Fear and Shame Kills Corporate Innovation

How well do your people deal with failure?

Most corporate innovators I meet happily point to the Apples and Ubers of the world when they talk innovation. They don’t mean the Apple that launched the Newton or the Uber that treated female engineering staff scandalously.

To talk of success without discussing failure misses a vital ingredient in creating innovation. It almost guarantees they will fail in their attempt to innovate. How do you treat failure? I’ve met it and I know. Do you? Do your people?

Luck can be fickle

We don’t like to admit how much we owe to luck. It’s uncomfortable to think that we might be where we are because of who our parents knew or that we were at the right spot at the right time. Fortune isn’t always random, but sometimes it is.

We embrace failure for a reason

Some see our embrace of failure in startups as arrogance, but this completely misunderstands the case. We understand failure is unavoidable. No amount of analysis can predict the future perfectly. We believe that experimentation is necessary to prove or disprove a business hypothesis. We think real arrogance is believing that proper attention to detail can separate good prediction from bad.

Look to Fuckup Nights

One of my all time favorite event series is “Fuckup Nights”, where startup people retell some of their biggest failures. I’ve spoken at the Copenhagen event twice. Last time it was within an hour of admitting my latest project wouldn’t make it. We do it in part to share the lessons learned, but just as importantly to take the sting out of failure, so we can use the failure to build what we do next.

Startups learn with childlike fearlesness

I have a theory that little kids are great at learning because they’re rubbish at everything. They consequently don’t stress perfection. My four-year is more interested in playing with his monolingual English-speaking cousins than in correctly conjugating their verbs. His mission is to play with them and at this he succeeds wildly. My eight-year old can be a shy English-speaker, but with her cousins, she’s more eager to play than she is shy, so she chatters away.

Guess who the self-conscious teenagers are?

Startups are fearless little kids and corporates are cautious teenagers. When young kids learn to speak a second language, their grammar is just as imperfect in the new language as it is in their mother tongue. Teenagers are self-conscious in all things and struggle with foreign languages, especially because their peers laugh at their mistakes.

Mistakes get you fired

A teenager’s fear of ridicule is real, because the pain of social exclusion is acute. The cost of a mistake in a corporate is just as real. You don’t get hired to make mistakes. You get fired for making mistakes. Couple this with the fact that most corporates hire very selectively, and the fact is that very few corporate employees have ever made a mistake.

If you want your corporate warriors to think innovation, teach them to manage the shame and embarrassment that comes with making mistakes. Teach them how to fail.

Innovation Theater People

Don’t get sucked into someone else’s ’dog and pony show’

The tinfoil hat segment of the innovation business has always existed. The new crazies that I see in the innovation business work at corporates. They may lack the wild-eyed look, but many hold equally improbable beliefs – and create just as little value. Beware of becoming too entangled with them unless you have a clear value proposition like, for example, they’re paying for the drinks.

Innovation is a big tent and we give away a lot of love, including to some who may not deserve it. I have a hard time figuring out how lots of these people add value. There may be method to their madness though, and I am straight up envious of much of it. They seem have a ball, make good money, and not be judged too hard on results. Respect.

The Hipster

Everyone’s got a Director of Innovation these days. The young-ish, sneaker-clad corporate head of innovation is on stage everywhere, talking about their company’s digital transformation. When pressed, they struggle to name anything specific that’s been implemented or sold, but the sneakers look good and, hey, their employer is embracing disruption. Mind the gap between the slideshow and reality.

The Dealmaker

The dealmaker is looking for startups that have product-market fit, a great team, billion-dollar potential, and a good cultural fit with their company. On a personal level, their preferred mate is a supermodel with a Stanford PhD, who, in the immortal words of  the boy band One Direction, “doesn’t know she’s beautiful”. Beware of the long distance and many cups of coffee between meeting them and cutting a deal.

The Community… Something

This person doesn’t exactly have a seven-word description of how they create value. Despite this, I’ll admit to anyone that cares to ask that this job sounds awesome. The KPIs seem to be ‘keynotes given’, ‘cups of coffee drunk at conferences’, and ‘LinkedIn connections added’. It looks like fun, but beware of anything they’re giving away for free.

The Garage Boss

Apart from workshops and events, I haven’t quite figured out what these people do, but garages are hot. The crowds trekking through Silicon Valley on innovation tours have seen the Hewlett-Packard garage and decided they need one too. “Innovation labs” and ”creator spaces” are also garages and a rose by any other name still smells as sweet.

The architecture is a key identifier. Look for plywood walls, primary colors, cool light bulbs, and bookshelves full of work by the right authors. The garage boss seems to hold a lot of workshops and those books don’t read themselves. Beware of panel invitations to be the ‘fun startup person’ aka the only person not in a suit.

Slide on up to the bar

The Innovation Theater Crowd can steal a lot of your time, if you’re not clear about how they can add value to you. Don’t be an extra in someone else’s show. Once you can see the value, however, make sure they’re paying for the drinks – and enjoy!

