We had the opportunity to conduct an interview with Jane Stevenson, Vice Chairman, Board and CEO Services, Korn Ferry; and Bilal Kaafarani, Chief Innovation Officer and Group President for Yildiz Holding and Vice Chairman of Northstar Innovation, a new venture with Yildiz Holding. They are co-authors of the book BREAKING AWAY: How Great Leaders Create Innovation that Drives Sustainable Growth–And Why Others Fail. (McGraw-Hill 2011) Thank you Joan Holman, Innovation Excellence’s Publishing Editor for connecting us!
Julie: A lot of people are writing about innovation in the marketplace. Why did the two of you want to tackle this subject and write a book about it?
Bilal: Because there aren’t many books on innovation that are written from “in the trenches”, and we wanted to share what we have learned from first hand experience. We felt there wasn’t a framework to connect innovation with leadership and culture. So what Jane and I did was create a framework to propagate innovation in organizations. Obviously there is no silver bullet, there’s not one magic way to innovate that you can give to everybody. So we tried to develop a framework that can help facilitate sustainable business growth. To test our framework we took it on the road to over 100 executives, and our new way of seeing innovation was validated when we started talking to top executives around the world.
Julie: Tell us about the four categories for innovation that you have presented in your book, based upon your research.
Jane: We actually started by looking at innovation throughout time. The initial research we did examined all the major innovations from as far back as time was recorded, and we looked to see what common ingredients were there. In the course of doing this it hit us that if you were to categorize the major innovations, they fell into consistent categories. Initially we thought they fell into seven categories, but then we were able to distill them into just four categories and you can read about these categories in depth on our web site at: www.breakingawaythebook.com/innovation.html
The four categories of innovation are:
- Transformational Innovation
- Category Innovation
- Marketplace Innovation
- Operational Innovation
Julie: You say these categories are timeless principles and that CEOs and innovation leaders have resonated 100% with your model.
Bilal: Yes, these are timeless principles. As we looked through history we observed although the applications changed, there really wasn’t divergence in terms of the underlying principles. What was interesting is when we went out and interviewed top CEOs and innovation leaders, we had 100% resonance for the model. Many of the top executives invited us back to do follow-on interviews with others on their team. We ended up talking to about 150 executives all told, and they were completely supportive of our innovation model. That was really confirming to us. The other thing we noticed was the huge interest level and appetite for what we were presenting. We were delighted to see our framework really resonated with the leaders we interviewed and related to their real experiences.
Julie: Did it seem like many of the organizations had more than one type of innovation going on?
Jane: Yes, most of them had at least three. I think where it becomes sketchy is the Transformational Innovation piece. And in some cases we did not see that going on. Certainly Operational and Marketplace Innovation were the most plentiful in supply. I think with Category Innovation it starts to get a little more elusive. And Transformational Innovation has a long lead time, and many organizations are too quarter-to-quarter focused to be thinking about what’s going to be there for our children or grandchildren, which is what you have to think about from a Transformational Innovation perspective.
Julie: How is the uncertainty and contraction in the global economy impacting the innovation discipline? Are leaders leaning towards it or backing off from it?
Bilal: People are talking about growth, talking about innovation. The challenge we have ahead of us is that people are thinking just about Marketplace Innovation or Operational Innovation. Serious Transformational Innovation is all about risk, and how much risk we are willing to put into it. Transformational Innovation has the highest risk, but is also has the highest worth. Because it’s perceived to be risky, many companies are leading with Marketplace or Operational innovation. You do need those, but in reality the economy needs more than just that. We need to be developing something for our children and grandchildren. We’ve harvested everything from previous generations, but we have not left anything for the next generation to actually keep carrying innovation forward.
Jane: To build off Bilal’s point, when you look at Asia, it takes on even greater significance, because Asia has been the service provider for the rest of the world – particularly the United States. What is happening now is that Asia has created a certain amount of wealth because it has been exceptional with Operational Innovation, (how to do things cheaper, faster, better). Asians are now recognizing that if, in fact, they can innovate on the front end, they can keep the whole dollar.
Julie: What do you see happening in the United States with innovation?
