How internal innovators win the game

Kaihan Krippendorf‘s latest book, Driving Innovation from Within, takes you smoothly in the intrapreneurs’ journey: his book guides internal innovators to innovation success through meaningful innovators’ stories, research, and wise and shrewd guidelines. It’s a long time since I did not read such a piece of work, steeped in intelligence: I couldn’t resist to extend the pleasure by asking Kaihan a few questions.

Kaihan is a strategy, innovation, & transformation keynote speaker, author of 5 books, founder at Outthinker -a consulting firm and network connecting senior executives with peer professionals and thought leaders-, and senior advisor at Coplex -a tech ventures starter-.

1) You’ve completed great research on the essence of innovation, and came to surprising findings regarding the relationship between innovation, and the overstated entrepreneur hero:

• 22 out of the 30 most transformative innovations were conceived by employees;
• Innovation more often comes from the collaboration of corporate (and institution) employees than from small teams of mavericks;
• More than 50% of the time, the innovator loses control of the innovation: competitors take over and scale innovations.

With this regard, what are the advantages of internal innovators?

Kaihan: I conducted about 150 interviews of internal innovators and experts for this book and found many expressed the view that innovating from within held several advantages.

First is scale. When you innovate from inside a company with scale, your innovations naturally scale more quickly. While entrepreneurs can often launch more quickly, their battle then becomes how to scale. The internal innovator’s experience is often the opposite. Getting idea to launch takes a lot of political effort and convincing. However, once you convince your company to get behind the idea, you can quickly tap into a sales force, channels of distribution, production capacity, brand awareness, etc.

The second is capabilities. Inside your organization you are but an email or phone call away from people with the kinds of capabilities and expertise your innovation needs. You can pick up the phone and speak to experts on production, technology, operations, markets, and industries for example. Your scale also makes it easier for you to connect with external partners. For example, if you call on a professor or potential partner and your business card has a well-known name on it, you will like get a call back much more quickly than an entrepreneur from an unknown company would.

The third is resources. Getting resources (time or money) is not necessarily easy for the internal entrepreneur, but neither is it for an entrepreneur who ends up spending about half his/ her time courting investors instead of building the business. Your company has assets to invest that typically demand a lower return that venture capital because they carry a lower cost of capital.

Finally, consider risk diversification. Jeff Bezos, Amazon’s CEO, once said “if you have a one in ten chance of a 100-times payoff, you should take that bet every time. But you have to be ready to lose nine times out of ten.” What he is pointing to is the ability of companies with scale too diversify their bets. If they can take ten bets each with a chance of a 100 times payoff, they can predictably produce a 10X return. Unfortunately, too many corporation’s investment practices measure the return on individual innovations rather the return on the portfolio of innovations.

2) You map neatly the 4 paramount steps of the innovation process (discover opportunities, evaluate and choose, take action, mobilize resources) with 6 vital attributes of an internal innovator (market awareness, innovative thinking, calculated risk-taking, intrinsic motivation, proactivity, political acumen –synchronizing one’s idea with the motivations of internal stakeholders);

And you coin 7 overcoming barriers in the acronym INOVATE: Intent, Need, Options, Value Blockers, Act, Team, Environment.

Let’s dig in into 4 of the 7 challenges:

• Intent: within the Intent chapter, you describe how the internal innovator has a work to do on his beliefs, behavioral, control, and normative beliefs, how he shall challenge them, unleash from limitations, and adopt new beliefs that leads to the future he wants. I found this part truly powerful, would you share your experience on this?

Kaihan: One of my doctorate advisors is an expert in “entrepreneurial intention.” The idea here is that for someone to take action on a new idea they must first have the intention to do so. This is the root or fundamental requisite of innovation. The research shows, and my study of internal innovators supports, the finding that there are three primary barriers that will block your intention. To put these in layman’s terms they are:

1. The belief that it is not possible, for example, to innovate from within a large organization or that the idea you have is not feasible. The common, and I strongly believe false, idea that large companies cannot innovate feeds into the persistence of this barrier for so many would-be innovators;
2. The belief that you are not capable. Even if you believe the idea could work, you may think that you lack the skills or character to pursue the idea;
3. Social pressure is the third major barrier and, if I am honest, it is the one that personally stopped me from pursuing many ideas in the past. You might think “what will my colleagues say?” or “what will my parent’s think?” You worry about being embarrassed.

The key is to do the internal work to identify which belief, or beliefs, is holding you back, dig in to really consider if the belief is true, in order to liberate yourself from that belief. This frees you to more honestly assess ideas that come your way, liberated to jump on a good one when you find it.

• Options: As you explain, ‘successful internal innovators are teeming with ideas. Too many people get so attached to their one big idea that if it fails, they are completely disheartened and give up. The path to success is paved with a portfolio of multiple ideas.’ I couldn’t agree more, and I’m a strong believer in innovation portfolio, and that exploring lineas of ideas nurture cross-fertilization. I’m sure you meet innovators who had fallen in love with their idea: how did you switch them to fall in love with the user’s problem as Ash Maurya puts it?

Kaihan: I think that falling in love with the user’s problem is great way out of the trap of getting too attached to your idea. Let’s simplify things and say that an idea is a combination of a problem and a solution (one potential “product-market fit,” if you will). When you are attached to an idea, you are attached to one problem and one solution. By letting go of the solution and instead thinking of multiple ways to solve that problem, in other words by “falling in love” with the problem, you free up your thinking. That said, mathematically, you further multiply your options for innovation if you also fall in love with other problems. Every organization or industry offers many exciting problems to solve. So a great exercise is to brainstorm multiple problems to solve by looking at the entire industry. These could be not only customer problems but problems of pricing, distribution, people, regulation, and more. Then you pick the top three problems that if you could solve them they would really advance the industry’s evolution.  Then you start brainstorming lots of ideas for each problem. At the end of that exercise you get an appreciation of the nearly infinite field of innovations available to you.

