Abstract

How an Executive MBA Essay Became a Book Chapter

“Wow… I am thrilled with Leading and Living Innovation!”.

That was my reaction when my transformation throughout an Executive MBA experienced its pinnacle in the course Leading and Living Innovation, lectured by Professor John Metselaar. A growth mindset, embedded in a love-of-learning culture and generative leadership, was prompted at every second, putting immediately in motion my prospect of becoming an innovation leader.

An amazing journey had just started. My excitement and eagerness to resonate about the cutting-edge concepts introduced in class were fulfilled through an essay. I was absorbed in conveying innovation as a way of life so bringing culture, leadership, disruption in action, disciplined creativity, and creative discipline into an exciting symbiosis of leading and living innovation.

The feedback from Professor Metselaar was amazing: “Awesome! Easily in the top 3 of best essays I have received in my years of teaching. You made my day as I saw how your curious and strategic mind of opportunities and growth connects my work at Solvay with that at The Conference Board!”. Besides, and to my surprise, few months later, Professor Metselaar reached out to me with “hey, how about submitting a chapter to my new book?”

And here it is. I hope you enjoy reading this chapter and can extract helpful insights for your business.

Keywords

innovation, leader, culture, strategy, S-curve

Innovation in Today’s World

The prospect of CEOs that innovation will remain an essential priority lays down on the fact that highly innovative companies have higher growth and higher profits than less or non-innovative companies, as it is demonstrated by their stock market performance (Assad et al., n.d.).

In today’s period, organisations are immersed in a VUCA environment, meaning a fast-changing world where volatility, uncertainty, complexity, and ambiguity are affecting the way companies evolve and compete. Innovation is the normal cycle of new product or service development; however, the recent pandemic has brought with it a ‘black swan’ event materialising a crisis disruption anchored on a massive transformational impact. Thus, organisations are affected by breakthrough innovation (steered by continuous technology progress and unlimited connectivity) and crisis disruption at the same time, leading to ‘VUCA on Steroids’ (Atkins, 2020).

Therefore, organisations need to know how to lead their innovation efforts through these turbulent, challenging times. Innovation leaders need to know how to evolve the strategy in their organisations to understand which innovation processes and models will work, know how to lead people in the origination and perceive which culture to anchor on for sustaining innovation that continuously creates and captures value.

In many cases, innovation practices struggle with finding the next S-curve to ensure the sustainability of the business and achieve growth. Strategy, portfolio, and programs are at the core of the development of innovation. In an overarching view, it is about doing the right projects, selecting the right benefits, tools and ways of working, and make sure that they are materialised in the right way. Ultimately, the creation, design, development, and scale of the new product or service are translated into growing the business through new value.

Within this context, the fast-changing times push innovators to constantly face the challenge of how to balance discipline and creativity. The challenges that come up from restraining creativity are a strategy that is not guiding the company to look for new ideas and a process creation that rarely brings ideas which are well vetted. In turn, with too much discipline the challenges stem from how not to deprioritise breakthrough innovation over the core programs that have lower risk.

Therefore, the innovation practice S-Curve comes along with two concepts: disciplined creativity and creative discipline, which help balance out and leverage the tools and ways of working, minimising the traditional trade-off between creativity and discipline. Disciplined creativity generates new creative capabilities while ensuring the scale of the organisation to create value that can be used. In turn, creative discipline transforms the operating discipline in the organisation while avoiding bureaucracy in processes and the not-invented-here (NIH) syndrome^[1] (Antons & Piller, 2015; The Conference Board (Webcast), 2021).

[1] Individuals have a generally negative attitude toward knowledge, ideas, and technologies of external origin. For an innovating organization, this bias becomes economically damaging when knowledge is rejected or underutilized despite being of considerable potential value (Antons & Piller, 2015).

Leading Innovation in the Innovation Practice S-curve

Innovation practice S-curve must be a continuous responsive innovation model that set the organisations to be ahead when disruption hits them. Organisations start in the ‘new innovation’ phase which is a stage of low growth where innovation commences. This is a time of rapid tries and often early failures on the path to finding successes. Leaders should make a heavy emphasis towards creativity, also creating change and trying out new ideas.

