One of the perks of business travel is that it occasionally leads you to the right place at the right time. On a trip to Europe in early November, I found myself attending the Thinkers50 gala in London to cheer on my colleagues, co-authors, and friends Greg Bernarda, Alex Osterwalder, and Yves Pigneur. Two years prior, in the preceding Thinkers50 gala, our work on The Invincible Company earned my co-authors and I a spot on the shortlist for a Strategy award. I recounted that experience in a blog post. However, the 2021 gala unfolded virtually due to the lingering effects of Covid-19. Fast forward to the present, and my friend and mentor Greg Bernarda has been shortlisted for a Thinkers50 Strategy Award. Meanwhile, my co-authors Alex Osterwalder and Yves Pigneur, ranked #4 globally in 2021, are vying for a new ranking in 2023. Here's a brief report on my perceptions, feelings, and reflections from the event. What’s most important in the world of Thinkers50 A strong congruence unfolded between the agenda, the 1.5-day experience, and the announced rankings. It seems that the motto "Be the change you want to see in the world" has been embraced by Thinkers50, focusing on three pivotal topics. ​Diversity, Equity, and Inclusion (DEI) For the first time, there were more women than men on the agenda, a trend mirrored in the 2023 Thinkers50 rankings. Noteworthy panels and mentions of DEI throughout the event highlighted its significance. And – oh surprise - despite the increase in female speakers, the audience was engaged, vital topics were covered, and the world did not come to an end! ​Sustainability The resounding answer to whether the management thinking community should care about sustainability was punctuated by awarding the #3 spot on the Thinkers50 ranking to Andrew Winston and Paul Polman for their activism and work on Net Positive. The prime-time slot for the sustainability panel underscored its importance and I’ll never forget Andrew's tactic of "bringing your kids to work" as a successful means to shift executive perspectives on sustainability. ​Community A palpable sense of community pervaded the room, with people deriving pleasure from being together. I for one enjoyed the experience of meeting new people and also spending time with the French-speaking tribe present at the event. This community spirit extended beyond the event, emphasizing a desire to have a positive impact on the broader community. The transformative potential of leadership knowledge in high schools was spotlighted by Julie Carrier, illustrating the outward-focused nature of this community spirit. What’s important, but not quite as important for Thinkers50 AI Despite being an existential threat and opportunity in our current world, AI took a backseat to DEI, sustainability, and community. Still, the panel discussion between Martin Lindstrom, Sinan Aral, and Kate O’Neil was the most thought-provoking of the event. Panelists highlighted that some groups of people now have information sets that are no longer overlapping at all. With common knowledge as a pre-requisite for human collaboration, panellists asked “How are we going to solve global crises when we are disintegrating common knowledge?” ​Innovation While undeniably important, innovation seemed to take a step back in the spotlight this year. Despite boasting six heavyweights in strategy and innovation within the Top 10 ranking, it didn't emerge as the paramount focus. This aligns with my observation of market trends over the past 12 months, suggesting that while innovation remains crucial, it no longer commands the forefront. Nevertheless, innovation thought leaders retain a critical role, guiding organisations away from short-term thinking. As Scott Anthony reiterated, "The best way to improve short-term profits is to focus on the long-term." ​Questioning the Status Quo The intent of the event was to re-Connect, re-Think, re-Set. So, there was a formal invitation for thinkers to question things. Hal Gregersen asked panelists “How can we be good ancestors?” Megan Reitz asked the audience to question the pathological busyness in organisations. Rita McGrath invited us to question “untested assumptions taken as facts” or face the consequences. Still, the questioning of the status quo felt somewhat polite. The irony of challenging the status quo amidst the opulence of the Guildhall in London mirrored dynamics at events like Davos, as noted by Greg Bernarda: “the status quo doesn’t feel that bad when you’re drinking champagne with colleagues and friends surrounded by the majestic Swiss mountains.” What’s not as important for Thinkers50 yet ​Higher Purpose and Meaning With a growing sense that we are at the end of a cycle, the purpose of organisations and the meaning of work in the future deserve more attention. Many employees in large organizations feel stuck in the abattoirs of the human soul and suffer in silence. In my home country of France, most people hate their job so much that the mere thought of having to work two more years before retirement brought them to the streets in 2022. There must be a better way. And I’m curious to hear more on these topics from the Thinkers50 and the management thinking community. ​The World Outside the US and China Mid-way through the afternoon of day 1 I asked my neighbour if London was in the United States. It was meant as a joke but there is some truth to the fact that management thinking remains predominantly US-centric, with the latest Thinkers50 ranking showing 33 American recipients. I’m not convinced that the change we want to see in society and business will come from the US so exploring ideas outside the US, articulated in languages other than English, could bring valuable perspectives. ​Thinking inside the Conference Room While the Thinkers50 event fostered a strong sense of community, the recurring use of panels sometimes hindered access to ideas with real depth. I don’t have a solution to offer on how to improve access to ideas inside the conference room, unfortunately. But outside the conference room, it’s obvious that other formats, such as books, podcasts, and videos better serve the brilliant ideas that led to the selection of these thinkers. In essence, the Thinkers50 gala and rankings underscore a paradigm shift, prioritising diversity, sustainability, and delivering real impact to the wider community with management thinking. While focusing on those topics meant giving less light to others, kudos to Des Dearlove, Stuart Crainer, and Monika Kosman in the Thinkers50 team for taking a stand and being “the change they want to see in the world” with this event and new rankings. One last insight that resonated with me on my journey back to Australia was Rahaf Harfoush’s comment that 'Work devotion is often a signal that people give to show they deserve their success.' I can observe many people around me to whom this would apply. It reminded me that the individuals processing those big ideas are often grappling with their own self-awareness and development journey. In the end, none of those grand ideas will change the world unless we seamlessly integrate them into these individual journeys. This presents the next challenge for Thinkers50, Vibrance, and all of us. About Fred Executive advisor on strategy and innovation. Co-author of The Invincible Company, a guide to building resilience in organisations with corporate innovation, and shortlisted for the Thinkers50 Strategy Award 2021. Subscribe: Turning Tides Newsletter New perspectives on Growth and Innovation. Delivered every Full Moon.

