium-sized companies can move to the next level by implementing open innovation and intrapreneurship.

I am still working on the presentation, but below you can see some bullet-points I plan to include in the 3 hour-long session. What do you think? Am I missing something important?

Besides hearing your comments here, it would be great to get out and share this with other companies, organizations and event organizers around the world. Let me know if you would like to discuss this

• The challenge. Growing a startup is very much about executing on a great product, idea or technology. However, as the company grows focus tend to shift towards control rather than keeping the visionary thinking and bold approaches that build the company. This must be re-ignited. Understanding open innovation and intrapreneurship can help do this.

• All the best people do not work here. One key reason for Procter & Gamble to initiate open innovation programs was that they learned that for each of their 7,500 R&D people there were 200 people outside the company with equal skills and competences. An ignorant – and arrogant – company would ignore these 1,500,000 million people arguing they do not matter as they do not work for us. P&G did not ignore this. They understood they should connect their own organization with the best and brightest from the outside world. Given the size of smaller companies, this mindset becomes even more important.

• People matter more than ideas. Innovation is not only about finding the right idea or developing a great technology. A company must also be able to identify and develop the right people who can be matched with these ideas at the right time.

• Innovation is about more than just products. Check the Ten Types of Innovation framework developed by Doblin. It is a great tool to broaden people’s mind on innovation.

• Think in terms of eco-systems. Today, one company does not compete against another company. Eco-systems compete against other eco-systems. Check this article by Hagel / Seely Brown to learn more: How SAP Seeds Innovation.

• Control or contribution? Big corporations can split their open innovation efforts on projects in which they are either are in control or just contributes with IPR or other resources. Smaller companies should only get involved in projects where they are in control or where their contribution is important and valued. The project should also fit the overall strategy of the smaller company.

• Big corporations can drain a smaller company. Signs of this include long planning periods, difficulties in identifying and working with the right people and too much time spent on patent lawyers too early in the process. If these tell-tale signs appear, a smaller company need to evaluate whether this will become a drain of valuable resources that could be better spend elsewhere.

• Where to look versus how to be found. Smaller companies need to be more active looking around whereas big corporation can focus more on being found and becoming a preferred partner of choice. Companies can look for projects and partners in their own networks (such as customers, suppliers and partners) or in external networks (such as universities, intermediaries and consultants).

• Is the company ready for open innovation? Any company must ask themselves why open innovation is relevant to them, how it should be defined to their situation, how it links with the overall strategy and how it can be implemented. Smaller companies must also prepare the organization for a cultural change, develop and implement a networking strategy and train their employees on innovation, stakeholder management and how to work with external partners.

• Open innovation is about communication. Companies must understand the importance of communicating internally as well as externally. New social media tools such as Twitter (search and share information) and LinkedIn (identify the right people, search and share information) must be understood and leveraged.

I am looking forward to your comments.

Startups Are Overrated: Intrapreneurs Are Better Bets

by Stefan Lindegaard

Startups are great because they create growth and lots of jobs so let’s pour lots of private and government money into programs that create more startups. Entrepreneurs and startups kick ass!

This is the common wisdom in most countries. Does it hold? I do not think so and an article in Borsen, a leading business daily in Denmark provided some interesting facts that support my view on this.

In short, the article argued that gazelle companies – defined as companies that have created growth each of the last four years and in total have more than doubled their revenues in that time span – create more jobs than other company categories. This is not much of a surprise as growth companies almost per definition need people to create growth.

The article showed a list of 50 companies that during 2005 to 2008 each had grown from 102 % to 2172 % in terms of revenues and created from about 20 to 900 jobs. More interestingly, only 5 companies had less than 5 employees in 2005 indicating they were pure startups. 45 of the 50 growth companies already had a platform to grow from leading to my point; established companies create more revenue, more profit and more jobs than pure startups.

What I really would like to see is that private and government funds currently used on startups are diverted to established companies setting up intrapreneurship programs. I am not saying that we should give giants such as Hewlett-Packard, BASF or Lego a lot of money and support to set up such programs. The big companies can – or should be able to – do this by themselves.

But the innovation community as well as governement people should take a better look on how we can help small to medium-sized companies develop a better understanding of intrapreneurship and help them set up programs aimed at identifying and developing not only ideas, but also intrapreneurs; the people driving innovation.

As some of you might not have heard of intrapreneurship before I have inserted this definition from Wikipedia:

“Intrapreneurship is the practice of using entrepreneurial skills without taking on the risks or accountability associated with entrepreneurial activities. It is practiced by employees within an established organization using a business model.