In the second phase of the innovation S-curve model, ‘technology improvement’, there is no longer a need for rapid tries and failures since the process that performs has been implemented. Leaders create a clear vision of growth for their organisations with the focus on incremental improvements, usually on quantity, quality, or cost. The incremental improvements continue until the end-of-life cycle. At this stage, the organisation experiences a disruption (e.g., new technology or business model from another organisation), being no longer possible to continue in the same replication pattern that allowed rapid growth. This innovation end-of-life cycle is usually unavoidable.

Therefore, external threats during the second phase that may end the period of rapid growth should be anticipated. It is fundamental leaders recognise that disruption may hit them, create a clear vision of what is changing and guide the organisation into the phase of a new product innovation, generating a new innovation S-curve (Hoque, 2014).

Thus, the question that can be raised is what the foundations are that both make the innovation S-curve model a continuous responsive innovation model and set the organisations to be ahead when disruption hits them. For that, a model that comes in the form of an ecosystem is developed, aiming at sustaining continuous innovation in a ‘VUCA on Steroids’ world.

The model comprises three continuously flowing circles (Figure 4.1): i) the outer circle which encompasses the cross-cutting elements generative leadership and “love-of-learning” culture; ii) the intermediate circle which flows over the four quadrants that translate disciplined creativity and creative discipline: VUCA strategy for the innovation portfolio, continuous innovation process for new product innovation, dual portfolio, and agile team operational discipline – adapted from (The Conference Board (Webcast), 2021), iii) the interior circle which materialises the measuring of the innovation output.

Figure 4.1. Three-circle innovation stream

Generative leadership and “love-of-learning” culture

Generative Leadership in an ecosystem for innovation should emerge from an unfolding series of events at every level of the organization, focusing on a mutual influence that occurs with every exchange. Leaders need to constantly reinvent themselves and focus on their people, rather than on themselves, to generate engagement, innovation, and growth. This is achieved by adopting and generating a growth mindset, bringing authenticity and embracing vulnerability, as well as creating a psychologically safe environment that can generate trust, feedback and aptitude to learn from failures and drive transformational innovation.

The crisis disruption amplified the need to unleash the full potential of ambidextrous leadership. Therefore, leaders should ensure that greater entrepreneurial spirit is brought into both the innovation team and the business – entrepreneurial mindset, as well as generate greater resilience by recoding team behaviours to do the right thing in upholding policy and ethics – resilient team (Metselaar & Gentle, n.d.).

Growth mindset is one of the enablers for the implementation of the ambidextrous innovation approach which the leader should materialise via a mutual influence and relationship, creating teams “on fire”, so the fundaments of the ambidextrous innovation approach^[1] flow among individuals in an agile way. This continuously absorbs and unlocks potential “human” bottlenecks (or even blocking points) throughout the innovation process.

Therefore, generative leadership comes to light allied with a virtuous cycle of learning and culture. Leaders are the catalysts that can boost up a culture of learning which means that generative leadership is tied with a “love-of-learning” culture that give rise to the continuous willingness to explore and try things out. It is important that learning becomes ingrained in day-to-day working life and is not seen as a separate, distinct activity.

The “love-of-learning” culture is crucial for innovation not to become sterile. This sterile situation is seen when organisations reach the ‘end-of-life cycle’ or ‘plateau and decline’ in the S-curve model and do not comprehend what to do next.

Culture in organisations is built by individuals and nurtured every day. A culture of learning is engrained in the purpose and core values of the organisation, where leaders appreciate the value of learning as a panacea for organisational sustainability and where every organisational member knows that continuous learning is both a means to an end and an end itself (Odor, 2018). The “love-of-learning” culture turns learning into a passion that paves the way for a continuous evolving vision and innovation strategy. Teams understand their diversity as an inclusive enabler of strategy that is nurtured by the quick internalisation of common, aligned goals which makes the organisation to move fast in a ‘VUCA on Steroids’ world.

Organisations should invest in organisational learning and required job skills and behaviours in addition to labs, facilities, and technology. Individuals should be a part of an ecosystem where innovation strategies and competitive information are enthusiastically shared, so their purpose is aligned with the purpose of the organisation to generate the right solutions (Assad et al., n.d.).