It’s not every day you help make someone $25M. Well … some self-important advisor types might claim they do this every day before morning tea, but rarely can we directly attribute something we have said or done to massive value creation. This is not an admission around a lack of impact, but rather a recognition that there are often many contributors and circumstances that combine to create wins, and our roles are more diluted than perhaps we care to admit. Over two decades ago, I asked one question that directly led to a successful investment decision. My question resulted in a 180-degree change of direction, the result of which was reported in the press as around $25M of upside. I have no idea if this is accurate or not, but it is not overly relevant to the story. Let’s just say that lots of money was made. I remember the conversation vividly. I was walking over a bridge in a foreign city, discussing the new business model of a very early-stage start-up. It was in fact pre-start-up. It was merely a business plan. I say discussing, but it was really more about me listening. My friend was listing the numerous reasons why the business model appeared to be flawed, why it wouldn’t scale and why the economics didn’t appear to stack up. It was almost as if he was trying to talk himself out of it. Here was my one question: "Would you prefer to invest in an A grade idea with B grade people, or a B grade idea with A grade people?" Asked in this way, the answer is pretty obvious. B grade people with an A grade idea will find a way to screw it up, while A grade people with a B grade idea will find a way to evolve it and give it every chance of success. The reality is that we don’t always know what constitutes an A or B grade idea. We like to think we know, but even the best VCs have a low hit rate. Still, we pretend that we can evaluate an idea purely on merit, applying our intellects to reason out what will be successful and what will not. Of course, if it were that easy, we would all be billionaires, either having started or invested in mega businesses. Yet, in the corporate world, we cling to the absurdity that we can apply our smarts and rationally predict where we can achieve step change growth. I recall my friend nodding his head when I asked my question and a different look crossed his face. I could feel him evaluating the person behind the start-up, someone we both knew well. In a matter of seconds, I could see that his entire line of questioning had shifted. The more educated and senior we are, the more we tend to think that we have the answers off the back of experience and expertise. My one question took my friend outside of his intellectual frame of reference and pushed him to reprioritise his investment criteria. I was a young 20 something, without a lot of spare cash, so I didn’t end up investing. Had I applied my own advice, I would have done quite nicely. I see this similar pattern in virtually every client I serve. They tend to hero the power of intellect and smarts. We value those who can problem solve and find answers. Those people would never have backed the start-up. They would have poked the same holes in the business model that my friend was poking and concluded that the model was flawed. And it probably was. I doubt any massively successful growth idea has ever been conceived and executed in the exact same way. So why when it comes to step change corporate growth do we agonise over the business model, trying to determine if it is going to scale and create value? Imagine if we put the same rigour into determining in a corporate setting who is going to put their bits on the line and be the A grade team? We rotate people in and out of corporate growth ventures, assign executive sponsors, and perhaps even incentivise initiative owners, and yet the rigour with which we do this is nowhere close to what we reserve for the so-called intellectual process of evaluating the business model. More often than not, the A graders in the business are busy running the core cash engine and are rarely spared for speculative growth plays. My friend completely changed his investment rationale. He backed the founder and he made a lot of money. He reminds me of this conversation every time I see him. If only I was 10 years older when the idea came along, and I could have been first in like he was. I didn’t make $25M, but I did learn a valuable lesson. People are the difference. Great ideas are just that … ideas. Sahil Merchant A proven entrepreneur, an innovator, and an expert in agility, growth and new talent. Founded and built McKinsey's digital and data practice in Australia and New Zealand. Subscribe: Turning Tides Newsletter New perspectives on Growth and Innovation. Delivered every Full Moon.

For leaders aiming to build a sustainable innovation capability, there will be many obstacles along the way, none more difficult to overcome than employees with a deeply rooted fear of failure. In this blogpost I want to highlight a few simple ideas that can go a long way to reducing the fear of failure in organisations. Tackling that challenge will require first a deep awareness of the problem and then the use of two simple frameworks to help anyone within an organisation - including innovators and intrapreneurs - identify where and when failure would be safe. Problem awareness Recently, the Head of Innovation in a large organisation shared with me that fear of failure was the number one problem that employees had highlighted in the latest culture survey. “Most of our people don't view failure as an opportunity to learn and improve, and don’t feel safe to fail” she told me. That was the biggest blocker she had to resolve if she was to move the needle on the organisation’s innovation capability. This deep awareness of the problem and its importance is of course the required first step to resolve it. Now what could she do to overcome this deeply rooted fear of failure within her colleagues? Should we celebrate failure? I feel like we’ve heard a million times that we should accept failure to succeed, i.e., that failure is a step on the way to success. One of my sports heroes from the nineties said it really well. "26 times I have been trusted to take the game winning shot and missed. I have failed over and over and over again in my life. And this is why I succeed." - Michael Jordan But should we really accept the invitation to fail? Is it relevant for us innovators and employees in large organisations? To take a concrete example: Can Bob from Finance fail 26 times at completing the monthly closure? And if he does, is it a good idea for the organisation to let Bob manage the monthly closure? Probably not, right? Still, we’re inundated by this invitation to fail, and not only by sport heroes. Startup founders, the business heroes of our era, some of them now at the helm of the largest organisations on planet Earth have also been inviting us to move fast and break things. So “fail fast and celebrate failure” is the mantra on everyone’s lips nowadays. But as my mother-in-law was due for an eye operation at the time of this writing, I reflected on the fact that I really didn’t want the eye surgeon to fail fast. And in the event that the operation would fail, the thought of the surgeon celebrating failure felt both absurd and obscene. Instead, I wanted him to plan the surgery thoroughly and execute it meticulously. So, is this it then? Is celebrating failure a false promise and managerial dead-end in our large private and public organisations? Should we focus on preventing and punishing failure instead? Should we prevent and punish failure? But then I thought of Glitch. Glitch was a game developed under the leadership of Stewart Butterfield. Glitch was officially launched on September 27, 2011, but reverted to beta status on November 30, 2011, and was then officially shut down on December 9, 2012. Without a doubt, Stewart Butterfield wasted a lot of money, time and effort on this failed video game. Some of it was his own, but some was also other people’s money, time and effort. So, should Stewart Butterfield’s failure with Glitch be prevented and/or punished? Before you jump to answer that, let me tell you another story. The story of Slack, and how it started. Slack began as an internal tool for Stewart Butterfield's company, Tiny Speck… during the development of Glitch. Slack was then launched to the public in August 2013 and contributed to transform the way large organisations communicate and collaborate internally and with their ecosystem of partners. With this additional context I hope you’ll agree with me that it would make no sense to prevent or punish any “failure” such as Glitch. The EXPLORE and EXPLOIT continuum So, if it’s sometimes absurd to celebrate failure and if it doesn’t always make sense to prevent and punish failure either, how should you know when to “fail fast and celebrate failure” and when to “prevent and punish”? Here again, the EXPLORE and EXPLOIT framework can help us navigate the situation more clearly and know whether we should celebrate failure as learning on our path to design and test new products and services or punish it as a consequence of poor planning and execution. For more background on the EXPLORE and EXPLOIT framework you can watch this short video. In summary, for innovation to thrive, we need to have two different operating models that will deal with “failure” radically differently: In EXPLOIT, our operating model should prevent and sanction failure. In EXPLORE, accepting and celebrating failure, as learning is the key to unlocking innovation and value creation. As I was introducing the simple "Explore and Exploit” framework in the organisation where fear of failure had been stifling corporate innovation, I could witness their enthusiasm as they realised that it could help them create a common language, an increased awareness of where failure is safe and ultimately contribute to reducing the fear of failure in their innovation activities. In the conversation that followed, an interesting question came up though. “What about EXPLOIT?”, someone asked. “What could we do to also reduce the fear of failure in our core business operations?” One-way vs. Two-way doors That was of course a great question as fear of failure in that organisation was not limited to their EXPLORE activities. And there’s another simple framework that can help with reducing fear of failure in core business operations as well. It’s the type 1 “one-way door” and type 2 “two-way door” decision-making framework popularised by Jeff Bezos in Amazon. This framework tells us that type 1 decisions are like one-way doors, difficult to reverse, requiring careful consideration. Failure would have serious consequences so it's critical to minimize failure through thorough analysis and caution. However, type 2 decisions are two-way doors, easily reversible if they don't work out. Quick reversibility encourages experimentation where failure is seen as a valuable learning opportunity. So, for type 2 decisions there should be no reason to fear failure. Between the two extremes of celebrating failures blindly and being stuck with fear there is a space of awareness, an awareness of two simple but powerful frameworks that can help reduce fear of failure in organisations: The EXPLORE and EXPLOIT framework, The type 1 “one-way door” and type 2 “two-way door” decision-making framework. Fear of failure is of course an immensely complex topic and there are many other interventions that would be required over time to reduce and manage that fear of failure in a systemic way. To dive deeper into this critical topic for the long-term success of organisations I recommend Amy Edmondson’s research and work on psychological safety. The fearless organisation (2018) is already a management classic, now followed by Right Kind of Wrong: The Science of Failing Well that’s just been released. But the two frameworks shared here are already a great starting point to raise awareness of where and when failure is safe, and subsequently unlock your corporate innovation efforts. About Fred Executive advisor on strategy and innovation. Co-author of The Invincible Company, a guide to building resilience in organisations with corporate innovation, and shortlisted for the Thinkers50 Strategy Award 2021.

