The Growth Zone
Five Essentials to Leading a Succesful Team that Innovates
Since the great economic turmoil of 2008, organizations have met the challenge by increasingly optimizing their exitsing business operations around their core value propositions. This has been incredibly effective in increasing cash on balance sheets, and returning that cash to shareholders has provided robust returns for investors. We are now nearing the peak of these optimization returns, which will demand that organizations rebuild lost innovation muscle.
The dark side of this optimization is the removal of resources that are non essential to delivery of the core value proposition, which makes it much harder to do innovation within organizations, because innovation at its outset is always inefficient. This forces leaders at all levels of the organization to make courageous decisions — Do we invest in driving the core optimization to ever higher levels, or explore an unproven, but potentially high payoff new idea?
This tension makes it much harder for the mid-level and senior leadership teams to effectively form and deliver on cross functional innovation. In this paper I will outline two areas of interest: (1) forming an effective “container” for innovation, using a life raft analogy, and (2) exploring five key essentials for cross functional team formation and execution based on the author’s 30 years of experience, which includes work in a dozen business models in 22 countries.
I. The Three Key Elements of Your Raft
Your raft is a container or framework for your project that you and your soon-to-be-formed team can use anywhere, anytime, to recruit support and contribution.
A good raft has three things:
- A narrative framework
- A financial framework
- A visual framework
Let’s look at each of these elements in turn.
The Narrative Framework
The best narratives are based on good storytelling technique, which means there’s a hero. In your breakthrough project’s story, the hero is your customer. Good story structure has been studied for years and has been summarized in numerous ways. For your purposes — running a successful, breakthrough project — you just need a very concise narrative that covers:
A compelling statement of the current problem you are solving for the customer
- What triggered our catalyst, driving the need for a project
- The key insight and solution you are pursuing
- The ultimate benefit for the end customer and the enterprise
Here’s an example of the narrative I used when I was working on a project for wirelessly connected vehicle safety systems:
- (1) The current transportation system results in 40,000 highway deaths per year.
- (2) The addition of passive safety in vehicles and infrastructure has reached a zenith in its effectiveness.
- (3) By actively having vehicles communicate with the infrastructure and with each other we believe we can mitigate damage in up to 76% of the collisions.
- (4) This could lead to 25,000 to 30,000 lives being saved per year.
The Financial Framework
The narrative will get people interested and will keep your team focused. But you’ll need to back up the narrative with clear, tangible financial benefits. This requires research, but there are a multitude of sources for this kind of information, such as government studies, industry whitepapers and academic studies. In the vehicle safety system example, Cisco created a public whitepaper that laid out the financials:
Vehicle connectivity has the potential to unlock more than US$30 billion in crash-related value for passenger vehicle owners, insurance companies, and society every year.
What you, the program manager, need to do is take this macro analysis and build a relevant model for your organization. Think along the lines of finding your specific role in the solution, your product or service contribution to that role, and ultimately what financial flow will accrue to your organization based on your participation. This takes some work, but once quantified becomes a very valuable tool to set priorities at the enterprise and functional levels.
The Visual Framework
Every relevant program needs to have an easily understood sketch or graphic that instantly appeals to those who are too busy to dig deep in the narrative or financials. There are many ways to do this, but one that I have found effective is the business model canvas made popular by Alex Osterwalder.
A good, high-level visual for the vehicle safety systems is this graphic created by the U.S. Department of Transportation (Exhibit 1).
Exhibit 1 – U.S. Department of Transportation vehicle safety systems graphic. (For a fuller visualization of the system in a recent article take a look here.)
Once you have a basic raft — your rough narrative, financial, and visual frameworks — start using it in every discussion you have with management, team members, and (under NDA) your partners and suppliers. Listen carefully and refine your raft as you get feedback. Quickly, your raft will begin to resonate with all your stakeholders.
A strong raft will allow your project to keep your momentum as the inevitable challenges arise, and as you need to have the hard trade-off discussions. While building a raft can be done internally, it really helps to get some objective outside help to speed up the process.
II. Delivering the Change Begins with a Cross Functional Team
Insightful analysis only profits the organization that takes the risk and commits resources to harnessing it.
Over the arc of my 30 years with Fortune 100 players, I’ve observed patterns that provide a map of the murky territory before us. Once you have clearly articulated the challenge, outcomes, and benefits, the next thing you need to do is put together that breakaway team.
A breakaway team that can create an outcome that scales is more in demand than ever, but change leaders, beware. Many well-intentioned efforts to send a team out to harness change waves do not work. This is because when well-intentioned change meets a resistant, embedded culture, usually the culture wins.
What follows are the five key elements that will plant and water the seeds of new growth — and give it the muscle to hang on for dear life as these change waves take off for shore.
Organic innovative step change is about crisply and intentionally building new internal capability to deliver either a new product to your current market or your current product to a new market. Done well, the new revenue flows will dramatically increase your sales and profitability.
Here’s what you need to start a process of organic step-change in your company:
1 – The Leader
Every change team needs a well-grounded, visionary leader with the ability to “manage up” and the persistence to execute. This person needs to be an expedition leader, not a tour guide. He or she should be the best the company has in three quadrants: vision, people, and results with a track record of making solid intuitive decisions. They need to seamlessly move across organizational boundaries and develop rapport quickly. They should know the “system” and be able to use it, but have the common sense to work around it as necessary. This person attracts good team members and has access to the top ten players inside and outside your organization. Finally, they should be promotable since, if successful, you’ll want to recognize them and place them in a position of more influence.