The empowerment of teams comes along with training, conscious freedom to try new things, openness to take failure to learn and progress, trust, and psychological safety that leads to autonomy. Individuals should be engaged in permanent motion towards the future to build new organisational pathways that allow experiments to fully emerge into innovation, so culture does not become sterile. This way, breakthrough innovation happens towards the regeneration of new value (sustainable growth through new S-curves over time).

[1]As in (Metselaar & Gentle, n.d.), the five key steps required to implement an ambidextrous innovation approach are: realign performance metrics, hitting the innovation sweet spot, integrate to identify solutions, think, and live outside.

Disciplined Creativity and Creative Discipline

The intermediate circle flows over the four quadrants that sustain disciplined creativity and creative discipline.

• VUCA Strategy for the Innovation Portfolio

In today’s period, an important aspect that organisations face is how to move from negative VUCA to positive VUCA and how to use strategy and portfolio process to make sure that there are no constrained forces in the ecosystem where the organisations play. Moving from a negative to positive VUCA requires testing the organisation’s portfolio against VUCA to generate a new innovation S-curve.

Therefore, when looking at the portfolio, innovation leaders should step back and look at where to play, consider the volatility of the ecosystem, ensure vision, understand the assumptions of the competitive landscape, and assess the complexity and ambiguity of the organisation to give rise to clarity and agility. One of the most effective ways to address volatility and uncertainty is agility (The Conference Board (Webcast), 2021). Agility must be grounded on the long-term vision and mission of the organisation so as volatility happens, the organisation can respond faster to the changes of the marketplace by turning purpose into action (purpose to agility).

• Continuous Innovation Process for New Product Innovation

The innovation leader needs to guide short-term profitability and transformative innovation by focusing on creating, developing, and commercializing ideas into new revenues in the long run. The innovation process for product innovation should be built upfront, embedded in the strategy of the organisation, and continuously adapted throughout the launching of innovation (new products).

The innovation process should be tailored to the sector (‘where to play’) and make use of the innovative capacity of the organisation (Neely & Hii, 2014; The Conference Board (Webcast), 2021). Therefore, the innovation leaders should consider the most appropriate toolset for the innovation process. Design thinking is one of the tools that can be used at the front-end which shares commonalities with agile practices: costumer focus, rapid iteration, and empowered teams. Funnel process is another way of implementing the innovation process.

Nonetheless, the best of such tools should be taken as a symbiotic complementation of them to maximise the outcome of the process, accelerate the move into action and create an internal ecosystem for the integration of the innovation process so the handover of the innovation outcome to internal or external stakeholders does not create points of failure. Failure should be admissible but mitigated by continuously stepping aside and measure the feasibility of the idea as satisfying customers’ needs or solving customer problems (The Conference Board (Webcast), 2021). The innovation process should be acquainted with the phase of the product in the S-curve.

• Dual Portfolio for (New) Product Innovation

The innovation programs must translate the innovation strategy that stems from the overall strategy of the organisation. The innovation projects are commonly put into a single portfolio bucket without a clear visibility and measurement of the contribution of such projects to the strategy of the organisation due to the incongruency of the comparison of projects whose objectives are different.

On the one hand, the innovation program should reflect the strategy of the organisation that flows via the operational portfolio and, one the other hand, be the vehicle that endures the strategy of the organisation to be continuously adapted over time via the disruptive programs – balanced flow. This reciprocal interaction can be haltered by the challenge of how to prioritise the different programs.

Therefore, the important reflection is both how to ensure that the metrics do not disadvantage the most disruptive programs and how to prevent that only a part of the strategy is translated into the portfolio due to privileging certain programs unintentionally. The solution is to differentiate the core portfolio from the disruptive portfolio and define the growth goals to each of those portfolio buckets so that the necessary resources can be assigned to them at the upfront. The proper allocation of resources and investment at the upfront accelerates the breakthrough innovation.

Moreover, the materialisation of the core portfolio separated from the disruptive portfolio permits the proper comparison of programs via metrics within each of these two buckets, leading to the appropriate prioritisation of them and optimal balance (The Conference Board (Webcast), 2021).