Employees, perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the resources and capabilities of the larger firm to draw upon.

Capturing the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc.) adds to the potential of an otherwise static organization without exposing those employees or self employed people to the risks or accountability normally associated with entrepreneurial failure.”

Imagine all the jobs and thus growth and prosperity we can create if not only the large, multinational companies, but also the smaller, mid-sized and yet established companies really knew how to develop and nurture intrapreneurship.

Everyone working with intrapreneurship – including myself – have an interesting business case as well as a worthwhile cause to pursue. Let’s go for it…

The full picture of innovation: Observations from Hewlett-Packard, Doblin and IDEO

by Stefan Lindegaard

Paul emphasized that successful intrapreneurship requires this level of innovation to differentiate it from standard business growth initiatives. This contrasts sharply with most people who are accustomed to innovate one thing at a time.  He explained that this is true, in part, because many leaders understand the need for a controlled plan or experiment — many are scientists and engineers who were taught the Scientific Method, or many have been fully trained in Quality Management, both employ the discipline of changing only one variable in an experiment at a time. But in order to be an intrapreneur, you need to think like a composer, not a musician, making changes to the entire orchestra simultaneously.

Paul’s emphasis on the number (three or more) and the approach (simultaneous, coordinated change) reveal some insights to intrapreneurial success for us all and why he is a highly-accomplished serial intrapreneur.  As a way to share his expertise to aspiring leaders, Paul teaches his methodology at the business schools of both Stanford and University of California-Berkeley.

Ten Types of Innovation

Not only do you have to think and work across business functions, you also have to innovate across the key areas of business when you move from ideas and research to revenue. Doblin has made some groundbreaking research showing that 96 percent of all innovations fail to meet their targets –  not necessarily because companies perform poorly at the core product or service innovation, but more often than not because companies fail to follow through with innovation in other key areas of their business. Businesses must be able to master all types of innovation – everything from business model innovation to innovation of products, processes, and services. This “whole picture” approach is important in delivering successful innovation, and is another key part of collaboration.

The T-shape from IDEO

On a more personal level, consider whether or not you are a “T-shape.” Innovation consultancy IDEO uses this term to describe people who are more likely to thrive with innovation. You should bring superior in-depth knowledge as an engineer, sales person or something else to the table. That is the vertical part of the T. But you should also have the breadth and empathy – the horizontal part of the T – to understand and appreciate the skills that other people bring to the table as you work as a team to become successful with your innovation projects.

As a T-shaped person, you accept that you don’t know everything and have the courage to seek help and advice from others. Gain a broader perspective by learning from those whose experience and views differ from yours.

Making change happen

by Stefan Lindegaard

Our current business climate brings a lot of change at the corporate as well as the personal level. They also bring out career development issues that often evolve around what you might call the “professional midlife crisis”. Besides the financial turmoil we currently have, such a crisis can also be caused by situations such as these:

•  Your company is not focused enough on innovation to offer you the types of exciting innovation leadership or intrapreneurial opportunities you desire.
•  You have plateaued in your company with no obvious next step available to you that will move you forward on the career path you desire.
•  Having defined your personal values, you realize they do not match those of your employer.
•   You do not have the flexibility in your current position that will enable you to achieve a greater work-life balance.
•  You would like to like to serve on a board of directors with another company or take a leadership role in an industry organization in order to broaden your impact.

Resolving these situations requires bringing about significant change. Your ability to make the necessary change is usually rooted in two things: perceptions and relationships. Many people think their own perception of who they are matches the way other people see them. It is remarkable how wrong this usually is. And more important, when it comes to making the change you desire happen, it is often the perception by others that matters more than your own perception of yourself. Therefore it is a good exercise to get a better understanding of how other people view you before you lock in on the things you want to change in your life. It might be that it is not you who has to change, but rather the perceptions other people have of you.

That change has much to do with perceptions and relationships can be seen in the cases of two innovation leaders who approached me for help in making change happen for them as they look for new external career development opportunities:

Our first person, let’s call him Peter, is about 50 years old and has spent 17 years in the same company having considerable leadership responsibility. He was seeking new opportunities as the situation with his current company was quite turbulent due to ownership issues. We started a process in which Peter identified his main areas of professional interests (skills, functions and type of companies), his goals for personal development, and his aspirations for a better work/life balance. The next step was to look into his perception balance (own perception versus others perception) and then to look into our combined relationships with regards to a short list of five to ten companies that could be of interest to him.

