How One Company Became the Theranos of Marshmallows
GUEST POST from Robyn Bolton
Here’s a head-scratcher when it comes to scaling innovation: What happens when your innovative product is a hit with customers, but you still fail spectacularly? Just ask the folks behind Smashmallow, the gourmet marshmallow company that went from sweet success to sticky situation faster than you can say “s’mores.”
The Recipe for Initial Success
Jon Sebastiani sold his premium jerky company Krave to Hershey for $240 million and thought he’d found his next billion-dollar idea in fancy French marshmallows. And initially, it looked like he had.
Smashmallow’s artisanal, flavor-packed treats weren’t just another fluffy, tasteless sugar puff – they created an entirely new snack category. Customers couldn’t get enough of their handcrafted, churro-dusted, chocolate-chip-studded clouds of happiness. The company hit $5 million in sales in its first year, doubled that the next, and was available in 15,000 stores nationwide in only its third year.
Sounds like a startup fairy tale, right? Right! If we’re talking about the original Brothers Grimm versions. Corporate innovators start taking notes.
The Candy-coated Vision
Sebastiani and his investors weren’t content with building a successful premium regional brand. They wanted to become the Kraft of craft marshmallows, scaling from artisanal to industrial without losing what made the product special. It’s a story that plays out in corporations every day: the pressure to turn every successful pilot into a billion-dollar business.
So, they invested. Big time.
They signed a contract with “an internationally respected builder of candy-making machines” to design and build a $3 million custom-built machine and another with a copacker to build an entirely new facility to accommodate the custom machine.
Bold visions require bold moves, and Sebastiani was a bold guy.
The Scale-up Meltdown
But boldness can’t overcome reality, and the custom machine couldn’t replicate the magic of handmade marshmallows. It couldn’t even make the marshmallows.
Starch dust created explosion hazards. Cinnamon wouldn’t stick. Workers couldn’t breathe through spice clouds. The handmade ethos of imperfect squares gave way to industrialized perfection. Each attempt to solve one problem created three more, like a game of confectionery whack-a-mole.
By 2022, Smashmallow was gone, leaving behind a cautionary tale about the gap between what customers value and what executives and investors want. The irony? They succeeded in their mission to disrupt the market – by 2028, the North American marshmallow market is projected to more than double its 2019 size, largely thanks to the premium category Smashmallow created. They just won’t be around to enjoy it.
A Bittersweet Paradox
For so many corporate innovators, this story hits close to home. How many promising projects died not because customers didn’t love them but because they couldn’t scale to “move the needle” for a multi-billion dollar corporation? A $15 million business might be a champagne-popping moment for an entrepreneur, but it barely registers as a rounding error on a Fortune 500 income statement.
This is the innovation paradox facing corporate innovators: The very pressure to go big or go home often destroys what makes an innovation special in the first place. It’s not enough to create something customers love – you must create something that can scale to satisfy the corporate appetite for growth.
Finding the Sweet Spot
The lesson isn’t that we should abandon ambitious scaling plans. Instead, we must be brutally honest about whether our drive for scale aligns with what makes our innovation valuable to customers. If it doesn’t, we must choose whether to scale back our ambitions (unlikely) or let go of our successful-but-small idea.
After all, not every marshmallow needs to be a mountain, but every mountain climber (that’s you) needs a mountain.
Image credit: Unsplash
Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.
‘Tis the season for “year in review” and “top 10 lists.” As fun (and sometimes frightening) as it is to look back, it is just as fun (and sometimes frightening) to look ahead. After all, as innovators, that is what we naturally do. So, in anticipation of the year ahead, here are 5 Must Reads to make 2025 far more fun than frightening.
(listed in alphabetical order by author’s last name so I can’t be accused of playing favorites)
Pay Up! Unlocking Insider Secrets of Salary Negotiation by Kate Dixon
This book is for everyone, especially… people who want to earn what they deserve
This book solves the problem of…the black box that is compensation and the fear of negotiating for what you’re worth
This book creates value by… Outlining a step-by-step system to:
Understand key terms and concepts and apply them to your situation
Research the information you need to confidently and competently negotiate
Know what to say and do (and NOT say or do) in the moment
Why I love this book: Full disclosure – Kate and I are friends, so I’ve had a front-row seat to her wisdom and humor (how many compensation books invoke Beyonce?) and the jaw-dropping impact she gets for her clients. I’ve even gifted this book to others because I know it works!
Disrupt Yourself: Putting the Power of Disruptive Innovation to Work by Whitney Johnson
This book is for everyone, especially… people who are rethinking their careers and are ready for change
This book solves the problem of… knowing how to start redefining your career (and yourself)
This book creates value by… Turning Clayton Christensen’s Theory of Disruption into four principles for self-disruption, including:
Identifying your disruptive strengths
Stepping backward or sideways to grow
Patiently waiting for your career (and legacy) to emerge
Why I love this book: Two quotes: (1) “Disruption starts as an inside game” and (2) “Constraints can be the perfect remedy if you are having a difficult time.”
Live Big! A Manifesto for a Creative Life by Rochelle Seltzer
This book is for everyone, especially… people who want to experience daily joy and creativity
This book solves the problem of…feeling stuck in the day-to-day reality of life, uncertain whit how to begin, and afraid to make big, drastic changes
This book creates value by… Offering 20 tips for:
Becoming a person who Lives Big, including slowing down, aligning to your purpose, and being patient
Acting big, including listening to your intuition, embracing change, and carrying on
Savoring the small joys of life, including the gorgeous design of the book
Why I love this book: Rochelle’s Discovery Dozen exercise is a game-changer. I learned this tool when she was my coach, and I have continued to use it for everything from naming my business, to deciding if/when/how to act on an opportunity, and writing articles.
The Coaching Habit: Say Less, Ask More & Change the Way You Lead Forever by Michael Bungay Steiner
This book is for everyone, especially... busy managers who want to be better people leaders
This book solves the problem of…balancing hands-on management with team empowerment and individual development
This book creates value by… Guiding you through seven questions that help you:
Work less hard while having more impact
Break cycles of team overdependence and workplace overwhelm
Turn coaching and feedback from an occasional formal event into a daily habit
Why I love this book: A copy of the 7 questions sits just below my monitor, reminding me to be curious, dig deeper, and that every decision is a choice to do one thing and not another.