Don’t make the mistake of choosing the person who likes to play with shiny objects as the leader if he or she doesn’t have the basic skills. The right person is likely the individual with the highest potential on your staff, someone you can see in your chair. Don’t make the mistake of thinking someone is too busy to take on this role, always ask him or her and be willing to find someone to take over what he or she is doing now. If you don’t do this, you run the risk of your best candidate jumping ship down the road.
(For further reading on building great teams, my colleague Les
McKeown‘s work on the predictable success based teams has more great insights on this topic.)
2 – The Senior Team
Truly organic change also needs a senior team that recognizes the need to continually move the business to new models with higher option value. Corporations are constructed from multiple profit centers that are either acquired or grown internally. The strongest pull inside corporations is investing in the core value proposition because it is well-traveled territory and forecasting ROI is usually a linear correlation. But the processes that got you to your current state won’t propel you to new profit centers. Entering new territory requires developing new ideas and systems. If you would like to study the breakthrough process more deeply, pick up a copy of The Breakthrough Company.
The true role of a senior leader is guiding the organization to new markets, products, and solutions that keep the organization vibrant.
New profit centers in growing organizations are planted on purpose. Intuit Software is a solid example of planting serial value propositions. The company was founded on DOS-based Quicken, made several quantum leaps to Windows, Mac, and then the web. Turbo Tax was a great portfolio addition that required a large shift, and finally as the small business market was booming, so did Quickbooks. These were not linear steps, but leaps that were intentionally chosen.
It is the responsibility of senior leadership to create the culture and provide the guidance to take the risk to move from one island of productivity to the next.
3 – The Air Cover
New ideas need effective air cover from the day-to-day demands of the existing enterprise. Very good academics have documented that planting a new value proposition inside a business is a full-time job. You need to have the best and the brightest members of a lean team waking up every morning to move this work forward.
The senior team needs to run the breakthrough activity with a different set of leadership structure and incentives.
- Set the plan and let the team execute. Agree in advance with specificity on the outcomes that engender success and give the group late latitude in how these are completed. Provide disciplined, regular high-level reviews where all stakeholders get an opportunity to review progress and recommit.
- Do not over commit funding and investment until you have systematically invested in removing risk. One of the big mistakes is to set up a large team predicated on success of the full effort, assuming that the critical path issues will be resolved. A much better plan is to focus all your resources on the critical to function problems sequentially, setting very specific investment limits.
- Keep the usual overhead of the core functional organization off the field in a make-sense way. Things like lengthy customer acquisition processes, quality systems, and financial systems enhancements need to be set aside.
- Be a blockade removal tool as necessary. The core organization will test management’s resolve directly and indirectly. Make it clear that tradeoffs need to elevated and resolved quickly.
4 – Leanness
This should be a lean team, with a very specific role for each team member and a minimum of management. These teams are addressing complex change issues and the communications need to be clear, simple, and direct.
In large organizations these initiatives can attract non value added managers like moths to a flame. Management needs to be strong and present to keep the team small — but at a minimum-viable level. A good model for a medium-sized program is to establish the leader by finding the best player–coach on the team, and then establishing a “mini Board of Directors” (BOD) made up of the sponsoring senior leadership team. This mini BOD needs to include all areas of the organization that would be affected if the new business model runs to completion.
Once the above is done and a plan is completed, the leader needs to be allowed to recruit the best talent available to participate on the team. This will be hard, but consider that getting a top team is the first proof-point to success. It speaks volumes to the rest of the organization if the staff of your breakthrough team is not the best of the best.
The maximum size of the team, even for very large projects, should be capped at 150 (Dunbar’s number). This size has been shown to be the largest organization that a very strong leader can guide and still maintain razor-sharp effectiveness. One team I spoke with has the two-pizza rule — if it takes more than two pizzas to feed the team, break it into two groups.
5 – Commitments
The seeds of change require a commitment of resources that go beyond simply financial for a sufficient duration to ground the new value proposition in the existing structure.
- This is a time to be lean, but not stingy. You need to pull your best growth-oriented people in to lead and contribute to this effort. It will be painful at first, but the dividends will be huge — you will find that if the depth chart in the core business is robust, your best and brightest will be energized like you have never seen before.
- You need to give the team the tools they need. If they need consultants, find them. If they need lead customers, make sure sales opens the doors. If you need new skills, use your own network to find them. If the option value is high enough, make the investment.
- There will be a dark night of discontent. They will hit a wall, and your resolve will be tested. It’s at this time that you and the men and women who are part of the team will grow the most. Nine times out of ten you will find your way through, or in the rare case you cannot, you’ll likely find what lean practitioners call a pivot into the right next step.
So, In summary, innovation must overcome ever higher barriers inside organizaitons based on their tight optimization around existing business models. To surmount the (positive) resistance to change, innovations need to be packaged and delivered in a powerful structure that allows cross-functional breakthrough work to be established and governed under sponsorship by the senior team.
© 2014, Dentro Consulting
Originally published as a part of the 2014 PMI Global Congress Proceedings – Phoenix, Arizona, USA