The other person, let’s call him Simon, is getting close to retirement. He has been with one company for the past 25 years and has seen it grow from a garage to a big business. He has been in charge of business development and is now looking for ways to use his experience by serving as on the boards of growth companies. The main challenge he approached me with was that he did not know how to activate his network. To some extent he hoped people would approach him, which did not happen. Chasing this opportunity required repeated action and persistence from Simon. Unfortunately, we did not get much result as it is difficult to get interesting board of director positions especially in times with financial turmoil.

Neither Peter nor Simon had given much thought to their perception balance–how well their self-perception matches how others view them. Thus, they were unaware of any perceptions by others that might interfere with their ability to achieve their goals. Yet given their ages, they each might well face age discrimination as they try to move toward their new goals despite their personal self-images as men with much to offer. This is just one example of how personal perceptions might differ from those of the people whose help they’re going to need in bringing about change. In addition, neither of them has worked on building and staying connected with his network in a strategic, i.e. goal and action oriented, way. They are not as connected as they thought they were.

You too need to consider your perception balance as well. Take a hard look at yourself and ask yourself whether there are people or incidents that can confirm the image you have of yourself. In my next post, I will give you some ideas on how to bring about change.

The careers of innovation leaders and intrapreneurs

by Stefan Lindegaard

I have previously argued that companies need two kinds of people to make innovation initiatives successful. They need innovation leaders who focus on building the internal platform required to develop organizational innovation capabilities. This is work on the strategic and tactical level.

Innovation leaders are often also involved as coaches, facilitators and sponsors for the second group required for innovation; the intrapreneurs who turn ideas and research into real products and services that move the business forward.

For your information, intrapreneurship is defined as the practice of using entrepreneurial skills without taking on the risks or accountability associated with entrepreneurial activities i.e. starting your own business. Intrapreneurs are employees who behave as entrepreneurs, even though they have the resources and capabilities of the larger firm to draw upon.

More than intrapreneurs, innovation leaders need the ability to read the corporate landscape, and they need to maneuver within corporate politics to secure the necessary internal resources for the innovation projects. They must attend the issues of many stakeholders, including senior executives, middle managers, and external partners.

Intrapreneurs are more operational minded as they have to develop a new business that meet the needs of demanding customers. Of course, this also includes coordination with stakeholders from the corporate mothership and external partners, but intrapreneurs also have a special talent for understanding the need to address the needs of paying customers and making this happen.

Intrapreneurs are even rarer within a company than innovation leaders. Based on my experiences, only 2 to 5 percent of a white-collar workforce has what it takes to turn ideas and research into business as long-term key drivers. Sure, other employees will chip in as innovation contributors in various phases, but they are not as significant and important as the intrapreneurs.

These contributors are often junior people who are still early on in their learning curve or experts with specific skills. Unlike intrapreneurs, they do not take a guiding role in turning ideas into realities; instead they are assigned to projects where they contribute with sheer man power and/or their specific skills and talents. As such, they are important, but are also easily replaced.

The number of intrapreneurs is low for two reasons. First, intrapreneurs have the skills and the will necessary to become entrepreneurs and start their own company. This means they usually do not end up in a large company in the first place. Those who do are often stuck because they followed the traditional career path as shown below.

Traditional Career Path:

1. High School
2. University
3. Consulting company (for some)
4. Corporate world
5. Retire

This path is different from what you usually see from an entrepreneur starting his or her own company.

Entrepreneurial Career Path:

1. High School
2. University (not necessarily completed)
3. Practical experience or startup
4. Serial entrepreneur
5. Venture capital, business angel, board member
6. Never really retire

(Inspired by MIT Entrepreneurship Center).

Intrapreneurs often start out in the corporate world with the ambition of starting their own company once they get some experience and earn a starting capital. However, once they get used to the security of being in a large company, their entrepreneurial spirit gradually decreases although it is still much higher than most of their colleagues.

They might also get married and have children, which often dampens the entrepreneurial spirit. Entrepreneurship is very much about uncertainty and that does not sound appealing to a perhaps risk-adverse spouse worrying about making mortgage payments and building a stable foundation for children. Actually, you are unlikely to become a successful entrepreneur and at the same time enjoy a good family life unless you have strong support from your spouse.