• Agile Team Operational Discipline

In an analogy with the VUCA concept developed by Military to respond rapidly in the operational field, organisations need to empower teams so that those teams get the visibility of the strategic framework, goals, and objectives of the innovation program, as well as transparency of the “what is going on”, to make the right decisions and quickly iterate from learning as they move forward within the innovation process. Therefore, organisations must go through agile and create and empower teams for self-management and rapid iterations.

Nevertheless, agile teams do not anchor on a free-wheeling process but on a creative ecosystem. This ecosystem makes visible to the team where to play in, how to make the right decisions and escalate the decision-making process when that falls outside their decision-making area, as well as talk the same language throughout the set of tools. It means “do the right things right”.

Therefore, an additional element that must be enrooted within the organisation is the verification of the “do the right things right” against quality with the purpose of generating accountability and empowerment in the organisation, as well as a feedback loop boosting cross-cutting learning stemming from the agile team, to accelerate innovation.

More prominently within an innovation-based culture, the agile way of working might be combined with lean pillars and principles in order to prioritise the value creation in the organisation, so all the efforts are focused on goals and daily work. It would also encourage the deep introduction of customer feedback that creates a constant stream of new ideas, likely to drive value in the final product, drive teams to take the initiative, and foster the innovation culture, enabling organisations to benefit from their ideas (Tamboryn, 2019).

Measuring the Innovation Output

The interior circle of the presented model addresses the measurement of innovation to support organisations to track, monitor, and assess innovation performance. Innovation activities often compete for resources against routine work; therefore, measuring innovation is essential to improving innovation outcomes and overall performance.

The Conference Board has developed a framework of innovation measurement for use by companies. The proposed framework based on six signposts of innovation provides a reference for assessing the innovation performance of a business and can serve as a basis for organizing metrics. Once the signposts are identified, the framework can be applied to accommodate today’s sophisticated and collaborative innovation models (Van Ark et al., 2017).

The use of such framework can bring support in the following ways (Rothman, 2018): i) explore innovation metrics in a way that helps change mindsets and grow the organisation; ii) communication device and means to educate all levels of the organization about innovation; iii) move the conversation about marketing metrics from a transactional one to a strategic one; iv) tie disconnected systems together to help measure organisation’s business system and business model; v) new approach to explore why some projects do not work.

Innovation Cases vis-à-vis the “Three-Circle Innovation Stream”

The cases presented below address the success and unsuccess of two start-ups that have been born on breakthrough innovation. Although developing innovation in two different sectors of activity, the insights stemming from the start-up Anki could be seen as lesson learnt for SkyDrive not to fall into Anki’s stumbling blocks .

Innovation Taking Off

The majority of the flying car projects remained grounded due to the impact of the pandemic on crushing the pace of innovation in some areas of activity. Nevertheless, the Japanese start-up SkyDrive (founded in 2018) took a manned prototype to the sky and aims to make travel by flying taxi a reality by 2023. Of the world’s more than one-hundred flying car projects, only a handful have succeeded. SkyDrive brings an example of breakthrough innovation in a ´VUCA on Steroids’ world where crisis disruption has been leveraged for the company to reach the market sooner than competitors.

“We want to realize a society where flying cars are an accessible and convenient means of transportation in the skies and people are able to experience a safe, secure, and comfortable new way of life (…) across the globe. We aim to take our social experiment to the next level in 2023 and to that end we will be accelerating our technological development and our business development. (Tomohiro Fukuzawa, SkyDrive’s CEO)” (IE Article Contributor, 2020).

The strong and engaging purpose of starting to run towards the sky by turning aircraft the people’s partner in the sky rather than merely a commodity, and making the distant future dream into a reality that is right before our eyes, (SkyDrive Inc, 2020) align all the company to a plan of action designed to achieve a long-term aim in a fast-learning and agile way – turning purpose into agility and showing a clear sense of direction.

