E16 Creating a Culture of Innovation
In this interview, innovation expert Simone Bhan Ahuja defines the role and impact of an “intrapreneur" in large organizations, the importance of creating a permissionless and safe culture for innovation to occur, and how c-suite executives need to encourage innovation at all levels. Simone also shares tips for large organizations to attract innovative talent away from start-ups and ways to build structured innovation into your organization.
For 15 years, Simone has studied emerging markets and how organizations can continue to innovate across all levels in resource-constrained environments. Simone is the author of Disrupt It Yourself and co-author of Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth. Simone is also the Producer and Director of Indique | Big Ideas From Emerging India, a TV documentary on innovators in India.
Simone Bhan Ahuja:
If you have one end user, one customer, or someone who might be touched by this product, or service, or business model who you think is representative, go ahead and test it out with them. If that works well, if you delight that one user, tell it with 10, try it with 100. If you hit 100, we know we've got something here. We can put some more time and more resources around it, whether financial, headcount, otherwise timeline, etc.
Don MacPherson:
Hello everyone. And welcome back to 12 Geniuses. This is Don MacPherson, your podcast host. As we continue to explore the theme of creativity and innovation in Season 2 of the podcast, we invited Simone Bhan Ahuja to the show. Simone is an innovation expert. The author of Disrupt It Yourself and Jugaad Innovation, a contributor to Harvard Business Review, and an advisor to the MIT Practical Impact Alliance. Through her company, Blood Orange, Simone helps companies drive breakthrough innovation with limited resources while staying competitive in a volatile business environment. In our conversation, we discuss why psychological safety is critical to innovation, how leaders can provide protection to their most innovative employees, and how failure can be used as a great learning opportunity. While Simone spends most of her time working with Fortune 500 organizations, she has advice for nonprofits and other small organizations too.
Simone, welcome to 12 Geniuses. You have a company called Blood Orange. What do you do?
Simone Bhan Ahuja:
So, we're an innovation strategy, consultancy, and advisory. And what we do is we help companies think about their innovation strategy, how it's connected to their business strategy. And I think most importantly, we help them understand how to put in place processes that lead to more consistent streams of innovation. And then following that is this really effective.
Don MacPherson:
And these are big companies, small companies, any company?
Simone Bhan Ahuja:
By and large, these are Fortune 500 companies. Having said that, we've worked with a handful of small to medium-size companies; some nonprofits, occasionally government agencies. And then I mentor a handful of entrepreneurs as well.
Don MacPherson:
And if you were to summarize the problem that you are solving for these companies, it's to enhance their innovation, is that right?
Simone Bhan Ahuja:
Yeah, that's right. The idea is innovation is something that pretty much every company I work with, especially the large ones have as a strategic priority. And what I hear most often is, well, how do we really do this? How do we actually make this happen in a way that is consistent and sustainable? Because we know that if organizations can't do that, they're not going to be able to grow. So, today we have a big problem for large organizations. 14% of the S&P 500 is going to be replaced in 10 years. 14% of new graduates want to work with large organizations because they'd rather work at a startup or start something on their own. Then, of course, we have the rapid pace of business and technology. So, all of these things together are creating massive pain points for large labyrinthine organizations that are really, really process oriented, which has served them well for a really long time. So, for decades, and in relative economic stability, having sameness as a part of your approach has been very effective. But increasingly, that's simply not the case anymore.
Don MacPherson:
14% of new graduates want to work for what type of companies?
Simone Bhan Ahuja:
What we're finding is that when it comes to any kind of established large organization, so that could be a Fortune 500, and similarly, it could be a large government organization. It's getting harder and harder to attract and then retain new graduates. They simply would rather be on the startup path. It looks pretty attractive. Even now it's so easy, right? The democratization of technology means that individuals can start their own organizations very easily. They can be very connected to end users and potentially solve their problems. So, it's the very thing that's threatening the large organization that's keeping these newer entrants out of their doors
Don MacPherson:
With these larger companies that you're working with to help establish process and to help them be more innovative, what are the main obstacles that they're having that are preventing them from being innovative?