Uncertainty is an Innovator Superpower

Uncertainty is kryptonite for corporate managers, however, and that needs to be addressed.

In this, the buzzword apocalypse, we’re all innovating, being disrupted, and boldly marching into a future where everything will be new, different, and better. Except that we’re not. CEOs may be talking the talk, but most organizations aren’t ready to risk walking the walk. This, unfortunately, makes sense.

There are two key barriers: a lack of training and an aversion to risk. Career success in a big organization is usually tied to performing clearly defined tasks well. Successful innovation is often random and messy.

The future is hard to predict and there are a lot of things that can go wrong. Too many folks think working with innovation is either a matter of trying hard enough – or something to be avoided. It is hard to blame them.

The “trying to plan your way out of uncertainty” trap

A big corporate recently announced the launch of a startup accelerator with a difference. Their innovation: they will choose the participating companies carefully. They will devote all of 2018 to selecting the right handful of startups so they can avoid picking the wrong ones.

Any intern at an accelerator could tell the corporate in question that they’re wasting their time, but the trap they’ve fallen into is difficult for many corporates to avoid. The media make it sound like there are great startups everywhere, but startups are really hard to build. My guess is that there are more startup accelerators than great startups.

The gap between the C-Suite and middle management

The brave speeches CEOs give about innovation often mention the need to push decision-making further down into the organization. But their employees aren’t stupid. They know how big companies work. They know that innovation is a risky business with plenty of opportunities to guess wrong. They also know that mistakes get punished.

Did you really say Steve Jobs?

Poor Steve Jobs gets named over and over in these speeches, but no one ever talks about the Newton. (The what? Exactly. Go Google it.) They seldom mention that his own board of directors fired him. They assume that no one in the audience has read how he could be a nightmare as a boss.

Acknowledge the lack of incentives for the people taking the risks

Middle managers aren’t stupid. They know the odds of hitting a homerun like the iPod are absurdly long. They know innovation often requires working in a minefield of conflicting stakeholder interests. They know success takes time – and that any success produced by the risks they take likely will come on their successor’s watch.

Acknowledge their fear that innovation is dangerous for their career prospects. Give them room to make mistakes. Praise them publicly for taking risks.

Train them

Teach your middle managers to make decisions on the basis of imperfect data. Few of the people who will have to do the innovating have any training in innovation beyond the occasional magazine article. Send them to hands-on workshops. Have them work with actual startups.

Network them

Expand their personal networks to include people who effectively manage uncertainty. Most of the people they know work at the same company. Startups and innovators are used to uncertainty, to not having all the answers. Have your middle managers work with them as mentors, startup competition judges, and at corporate-startup matchmaking events to familiarize them with uncertainty – at a safe arm’s distance.

Let them self-select

Let your innovators volunteer. According to the Kauffmann Foundation, the most successful entrepreneurs are over 40. Every firm has a few risk takers hidden amongst the risk-averse majority. They often leave big corporations that can’t or won’t innovate to create the innovation they wanted to see.

If you train them, network them, and give them the opportunity, they may turn uncertainty into a superpower for you, instead watching them walk away to use their superpowers for themselves or someone else.

Penetrating The Corporate Immune System

Startup mentors can be great executive educators

I was on a mentor panel at a big event once with a corporate executive who was really organized. Unlike the rest of us, he’d actually read the startup profiles. He had a tidy list of questions. The questions were mostly common to all and were along the lines of ‘Do you have a patent?’ and ‘What are your profit margins?’

He quickly caught on that many of his questions weren’t relevant in the given context and that he was applying big company, established product KPIs to products and services that were only just being developed. As the day progressed, he discretely put a line through one question after the next. He probably learned more than any of us that day.

What matters and what does not

We didn’t care about patents. (One question crossed out). We talked to customers before we had a finished product. (Another question crossed out). We didn’t worry if all the bugs were fixed before showing a product to customers. (Another question crossed out). We didn’t put much weight on projections that went past two years. (Another…).

Learning effect

The panel was a great example of the power of peer teaching. Our corporate panelist was obviously competent. His insights on how big businesses work were concise and crystal clear. At the same time, his shrinking list of stock questions was clear proof that he was learning plenty about startups and innovation from us.

Having trouble embracing failure?

CEOs who want their managers to use failure productively first need to help them learn when and how to accept failure. A day on a panel of peers who accept that some failures are inevitable, and even laugh as they tell stories about their own failures, can do more to change perceptions than a lifetime subscription to the Harvard Business Review.

Even experienced managers hate mistakes

They usually focus on efficiently doing something they already know how to do. They’re used to incrementally improving performance. Step change improvements require bold experiments whose outcomes cannot be known with certitude beforehand. Mistakes are common in rapidly iterating startups because they focus learning by experimentation.

Like scientists, startups do experiments to create the data they need to find the answers they need. A negative result is just as important as a positive result. Mistakes that teach you something are valuable. Alexander Fleming’s failure to keep a tidy laboratory gave us penicillin. In most firms, he would have been fired.