The agile teams are enabled by agile processes that give rise to creativity shaped by discipline, so rigour and trust are cross-cutting values. Teams are empowered to modify or improvise plans and actions according to the current situation to achieve company mission, vision, and goals (SkyDrive Inc, 2020). A growth mindset is clearly at the core of the start-up by embracing the big challenge of changing the way people travel daily and learning from experimenting and persisting.

The “love-of-learning” culture can be seen by the personal attributes of the workers by being open to learn from others in order to improve each other’s knowledge and experience in areas outside of one’s own expertise (SkyDrive Inc, 2020). This culture is a key element for the innovation process not to become sterile and highlights the value that the innovation leader gives to learning as a panacea for the start-up success.

Learning has paved the way for a continuous evolving vision due to moving towards air mobility and not staying only in the S-curve representing the cargo drone’s innovation developments – a culture that sustains the next disruptive technology. The SkyDrive innovation with the SD-xx (flying car model) sits on the bottom of its S-curve; therefore, SkyDrive’s management team should continue making a heavy emphasis on creatively creating change and trying out new ideas.

• VUCA Strategy for the Innovation Portfolio

SkyDrive with the SD-xx has tested the project against VUCA and turned it into positive VUCA. The company has defined where to play – air mobility – and understood the volatility of the ecosystem by partnering with other companies. Moreover, there is a strong vision to move towards the sky and make it the new road for liberating people by driving and flying. The introduction of agility comes along with the change of mindset towards cutting down the time to deliver innovation in the air mobility field, materialising considerable sense of speed (IE Article Contributor, 2020).

• Continuous Innovation Process for New Product Innovation

The innovation process taken by SkyDrive for the SD-xx seems to be lying on the lean startup methodology due to the need to iterate repeatedly within the cycle build-measure-learn in the sense of designing, testing, manufacturing, and introducing monitoring equipment with a considerable sense of speed (IE Article Contributor, 2020). The move from prototype to production line, and therefore, to incremental innovation will be a detrimental step in the process (a different magnitude of resources and activities will need to be allocated) as the product should viably bring value to the consumer, the company, the stakeholders, and the society.

• Dual Portfolio for (New) Product Innovation

Although having a reduced portfolio, the two innovative products being developed by SkyDrive (cargo drone and air mobility) are likely to be differentiated and embedded separately into a core portfolio (cargo drone) and disruptive portfolio (air mobility). The allocation of resources and investment might be made at the upfront and separately to accelerate the breakthrough innovation (human resources are allocated exclusively to the program as well as investment). The two programs stem from the innovation strategies carried out for both portfolio buckets – different where to play, goals and pacing.

• Agile Team Operational Discipline

The influence of Toyota in the start-up drives the interpretation that agile together with lean principles might be steering the way of working in the company. It means “do the right things right” against quality which is sustained by accountability and empowerment of the teams as well as ability to respond to change. Adaptability, flexibility, and interpersonal skills are at the core of the company (SkyDrive Inc, 2020). The speed of innovation clearly highlights the feedback loop that must be existing among teams in SkyDrive.

• Measuring the Innovation Output

The phase of the start-up eases the view on the status of the project as well as the definition of the metrics since the focus of the company is on the product innovation. Nevertheless, metrics on human resources, investment, supply chain, and marketing should be documented and tied to innovation, so those metrics become visible to all the company and culture becomes measurable. For instance, this would help employees see how their roles fit into the big picture, and therefore, think about how to do their jobs differently.

Failing in Sustaining Innovation

Anki, a robotics start-up rolled out in 2013, began with a long-term plan to evolve from specialisation in robotic toys to the creation of high-level robots. The new generation of robots would look alive, have natural looking and imperfections, and move around as humans do. The goal was to make customers use them as companions, maids, security guards, etc. The company shut down in 2019 after running out of money, even though having sold more than 1.5 million robots in its lifetime. The assets were posteriorly bought by the company Digital Dream Labs.

Multiple reasons that led to the failure of the company when enlarging the portfolio, via the development of the second innovative product ‘Vector’, could be pointed out. Firstly, it was not set up a strong purpose for the company. The ‘where to play’ and goals might not have been coherent with the purpose communicated by the management team. This insight is sustained by the fact that the first product was developed to be a toy while the CEO stated that “for us, it was never meant to be a toy company, or even an entertainment company. It’s a robotics and AI company” (Schleifer, 2019). The lack of clarity and strong vision likely gave rise to misunderstanding the volatility of the ecosystem and the assumptions of the competitive landscape, which in a VUCA world becomes critical.