Simone Bhan Ahuja:
One of the biggest things that I hear every single time, and so was the biggest barrier, is this idea of psychological safety. Do we feel safe sharing new ideas? Can I bring forward something that's atypical without getting embarrassed? And this is the thing that I hear every single time in every workshop. And when we tally up what people bring forward, that is always at the top of the heap. So, that really falls under culture, right? Because your culture is your belief system, your values, your attitudes. If your attitudes about taking risk are that you’re risk-averse, you're not going to feel very safe. So, I think that is the most important barrier that has to be addressed.
Interestingly, when I talk to senior leaders in these organizations, they say, “We don't really have barriers.” Now, these are often senior leaders who are very interested in driving disruption, driving innovation and entrepreneurship. To be fair, they're pretty forward-looking, but they don't see the barriers that exist sometimes in their own organization. Just yesterday, I had a call with a Fortune 50 company, and we're designing a session for them. And they said, “Well, we don't really want to talk about barriers because our senior leader says we don't really have barriers.” And I said, “This is a part of what I call innovation therapy. Okay? This session really isn't only for the people who are in the room, so that senior leader's team, it's a bit for the senior leadership as well. Because the innovation therapy piece isn't, you don't have a barrier. It's, what is my perception?”
Whether it's an actual organizational barrier, so for example, I'm not incentivized when I might be punished if I take our risk, it's what is my perception of taking risk and the impact that it will have on me or my group, for example? I think that it's one of the most important things organizations have to explore and be really honest about. Others are really around structure. I have a chapter in the book called ‘Add Discipline to Disruption’. And this isn't about creating a tight, tight framework or a tiny sandbox. It's really about making sure that there's a systematic approach that people have a pathway to bring new ideas forward. So, if we think about HR functions in the past, or marketing, or finance, these were not functions decades ago. That's a newer phenomenon in business. Similarly, innovation is just now starting to become a function.
And innovation has to be handled a little bit differently because we need to have some systems and processes in place while giving people the space to create. And then we also have to know when we separate the innovation is so different or the potential innovation is so different that we have to take it outside of the organization. The third barrier is really about if we don't feel connected to that, what we're doing, how much are we willing to risk for it? So, if we do feel connected to it, if we do have passion and purpose, that's going to give us rocket fuel to move forward. But if we don't, we might not be willing to take those risks, or we might feel tired, or we might feel like I've got other things I want to do that are more connected to how I'll be rewarded.
Don MacPherson:
You're saying that innovation is now being treated as a function. Are you seeing organizations creating chief innovation officers?
Simone Bhan Ahuja:
Yes. Yes. Many organizations are starting to understand that innovation should be a function. And I would say, in a way, it's still early days. So, there's still a lot of what we call 'innovation theater' going on, where there are rooms set up with a lot of whiteboards, there are a lot of post-its. Somebody might have a post in Silicon Valley, where some ideas are getting tested, maybe with entrepreneurs in the Valley. And there's nothing wrong with that, but if there's not a broader system in place that can become an issue. There are chief innovation officers increasingly in many large organizations who are helping to design what those systems look like, helping to create the space where they need to. And I think that's an important discussion we should have also, right? What does it mean now to lead innovation and to manage in the future? Because it's not really about keeping people on the rails anymore. It's about creating space to innovate.
Don MacPherson:
You've mentioned entrepreneurs a couple of times, and I think most people will have a pretty good idea of what an entrepreneur is, but can you give us a definition so we have an understanding of what it looks like and how most companies are defining that term?
Simone Bhan Ahuja:
Yes. So, an entrepreneur is someone who functions more like what I would call a fast and frugal entrepreneur on the inside of an established organization. It means that they're going to move a little bit more away from business-as-usual processes. It means that they might be good at navigating some institutional barriers. It means that they might be driven by their passion, and their purpose, and they're not necessarily waiting for a top-down mandate to get into action. That's what an entrepreneur is in the disrupt it yourself world.
Don MacPherson:
Let's return to psychological safety because you said that that was one of the big barriers that organizations have, larger organizations have in being innovative. How do you create psychological safety or how do you help people understand that they are safe to fail or to experiment?