Readers Choice!
Version 1.0.0
It’s audience participation time! In the comments below, drop YOUR recommendation for a 2025 Must Read.
Bonus points for telling us:
Who it’s for
Problem it solves
Value it creates
Why you love it
Image credit: MileZero, Misterinnovation.com
Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.
A Corporate Carol About Why You’re Not Getting Results
GUEST POST from Robyn Bolton
Last week, InnoLead published a collection of eleven articles describing the root causes and remedies for killers of innovation in large organizations. Every single article is worth a read as they’re all written by experts and practitioners whose work I admire.
I was also inspired.
In the spirit of the hustle and bustle of the holiday season, I gave into temptation, added my own failure mode, and decided to have a bit of fun.
The Twelve Killers of Innovation
(Inspired by the Twelve Days of Christmas yet relevant year-round)
On the twelfth day of innovating, management gave to me:
Twelve leaders short-term planning
Eleven long projects dragging
Ten cultures resisting
Nine decisions made too quickly
Eight competing visions
Seven goals left unclear
Six startups mistrusted
Five poorly defined risks
Four rigid structures
Three funding black holes
Two teams under-staffed
And a bureaucracy too entrenched to change
Want to write a happier song?
Each of the innovation killers can be fended off with enough planning, collaboration, and commitment. To learn how, check out the articles:
Teaching at The Massachusetts College of Art and Design (MassArt) offers a unique perspective. By day, I engage with seasoned business professionals. By night, I interact with budding designers and artists, each group bringing vastly different experiences to the table.
Customer-centricity is the hill I will die on… In my Product Innovation Lab course, students learn the innovation process and work in small teams to apply those lessons to the products they create.
We spend the first quarter of the course to problem-finding. It’s excruciating for everyone. Like their counterparts in business and engineering, they’re bursting with ideas, and they hate being slowed down. Despite data proving that poor product-market fit a leading cause of start-up failure and that 54% of innovations launched by big companies fail to reach $1M in sales (a paltry number given the scale of surveyed companies), they’re convinced their ideas are flawless.
We spend two weeks exploring Jobs to be Done and practicing interviewing techniques. But their first conversations sound more like interrogations than anything we did in class.
They return from their interviews and share what they learned. After each insight, I ask, “Why is that?” or “Why is that important?
Amazingly, they have answers.
While their first conversations were interrogations, once the nervousness fades, they remember their training, engage in conversations, and discover surprising and wonderful answers.
Yet the still prioritize the answers to “What” over answers to “Why?”
…Because it’s the hill that will kill me. Every year, this cycle repeats. This year, I finally asked why, after weeks of learning that the answers to What questions are almost always wrong and Why questions are the only path to the right answers (and differentiated solutions with a sustainable competitive advantage), why do they still prioritize the What answers?
The answer was a dagger to my heart.
“That’s what the boss wants to know,” a student explained. “Bosses just want to know what we need to build so they can tell engineering what to make. They don’t care why we should make it or whether it’s different. In fact, it’s better if it’s not different.”
I tried to stay professional, but there was definitely a sarcastic tone when I asked how that was working.
“We haven’t launched anything in 18 months because no one likes what we build. We spend months on prototypes, show them to users, and they hate it. Then, when we ask the researchers to do more research because their last insights were wrong, they get all cra….OOOOHHHHHHHH…..”
(insert clouds parting, beams of sunlight shining down, and a choir of angels here)
“That’s why the researchers are so sad all the time! They always try to tell us the “Whys” behind the “Whats” but no one wants to hear it. We just want to know what to build to get to work. But we could create something people love if we understood why today’s things don’t work!”
Honestly, I didn’t know whether to drop the mic in triumph or flip the table in rage.
Ignorance may be bliss but obsolescence is not It’s easy to ignore customers.
To send them surveys with pre-approved answers choices that can be quickly analyzed and neatly presented to management. To build exactly what customers tell you to build, even though you’re the expert on what’s possible and they only know what’s needed.
It’s easy to point to the surveys and prototypes and claim you are customer-centric. If only the customers would cooperate.
It’s much harder to listen to customers. To ask questions, listen to answers you don’t want to hear, and repeat those answers to more powerful people who want to hear them even less. To have the courage to share rough prototypes and to take the time to be curious when customers call them ugly.
So, if you want to be happy, keep pretending to care about your customers.
Pretty soon, you won’t have any left to bother you.
Image credit: Pexels
Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.
Corporate offsites – the phrase conjures images of everything from “mandatory fun” with colleagues to long and exhausting days debating strategy with peers. Rarely are the images something that entice people to sit up and shout, “YEA!” But what if the reality could be something YEA! worthy?
Offsites May Be the Answer to the WFH vs. RTO Debate
Offsites aren’t new but they’ve taken on a new role and new significance as companies grapple with how to manage Work from Home (WFH) and Return To Office (RTO) policies.
As with most things in life, the pendulum swings from one extreme to another until eventually, finally, landing in a stable and neutral midpoint. When the pandemic hit, we swung from every day in the office to every day at home. Then society opened back up and corporate landlords came calling for rent, whether or not people were in the offices, so we swung back to Return to Office mandates.
Offsites, the authors suggest, may be the happy medium between the two extremes because offsites:
“give people opportunities for interactions that otherwise might not happen. Offsites create unique opportunities for employees to connect in person, forming new relationships and strengthening existing ones. As a result, offsites help people learn about others’ knowledge and build interpersonal trust, which are both critical ingredients for effective collaboration.”
Offsite Connections Lead to Collaborations that Generate ROI
After analyzing eight years of data from a global firm’s offsites and 350,000 “instances of formal working relationships” for 750 employees, the authors found that intentionally designed offsites (more on that in a moment) yield surprisingly measurable and lasting results:
24% more incoming requests for collaboration amongst attendees post vs. pre-offsite (silos busted!)