This article won’t make me popular. A high proportion of the clients we work with engage us to help with people and culture opportunities and therefore, Chief People Officers are a critical stakeholder group for us. I am not going to win a lot of friends by stating that our HR leaders are failing us… but they are. The challenge Much of that failure is put down to the times that we live in. There are heightened expectations around working conditions within the younger workforce (considered unrealistic by many). Most organisations face challenges around culture where a large proportion of employees no longer want to come into a physical office, and There has been an irrevocable change in the mental models around what a job and employer loyalty actually means in one’s life. Today, if an employer doesn’t quite meet my lofty standards, I simply leave and try to find one that does. Zara and H&M helped pioneer fast fashion, and a similar mindset seems to have permeated its way into the employment space. Yes, it is easy to blame the current times for the great resignation, cultural dislocation, and the inevitable talent gap that nearly every organisation experiences but only a few openly admit to. I see this as a convenient cop out. Gone are the days when the Head of HR sat on the kids stool at the executive table. People are rightly seen as a competitive differentiator and therefore our HR leaders are highly experienced, articulate, emotionally intelligent and politically savvy. I’ll tell you what they are not however… they are typically not risk-taking entrepreneurs who chase after unlimited upside at the risk of downside failure. No…most CEOs want their Head of People to be a safe set of hands and not a swashbuckling cowboy or cowgirl that gets excited at the next big trend and chases after dreams of windmills. Having met with some of the most senior people leaders across some of our biggest corporate institutions, the part I struggle with is that every one of them has spoken to me about significant people aspirations. Not one has said that everything is great and that they are looking for small, incremental tweaks to keep them at the top of the heap. No, our conversations have all been about radical shifts and step change. Some have even identified that their organisations are facing existential crises that can only be addressed by a fundamental change to their talent environment. What it might take I am sure you can see my concern. You don’t get fundamental change by taking the safe path that minimises downside. You also don’t achieve step change via experience and intellect – something that all the HR leaders I have met have plenty of. All of our experience and intellect is what brought us to where we are today. Rather, our HR leaders need to embrace a much more experimental mindset. If we want to truly transform our people environments, we need to think in terms of Probe-Sense-Respond which underpins problem solving for complex challenges, instead of Sense-Analyse-Respond which is how we approach complicated challenges. So many of our corporate leaders struggle to change up their toolkit to adapt to complex instead of complicated problems, and yet it is ironic that our HR leaders struggle in the same way given that nothing better fits into the category of complex than do human beings. Dollars don’t have feelings and I am therefore more accepting that CFOs will be better equipped to solve complicated challenges instead of complex ones. I am not sure our HR leaders can offer up the same excuse. If we want to really shift the dial on people, we need a portfolio of bold people initiatives and we need to approach them the way that a VC approaches their portfolio which is geared to provide high levels of growth. We need to accept that the majority of those bold initiatives will fail, and that we have little way in advance to pick the winners. And yet, the winners will provide disproportional returns. This line of thinking made me really depressed. HR leaders are often as far away from entrepreneurial profiles as are Chief Risk Officers. Our HR executives are well placed to lead us I had an epiphany just last week (why do they always happen in the shower?) Perhaps we don’t need our CHRO to be that swashbuckling entrepreneur. After all, when we help our clients set up ‘at scale innovation engines’, we preach that innovation is an output of a repeatable and disciplined process and not one of creative brilliance. Surely it is the same for our HR leaders. If we can help them think like venture capitalists, then they don’t have to deliver the radical step change that they are desperate for. Rather they simply need to oversee the system that – based on real data and evidence – will quickly kill off the people initiatives that won’t deliver (hence saving both time and cost) and double down on those that will. I am not suggesting that our people leaders are failing us because they have spots when they should have stripes. No, our HR leaders are perhaps not natural entrepreneurs. But there is no reason why they can’t oversee a people and culture led transformation that delivers massive change as long as they embrace a different operating model when it comes to HR initiatives. What frustrates me is that so many of our people leaders at our largest incumbents talk about the need for step change. And then they pull the same levers that have been pulled countless times before - e.g. an Employee Value Proposition review, REM benchmarking or embarrassingly, investing in some hackathons to try to appeal to new digital and data profiles. Or, they commission a report from the usual advisory gurus and watch as their talent environment continues to deteriorate. Maybe it wouldn’t hurt for our people leaders to chase after a windmill or two. At the very least, they should create an environment where windmills can be quickly built, torn down, and re-imagined. As the talent environment and expectation of the younger worker continues to massively shift, a failure to adapt and try new things and the propensity to rely on what HR leaders know well may precipitate the downfall of the modern organisation. Sound alarmist? Maybe. And yet, many of the HR leaders I know well are feeling uneasy. They tend to have excellent intuition, yet something has changed and in their quiet moments of honesty, they can’t quite put their finger on it. They champion the need for a bold and adaptive organisation – and I say this as someone who counts several senior HR leaders as friends – but perhaps the most important tool I can offer them is a mirror. Am I optimistic? Strangely, I am. If anyone can role model the adaptive leader, question all their assumptions, and reimagine their operating model to inspire change in an adaptive organisation, surely it is our HR leaders, irrespective of their entrepreneurial DNA. Sahil Merchant A proven entrepreneur, an innovator, and an expert in agility, growth and new talent. Founded and built McKinsey's digital and data practice in Australia and New Zealand. Subscribe: Turning Tides Newsletter New perspectives on Growth and Innovation. Delivered every Full Moon.