Simone Bhan Ahuja:
There are a lot of ways to signal psychological safety. And the least valuable is talking about it, just talking about it and not doing anything else. I'll give you an example. I was at a very large consultancy a few weeks ago. And the senior leader there was talking about psychological safety, and we have your back, I've got your back, try something new. This organization is becoming too much about doing things in a same way and not really bringing thought leadership to our clients. Take a risk. Well, the truth is that when we dug into it, none of the metrics, nothing these consultants were measured by had to do with new ideas, thought leadership, innovation. So, my question to that senior leader is, if we don't reinforce this, how are we going to create the psychological safety? It all has to go together.
A simple way to do it, beyond talking about psychological safety, and go ahead, try it, take the risks, is the low-hanging fruit might be put it on your agenda of an existing meeting. Let's talk about innovation. Let's just start getting a conversation going. One nonprofit that I had worked with did something really valuable was to talk, not only about the ideas that they have that could lead to innovation, but they talked about their so-called failure. And we can talk about that word in a minute, too. They talked about what didn't work, why it didn't work, and what they learned from it. And they did it in a way that was such a regular part of their cadence, that it didn't feel risky.
So, I think, if you bring it into your culture by talking about it regularly and then demonstrating a couple of things; one is we'll reward you for trying things, not over and over again. But if you tried something and it didn't work, and we learn from it, and the learning was shared so it has value for others, we will reward you for that.
Don MacPherson:
I think that's so important. We've had a guest on, her name is Sara Kenkare-Mitra, and she runs research and development for Genentech. She does a lot of cancer research. She's got a team of about 500 people. And one of the things that she says is, “There are failures all the time in our research, and we celebrate it. We acknowledge the people who worked on a failure and we talk about all of the things that we've learned.” And so, that I think is one very, very important way of helping to build that psychological safety.
Simone Bhan Ahuja:
Absolutely. First of all, hats off to the scientists and technologists who are talking about failure and celebrating it. It's not that common. I think what I've learned over the last several years and have sort of inculcated into the work that we do at Blood Orange and share with our clients is, for many years, a lot of us were saying, “Fail fast, fail forward.” We've heard that phrase. The truth is that since we were children, failure is a bad word. Rather than try to make people say that failure is good, fail fast, fail forward, we just reframed it as learning, right? So, we have a hypothesis. We proved it out. Fantastic. We can move forward. We have a hypothesis. We disprove the hypothesis, that's learning. Let's celebrate the learning.
Once we reframe the failure as learning, in many, many organizations, no matter how much they say they're celebrating failure, it is more impactful and it is more well accepted by a broader number of people more quickly. That's something that in my book, I call it ROI as return on intelligence. This is that idea of becoming a learning organization. When you can become a learning organization, when you emphasize the learning, then you can start to be an organization that's going to drive more consistent innovation, especially if you share those learnings and you have a forum to share those learnings.
Don MacPherson:
What role does authenticity of the senior leader, or maybe a disclosure of a personal failure, not personal or professional failure, by the senior leader play in creating psychological safety within the organization?
Simone Bhan Ahuja:
When senior leaders can say, “Listen, this has happened to me before. I failed. In one case it was a complete disaster.” Or, “In one case, we learned from it tremendously, and here's what happened. We're still standing and we advanced because of it.” It's a very, very powerful message, more powerful than almost anything else. One of the things that we've also seen and one of the things that we help managers to do is this very thing. If we have to recruit coaches or ambassadors or those who wanna support interpreters in the organization, we often pick out those who have been entrepreneurs in the past because they understand those pain points. They understand that journey. They understand that there are specific barriers that will have to be navigated.
They'll be more empathetic, and perhaps more willing to provide one of the most fundamental things that will drive innovation, entrepreneurship, which is air cover, right? Air cover is when you have someone fairly senior who is going to be your sponsor and who's going to shield you from the immune system or the business-as-usual approach of the organization.