17% of new connections were still active two years after the offsite (lasting change!)
$180,000 in net new revenue from collaborations within the first two months post offsite (real results!)
The benefits event extended to non-attendees because they “seemed to get the message that collaboration is important and wanted to demonstrate their commitment to being collaborative team players” and “likely identified new collaborators after the offsite through referrals.”
How to Design Offsites That Get Results
Four key strategies emerged from the authors’ research and work with over 100 other organizations:
Design for the people in the audience, not the people on stage. Poll attendees to understand their specific needs and goals, then design collaborative activities, not management monologues.
Design for the new hires, not the tenured execs. Create opportunities for new hires to meet, connect with, and work alongside more experienced colleagues.
Set and communicate clear goals and expectations. Once the offsite is designed and before it happens, tell people what to expect (the agenda) and why to expect it (your design intentions and goals). Also, tell them how to make the most of the offsite opportunities by thinking about the skill and network gaps they want to fill.
Track activities to measure ROI. The connections, collaborations, and commitments that start at the offsite need to continue after it in the form of ongoing communication, greater collaboration, and talent engagement. Yes, conduct a post-event survey immediately after the event but keep measuring every 2-3 months until the next offsite. The data will reveal how well you performed against your goals and how to do even better the next time.
Offsites can be a powerful tool to build an organization’s culture and revenue, but only if they are thoughtfully designed to go beyond swanky settings, sermons from the stage, and dust-collecting swag and build the connections and collaborations that only start when people are together, in-person, outside of the office.
Image credit: Unsplash
Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.
Once upon a time, in a lush forest, there lived a colony of industrious beavers known far and wide for their magnificent dams, which provided shelter and sustenance for many.
One day, the wise old owl who governed the forest decreed that all dams must be rebuilt to withstand the increasingly fierce storms that plagued their land. She gave the beavers two seasons to complete it, or they would lose half their territory to the otters.
The Grand Design: Blueprints and Blind Spots
The beaver chief, a kind fellow named Oakchew, called the colony together, inviting both the elder beavers, known for their experience and sage advice and the young beavers who would do the actual building.
Months passed as the elders debated how to build the new dams. They argued about mud quantities, branch angles, and even which mix of grass and leaves would provide structural benefit and aesthetic beauty. The young beavers sat silently, too intimidated by their elders’ status to speak up.
Work Begins: Dams and Discord
As autumn leaves began to fall, Oakchew realized they had yet to start building. Panicked, he ordered work to commence immediately.
The young beavers set to work but found the new method confusing and impractical. As time passed, progress slowed, panic set in, arguments broke out, and the once-harmonious colony fractured.
One group insisted on precisely following the new process even as it became obvious that they would not meet the deadline. Another reverted to their old ways, believing that a substandard something was better than nothing. And one small group went rogue, retreating to the smallest stream to figure it out for themselves.
As the deadline grew closer, the beavers worked day and night, but progress was slow and flawed. In desperation, Oakchew called upon the squirrels to help, promising half the colony’s winter food stores.
Just as the first storm clouds gathered, Oakchew surveyed the completed dams. Many were built as instructed, but the rushed work was evident and showed signs of weakness. Most dams were built with the strength and craftsmanship of old but were likely to fail as the storms’ intensity increased. One stood alone and firm, roughly constructed with a mix of old and new methods.
Wisdom from the Waters: Experiments and Openness
Oakchew’s heart sank as he realized the true cost of their efforts. The beavers had met their deadline but at a great cost. Many were exhausted and resentful, some had left the colony altogether, and their once-proud craftsmanship was now shoddy and unreliable.
He called a final meeting to reflect on what had happened. Before the elders could speak, Oakchew asked the young beavers for their thoughts. The colony listened in silent awe as the young builders explained the flaws in the “perfect” process. The rogue group explained that they had started building immediately, learning from each failure, and continuously improving their design.
“We wasted so much time trying to plan the perfect dam,” Oakchew admitted to the colony. “If we had started building sooner and learned from our mistakes, we would not have paid such a high cost for success. We would not have suffered and lost so much if we had worked to ensure every beaver was heard, not just invited.”
From that day forward, the beaver colony adopted a new approach of experimentation, prototyping, and creating space for all voices to be heard and valued. While it took many more seasons of working together to improve their dams, replenish their food stores, and rebuild their common bonds, the colony eventually flourished once more.
The Moral of the Story – (just in case it isn’t obvious)
The path to success is paved not with perfect plans but with the courage to act, the wisdom to learn from failures, and the openness to embrace diverse ideas. True innovation arises when we combine the best of tradition with the boldness of experimentation.
Image credit: Pixabay
Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.
Paul Graham, cofounder of Y Combinator, was so inspired by a speech by Airbnb cofounder and CEO that he wrote an essay about well-intentioned advice that, to scale a business, founders must shift modes and become managers.
In effect there are two different ways to run a company: founder mode and manager mode. Till now most people even in Silicon Valley have implicitly assumed that scaling a startup meant switching to manager mode. But we can infer the existence of another mode from the dismay of founders who’ve tried it, and the success of their attempts to escape from it.
With curiosity and an open mind, I read on.
I finished with a deep sigh and an eye roll.
This is why.
Manager Mode: The realm of liars and professional fakers
On the off chance that you thought Graham’s essay would be a balanced and reflective examination of management styles in different corporate contexts, his description of Manager Mode should relieve you of that thought:
The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it’s up to them to figure out how. But you don’t get involved in the details of what they do. That would be micromanaging them, which is bad.
Hire good people and give them room to do their jobs. Sounds great when it’s described that way, doesn’t it? Except in practice, judging from the report of founder after founder, what this often turns out to mean is: hire professional fakers and let them drive the company into the ground.
Later, he writes about how founders are gaslit into adopting Manager Mode from every angle, including by “VCs who haven’t been founders themselves don’t know how founders should run companies, and C-level execs, as a class, include some of the most skillful liars in the world.”