We always set out with good intentions. We know the theory, we have read the case studies, and we know what the right thing to do is. But all too often, in the heat of the moment, we want to revert to old ways of doing things - ways that we know won’t serve us well in the long run, but feel familiar and safe. How do we enable leaders and teams to resist this urge and stay true to the course? This was one of the topics raised at our recent innovation community monthly calls, and the question was related to staying committed to using an experimental framework to de-risk business ideas. Corporate innovation requires a portfolio of ideas and small experiments to identify winning concepts. Progressively, assumptions are tested for validation and then, if the confidence level is increasing, additional investment is put into the idea to support more rigorous experiments and, eventually, full-scale implementation. This approach is outlined in The Invincible Company and is consistent across leaders in the field. However, we often see organisations undermine this approach in ways that resemble one or more of these patterns: Committing to implementation, without experimenting first This has been the default way of doing things in many organisations. An idea is funded on the basis of some initial desk research and a business case, and then teams are mobilised to build the end product in the hope it will succeed in the market. Ignoring the learnings from the evidence and persisting anyway Sometimes teams forget that the purpose of experimentation is learning, and the feedback received needs to influence the path forward if it is to be useful. Sometimes teams stubbornly persist with an idea even when the evidence coming back from experiments is not encouraging. Not having a sufficiently broad portfolio The whole philosophy of innovation through experimentation relies on the concept of having a portfolio that is large and diverse enough for the organisation to be receiving feedback that will illuminate which path to pursue. If there are only one or two ideas being tested, or if the ideas are all very similar, then the ability of the organisation to learn is inhibited. To foster a culture of experimentation and portfolio thinking, organisations must prioritise a leadership mindset, establish robust process and governance, and consistently amplify quick wins. Leadership mindset Ensuring that there is leadership awareness and support for the experimental approach is perhaps the most crucial thing. We have found that there are two key insights that are essential for leaders to have. The first is to recognise the Explore Exploit continuum, whereby the business of today exists at the Exploit end of the spectrum, while innovation is at the Explore end. Explore and Exploit require different toolkits and operating models, and leaders must be able to quickly switch gears between the two depending on the matter at hand. The toolkit for the Exploit world is well understood in terms of how to assign resources, execute, measure performance, and improve. However the toolkit required for Explore is often new terrain. Acknowledging that a different set of tools is required creates space for learning and skills development, both amongst leaders and team members - all of which will go a long way to fostering a culture of innovation. [see this video of Lucy Luo from Strategyzer describing the Explore toolkit]. The second is to appreciate that every learning from an experiment is to be celebrated, even if it doesn’t validate an assumption that we had hoped to be true. A common trope in the startup and innovation world is to “fail fast”, however I prefer to see the emphasis placed on the learning that comes from a failed experiment (see this great article from Sahil Merchant that elaborates on this point). Actual failure only occurs when experimentation is bypassed and all of the investment put into one big bet amounts to nothing. At Vibrance we use an experiential group activity based around an “electric maze” that really helps leaders internalise these mindset shifts. It is quite incredible to witness the penny drop moment that people’s perspective changes, and to hear the learnings from the workshop activity referenced later during later business meetings as a metaphor for the appropriate mindset to be using. Process and governance These words sound dry, and perhaps not very fitting in an innovation context. But in reality, by establishing the rules of the game upfront and securing the appropriate amount of funding, it is a key unlock to addressing the question at hand - how do we enable leaders and teams to stay true to the course? By setting up a process which acts like a funnel, to first encourage many ideas to emerge from various sources, and then prioritise those to be explored next, there is less room for the experimentation process to be derailed. In our experience, there is another governance related penny drop moment that we find is important for leaders (especially the CFO) to experience - and that is to recognise that the metered funding and portfolio approach actually reduces risk overall. While there will be many initiatives that do not make the cut and are therefore retired, the numbers game assures us that the process will eventually turn up some winning ideas. But this requires a long game mindset, and will not bear fruit if it is cut short. We find that working through a series of “building blocks” with an organisation to build up their process and governance framework through a co-design process is the most effective way of setting this foundation. For example, one building block could be the design of an intrapreneurship program, and another could be to detail how funding will work. Typically there would be around 10 areas that required focussed attention. This isn’t a quick and easy exercise or a cookie cutter PowerPoint deck - it requires genuine and sustained engagement from an organisation to design and implement a process and governance framework that is customised for their needs and context. Amplify quick wins At the end of the day, people need to see action and progress in order to feel confident. That’s why it is important to support teams in conducting experiments and showcasing their findings, and to keep this happening on a regular cadence. There is something very powerful about hearing people present their findings from having spoken directly with customers (read one of my favourite examples of direct customer interaction here) and having run experiments, and it is different (in a good way) from hearing someone talk about their ideas or what they would like to be true. Creating the forums for these learning to be shared requires deliberate design, as does enabling innovation teams to be able to tell engaging stories. Having an innovation coach to work with teams is often a good way to keep this cycle on track - someone who has done it before, that provides the nudges and prompts to support teams, while also ensuring that psychological safety is maintained when people are sharing their learnings. Corporate innovation is a long game. It requires not just initial enthusiasm and investment, but also a commitment to stick with the process so that the winning ideas can eventually emerge. It is also a game of hearts and minds, which is where this suite of approaches will hopefully be helpful in both securing leadership support at both a conceptual and emotional level, while also enabling the flow of learning and storytelling that will maintain the enthusiasm and commitment to experimentation as the backbone for innovation. About the author Pete Cohen is an innovation, technology, and product development specialist with experience spanning from start-ups to enterprises. Pete draws from his diverse background which includes the arts and the not-for-profit sectors.

Surely this can’t be the start of an inspirational post that will leave us feeling safe and happy in our knowledge that deep down we know the right path. So many self-help gurus talk about the need to believe in ourselves and trust our gut intuition. I’ve heard from somatic healers, vibrational energy teachers, trauma specialists, and even your vanilla leadership coaches, who have all told me that my body, my heart, and the universe itself is trying to provide me with the answers to the most difficult questions I face. Well, I have been listening and I don’t hear shit…. No, surely this can’t be a feel-good post. All this listening however has led me to a great sense of contentment. I’ve slowly, over a period of 25 years, learned how I need to make difficult decisions, which almost always end up being the correct call for my life. I stress here that my particular methodology works for me. Like one of those stuntman warnings where kids are reminded not to try this at home, I am not advocating that this is right for you or anyone else. I start by taking a very left-brain approach to things. After all, this is my (and most likely your) formal training. I list out the pros and cons in a very rational, almost nerd-like way. Then, I add in the emotional side of things. I try to tap into my feelings and that soft gooey centre that inevitably rules my life despite the façade of analytical logic. I combine left and right brain, make an informed and considered decision, and then deliberately do the exact opposite. My family laughs at this point. I do the opposite of what every ounce of my heart, mind, intellect, instinct, gut, big toe and sweat orifices tell me to do. In my case, they are all liars. I love them all intimately but with love comes knowledge and acceptance. Every part of me lies to myself. Just can’t be helped. To be a bit more accurate, they are not actually lying. But, neither are they answering the question I think I am posing. My instincts tend to try to avoid pain. Inevitably, I manage to convince myself of a particular path because it will most likely be easier. I don’t articulate that as a reason of course. The pros and cons, my gut and those invisible midi-chlorians all provide really good reasoning to turn left. Left makes sense from every angle. So I turn right. My best analogy for what is really going on here comes from the strength training I do 4 times a week (yes, my muscles are strong underneath their comfy exterior padding). I never had good exercise technique as I would unconsciously squirm and reposition myself so that the muscle I was trying to work was relieved of the stress and tension that would make it stronger. I have now managed to find a gym where the precision equipment locks me into place so that I can’t inadvertently make things easier for myself. My contrarian decision heuristic has served me well in both business and my personal life. From a commercial perspective, I convinced myself that the time was not right to expand. So we expanded. I once convinced myself that an entrepreneurial idea had real legs and was destined for unicorn glory… so I binned it. At a family level, I convinced myself that my child should finish his engineering degree given he was doing well academically, and it was only a matter of a few years. So, I encouraged him to drop out and chase a dream of being a musician. I find that my clients often convince themselves of all sorts of things, just as I do. Rarely is it the right call. I have learned to not trust myself. The more convinced I become, the more I distrust… the more I question what is really at play and what subliminal motives are manipulating me. And then I make a better decision.