Don MacPherson:
We are talking with author and innovation expert, Simone Bhan Ahuja. When we come back from this short break, Simone is going to give practical advice on how organizations can do a better job of retaining entrepreneurs and other creatives.
Hi everybody, this is your podcast host, Don MacPherson. At 12 Geniuses, we write, report, and speak about the trends shaping the way we live and work. As we look toward entering a new decade, technologies like 3D printing, artificial intelligence, gene editing, and more and more sophisticated robots will continue to disrupt and change our society. If these trends are important to you, we invite you to follow us on social media. And to book me to speak at your next event, contact us at future@12geniuses.com.
We are back with the author of Disrupt It Yourself, Simone Bhan Ahuja. In this part of the interview, we are going to talk about intrinsic motivation, the importance of keeping your innovative efforts frugal, and the CEO's role in fostering innovation. When a larger organization has identified and groomed entrepreneurs or innovators within their organization, how can they keep them? How can they keep them within the organization and prevent them, not necessarily prevent them, but discourage them from leaving and taking their ideas elsewhere?
Simone Bhan Ahuja:
The simplest way and the most important way for an organization to ensure that entrepreneurs stay with their organization is to support them, to identify them, to acknowledge them, to provide air cover as needed, especially in the early stages of innovation and as innovation becomes more of a discipline, and then support them and provide pathways for their ideas so they can move forward to execution. That is what will satisfy an entrepreneur and help you retain them.
Now, where in there did I hear anything about financial benefits?
Simone Bhan Ahuja:
Entrepreneurship is very much about intrinsic motivation. I have almost never seen successful innovation that wasn't driven by passion and purpose or some internal desire to solve a problem. But I think the smart organizations are understanding that both intrinsic and extrinsic motivation is really important. So, the entrepreneurs will have their intrinsic motivation. The smart organizations that want to drive innovation through entrepreneurship and retain, and even attract entrepreneurs, will reward them extrinsically. That could look like a lot of different things. That can look like acknowledgement. Acknowledgement could be posting about what they're doing on social media. It could be some kind of an award ceremony or celebration. It could be giving them tickets to something, giving them access to senior leadership.
It could also very much be about giving them a stake in whatever it is that they're trying to bring forward. So, if it's a new arm of business, can they stay connected to the business financially? And in some instances, that makes a lot of sense. So, extrinsic motivation is imperative if you want to make entrepreneurship sustainable and move it away from being an ad hoc occurrence.
Don MacPherson:
You do recommend that entrepreneurs and organizations keep whatever projects they're working on very lean and mean, why is that?
Simone Bhan Ahuja:
So, keeping it frugal is probably one of my favorite principles, and it's connected to research that I've done over the last 12 years, where we looked at innovation and severely resource constrained environments, thinking about how people solve even really big pressing problems, because it does actually happen. The research led to a book called Jugaad Innovation or Frugal Innovation. When I started to bring this idea back to organizations in more resource-rich environments like developed economies like in the U.S., at first it didn't resonate until 2008, 2009, after the great recession. At first it was like, “Well, what are we going to learn from these third-world countries?”
I wrote an HBR blog where people actually made that comment. After the great recession, people were calling us up and saying, “How do we do this? How do we actually drive big innovation, solve big problems with fewer resources?” Now things have normalized again. So, the question comes up again, why does it make sense to use fewer resources? But what we found time and time again through this research is, in many cases, if you're experimenting with something that's different, that's it's either a new audience, a new market, or a new product, or a new business model, if you keep the experiment small, if you keep it light and tight, if you keep it focused and resource skinny, then you have less fingerprints, you have less bureaucracy, you have less business-as-usual processes attached to it and less traditional metrics.
What you gain is you gain knowledge. You start to gain data and you start to gain proof points. So, it makes it easier to then go to the organization and say, “Listen, we have these proof points. We know that end users want this. Here's what it looks like. Here's a real prototype that you can test out or that we've tested out. You can either put it in your hand, or you can try it out, or you can take a look at what the results are.” Intuit, for example, has an approach they call unit of one. So, their senior leaders might say, or in their organization, they'll say, “If you have one end user, one customer, or someone who might be touched by this product or service or business model, who you think is representative, go ahead and test it out with them. If that works well, if you delight that one user, tell it with 10, try it with 100. If you hit 100, we know we've got something here. We can put some more time and more resources around it, whether financial, headcount, otherwise timeline, etc.” So, if you start small and focused, you will invariably save financial resources and you will definitely save time as well.