Jane: In the United States, we’ve been trying to optimize costs but we haven’t been funding innovation. So we’re low on the front end of innovation and we’ve already outsourced the back end operationally. Because of this, I think the risk in the U.S. is very high from an innovation standpoint. The lead-time to do really major innovation is tough to shortcut. There’s also a discovery process that has to be funded somewhere. What we see is that many companies are cutting their research budgets significantly for anything that isn’t a pretty sure bet in the marketplace. In addition to that, venture funding is very, very tight because of the volatility in the market. So funding where innovation gets created is falling behind.
Julie: So what can companies do to move innovation forward?
Bilal: There are different ways to do innovation. In today’s environment, corporations can find it very difficult to do Transformational Innovation. The way to move it forward is more about incubating it than talking about it. The thing is, most people will say, “Yes, yes, we need to do that”. But what they really need to do is fund it. It really boils down to having the depth and breadth to fund those transformational ideas or the underlying science or technology, or whatever it’s going to take.
Julie: Where are the innovations that will change society and create 100 potential new categories? Do you see them?
Jane: No. Not right now. Truth is, we rarely see it. The burden now falls on the venture community but ever since the bubble burst, it’s been a tough road.
Julie: I spent five years working at P&G on innovation as a consultant. The culture there around innovation is completely different than just about any other place I’ve worked– from the standpoint that innovation there has actually permeated the culture, the language, the way they run. It’s in the water system.
Jane: And that always stems from the top. When the top changes, the innovation focus can, too. It is clear that when AG Lafley became CEO at P&G, he put innovation at the head of the pack. Over his decade of leadership, he instilled innovation thinking into everything the company did. It was a company that really endeavored to have all four types of innovation in play, and one that put funding behind that portfolio approach. As you know, they used a portfolio approach where Operational Innovation enabled investments to be made in other areas, with Marketplace Innovations that allowed them to win in the market utilizing new features and benefits to keep them competitive through the timeframe to develop the next major category innovation…and so on. What we’ve seen in a couple of transitions where a successful innovation leader was at the helm, but was followed by a more operational oriented leader, is that what takes a long time to build up, can be halted very, very quickly. That is one of the big messages that needs to get out to today’s leaders: Don’t let your innovation investment and culture fall prey to the short-term mindset.
Julie: As I look out and I see so many companies in different stages, many companies think innovation is a single function’s, department’s or one or two people’s responsibility. What is your very best advice to CEOs, many of them who are just starting on their innovation journey? What would your best advice to them be?
Bilal: There is a letter to the CEO in our book on pages 98-101 with our best advice for any CEO today. You can read that letter, which is posted on our website at http://www.breakingawaythebook.com/ceoletter.html
Jane: Yes, I agree that the letter we wrote to CEOs has the best advice for business leaders today. We could also distill it down to a couple key points, and the first point is that there is not a quick fix.
Bilal: And the second point would be that you, the CEO, need to own the innovation agenda.
Jane: Yes, it has to be owned from the top. It has to be driven from the top.
Bilal: And the third point is that the business leader also needs to make sure he or she funds it.
Jane: Yes, there has to be appropriate funding for appropriate levels of risk. I think that is an important piece of advice. And another important piece of advice is that celebrating talents and opportunities for people to uniquely contribute and be part of a powerful team is a very, very important element of success. We like to say that innovation is a team sport. And accountability is very important, but team accountability is as important as individual accountability. Also, one of the things a great innovation leader does–and frankly AG Lafley did a great job with this at P&G–is to understand where someone’s aptitude is, and put them in situations that exacerbate their strengths, as opposed to trying to recreate someone through developmental opportunities. That is a big teaching in the book and a very important success factor for a CEO who is noted for successful innovation.
Bilal: And when things go wrong, don’t start assigning blame. Try to own the good, the bad and the ugly that comes with the innovation.
Julie: That gets back to the whole issue about really embracing failure, and not just paying lip service to the idea of failure. But really doing it, really making its value explicit. How many decades is it going to take for that idea to become practice do you think?