Founder Mode: A meritocracy of lifelong learners
For Graham, Founder Mode boils down to two things:
Sweating the details
Engaging with employees throughout the organization beyond just direct reports. He cites Steve Jobs’ practice of holding “an annual retreat for what he considered the 100 most important people at Apple, and these were not the 100 people highest on the org chart.”
To his credit, Graham acknowledges that getting involved in the details is micromanaging, “which is bad,” and that delegation is required because “founders can’t keep running a 2000 person company the way they ran it when it had 20.” A week later, he acknowledged that female founders “don’t have permission to run their companies in Founder Mode the same way men can.”
Yet he persists in believing that Founder, not Manager, Mode is critical to success,
“Look at what founders have achieved already, and yet they’ve achieved this against a headwind of bad advice. Imagine what they’ll do once we can tell them how to run their companies like Steve Jobs instead of John Sculley.”
Leader Mode: Manager Mode + Founder Mode
The essay is interesting, but I have real issues with two of his key points:
Professional managers are disconnected from the people and businesses they manage, and as a result, their practices and behaviors are inconsistent with startup success.
Founders should ignore conventional wisdom and micromanage to their heart’s content.
Most “professional managers” I’ve met are deeply connected to the people they manage, committed to the businesses they operate, and act with integrity and authenticity. They are a far cry from the “professional fakers” and “skillful liars” Graham describes.
Most founders I’ve met should not be allowed near the details once they have a team in place. Their meddling, need for control, and soul-crushing FOMO (Fear of Missing Out) lead to chaos, burnout, and failure.
The truth is, it’s contextual. The leaders I know switch between Founder and Manager mode based on the context. They work with the passion of founders, trust with the confidence of managers, and are smart and humble enough to accept feedback when they go too far in one direction or the other.
Being both manager and founder isn’t just the essence of being a leader. It’s the essence of being a successful corporate innovator. You are a founder, investing in, advocating for, and sweating the details of ambiguous and risky work. And you are a manager navigating the economic, operational, and political minefields that govern the core business and fund your paycheck and your team.
Image credit: Pexels
Sign up here to join 17,000+ leaders getting Human-Centered Change & Innovation Weekly delivered to their inbox every week.
In a recent blog, I argued that management needs to be accountable not only for delivering current performance but also for investing in power initiatives that will fuel future performance. Compensation systems that focus solely on the former too often result in a hollowing out of the enterprise, as we have seen with any number of iconic companies that have “performed” their way to the sidelines.
But this begs a key question—how do you measure power? Specifically, what kind of metrics could supply a stable foundation for management accountability and executive compensation?
In my book Escape Velocity, when discussing managing for shareholder value, we introduced a framework called the Hierarchy of Powers. The idea is that investors, who are buying a share of your enterprise’s future performance, value your company based on how much power they think it has relative to other investments they could be making. In this context, we claimed there were five classes of power that got evaluated in the following order of priority:
Category Power. Is your core business in a category that is growing, stable, or declining? This, we claimed, is the single biggest predictor of future performance.
Company Power. Within that category, where is your company in the pecking order of companies? If you are number one, that is a huge advantage. If you are number two, it also provides tailwinds. After that, there are no more tailwinds to be had.
Market Power. For companies that focus on one or more vertical markets, is your company the default choice for major prospects and customers in that segment? Wherever this is the case, it gives a material boost to your sales momentum and thus your company’s valuation.
Offer Power. Do you get preference and/or premium pricing due to the differentiation of your offer? Do you win the lion’s share of any competitive bake-offs?
Execution Power. Do you have a history of meeting or beating guidance on a consistent basis?
The model has stood up well over the years, but there is still the question of how to ensure accountability for investing in power when so much of our attention (and compensation) is focused on creating the next quarter’s performance. To that end, my colleague Philip Lay and I have been sorting through objective measures that signal material gains in power, ones that executive teams could readily track, and compensation programs could use to calibrate bonuses.
Here’s what we propose should be the top two metrics for each class of power:
Category Power. The focus here is on portfolio valuation—how many categories does the enterprise participate in, and how is each category faring. Meaningful changes in category power typically come through M&A, often supplementing organic innovation that is looking to scale quickly. Top two metrics for each category assessed:
Category Maturity Life Cycle status. The key stages are secular growth, cyclical growth, stagnant, and declining.
Technology Adoption Life Cycle status. This model focuses specifically on the period of secular growth, breaking it up into the following stages: Early Market, Chasm, Beachhead, Bowling Alley, Tornado, and Main Street. The two big valuation changers are winning a beachhead market segment in the Bowling Alley and participating with meaningful share in the Tornado.
Company Power. In high-growth categories, the focus is on bookings growth and competitive win rates. In mature categories, it is on the stability of the installed base as well as bargaining power both with suppliers and with customers. The top two metrics are:
Market share within each category. By far the most important metric, as market ecosystems organize around and give preference to the category leader.
Balanced mix of power and performance categories. For global enterprises, in particular, portfolio balance creates optionality to deal with both bull and bear markets.
Market Power. In emerging categories, dominating a target market segment, as opposed to merely participating in it, is critical to crossing the chasm and creating a sustainable franchise. In mature categories, target market segment focus is key to creating above-market growth. The top two metrics are:
Segment share. The most important metric because ecosystems that serve market segments organize around a segment leader only when it has dominant segment share.
Growth rates within target market segments. This is particularly important in any economic downturn that impacts different market segments to highly varying extents.
Offer Power. This metric and the next are closely aligned with delivering performance in the current fiscal year. That said, they still signal successful investments in power. The top two power metrics are:
Magic quadrant status. This is the most widely circulated third-party measure of offer power.
Win/loss record in head-to-head competitions. This is the most credible measure of offer power.
Execution Power. This really is the land of performance, but there is still power in reputation. Top two metrics are:
History of “meeting or beating” commits, be they forecast or, release dates. This is what gives confidence to customers and partners to give your team the nod.
Customer success metrics. These include Net Expansion Rate, Net Retention Rate, and Promoter Score, all of which validate that you are keeping your sales promises.