The second reason for the scarce number of intrapreneurs is the corporate environment itself. Intrapreneurs have a constant drive and they seem to have an innate need to always question the status quo, which often put them at odds with colleagues. They are at risk of being labeled troublemakers, making their career path within the current organization much more difficult.

This often forces them to seek other opportunities. Ideally, they end up in a company that has discovered that troublemakers are not necessarily a bad thing. The lucky ones stay in their company and they become coveted pieces in the effort of developing the innovation DNA.

Talking about career paths for innovation leaders and intrapreneurs, this is my take on how it could look like:

Innovation Leader / Intrapreneur Career Path:

1. High School
2. University
3. Consulting company (for some)
4. Corporate work (business development / innovation)
5. New venture projects within an established corporation
6. Senior management (sponsoring innovation projects)
7. Semi-retire (consulting)

It would be great to hear feedback on this.

Defeating the corporate antibodies

by Stefan Lindegaard

Change is frightening to many elements inside the typical organization. Change threatens people’s power, their status, their egos, and, in some situations, even their jobs. Change can make someone’s expertise obsolete and thereby make them obsolete as well. Because people are afraid of change, innovation efforts often cause the eruption of corporate antibodies that fight to kill innovation and maintain the status quo.

The factors that cause angst within a closed system of innovation may prove to be even more threatening when a company shifts toward open innovation. Executives and managers may feel they can control the degree of change and shape it to their own needs as long as everything is happening within the organization. But start to bring outside forces in and it’s a whole new ballgame. One reason is that change related to open innovation impacts the whole company. It is not just driven from R&D or the innovation guys. If you want to succeed in open innovation you have to make changes in business functions such as sales, supply chain, production in order to accommodate your new external partners. This can be scary to many people.

Detecting antibodiesThe signs that corporate antibodies are at work can be heard in statements such as:

“We already tried that and couldn’t make it work.”
“What we’re doing has worked fine for years; there is no need to change.”
“Our current product is still profitable; I don’t see why we need to spend money on something new that might not even work out.”
“We already explored that idea years ago but decided against it.”
“If that were a good idea, we’d already have thought of it. After all, we are the experts on this.” (Said about an idea coming from the outside)
“Let me just play devil’s advocate here….”
“Of course, I support innovation, but I just don’t think this is the right time to make a big change. The market isn’t ready.”

People who are making these types of statements may truly believe that what they’re doing is best for the company. Or they may be putting their personal interests ahead of company loyalty. Some people also become antibodies because they don’t feel there are being recognized enough – that their opinions should be given more weight than they are. Such feelings can cause people to continuously take the negative side or to chronically play the role of devil’s advocate – the person in the room who believes it is their job to question everything. The phrase “I hate to bring this up, but…” comes from them a lot, followed by a boatload of negativity.

This is not to say that anyone who questions the need for change or the direction that change is taking is an antibody. Sound feedback is needed from many quarters for real innovation to occur. But what I’m talking about is not constructive criticism. Rather it is the relentless negativity, foot dragging and throwing up of needless roadblocks that pose a true threat to innovation ever becoming a reality.

Here’s how the corporate antibodies often play out during three stages of innovation:

•  Discovery
Often in this early phase, people will appear to be sceptics but will generally still be open minded. Antibodies are often not yet a real problem.

•  Incubation
In this phase people begin to learn what a new initiative will do to them. This can be where the big battles occur as people begin to understand how the proposed innovation might put their status or influence at risk. Most will be inclined to see changes as threats, not opportunities. So you’ll become locked in power battles as people decide that they want to block you instead of back you.

•  Acceleration
In this final phase, you’ll have to deal with corporate politics at its toughest. When it becomes clear that the innovation is going forward, some people will even fight to own and control it, even if they fought against the innovation at every step of the way up to this point.

Some solutions It’s never too early to start making people backers rather than blockers. By being proactive rather than reactive, you can sometimes co-opt the antibodies into the process in a way that satisfies their egos and makes them feel their ideas and authority are being appropriately recognized and that they can play a valuable role in shaping the company’s future, including their own destiny. Bring people together to facilitate knowledge sharing and the building of new relationships that broaden everyone’s perspectives. Keep people involved in the innovation process.

Make people backers rather than blockers.

Stay below the radar. In some situations, the best choice is to stay below the radar as long as possible. Don’t become too interesting too early. This will help you avoid people who want to own the idea or process or who want to apply standard corporate processes to the project even though this can kill it.