This makes perfect sense

You can read about the benefits of learning from mistakes, but a career in a climate that punishes mistakes makes it hard to accept them in practice. Companies that want to change their view of failure need to help their leaders’ change their view of failure. We can’t expect people to learn this on their own.

Mentoring can take the edge off learning hard lessons

Entrepreneurs, investors, and startup mentors appeal to corporate types for a number of reasons: the dynamism, the perceived freedom of action, the innovation, and the hoodies. It’s also a world where, for once, they’re not expected to have all of the answers. They can lower their guard and be open to suggestion.

Like a lot of corporate people new to startups, he wasn’t used to being in a stuation where he didn’t have all the answers. Unlike some, however, it didn’t take him long to see what he had to offer startups and how to present it. Our panel’s corporate guy was a quick learner – and it turned out he also had a lot to teach the rest of us mentors.

How to Reward Your Mentors – Help Their Careers

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The More You Can Do For Your Mentors, The More They Will Do For You

Two things worth remembering: when they’re mentoring, they may not be on company time – and you may have more to offer them than you think. Mentors are usually driven by a combination of both professional and more personal reasons. Corporate mentors may have been assigned to participate. VC mentors may be their fund’s person responsible for tracking your program. The individuals, however, may be looking for something more personal

Are Your Mentors Planning Their Next Career Move?

The corporate pyramid narrows sharply at the top and the pressure from below is unrelenting. It’s not every associate that makes partner. We don’t all make it to the next rung on the ladder we happening to be climbing right now. Time spent looking for the next thing is often well spent.

Match your investors with people they should know – people they can help and be helped by in return. Give them insight and show them new trends. Your mentor might not a standard “startup type”. Being associated with you can give them credibility with hard to describe concepts like ‘innovation’ or ‘disruptive technologies’.

Get Mentor Buy-In By Helping Your Mentors Network

This sounds “nice-to-have”, not “must have” to most people running accelerators and mentor programs, but it’s essential. Busy program managers focus on helping their batch of startups. Mentors can be hard to schedule, hard to match with the right startup, and often unreliable. But the fact is that mentors are hard to do without. Their knowledge and network provide the capacity to scale.

Match Your Mentors With a Purpose

The focus of most mentor matchmaking is on finding the right startup for them to help, but this is just the first step. Think through how to match mentors with each other – and with your sponsors and partners. Your mentors often match perfectly with your partners looking for trends, intros to startups, and insights into innovation.

Help Fill Your Investors’ Pipelines

Simply by virtue of their numbers, your mentors together see more startups than you do, even when you’re actively recruiting. Matching your investors and your mentors is a perfect way to give both parties interesting leads. Your investors are looking for interesting pipeline and they can provide all sorts of help to your mentors.

Help Your Mentors Help You

Helping your mentors help themselves can also teach you interesting things about the market. Working with startups, especially tech startups, means living in a world where the new is everyday and innovation is a given. That’s not how things work elsewhere.

There is a lot of value in finding out what problems people want help solving – and one way to do that is to offer to help your mentors solve their own professional challenges. Mentors who see a personal benefit are more likely to commit to your program – and you can help make that happen.

Mentor Archetypes – Corporates

007Know Them by Their Suits

Startup people are often quick to label corporates and often negatively. This is a mistake. They can make great partners, great customers, and great mentors. Like us, they can take getting to know. Look past the suit to discover what they have to offer and what they want.

Look Past The Suit to Judge The Individual

The suits may all look the same, but so do our hoodies and sneakers. Ask where they’re from in their organization. Sales? R&D? Innovation? HR? Business development? Each has different things to offer and different things they want. Despite what Monty Python said, they are all individuals.

Corporate sales people can be very valuable for their insight into how to sell to corporations. They are usually expert at the long game. They don’t mind it waiting for the customer to pay, especially when they can get a long-term contract that is easy to renew. They can teach you a lot about how to manage sales processes and what to expect from different customer types.

They’re not just good at sales

Yes, you need revenue and you either want them to buy your stuff or help you sell it, but they can offer more than that. The corporate HR people trying to recruit developers from your startup co-working space may be able to teach you a lot about on-boarding or retaining staff.

The R&D specialist scouting trends may be able to get you a whole new level of access at big events. Their innovation coordinator may get your startup into a trial they’re running or access to their hardware.

Instead of Laughing, Start Learning

These guys are often really good at skills you need. Laugh at their suits, but they usually wear them for a reason – money. The suit may match certain customer expectations and big companies are good at knowing what their big customers want. Matching those same expectations may make or break your startup.

Follow the Benjamins

Corporates make lots of money, often absurd amounts of money. They do a lot of things right, or they wouldn’t be in business. We may think software-as-a-service is new, but tech didn’t invent the subscription sales model.

These guys invented big, multi-year sales, complete with ‘add-ons’, ‘lock-in’, and much more that have earned them massive profits. People stand behind all the logos and branding. People are what make corporates go, just like startups. Used properly, their knowledge can help you make lots of money too.

Do they wear sneakers? Who cares.