Guidelines for Using the Metrics
Metrics are a device to ensure visibility and accountability, and nowhere is this more important than when dealing with something as abstract as power. The key is to associate the right metrics with the right people, the ones who can have the most impact on the level of power in question. This works out as follows:
Top Executives:Category Power, Company Power. The two key levers here are using M&A to strategic advantage and using the annual budgeting process to allocate resources asymmetrically to achieve strategic objectives.
Middle Management:Market Power, Offer Power. The two key levers here are using market segmentation to strategic advantage and allocating the resources under your control asymmetrically to achieve dominant shares in target market segments.
Front Line:Execution Power. The key lever here is to align and focus the resources under your control or influence them in order to deliver the performance you have committed to.
For purposes of compensation, promotion, and overall alignment, these metrics align well with OKR objectives and can be used wherever OKRs are focused on increasing power. Again, the goal is not to replace performance metrics but rather to complement them.
That’s what Philip and I think. What do you think?
In Silicon Valley, we talk a lot about leadership but perhaps not enough about management. That’s because we are famous for working the fuzzy front end of things, where management is premature and leadership is paramount. But to have real impact on the world, you must eventually lean on strong management to operate at scale. So, what exactly does that entail?
First and foremost, management is about delivering the performance committed to in the plan. Everyone gets this, and while there are major differences in styles of management, all are measured ultimately by performance metrics, and no one is confused. We may not like the numbers we are supposed to make, but we know what they are, we have some idea of what it will take to make them, and we will get report-outs along the way to tell us how we are doing.
Such is not the case, however, with a second dimension of management accountability—the need to continually invest in ways that will power future performance. Performance consumes power as a means to create returns. If we focus 100% of our resources on performance, we will eventually exhaust all our existing sources of power and will be unable to compete effectively going forward.
Seems obvious enough, but here is the problem. We do not define power anywhere nearly as clearly as we define performance. We do not have reports that tell us how we are doing on the power side of the equation. We are often not really clear about what power we should be going after, what investments could be specifically targeted to deliver power, or what metrics would verify that we have succeeded. Worse still, our performance compensation systems can actually incent us to ignore all this ambiguity around “power management” and focus solely on meeting our performance commitments, particularly when resources are tight. Worst of all, as power dwindles, it becomes harder and harder to make the number, which puts more pressure on the resources we have, which further disincentivizes investing in future power. The result is a downward spiral from which it is painfully hard to escape.
So, what can we do to prevent it?
To begin with, we will need a map—specifically a power map, an understanding of the geography of our current power base. We can develop one through root cause analysis. That is, if we are in the Performance Zone, we can ask, where are our products successful, where are they not, and why? Where are our sales efforts successful, where are they not, and why? Similarly, if we are in the Productivity Zone, we can ask, where are our systems working as promised, where are they not, and why? Which of our programs have delivered the change in state promised, which have not, and why? (Note: if we are in the Incubation Zone, we are already an investment in power, so this exercise would not apply.)
Root cause analysis, by its very nature, shifts the focus from the domain of performance (effects) to that of power (causes). The deeper this analysis can penetrate, the more insightful our map of power becomes. This is a good opportunity to engage the entire team, not only to improve the quality of the analysis, but also to help everyone develop their own management perspective.
Once a power map is in view, then the question becomes, if we could intervene in only one place, where could we have the most impact, and what would it take to bring it about? We are looking for a specific initiative that could change the game within whatever time limits are appropriate to the situation. Here are some examples:
In response to a weakening industry status, Sybase leveraged the financial crisis in 2008 to boost its power on Wall Street, a long-dormant part of its power map, with a campaign that focused on portfolio risk analysis, capitalizing on the unique attributes of its columnar database for online analytics. The success of that campaign bought valuable time to develop a mobile app platform for hosting enterprise applications on the iPhone, something that led to SAP acquiring the company at a premium in 2010.
In response to the successful performance of the iPod and iTunes (almost half of Apple’s revenue in 2007), subsequently being exposed to the existential threat of smartphones eventually assimilating music players, Apple invested deeply in the iPhone, leveraging its existing wireless downloading infrastructure to liberate programs and content from carrier control. Today, the iPod is effectively embedded in the iPhone, and it is that device that supplies 50 percent of Apple’s revenue.
In response to drastically deteriorating industry power at IBM in the early 1990s, Lou Gerstner completely reframed the enterprise’s power map, rejecting the view that future power would come from disaggregation, asserting instead that it would come from global integration. Leveraging an emerging global trend in e-commerce, he and his team transformed the company into a services-led powerhouse that helped lead the IT industry for another decade.
These examples, of course, represent big power maps. Most of us play on a considerably smaller stage. But the principles are the same:
Leave conventional wisdom behind
Take a fresh view of the power dynamics influencing your organization
Launch a single focused initiative that tees things up for future success
All that remains is to create accountability for power outcomes. Accountability begins with identifying a single accountable person. People often shy away from this because they associate it with someone to blame. That is neither the point nor the role. Rather, this person is the quarterback of the initiative. To be really clear, they are not the team owner (that would be the executive sponsor) nor are they the coach (that would be the line manager in charge of delivering both performance and power), but rather they are the person on the field taking input from teammates to make the best calls in the moment. Without this single point of coordination, initiatives are unable to take decisive action under conditions of uncertainty—in other words, they underperform in game-time situations.
The next thing we need is a good way to keep score. This can be tricky because indicators for power are not as easy to see as those for performance. Nonetheless, we cannot manage what we cannot measure, so we need to get creative here. One place we can look for ideas is from our customer success operations. There the focus is on onboarding, adoption, usage, and upsell—all of which are signals of whether power is waxing or waning. Whatever the initiative we are managing, we need to create proxies to detect these kinds of signal and use them to track our progress.
Finally, we need to tie meeting power metrics with compensation, not only for the single accountable person but also for the organization making the resource sacrifices to enable the investment required. This will typically be in the form of bonuses for hitting key metrics within a given time limit. Not only do such bonuses motivate, they also make clear to the rest of the enterprise that this initiative is important, and that the people leading it are committed to its success.