Almost six months ago, Vibrance and Strategyzer organised an event called Corporate Innovation in Action, where we heard perspectives from local and international thought leaders about how to support organisations in their ambitions to foster growth and resilience (you can read our reflections here). There was a real sense of camaraderie in the room, and a desire to keep the collective conversation going, so we recently reconvened for a face-to-face information drink followed by an online session to share what challenges and opportunities are currently on our collective minds. For our online session we used the Lean Coffee format to facilitate our discussion, where all participants have an opportunity to suggest topics for discussion. We then collectively voted on these topics to prioritise them for quick fire discussion. We received an interesting insight into the topics that are front of mind for this community of Australian corporate innovation professionals. The most prevalent theme that emerged was: how to justify investment in innovation while there is a focus on cost cutting and seeking operational efficiencies. Navigating corporate innovation challenges in Australia was top of mind for locals. In September 2022, my colleague and Vibrance Partner Fred Etiemble wrote Innovation in a Downturn?, an article about how to assess whether an economic downturn could be your opportunity for breakthrough innovation. He explores critical and practical questions related to the constraints that organisations are under during tough times, specifically in relation to resourcing and leadership bandwidth. When we came together in March 2023 for the Corporate Innovation in Action event, Australia was definitely facing into an economic downturn, making the question even more relevant. Since then, conditions have become more uncertain with many organisations downsizing their workforce and high interest rates generally giving confidence a battering. These are tough conditions for corporate innovators to secure funding and moral support from leadership. It is therefore no surprise that the key question and challenges that emerged were related to convincing leaders and unlocking investment in innovation. Under more buoyant conditions, organisations are typically focussed on how to optimise their innovation projects. However, the current challenge is to convince boards and senior leaders that investment in innovation should be prioritised at all. When faced with this question, the group shared that an effective strategy can be to frame the response in the language of risk. At face value, investing in speculative innovation projects during a downturn feels risky. After all, the vast majority of those projects are not expected to generate returns. The “judo move” is to open a conversation with leaders about the risk of not having a balanced portfolio that includes at least some investment in the future, akin to having an insurance policy against disruption. This can be done by undertaking an assessment of the current initiatives, and highlighting that even those which might fall under a continuous improvement banner will actually do little to safeguard against business model disruption. It is challenging to find the right language to convince leaders. But it is a challenge that is part of the job of driving innovation within a large organisation. If framing the conversation around risk is not enough in your context, you might want to try one of the 6 ways for selling innovation and experimentation to a CFO suggested in this Strategyzer blogpost. Ironically, maintaining the investment in a portfolio of small bets that explore possible business models of the future - otherwise known as transformative innovation - might be the best strategy to come up on the winning side of the downturn, as reflected in the recent McKinsey article Innovation: Your solution for weathering uncertainty. “The risks associated with business as usual versus bold innovation have been inverted: In times of fundamental change, shifting resources toward big innovation bets is an important hedge against uncertainty” - McKinsey & Company One reason to maintain an innovation portfolio, even during a downturn, is that when disruptive forces come knocking (which they eventually will), it is too late to start exploring new transformative ideas because new business models can’t be switched on overnight - they take time to systematically explore and mature. Another reason is that innovation requires particular capabilities and organisational muscles, which if left sitting on the couch for too long can’t be easily reactivated. We are at an interesting moment as a society, with Australian businesses facing exponentially accelerating change and the confluence of many forces and crises. Innovation plays a key role in enabling us to respond, and hopefully thrive, in these conditions. What remains to be seen is whether during these tough economic times, Australian business leaders will respond to these risks and challenges proactively or defensively. Judging by the discussions and the energy in our session, there is at least a group of corporate innovation professionals doing their best to support leaders in being the authors of their future rather than victims of uncertainty.

The path from A to B is rarely linear. Even when aiming to achieve something relatively straightforward like revising the financial model for a contract renewal, seasoned leaders know that there are several foundational pillars that must be shored up before meaningful and sustainable change is possible. This case study describes our work with two large financial services organisations who have been doing business together for decades, whereby one is providing backend technology and administration services to the other. A change in the regulatory environment prompted a need to pursue cost savings, and so their long standing contract was on the table to be reimagined. These two organisations knew that they needed an independent third party to help them through this process. Some stakeholders favoured taking the very objective approach of focusing solely and immediately on the financial dimensions, for which a traditional consultancy would have been adequately geared to do. However the senior leaders knew that the same thinking and approach which had brought them to this point could not take them further. They were seeking a different approach in order to drive a really meaningful outcome, and they found that in Vibrance Partners. So, what was it about this situation that required a different approach? All large scale business to business (B2B) relationships are complex. There is a strong interrelationship between the daily lived experience of staff and customers and the overarching strategic intent, however keeping these aligned is challenging – especially when the relationship has previously been optimised for efficiency and cost control. Part of the evolving business and technology landscape is that expectations are changing. Customer expectations are increasing, as we all become accustomed to the experience associated with instant, digital channels. Gradually, business expectations are also increasing as services become more modular – a specialist provider can offer one focussed value proposition while integrating with core systems via application programming interfaces (APIs). This was the set of dynamics that our clients were grappling with – increased customer expectations that create competitive pressure, and a desire to have optionality around using best of breed technologies and service providers – all the while needing to minimise costs. Responding to these changes requires a significant level of agility both from a technology and a ways of working perspective. Simply taking out cost from the contract, while achievable, would have actually been counterproductive in the long run. Rather, both organisations needed to develop a shared understanding of each other’s perspective, and use that to arrive at a set of decisions that encompassed the whole relationship and operating model, while also demonstrating a financial model that met key objectives. Our approach The central goal was to create conditions where meaningful dialogue could occur. Tailored workshops Our initial work was to level the playing field so that all participants of the joint working team could have their perspectives heard, reshaping the existing client/vendor dynamic that had existed between these two organisations. This was achieved through considered workshop design and facilitation. While standard tools and frameworks are generally geared for surfacing the needs of one organisation, Vibrance developed frameworks that allowed for the exploration and synthesis of the two broad points of view. These workshops were very hands-on, and were all conducted virtually using online collaboration tools so as to cater for team members spread across three states. Holistic approach We needed a way to ensure that our conversations encompassed multiple perspectives and thinking styles. We chose to leverage the Herrmann Brain Dominance Instrument (HBDI) – a framework that helps individuals and groups to take a step back to understand their natural tendencies when it comes to how they think and work, and to be able to move forward with a more balanced and holistic approach. This framework was used as a guide to provide a consistent vocabulary throughout the engagement to frame the conversations and exercises across the four dimensions of rational, experimental, relational and practical ways of thinking. Participants of the working team used the HBDI framework to self identify and share their personal dominant thinking styles. This helped the broader team to maintain an awareness for when conversations were becoming too focussed on the analytical dimension, for example, and to self correct towards a more balanced dialogue. Genuine shared understanding of capabilities, challenges and opportunities In addition to supporting the core working team through the process of co-designing a set of relationship principles and a new operating model, a key part of the journey was creating the opportunity for people from across the respective organisations to come together to have deep dive conversations related to seven discrete capability areas of strategic importance. These sessions bridged the gap between the executives and the people at the front lines who have deep domain expertise, and who know first hand where the opportunities and challenges lie. Vibrance facilitated joint preparation sessions for each capability area to ensure that the right questions were being both asked and answered, and then provided coaching around utilising diverse presentation styles to demonstrate capabilities and build a shared sense of confidence that together the organisations could achieve the desired outcomes. The Vibrance Difference Vibrance brought to this engagement the essential balance between structure and adaptability. A structured approach was required to drive outcomes within a compressed time frame, corralling busy executives across two organisations. Adaptability was key in facilitating a process worked through the many dimensions that underpin a reimagined B2B relationship, operating model and commercial construct. We enabled our clients to reimagine their partnership, which reduced overall operating costs by a significant amount, while enabling the other party to be able to deliver more value more efficiently by streamlining and integrating services – a genuine win-win scenario. This was underpinned by making visible and explicit the joint commitments change across the dimensions of technology, process and culture that would be required to make the reimagined partnership model achievable and sustainable. Our team leveraged deep expertise across strategy, commercial, innovation, new ways of working, organisational development and technology – all of which played a role in facilitating a holistic approach, which ultimately led to exceeding expectations by not only arriving at the target level of cost savings, but also provided confidence that both parties were aligned in understanding their respective commitments that would be necessary to ensure the ultimate success of their organisations and the customers they serve.