The members of the leadership team might not have been fully aligned with the strategy of the company. This assumption is substantiated by the fact that the founder was advocating that toy cars (´Cozmo´) were only at the beginning, while a co-founder mentioned that of the company’s energy is going into gaming (Newton, 2015). This fact might have contributed not to opt for incremental innovation on the first product (run the phases of the S-curve) but, instead, move to the development of ‘Vector’ too early. Even though positioning it in a different segment, ‘Vector’ was not more than a toy.

The shift in resources from the core portfolio without a clear comprehension of the ‘where to play’ might have been one of the steps that contributed the most for the company running out of money, since the supply chain and marketing areas of the company seemed not being integrated into the innovation process and metrics assigned. This also means that complexity of the innovation process might have been poorly measured, and the company not stayed true to its core nor kept it healthy.

The management of the innovation portfolio might have been conducted without having a clear understanding of the value of the product for the consumer, company, stakeholders, and society. In turn, the change in purpose might not have been followed by adapting the strategy and focusing on a sustainable, stable growth.

The innovation process seemed not to have embedded feedback from the early adopters. This assumption gains validity due to the step taken by Digital Dream Labs to save ‘Vector’ in the market by developing rapidly two main features that solved “pains” for the customers (Vincent, 2020). Therefore, the proof of scale was not effective nor the verification of the “do the right things right” against quality.

Innovation into Daily Life Case

The knowledge acquired during the course has prompted me to set up an innovation office having as the ‘where to play’ my area of business in my organisation. The challenges that have been raised in this initiative are technical, organisational, human, and of external nature.

The first action has resided in the team to work in an agile way and overcome organisational silos. Therefore, it has been developed a strong and inclusive innovation culture and leadership, perseverance, and resilience, so two intertwined goals are achieved: buy-in in the organisation and change of culture towards a growth mindset. Thus, the concepts of generative leadership and “love-of-learning” culture flow from the inside (innovation team) to the outside for a swift change of practices and “do the right things right”.

The innovation strategy focuses on the ‘where to play´ and defined goals to give rise to a portfolio that brings a sustainable competitive advantage. The sense of speed is essential; therefore, one goal has been to undertake both internal buy-in and ideation of the first two projects within six weeks. The assessment of the “competitive landscape” has been carried out and the “touching points” with other departments identified for the outcome to be aligned with the overall strategy of the organisation (avoiding the risk of creating an isolated cluster).

The creation of the innovative products (S-curves) comes along with the allocation of resources in an efficient and flexible way. The management of the portfolio and programs has been carried out in the innovation office which reports to the top-level management and has an overview of the resources existing in the organisation. This management approach brings an optimal prioritisation and balance of programs (observing the innovation strategy) and a continuous improvement of the innovation process (sharing of lessons learnt).

The asset of turning purpose into agility has also boosted the network effect both internally, by making others eager to join the programs, and externally, by attracting the participation and feedback from stakeholders (“customers”). The network effect is also valuable to enhance the visibility and impact of the innovation office.

The empowerment of the team to have high levels of freedom on decision-making, within a psychologically safe approach, has been essential to a successful process. The levels of decision-making and the reporting flow to the management have been identified – agility also comes with discipline. The specifics of the business require a strong involvement and coordination with stakeholders as well as speed. Thus, the innovation process that been defined for the product development is the combination of design thinking and lean startup methodologies.

The outcome of the innovation process is transferred to operations department which undertakes the launch phase of the products. Nonetheless, this department is involved in the innovation process from the outset so that operational feedback is considered and points of failure in the launch phase are avoided. The signposts of innovation have been defined to measure both financial and non-financial metrics as well as track and manage the innovation performance.

In a nutshell, the overall action is to energise the addressed concepts and models and make the three-circle innovation stream a virtuous and every-day flow for the product innovation to sit at the core of the business and contribute to a sustainable organisation and, ultimately, society.