Many would-be innovators obsess over ideas, wait for inspiration to strike, and believe that with the right idea, success can miraculously come overnight.
However, as we’ve written before, that’s just not going to happen. In fact, usually the only thing separating the winning innovators from the rest is execution. It makes all the difference in the world, and yet, it’s still a vastly underrated capability.
As part of our coaching program, we’ve asked hundreds of corporate innovators and innovation leaders to reflect on their strengths and weaknesses. And, by far, the most common answer is that they’re great at coming up with ideas and thinking about the big picture but lack the patience and discipline to see things through to results.
As such, it’s safe to say that as a community, we innovators need to take a hard look in the mirror and admit that this an area where most of us have a lot of room for improvement.
So, in today’s article, we’ll explore the topic of executing innovation in more detail to try to understand what the problems associated with it are, and what successful execution of an innovation really takes. This is designed to be a guide to help leaders get it right, but I think there’s a lot that every innovator regardless of job title can learn from.
What does executing innovation mean?
Before we dive deeper, it’s probably a good idea to clarify what we mean with the term “executing innovation”, and how it relates to “implementing innovation”.
These are often used interchangeably, but I think it’s useful to distinguish them from one another. The way we like to put this is as follows:
Implementing innovation is the process of taking an idea and then turning that into reality.
Executing innovation, on the other hand, is the entire process of creating value with innovation.
In other words, implementation is what you do for an individual idea to make that happen. Execution covers the implementation, but also the process of turning that (along with many other ideas and innovations) into something that actually creates value and can be scaled up.
Implementation isn’t always easy, but it’s still typically a linear project that you can usually plan out in advance. Execution, on the other hand, is a much more complex and multidisciplinary effort.
To succeed at delivering value, you need to get a lot of things right. And with innovation, there are many assumptions in that plan. Some of those assumptions will always prove to be false, and you’ll need to deviate from the plan.
That combination of multidisciplinary collaboration and the need to deviate from original plans often leads to a myriad of practical challenges in many large organizations.
However, before we dive deeper into those challenges, let’s first take a step back to realize why execution is so critical.
Why execution is critical for innovation success
There’s a reason for innovation being defined as the act of introducing something new.
Everyone has ideas. Many can even implement some form of them, typically a prototype, but few successfully realize the full potential of the idea by truly executing on it successfully.
To clarify, ideas are an important starting point, but with every great idea, there are hundreds or even thousands of people across the world who’ve had the same exact idea.
Most never start working on it. Many give up in the process. Some make it to market, and a few might even make that into a feasible business. There are usually only a couple of winners. Those are the ones that succeeded in executing that idea.
Everyone has ideas, but few successfully realize the full potential of their ideas. The ones that do are the ones that know how to execute well.
This is of course a bit of an oversimplification but should help explain the fundamental importance of proper execution.
And that is not just true for individual ideas and innovations, but it’s also the case for corporate strategies at large. Look at any given industry, and it’s quite likely that you’ll see many companies with a nearly identical strategy. Again, the difference comes down to how well the company succeeded in executing that strategy.
In other words, your idea or strategy sets the ceiling for your impact if successful, but execution determines how close to that ceiling you’ll get. Even the best idea or strategy is worth nothing unless it’s executed well.
On the other hand, even with a mediocre strategy or idea, you can achieve remarkable success if you just execute it well enough. There are dozens of well-known companies like McDonald’s and FedEx that are obvious examples of this. There’s nothing particularly remarkable or distinctive about their ideas or strategies. They weren’t the first in their respective fields, they just executed on their ideas brilliantly.
What’s more, if you’re a strong executor, you’ll soon find out the limits of the original strategy or idea, at which point you can adapt and change course accordingly. But, it doesn’t work the other way around.
Thus, no matter the situation, execution will always be more important than your idea or strategy.
Misconceptions about executing innovation
As you might have realized by now, execution is of course a massive, nuanced, context-specific and very complex endeavor. In practice, it’s an endless jungle of interlinked choices and actions affecting one another that you need to navigate with limited information to get to the other side.
Thus, the space of possible challenges and problems you might encounter is pretty extensive. So, instead of looking at the individual problems themselves, it’s more helpful for us to try to understand the common misconceptions that ultimately lead to teams underappreciating execution and thus subsequently failing at it.
A big factor behind most of these is the fundamental uncertainty that innovation is always associated with. Because you can’t know everything in advance, it’s not going to be a nice and linear process of doing simple steps one after another. Instead, it’s a messy and iterative process of creative problem-solving.
Anyway, with that, here are the top four that I most commonly see innovation leaders and their teams have.
1. The leader’s job is just to get the big picture right
This is probably the most common problem I’ve come across, and it’s especially common among inexperienced executives, or ones that otherwise lack execution experience, such as some management consultants and academics.
There are many shapes this one might take, and we’ll return to it later, but what it ultimately comes down to is the glorification of strategy work and/or surface-level creativity.
In business school, and in consulting, we’re taught to think about the big picture as the job of top management. We’re led to believe that a leader or innovator takes in a market analysis, compares a few scenarios, chooses a positioning, and then paints an inspiring vision to show direction for the company. Then the pieces will simply fall in place and success happens.
While the above mentioned are of course still useful activities, if you’ve ever actually turned an innovative idea into a successful business, you know that in practice, there’s a lot more to it than that, and experienced executives are of course well aware of that
Strategic choices can be made across the organization, but the responsibility for execution always lies at the top.
As Professor Martin has well put it, CEOs should stop thinking that execution is somebody else’s job, and the same applies for every innovation leader. Strategic choices can be, and frequently are, made where the action is. Yet, the responsibility for execution always lies at the top. After all, there’s a reason for the CEO being the Chief Executive Officer.
2. I don’t need to understand the details
The second is closely related to our first one. It’s easy to think that as a leader or visionary innovator, you’re the person responsible for the vision, ideas, and big picture decisions, and then the experts will then figure things out in practice. After all, that’s why you hired them, right?