How to play the new talent game and win the hearts and minds of employees. If the pandemic has taught organisations one thing, it’s that the power has shifted to people. Exposure to new ways of working has highlighted a stark contrast, giving people pause to reflect on the meaning of their work and its influence on their happiness. The increase in bandwidth and the ability to manage our daily lives better has magnified the pressure, anxiety, and impact of the “rinse and repeat” workday to our mental health. The bottom line is the competition to retain and attract talent has reached fever pitch. A retail CXO reached out to Vibrance for help on their talent management strategy. Digital talent acquisition in the pandemic era was critical and the organisation is only as good as the people and to survive in 2022, they needed to respond to this evolving dynamic in an intentional manner in order to survive. And so began the implementation of the Vibrance Talent Engine, a framework specifically designed to accelerate digital talent acquisition and build a foundation for an enhanced candidate-centric experience. We started by conducting one-on-one interviews across the organisation and with potential candidates to establish a fresh perspective on opportunities, deeply understand unmet needs, and assess strengths and weaknesses within the current state. These synthesised insights provided a form of objective connective tissue between stakeholders that often is unseen due to varying perspectives and priorities. With alignment and a clearer understanding of internal challenges, we began a series of collaborative workshops that acknowledged blind spots and refocused the team on ‘intentional solutions’. By tapping into a collective intelligence, we quickly co-created a prioritised backlog of initiatives to overcome blockers. Our next step was to stand up a talent war room, supported by HR, business owners, technical leads, enabled by a suite of tools and assets. While Vibrance brings best practice assets to the table, our experience has taught us that evolving each through a continuous cycle of test and learn sprints leads to better outcomes for each organisation. Where previously there had been a lengthy hiring process with experiential inconsistency, the company now operated with a concrete hiring speed supported by fortnightly sprints. Additional benefits included: improved conversion rate of talent with multiple job offers educated HR on digital roles implemented CV and telephone screening standards that made talent identification timely committed dedicated digital talent specialists to full lifecycle recruiting introduced online testing of digital skills by discipline, helping to confirm capabilities prior to the investment of effort introduced a structured interview assessment which created a shift from ‘jobs’ to ‘capabilities’ enabled consistent candidate calibration for decisioning The war room was supported by a clear governance process with KPIs, dashboard tracking and a status update cadence that kept varying levels of authority informed and able to contribute expertise. The war room became the central hub for all digital and analytics needs, driving pace and change to the process. A key measure of success is the engine’s ability to scale and respond quickly to candidate feedback across the funnel, iterating and testing improvements as required to transform the experience. A key motto for the team became ‘if we want to secure the best people, we need to provide the best candidate care’. While the pandemic has upended the world causing many organisations to be reactive, the key to success in our experience is to take a step back and understand the drivers of attrition and adopt a candidate centric mindset across the entirety of the pipeline. And you need to address this now.

How we helped a legal firm develop a breakthrough innovation capability Justice may be blind but the legal industry shouldn’t be deaf. If you heard the weak signals of disruption in the legal industry, what would you do if you were leading one of the key players of that industry? Faced with this challenge, the CEO of an Australian legal firm decided it was time to make innovation one of the key pillars of their new strategy and build their innovation muscle to create new growth, protect the organisation from disruption risks and extend access to justice to people in Australia and abroad. To deliver on that strategic intent, he engaged Vibrance to mobilise the organisation and build a picture of what a future innovation capability could look like. The CEO needed us to source the perspectives of numerous stakeholders across the firm to clearly understand and address their unique challenges. In particular, he was looking for a recommendation on how an innovation capability could exist within a traditional legal environment and what structure, operating model, processes and culture would be required to build resilience and maximise the potential for new product growth. We framed those challenges into the following lines of inquiry: How can we access genuinely breakthrough opportunities when most of the organisation will be coming from a place of here and now, rather than what the future could be? How can we be confident that the organisation will stay the course and invest in new ideas when collectively there is little conversation about the threats and opportunities that are driving the need for innovation? How will we successfully deliver an innovation agenda when very few staff have product building experience or digital and innovation backgrounds How do we create an innovation capability that is free of the organisation’s bureaucracy but still sufficiently connected to take advantage of scale, expertise, client base and brand? How do we create a system that protects the organisation from pursuing costly solutions that end up not providing any real ROI? How can we ensure the right approach to test and learn when Executives and the Board are accustomed to 90% of risks paying off? The Vibrance team started by assessing the existing innovation capability and unpacking learnings from previous new product development initiatives in the organisation. We also interviewed all key stakeholders to understand their appetite, motivations, concerns and existing convictions. By first asking questions and creating a space for people to share their perspectives, we were able to identify where there were areas of common ground, and where there were different views that needed to be bridged. This was essential context to take into the next stage of helping our client design their innovation blueprint, as force fitting a cookie-cutter approach does not create the conditions for success. With a core team of key stakeholders in place, we mirrored the research findings to the team to reach a shared understanding, generate excitement, and address concerns head-on. We agreed on a set of design principles that operated as a working manifesto, keeping everyone focused as we co-designed the high-level blueprint of an innovation capability that could create new growth and resilience in the organisation. That meant diving into the following lines of inquiry as a collective: What type of innovation are we aiming for? And what are our innovation objectives? What’s the best vehicle to deliver our expected outcomes? What’s the most relevant structure for the innovation organisation? And who should innovation report to? What budget should we start with? And how is the budget likely to evolve? What operating model will we use to manage innovation? What will our process, governance, funding, KPIs look like What talent do we need to attract to innovate at scale? And how will we manage them? For each question we presented a series of options and assessed with our key stakeholders which one would work best for the organisation. Exploring and answering those questions at the appropriate level of depth enabled us to have the right conversation within the Executive team and then to get alignment with and buy-in from the Board of Directors. On top of a concrete 1-year roadmap, this first project phase created confidence and clarity on how the firm’s strategic pillar focused on innovation could be managed. The ultimate outcome was the client’s Board signing off on the investment required to fund the first year of establishment and operations for their new innovation capability.