Have frameworks and processes in place. Such debacles can partly be avoided by setting internal rules on how to bring innovation projects forward. With a framework and process in place, it becomes easier to move projects forward without having them get hung up in destructive warfare. This, however, can be difficult in organizations where the executives do not have a good understanding of how innovation works, as I discussed in the previous chapter. This is one more reason to make sure you educate top leaders about innovation.

Provide high autonomy. Having innovation councils with high autonomy or units with their own assigned budgets and goals are other ways to get around the damage that can be done by corporate antibodies. Such structures help shelter new ideas against situations where executives are not willing to spend their political capital in supporting innovation or when they believe the change will impact their own career negatively. 

Manage your stakeholders. You need to understand that the projects you run affect other people. The more people you affect, the more likely it is that your actions will impact people having the power and influence to make or break your project. This makes stakeholder management a critical discipline for you to master if you want to become successful with your innovation projects. You can get an idea of stakeholder management by thinking in terms of three steps: identification, profiling and communication.

Check this older post: Can you manage your stakeholders?

What is your take on antibodies? It would also be great to hear your stories on defeating the corporate antibodies.

TBX – an approach to developing the innovation culture

by Stefan Lindegaard

Having been involved in several efforts on developing the innovation culture within companies, I have learned that you need to work with three organizational approaches.

I call this the TBX approach:

•  T (Top Down) – Get the executives onboard and make them personally committed to the innovation activities. Without executive support, no change occurs.

•  B (Bottom Up) – Value creation begins with people, one by one, team by team. Nothing happens unless you get the employees engaged and involved. Take ideas, feedback and other input from employees seriously. If ideas just seem to run down a sinkhole and never to re-emerge or if leaders are not able to commit resources to any ideas, you will lose the trust of the employees.

•  X (Across) – The biggest challenges will come from the middle managers placed across the organization. A key reason is that middle managers have a narrow focus on their own profit and loss responsibility. They do not see the full picture and thus will not give up resources that do not benefit them in the short run although it is the right thing for the company in the long run. Thus, if not dealt with appropriately and effectively, they can bring innovation to a grinding halt.

The T and B are quite obvious, but try to step back and think for a while on middle managers and the impact they have had on innovation projects you have worked on. They are much more influential than you might think of and you need to find ways of getting around these people.

You can get results through efficient stakeholder management but often you need also to change they way these people are incentivised. Such changes will only happen if you already have the T in place…

Corporate business plan competitions – an initiative to identify intrapreneurs and create open innovation

by Stefan Lindegaard

You know that some people in your organization have the potential to drive innovation forward, but how do you identify them? And once you’ve found your potential “intrapreneurs,” how do you train them and support their success? The chief tool I recommend for this purpose is a corporate business plan competition.

Such competitions are patterned after the business plan competitions run by educational institutions such as MIT and Harvard Business School, but the idea has been successfully adapted for a corporate environment or even used to drive open innovation. Companies that have successfully used this strategy to foster intrapreneurship include Danfoss Ventures, an international leader in mechanical and electronic products and controls; Novozymes, the world leader in bio-innovations; and computer giant Hewlett-Packard.

Corporate business plan competitions can…

• …increase revenues and raise profits, both short- and long-term. Intrapreneurs are at their best when they are challenged with new ventures or projects. Business plan competitions can link intrapreneurs to new ventures and projects, and when combined with solid execution strategies, can produce revenues and profits.

• …support recruiting efforts. A committed focus on intrapreneurship as evidenced by a business plan competition improves the corporate image and makes it easier to attract and retain top talent.

• …encourage others throughout the company to focus on innovation. Visibly identifying and cultivating intrapreneurs through a business plan competition can shift the corporate culture so everyone stays alert and always on the lookout for opportunities that might otherwise be lost.

• …help create a platform for open innovation. A business plan competition is an innovation engine that could be very effective in not only listening to the needs of the external ecosystem of customers and partners, but also in turning this input into business ideas and stronger relationships with key partners.

You can read more on corporate business plan competitions in the latest issue of Strategy & Innovation for which I wrote the feature article. See this document: Corporate business plan competitions

Strategy & Innovation is published by Innosight which is an innovation consultancy founded by Clayton Christensen.Corporate business plan competitions

Great cases of intrapreneurship

by Stefan Lindegaard

I stumbled over a couple of blog posts from BNET and after having read this I urge you to visit their feature on intrapreneurship if you aspire to build new businesses within your company. Great stuff – check this link: Unleash Your Inner Intrapreneur