Well, that might work if you’re operating in a static industry where all the variables are known and static, but with innovation that really isn’t the case.
You need to get the big picture right, but it isn’t enough to succeed. You need to also have the right product, business model, technology, customer experience, customer acquisition channels and tactics, operating models, etc. All of these have a wide variety of choices that depend on one another and changes in any of the areas will force you to change many of the other pieces in the puzzle too.
With innovation, the devil is in the details!
As an innovation leader, connecting the dots is ultimately your job, and you can’t do that without understanding the details.
That’s why you’ll find an obsession for the details in pretty much every successful innovator, both past and present. They have the same in-depth understanding and attention to detail as the best artists, athletes and top representatives of other fields do too.
So, while you absolutely need to engage with and empower the experts, they are experts in their own field and likely don’t know how to consider all the other moving pieces in the puzzle. As an innovation leader, connecting the dots is ultimately your job, and you can’t do that without understanding the details.
It’s the one responsibility you simply can’t delegate away.
3. Execution requires a clear and unambiguous plan
Even if you are an experienced executive and value the importance of execution highly, it doesn’t mean you couldn’t fail when executing innovation. Here the most common problems occur if the leader’s experience comes primarily from operations within the known and well understood confines of “business as usual”.
When the environment is well understood, and the scale large from the get-go, it’s of course valuable to try to plan carefully, analyze business cases and craft detailed project plans prior to execution.
Also, since everyone knows that innovation is a risky endeavor, it of course makes sense to try to reduce those risks before your start a big innovation project to try to avoid major mistakes and generally just ensure that you’ve done a good job in planning and preparation before committing to the project.
This often leads to large companies commissioning all kinds of market studies and strategy projects. Some of those can certainly be useful in increasing your understanding of the landscape, but most invest way too much time, energy, and money into these. Also, every now and then these projects seem to be ordered only to have a scapegoat in case something goes wrong.
Regardless, there’s a fundamental problem: with innovation, you can’t have all the answers in advance. You’ll always need to make a number of assumptions upon which your plan relies on, some of which will inevitably prove to be wrong.
With innovation, you won’t have all the answers in advance.
Thus, if you require innovators to propose clear, detailed and unambiguous plans for you, or conversely create such plans and then hold innovators accountable for successfully executing them, it just won’t work out. And, whenever it then comes to surface that everything hasn’t gone according to the plan, innovation projects are frequently shut down, even if they’d still hold a lot of potential.
You obviously still need to align with the strategy, plan ahead, and have a disciplined approach to execution, but it’s not so much about creating a detailed roadmap, as it is about choosing direction and figuring out which questions or problems you’ll need to address first.
In other words, you need to embrace the uncertainty and the fact that you can’t have a perfectly unambiguous and detailed plan before starting to execute it. Instead, figure out what the assumptions and uncertainties in your plan are and commit to a disciplined learning effort to figure out the right path forward.
4. Innovation is fun
There’s a stereotype around people working in innovation being these visionaries that are bursting with great ideas and seem to come up with great new concepts all the time. And as mentioned in the intro to this article, that is often true.
That skillset is of course very useful for innovation, but there’s also a downside. There are naturally exceptions, but many of us working on innovation can find execution too boring and repetitive, and/or lack the perseverance, discipline, and patience needed to succeed at it.
Innovators often spend too much on the creative and “fun parts” of innovation, as opposed to what’s really needed to turn an idea into a successful innovation
As a group, we generally love creative work, and are always looking for fresh, new stimuli to feed that inspiration. That often leads us to spend too much time and effort on the “fun parts” of innovation, and too little on the not so fun, more repetitive, and laborious parts of the process that execution essentially is comprised of. The reality is that for every minute you spend coming up with ideas, you’ll probably need to spend a day, a week, or even more implementing those ideas.
So, if your innovation team is primarily filled with, or led by, such “idea people”, which is quite common, then there’s a big risk of a systematic lack of respect for and capabilities in execution. This will lead to a very suboptimal culture for innovation, and ultimately disappointing business outcomes.
Getting Execution Right
As already mentioned, there are a lot of similarities between successful execution in “business as usual”, and in innovation. However, there are also clear differences between the two.
So, to help you navigate the differences, and to succeed at executing on whatever innovation you’re working on, here are the five most important factors to keep in mind whenever you’re trying to execute on an innovation and build something truly novel.
1. Take the path most likely to succeed, but keep your options open
As mentioned, with innovation planning and strategy work need to be done a bit differently than you would with an existing business.
Good decisions here make it much easier for your team to figure out how to move forward and can save a lot of time money going down the wrong path. Regardless, you’ll soon end up at another crossroads and need to make another decision. Heck, sometimes you might even come across a dead-end and need to backtrack to an earlier crossroads. Sometimes Plan C or D is the way to go.
The point is that no matter which path you choose, you won’t see what’s ahead all the way to the end.
Thus, good strategy work requires you to embrace uncertainty, test assumptions critically, and think deeply about the real-life feasibility of each path ahead.
And it’s certainly not a one-time project you do at the beginning, but more of a continuous learning process as you unravel the puzzle piece by piece.
If you keep an open mind and build your teams and products to embrace that uncertainty, you can quickly recover and learn from setbacks, as well as embrace new opportunities you couldn’t even think of before you set out. This is what’s known as cognitive and organizational flexibility.
2. Solve the biggest problems first
As humans, most of us have a bit of a tendency to go for the comfortable low-hanging fruits and procrastinate on the hard but important problems, as well as uncomfortable truths.
I’ve certainly been guilty of this on many occasions, even while writing of this article. Getting a number of small things done makes us feel like we’re making good progress, but unfortunately that’s often a bit of a false sensation as we might not really be any better off than when we began.
With the inherit uncertainty in innovation, that is naturally a bit of a problem. When you’re executing any given innovation, there’s countless things that need to be done so it’s easy to just start checking off boxes like building more features, creating marketing materials, getting compliance approvals, or whatever you may have on your agenda.
But, it’s the big things that make or break your innovation early on. For example: will a customer benefit from my product, how much are they willing to pay, can I even build the product I’ve envisioned, etc.