How to assess whether the downturn could be your opportunity for breakthrough innovation As the COVID crisis now evolves into an economic downturn, more and more leaders will increase their focus on the core business, even if it is at the expense of future growth. Given the current economic forecast, corporate innovation might be seen as a luxury that large organisations can’t afford anymore. Two recent articles, Innovation in a crisis: Why it is more critical than ever by McKinsey and 3 ways to innovate in a downturn by Innosight urge leaders to take a different approach, arguing that innovation still has a key role to play to help organisations come out of the downturn stronger. McKinsey advises that “particularly in times of crisis more urgent actions to take include: Adapting the core to meet shifting customer needs, Identifying and quickly addressing new opportunity areas being created by the changing landscape, Re-evaluating the innovation initiative portfolio and ensuring resources are allocated appropriately, Building the foundation for postcrisis growth in order to remain competitive in the recovery period.” There is also a competitive angle, with an opportunity to make headway at a time when many competitors will freeze their innovation budget. I have never followed F1 racing but this quote from late Brazilian champion Ayrton Senna is a great metaphor of the window opportunity in the downturn. “You cannot overtake 15 cars in sunny weather, but you can when it’s raining.” - Ayrton Senna While I fully support the call to action, I also want to acknowledge that it might not be for everyone. In this blogpost I highlight three considerations that will give leaders a deeper understanding of whether they can action the above recommendations in their context. Those three things to consider are: The magnitude of the resource crunch impacting corporate innovation, The leadership bandwidth available for innovation topics, The innovation readiness of their organisation. Magnitude of resource crunch Limited resource allocation is often one of the main limiting factors of corporate innovation, even in growth phases. This will get much worse in a downturn, and corporate innovation departments might see their budget slashed by cost-cutting exercises. So, the first question leaders should clarify is the magnitude of the resource crunch for corporate innovation: what resources will remain for corporate innovation in the downturn? One of my clients will have the budget allocated to their innovation ecosystem divided by 10 next year compared to what they had initially planned. In this context, the corporate innovation team had to honestly re-assess if they could still play a role in transformative innovation in a way that would help the organisation come out stronger from the downturn. In this case, they assessed they could still move the needle on one strategic area and decided to focus entirely on this one. Leadership bandwidth Mental bandwidth of executives might be an even more scarce resource. In a crisis it is counterproductive for innovation leaders to bring to executives’ attention topics that they have no mental bandwidth to process. When innovation leaders push their agenda too hard in a crisis, that can only lead to the counter-productive decision to pause or stop everything. Innovation disappearing completely from the executive agenda is the worst possible outcome, so innovation leaders should adjust their expectation of executives’ attention to the reality of their available mental bandwidth. They should understand: How much bandwidth is left for topics that are not directly related to the crisis? And how best to keep innovation as an executive level topic during the downturn? What should be put on hold, stopped to align with the new availability from executives? One Head of Innovation I’m working with in Europe had paused interactions with the CEO the first three months of the war in Ukraine, and then resumed interactions only when the time was right. On a monthly rather than bi-weeky basis first. Even though some decisions couldn’t be made during those 3 months, the pause enabled to maintain strong CEO support for innovation, as counter-intuitive as it may sound. Innovation Maturity The organisations that show the best resilience to crises are those we call ambidextrous. Those that can balance exploitation, i.e. maximising the current business and exploration, i.e. preparing future business with a portfolio of innovation projects. Such organisations have been building their innovation ecosystem for years and would have enough maturity to assess options and make optimal decisions on what programs and projects in their innovation portfolio should be continued, put on hold or stopped. But in my work, I’m often in discussions with companies without a mature innovation capability yet. Organisations that have been mainly focused on their core business, with only some efficiency innovation and continuous improvement going on. They are not ready to leverage innovation for new growth. Should those organisations start building their innovation capability during the downturn? Most of the time, given innovation’s time to impact, plus the resource and leadership bandwidth it requires, I’d advise organisations with low innovation readiness against building an innovation capability in the middle of a crisis. Such organisations might have to weather the storm first and start the work on their future exploration ecosystem only when they see the other side of it. So, to understand how to best leverage innovation in the downturn, leaders should first clarify the innovation readiness of the organisation: How mature is the organisation’s innovation ecosystem? And is it mature enough to create value for the organisation during the crisis? It’s obviously not an easy question to answer and will require a judgment call from leaders. The presence or absence of the most important enablers for innovation in a crisis could tip this judgment call on one side or the other. In a recent Vibrance community jam, we asked our clients how they approached maintaining a focus on step out innovation and growth when operating environments became difficult. In their experience, the most important enablers to maintain this focus are: An organisational commitment to long-term thinking and value creation, A documented strategy that includes innovation as a key pillar, An Executive in the leadership team dedicated to innovation and future growth. A crisis is a terrible thing to waste, as the saying goes. The downturn could be an opportunity in disguise. An opportunity for leaders to do the hard work that would enable the organisation to come out stronger from the downturn. Is this opportunity for you? To assess whether you would be able to execute an ambitious innovation program during a downturn, start by looking honestly at: The magnitude of the resource crunch impacting corporate innovation, The leadership bandwidth available for innovation during the downturn, The innovation readiness of your organisation, and whether the most important enablers for innovation in a crisis are present.