Bilal: Of course, failure is a part of innovation, and although a good CEO realizes they have to worry about what is happening today, they also need to think about the future, and about which gifts they want the company to leave behind. Future CEOs will need Transformational Innovation they can build on and harvest successfully, and a good CEO will have it ready for these future CEOs so they can weather any conditions the company might have in the future. If they don’t have that kind of pipeline to work with, they will be in a situation where the board will be asking them to commit to delivering major breakthrough innovation on a time frame that will be impossible to achieve.
Julie: What is the most profitable kind of innovation and how can it be developed?
Bilal: If there’s a Transformational Innovation that can develop categories, this is the most profitable kind of innovation; this is where companies can really make money. But they have to make sure it is funded and incubated.
Julie: It’s clear to me that you have both gone on a personal journey to write this book. And the thinking that’s come out of it has some far reaching implications. How has the project changed each of you and the way you’re operating in your organizations?
Bilal: Last year I took a new assignment in Istanbul as Chief Innovation Officer and Group President for Yildız Holdings, a $10+ Billion conglomerate business based in Turkey. My boss, Murat Ulker, who was interviewed in our book Breaking Away, is someone who believes in what Jane and I are saying. Forming an innovation company in which we’re going to implement the model in the book is the evidence of his belief and commitment. Our company, called Northstar Innovation, will be the first and only innovation company in Turkey especially focusing on consumer goods. The company will offer a platform for innovation and fund itself based on the innovation it produces. There is information about Northstar posted on our website: Http://www.breakingawaythebook.com/news.html
Julie: How exciting. Jane, how about you?
Jane: I am in an innovator role at Korn Ferry around governance. My job is to lead the global CEO succession practice. We’ve created a new offering for the marketplace to enable boards to understand and live up to what the gold standard looks like for CEO succession. This means thinking two to three generations for CEO leadership and holding a company’s leadership team accountable for developing streams of leadership potential. This kind of solution is good governance, and it also produces the kind of company that great high-potential leaders want to work in. This is what I’m focusing on, and on a recent flight, I suddenly realized that I was experiencing exactly what we talk about in Breaking Away. In birthing this new offering, which integrates four or five streams of our business, all of which are currently housed within different hierarchical structures, all of a sudden I was feeling very impatient and understanding the things that have to happen to birth a completely transformational way of doing things. It was a funny moment in which I realized the book really had changed my life in a lot of ways, because I understood what was happening, whereas before I would have just been frustrated! Perhaps a more profound change is that Bilal and I both feel that we were fortunate to have been given the insight about the message in Breaking Away. We view this as a sacred trust, and we need to do well by the message because it is only just an interesting idea unless it’s integrated into companies. What I have seen over the 26 years I have been working with top leaders is that companies are more and more fear based, not less and less fear based. Leadership has less and less credibility and this is a disastrous recipe for innovation or growth. Think about it, three quarters of our life is on the job for most of us. So if three quarters of your life is spent simply trying not to make a mistake, and that’s how you’re focusing your energy, we will have little innovation and little true progress. If this continues, society will reap a devastating consequence from that. If, on the other hand, we implement a portfolio of innovation that utilizes the type of leadership capabilities you have and that puts you in the kind of a culture where you can thrive and innovate successfully, this is a good formula for business success and for people to play full out. So how Breaking Away changed me is that every day I now think about how we can make this change and about what am I doing that would make a change in the world. By enabling people to activate the message in Breaking Away, and to implement it in the way that promotes the success of people, business and society, that’s a very fulfilling future that can be created.
Julie: What do you think your book can do to help foster more innovation?
Jane: Both Bilal and I truly believe that if the principles in Breaking Away are put to use and utilized by today’s CEOs, it will totally change the way people can contribute in the workplace.
Bilal: Jane and I want to change the way leaders and innovators think about innovation and leadership, and in the book, we have provided the insights and the tools that can help business leaders achieve innovation success.
Image Credit – photo of Jane Stevenson and Bilal Kaafarani by Lyn Bonham
Julie Anixter is Chief Innovation Officer at Maga Design and the executive editor and co-founder of Innovation Excellence. She worked with Tom Peters for five years on bringing big ideas to big audiences. Now she works with the US Military and other high test innovation cultures that make a difference.