While you need to care about the details, it’s the big things that make or break your innovation early on. So, start from the big problems, even if it hurts!
The key is finding a way to figure out what these big problems or critical assumptions are, and then find ways to quickly test and address them. This allows you to quickly figure out if you’re on to something, which of course saves a lot of time and money for you in the inevitable case that you weren’t quite there from the get-go.
Also, if you get the big things right, you can already deliver most of the value, and that means you can more quickly start capturing some of that value to get a return for your investments.
Plus, if you tackle these early on when you still have a small team, changing course will be much quicker and easier, and you’ll have spent much less money solving the same important problems than you would with a larger team later on.
In most businesses, these critical assumptions revolve around how much value you can deliver to customers, and how valuable they see that to be. However, in certain circumstances, those can be related to something entirely different, such as the feasibility of implementation when developing a new breakthrough drug.
Solving for the hardest problems first does generally require a bit more of a leadership commitment as you won’t always be able to show quick wins as early on, but at least it can save you from an embarrassing and costly failure like CNN+.
3. Build the right team
It might be a bit of an obvious statement, but it’s still probably worth pointing out: innovation is a bit of a team sport. So, to do well at it, you need the right team.
However, what might not be as obvious is that ‘the right team’ means in practice. In our experience, there are two key parts to this:
Multidisciplinary team with talented individuals in each area
Leadership and individuals that share the right mindset for innovation
The prior is pretty self-explanatory. Innovation is almost always a cross-disciplinary effort. The specifics depend on what kind of an innovation you’re working on, but usually you need expertise in at least design, engineering, commercial and operational matters.
The most impactful innovations are actually comprised of a stack of innovations in many of these areas, each designed to work together to address a specific problem or ‘job’ for the customer. Thus, if you have talent at every position, the outcome will be much more than the sum of its parts.
The latter, however, is the part that many teams fail to appreciate. Innovation is, by definition, doing something that others haven’t succeeded at before, so the journey won’t be easy.
Your team will face a lot of uncertainty and struggles, and will still need to perform at their best, often under a lot of pressure. That requires a very specific type of culture within the team, but also the right mindset for each individual. You want people that can cope with uncertainty and are able to remain optimistic and overcome difficult situations while still being realistic and ruthlessly critical of their own capabilities. They need to have an innate passion to strive for excellence, and a lot of discipline, grit, and perseverance.
And, of course, because it’s a team sport, people need to be able to work well together and perform as a team. This, however, isn’t usually much of an issue as long as people can leave their egos at the door. The struggles you will face together as a team will build bonds and gel you into a team.
4. Make sure every decision and detail are aligned
As we already discussed, you don’t need (and usually can’t have) a clear and unambiguous plan for an innovation project where every role and task would be charted out in advance. However, as we also discussed, the devil is often in the details and seemingly small things can derail the project from its goals?
So, what gives?
Well, the point is that with innovation, you need to keep an eye on everything. As an innovation leader, you need to maintain excellent awareness of both the big picture and the details throughout the project. But, because the environment changes dynamically and you need to move fast, you can’t really do that work upfront.
Nor can you just look at some KPIs and financial reports to figure out if things are moving in the right direction because the important things won’t show up in these for quite a while, and at that point, it’s often too already too late to react.
As a leader, your primary job is to keep up with what’s going on both with the ever-changing big picture, and the details on the ground so that you can spot problems early and intervene before it’s too late, no matter where the issues might arise from. If you don’t understand how everything works in practice and know what problems everyone is working on and why, it will be pretty much impossible to do that.
Some might see the latter as micro-management, but it doesn’t mean you have to dictate what everyone does. It just means that as a leader, you need to be the person that connects the dots and then empowers the team to succeed. There’s a clear difference.
Which brings us nicely to our last point.
5. Take full ownership for the execution
As we’ve covered, execution is the make-or-break part in the lifecycle for every innovation.
It’s always a bit of an exploratory process where you need to remain flexible, while still moving forward quickly and executing at a high level.
And, at the same time, seemingly inconsequential low-level choices related to implementation turn out to become existential issues for any innovation project.
Again, you don’t need to decide everything on behalf of your team. In fact, often it’s best to let the experts solve problems and do their job, as long as you can give them the right guidance and constraints to work with. Instead, you need to think of every potential problem as your fault and then figure out a way to get past them together with your team.
The bottom line is that being an innovation leader isn’t easy. It takes a lot of time and work to understand and stay on top of things, but as already mentioned, that’s the one thing you can’t really skip, automate, or delegate. Essentially everything else you can.
The only way to succeed at that is to take full ownership and commit to the process.
Conclusion
We’ve covered a lot of ground, so let’s do a bit of a recap.
Innovation isn’t a linear project that you can plan out in advance and monitor progress with a Gantt chart. There will always be plenty of surprises. Many unpleasant, but usually some positive ones too. You’ll need to be flexible enough to react to these and alter course accordingly.
It’s an inherently messy and iterative process of figuring out a way to build new things and align all the pieces so that everything works out.
Fundamentally, an innovation leader’s job is to show direction and try to keep track of everything that’s happening, align those puzzle pieces together with the big picture while always being on the lookout for potential problems and then eliminate those before they derail the project, as there will be many.
It’s not an easy or comfortable job, but if you can get it right, it’s an incredibly rewarding one.
Ironically, despite all the talk about practical issues and attention to detail being vital, this has been a bit of a high-level overview on the topic. So, if you’re interested in learning more about the details related to what we’ve discussed today, I have a couple of practical recommendations for you:
First, the best way to learn to innovate is by doing. So, get your hands dirty, keep these tips in mind, do your best, and I’ll guarantee you’ll learn a lot.
But, if you currently don’t quite have the time to commit to an innovation project, a good alternative way to learn more about innovation management is with our Innovation System online coaching program. We’ve now made the program completely free of charge for the first 1000 readers to sign up for it.
This article was originally published in Viima’s blog.
Image credits: Unsplash, Viima
Sign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.