How to design the right rewards and incentives system for innovation When we run an Innovation Ecosystem Assessment in a large organisation to identify the biggest blockers to innovation, the number 1 blocker according to employees is always the same. Drumroll… the incentives and rewards system, or lack thereof. In this blogpost I propose an approach to “incentivise” employees to innovate that goes beyond the narrow scope of financial rewards and also focuses on: Removing the underlying blockers for employees to innovate, Helping them connect to their intrinsic motivation, Accessing financial and non-financial rewards adapted to corporate innovation. The problem with incentivising innovation I remember one instance a couple of years ago when I shared my top ten recommendations on how to improve the innovation capability of an energy company in Western Europe. The CEO endorsed them all, except one. I had recommended to design a rewards and incentives system for innovation and that really made him cringe. He would not hear about this. In What money can’t buy, Michael J. Sandel dedicates a whole chapter to “incentives” that can help us understand why some people cringe at the idea of incentivising certain things. “To decide whether to rely on financial incentives, we need to ask whether those incentives will corrupt attitudes and norms worth protecting.” - Michael J. Sandel That’s probably the root cause of this CEO’s discomfort. The fact that financial incentives leave a mark and can corrupt those attitudes and norms worth protecting. For a leader who truly believes in innovation and wants to free up employees to innovate, the idea of “bribes” to trick employees into doing what they should be doing willingly is simply unacceptable. The other insight from the pushback that day was that when people hear “rewards & incentives for innovation” they only think of financial rewards, but we should take a wider perspective on this challenge, a perspective that goes beyond financial rewards. In fact, we must, as survey after survey shows the absence of rewards and incentives for innovation comes up as the number one blocker perceived by employees. In this blogpost I propose an approach to “incentivise” employees to innovate that goes beyond financial rewards and focuses on: Removing the underlying blockers for employees to innovate, Helping them connect to their intrinsic motivation, Accessing financial and non-financial rewards adapted to corporate innovation. Removing blockers In their book The Human Element, Loran Nordgreen and David Schonthal explain that to overcome the resistance that awaits a new idea you must resolve the friction(s) that idea creates. That book resonated because experience shows me that “removing blockers is 50% of any change work”, and I have made it a design principle in my work on innovation ecosystems. “To create change we must first understand the forces operating against change. While we might not see them, they are there, quietly undermining our efforts to innovate.” - Loran Nordgreen, David Schonthal To create an incentive system that overcomes the main forces operating against the participation of employees to innovation, you should start by identifying them. In a recent project, my clients identified the most common obstacles for employees in their organisation as: Difficulty to start. Employees don’t know how to join an innovation program, or joining is too complicated, Skills gap. Employees don’t feel confident enough in their skills to join an innovation project, Unfair process. Employees don’t know how innovation projects will be measured and judged, or fear unfair treatment, Access to funding. Employees don’t believe funds will be allocated to innovation projects, Risk of losing variable pay / bonus. Employees cannot risk losing a bonus or variable pay component by joining an innovation project, Career risk. Employees fear joining an innovation project is career suicide. Once the obstacles are clearly identified, you should move on to brainstorming different options on how you could overcome each obstacle and select one or two options that you would want to offer in your “incentives and rewards” system. For instance, one of my clients resolved the “career risk” by making it a prerequisite for career progression that high-potential executives spend 18-months embedded with one of the organisation’s innovation programs. That changed the “innovation is career suicide” narrative when innovation leaders moved to prestigious roles and created a virtuous circle when those executives took an innovation mindset to their new roles. Caveat, I’m sharing this as an illustration only. That might not be the right approach in your organisation, and every organisation will have to select the option that works for them. I advise my clients to use an options table as their main tool to progress this work. You can see a sanitised example below. Each line represents an obstacle, and each column is an option on how to overcome that obstacle. The preferred option(s) to be implemented in the “rewards & incentives system” can be highlighted in a different colour by the team. Connecting with intrinsic motivation If removing those underlying blockers is 50% of the job, it’s not all of it, and there is a lot more we should do to help employees innovate in large organisations. Let’s come back to the CEO I was mentioning earlier. He wanted to tap into employees’ intrinsic motivations to innovate. But that doesn’t happen without the right support. And here as well, employees would benefit from a little help from a well-designed “rewards & incentives system”. The framework provided by Daniel Pink in his book Drive is a great introduction to understanding motivation.To motivate employees who work beyond basic tasks, Pink argues that supporting employees in the following three areas will result in increased performance and satisfaction: Autonomy: The desire to be self-directed. Mastery: The urge to get better skilled. Purpose: The desire to do something that has meaning and is important. With those motivation drivers in mind, we can start brainstorming options on how participating in innovation programs could help employees connect to their sense of purpose and develop autonomy and mastery. For instance, one of my clients ran a campaign to join their intrapreneurship program calling for new business ideas only around the ESG (Environmental, Social, and Governance) area, creating the opportunity for employees to make a difference towards a better world. Rewards truly adapted to corporate innovation Whether you’re writing a blogpost or working on the design of an innovation capability, there comes a point where you can no longer avoid the tricky topic of rewards. Rewards can be separated into non-financial and financial rewards. Let’s start with non-financial rewards. Imagination is the only limit to non-financial rewards that can be designed. And they can play a much bigger role than what is commonly expected. The simplest ones are usually the most effective – visibility and recognition for instance can be powerful incentives for employees in large organisations. One of my clients finishes every innovation sprint with a dinner between innovation teams and Executives. Teams whose projects will move on to the next phase as well as teams whose projects have been stopped at the end of the sprint attend the event. The recognition given to all innovation teams during that dinner and the visibility that employees receive even beyond the event thanks to pictures, videos, and internal communications work wonders to motivate them and all employees to be part of the innovation effort. Let’s now address the tricky topic of financial rewards. One of the misconceptions I often hear is that to attract talent in corporate innovation, organisations have to provide financial rewards with similar upsides to what a successful start-up founder could expect. That assumption ignores the fact that corporate innovators are very different to entrepreneurs, with different motivations and expectations when it comes to financial rewards. In their book Corporate Explorer, Andrew Binns, Charles O’Reilly, Michael Tushman share a similar point of view. “Rewards are important, but our experience is that what motivates a corporate explorer is not the same as that of a true entrepreneur – and the rewards are therefore different. It is best not to experiment with schemes that try to force the venture capital world into the corporate” - Andrew Binns, Charles O’Reilly, Michael Tushman I advise my clients to acknowledge that difference between corporate innovators and entrepreneurs and to design their financial rewards accordingly. I help them think through the below key factors and how they impact financial rewards: Triggers for rewards: Is participation in innovation enough to earn a financial reward? Should displaying the right innovation behaviour trigger a financial reward, even if it doesn’t lead to an outcome yet? What outcomes should trigger a financial reward? Types of rewards: Should rewards include bonuses? Participation in a long-term incentive (LTI) plan? Stock-options? Equity in future business? Promotions? Individual vs. collective: Should rewards be designed for the individual? For the innovation team? For all stakeholders in the innovation portfolio? The above list is not exhaustive but can act as a conversation starter to explore different aspects of financial rewards and how they would impact employee behaviours. Those conversations are then translated into financial reward prototypes that can be tested with relevant stakeholders, and then iterated until you find the financial reward system that feels just right for the particular profile of innovator you’re designing for. You should repeat this work for each profile of innovator that you will have in the organisation. Indeed, the rewards and incentives for an intrapreneur – i.e. an employee that will join an intrapreneurship program and work on an innovation project on a part-time basis for a few months – should be very different to the rewards and incentives for an employee in a dedicated innovation team exploring new product, service, or business ideas. At Vibrance we believe there is huge untapped value in employees of large organisations. To seize that opportunity, you need to create the space for employees to innovate. We know from surveying employees in large organisations in all types of industries that the biggest blocker to innovation from their perspective is always the same: the lack of a proper incentives and rewards system. While working on this topic might be uncomfortable at times and challenge existing cultural norms of an organisation, it is key to attracting and retaining employees who have the skills and attributes to be successful in corporate innovation. The market for innovation talents is becoming increasingly competitive. So it is worth putting on your designer hat, and start prototyping the unique rewards and incentives that will attract or unlock the innovation talents that the future of your organisation depends on.