• Value Blockers: ‘disrupt without disrupting, bend your business model to your corporate environment, pursue an innovation that challenges the competition but is not disruptive to your core current business, at the opposite, it leverages the key assets of the company.’ I call it finding the greatest slop line, where the organization pushes your back like a wave for the surfer. Would you share a few examples with us of this ‘magical middle’? You don’t mention Partners in the 8 P’s structuring a business model (positioning, product, pricing, placement, promotion, process, physical experience, people), nevertheless can they be decisive?

Kaihan: This is a great idea to add “Partners” to my list of 8Ps. To be honest, I have been applying and developing my 8P framework for over a decade and have always said “there may be a 9^th P,” but have never found someone suggest one! Partners does open up another dimension and one that is increasingly important in innovation. The research shows that collaboration between partners, particularly public-private partnerships, are creating a growing share of the most significant innovations.

As for the “magical middle,” an example I think illustrates it well is X-Box. One of Microsoft’s most successful innovations, the idea was originally conceived as a Sony Playstation killer, essentially a Playstation copycat. This approach would have played to Sony’s strengths while ignoring any of Microsoft’s unique assets. But the company subtly shifted gears in a  way that enabled it to powerfully leverage a key asset it brought to the game. To see what they did, its important to appreciate that in the gaming business, the end user is not the most important customer. Game developers are more critical. If you don’t have game developers building appealing games for your console, you won’t attract end-users no matter how effective your marketing plan is. Microsoft, indirectly, had a huge base of PC game developers who were accustomed to building games for computers. If they  could convince these developers to follow Microsoft’s shift toward its first console, they could wield a considerable advantage.  So, the Microsoft team shifted gears. Instead of building a Playstation killer, they would design the first gaming console built for PC game developers. They ensured that the experience of developing games for the X-Box felt similar to that of developing for PCs. As a result of playing to their strengths, Microsoft was able to launch with an attractive game line-up which set them up for the success they enjoy now in gaming.

• Team: you underline how ‘collective leadership, building an effective cross-functional flexible team, with a team learning culture, sharing interdependent goals and aligned focus, progressing on rapid rhythm, high speed of learning and positive velocity’ are foremost. I call it Creative Tension! Would you have some exemplary teams meeting these criteria in mind?

Kaihan: One of my favorite movies is Apollo 13 with Tom Hanks. In that movie, astronauts nearly  get stranded in space and team of engineers on the ground have to rapidly work out a way to get them home. If you watch that movie, you will see they exhibit all of those characteristics. The team I write about in my book that created a new publishing platform inside the publisher Macmillan also exhibited these behaviors. Look at any team that rapidly built or solved something of significance and whose members, after the journey, wanted to stay together and I am willing to bet you will see the Creative Tension you talk about in place.

3) You share a research by Mc Kinsey which demonstrates that investors place far more value on new revenue generated through internal innovation than on revenue you capture through acquisition, in other words innovation-based growth exceeds acquisitions-based growth.

Thus, you stress that ‘forward-looking organizations are adopting a new, more agile organizing principle. They are evolving into platforms in which employees have the freedom to spot opportunities, act on them, and rally the resources to pursue them. The internal innovator is put at the central role for innovation’. Furthermore ‘outperforming companies quickly integrate innovations into their business which allows them to pool profits in ways smaller companies cannot. They turn innovation into value.’ Considering these 2 elements, ‘agile participative innovation’ and ‘rapid integration of innovations’, would you suggest a new index for assessing innovation capability for corporations?

Kaihan: Very interesting question. The current measures of innovation, in my view, all bring some bias as to what type of innovation is most desired. If you measure patents, you value R&D. If you measure revenue from new products (e.g. % of revenue from products released in recent years), you value product innovations, potentially at the cost of operational innovation. If you measure “Entrepreneurial Orientation” or “Entrepreneurial Intensity,” you value entrepreneurial behavior. I’d be very intrigued by creating  or finding a more holistic measure of innovation that gives proper due to all of these views of innovation.

4) Intrapreneur or internal innovator are often presented as ‘positive or diplomatic rebels’, ‘hacking the organization in the spirit of the rules’. I understand this qualification but in my eyes it’s not an end in itself: if I had to summarize, I would say an internal innovator is someone who ‘relentlessly magnetizes energy to grow his project, and turn his innovation into value’. What would be your one sentence summary?

Kaihan: I agree 100% with your comment about this not being an end in itself. Tendayi Viki recently wrote a book called “The Pirate in the Navy” which is a nice metaphor. The Pirate is the rebel that wants to break the rules. The navy officer is the person that wants to maintain order. So the question is, how do you do both? How can you be a pirate that operates effectively in the navy?

How do you describe this person? I would add just a few short additions to your definition: an innovator is someone who relentlessly attracts energy to grow his projects, and turn his innovations into value for his organization and the world.

I have found it important to not focus on just one project, per our discussion above so I’d make the project and innovation in your definition plural. Also, its interesting and helpful to think about who the value generated is for. I have found that internal innovators that are most happy and fulfilled get intrinsic value out of doing the innovation. They are not after wealth for themselves, nor even the recognition. They are like the leader that the ancient Chinese philosopher Lao Tzu described when he wrote “A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.”