I had just gotten the word.
We had hand chosen a dozen subject matter experts to put together an early stage probe into a promising new market. We had been making solid strategic progress with some very big names, but we had also just been through an organizational change tucked under another acquisition that had its own issues. They had missed their first commitment and needed to cut some costs, and we were an easy target since all our work was custom and strategic (i.e., unforecastable).
Knowing that once your organizational “air cover” is lost that you need to quickly pivot, I pulled the team into a group meeting and we all got on the phones. Within 10 days they all had been placed in new jobs within “the core business.”
Such is the life of an internal growth champion. Depending on which survey (here or here) you choose, up to 70-80% of new initiatives don’t make their benchmarks.
Yet we still try – why? Fortunes are made by firms that optimize and amplify ideas into amazing large-scale enterprises. We write books and case studies for those that find a way through the thicket.
Yet the very strengths that create powerful returns for shareholders create quite an unwelcome environment for organic innovation. In the above example, the market applications we uncovered morphed into several successful lines of business over time, but much of the early lead was ceded to competition by disbursing the original team that had great outside of the firm relationships.
From another viewpoint (that being quarterly financial performance), the actions to disband the efforts were exactly the right call. When you are operationally oriented, you need to have specific proof points and very clear paths for return on every investment.
We try all manner of workarounds to this dilemma including doing M&A, setting up incubators, strategic partnerships and building a corporate investment arm. In the end though, the hard work of mixing oil and water remains.
Balancing these operations and future viewpoints becomes the question for senior leadership. In the firms I work with from manufacturing, water and energy (which are nearly all dominated by operational expertise) striking this balance is THE critical question.
In my work with these firms, I have built some tools that allow them to use their muscles in a way that opens doors rather than closes them (and of course closes them quickly if there is nothing there).
How to Flip the Script
#1: Build pathways that allow your firm to use its strengths to choose well
In every firm there are “hidden” strategic resources that are trying to bring forward the new and unique for your firm. Many times we see firms put in an “idea capture” process and assume that’s all they need.
The best firms actually find that move to be counterproductive, and instead establish processes that produce specific areas that the senior team pre-identifies for investment. Knowing that these are the targets, it frees your “hidden” innovators to tailor their efforts to areas that have a high probability of becoming an investable activity.
To bring this into precise focus, instead of your annual innovation offsite, it is more productive to invest in getting your senior team on the same page regarding a handful of specific areas that everyone agrees are focused on the areas of highest leverage (see posts here and here for more about this).
#2: Train your growth leaders to manage expectations very carefully
Highly operational firms have very specific metrics for financial outcomes and timing. By forcing your early stage growth leaders to conform to tight financial outcomes, they’ll be setup for failure and quick exit.
The reason for this, is that is to “make” the hurdle rate your growth champions have had to add risk upon risk. One of the most telling ,exercises is to put the “hockey stick” chart that is in every presentation up on the wall and ask who believes it. When no one does, the next question is “why not,” and then make a list. These are the areas to go look at.
To do quality investigation demands an equally rigorous, but very different construct that uses very tight targets for investment, learning and resources. We use a risk prioritization method for early stage work that drives learning and uncertainty reduction. (see posts here and here).
#3: Ruthlessly set up and guide to medium range objectives
One of the biggest issues I see with newly minted growth leaders is a commitment to hard objectives that are way down the road in time, and have dozens of implicit actions that need to go perfectly to achieve.
Experienced growth leaders set medium term outcomes that are like the stones we use to cross a creek. Each success allows us to survey the path and choose our next step wisely. This progressive approach is exactly what every early stage firm does – it simply needs to be practiced in the context of the large enterprise that is now present.
For instance, completing five real sales calls with potential partners creates more clarity than hours spent modeling the market and pricing interactions. Testing insights quickly and specifically allows the risk to be reduced sequentially, and allows management to get a sense of the real project momentum.
#4: Make sure the narrative works for everyone
This one is subtle but oh-so important. A rookie mistake many growth leaders make is not creating the exploratory work in a context that serves the entire firm.
Many times the forces that conspire to kill off internal work come from the current leaders of the core product or service. Since they are inevitably your investors, you need to have drafted a charter that is in service to the full enterprise. This takes some work at the outset, but pays huge dividends as the hard decisions come to the fore and you need their support to keep things rolling.
To make this practical, a useful exercise is to grant your self success and write the headline. You will quickly find that it’s harder than it sounds, especially when you add the multiple stakeholders of investors, employees, suppliers and clients.
These four items will give you a good start at creating an environment for those who are wary to bring their initiatives forward. Just as I tucked those twelve “hidden” innovators into the core business units, it is highly likely that you too have these dormant growth leaders in your firm. I specialize in partnering with firms like yours to help you establish opportunity, framework and results to bring those leaders and projects forward.
To get started on that journey, please give me a call at 847-651-1014 or use this link to set up a 20-minute (no strings attached) consult.