Don MacPherson:
Let's talk about a couple of roles within the organization. What is the CEO's role in fostering innovation and fostering entrepreneurship?
Simone Bhan Ahuja:
The most important role of the C-suite in innovation is having that conversation and signaling that innovation and entrepreneurship is important, but also ensuring that the next layers have a few things in place. They have to understand why. Why is this important to us? They have to understand how to do it. The tools have to be given to the next layer. How do we actually do this? What are the systems that we're going to set up to do this so that I can enable this and not just talk about it with you? There has to be role modeling that occurs. You talked earlier about talking about what a failure looks like or a learning looks like. Do we communicate that? And do we share that?
Then the fourth piece is reinforcing mechanisms. How do I ensure that beyond these, what can be exercises? If you just run a quick workshop, or if you have a couple of conversations, these things become what people do call innovation theater until, especially at established organizations, and I never used to think this way until we did this research, if you don't give the reinforcing mechanisms in an established organization with the existing team, you're not going to have the transformation and the shift that you're looking for.
Don MacPherson:
You've talked about culture. You've talked about attracting and retaining talent. You've talked about developing and changing behaviors. A lot of these things fall on the shoulders of the chief HR officer. Let's talk about their role in this.
Simone Bhan Ahuja:
So, it starts with, how do we define the roles of the people that we're bringing into the organization? How do we adjust the roles of the folks who are already within the organization so that we can retain the entrepreneurs who are already there? And importantly, what are the metrics that we use to measure them? Whether they're at a very senior level, whether they're at the management level or the individual contributor level. HR has a role in helping to determine what those reinforcing mechanisms look like. So, if we do a 360, what are the metrics that we're gonna use to help measure whether you're doing your job with respect to innovation? Because I believe fundamentally, if we don't put those in place, we're really just not going to have the shift because people are going to default to what it is that they're being measured for. So, I think that's a fundamental role of HR.
Don MacPherson:
We've talked about psychological safety and creating psychological safety, but in large organizations, there's a ton of bureaucracy, typically. Can you give an example or two of organizations that have eliminated this bureaucracy or minimized the bureaucracy in order for innovative ideas to bubble up?
Simone Bhan Ahuja:
I can point to L'Oreal as one who has made space for innovation. There, I met an organic chemist named Belinda Ortiz. And so she was looking at mascara formulations. And she had this issue where she had experienced personally that she couldn't find foundation, a makeup that covers your skin to make it look more uniform, for her deeper skin tone. And she went to her senior leaders and said, “Listen, I don't work on this, but I have to tell you what it is that we're offering for women all over the world today is kind of amiss.” And to their credit, they didn't shut her down and say, “You're mascara, forget it.” They said, “All right, show us what you got.” So, they gave her lab time. They gave her kind of a permissionless environment, which is vitally important. They didn't give her a ton of resources.
She didn't have headcount, she didn't get a raise, not then anyway. But what she did do is she went out and she was able to experiment, though, and she did it, kind of this fast and frugal way. So, she tagged onto existing affairs where L'Oreal was to get connected to end users. They allowed her to do that. They eliminated these barriers, right? That, “Oh, you can't talk to our end users. You're supposed to be in the lab.” She was able to bring that data back. And then ultimately, she had enlisted multiple colleagues to help her, who had also experienced the same problem, to emerge with a winning product for L'Oreal that became kind of a breakaway success for them. Here, this wasn't that they provided this tremendous support and gave her a ton of resources. This was about let's take away those layers of bureaucracy and let this entrepreneurship flourish.
I think that's a really important thing for organizations to keep in mind that sometimes, even if you don't have the formal systems in place, you might need more of that in the future. Sometimes it's about removing those layers of bureaucracy and just getting out of the way.
Don MacPherson:
If I'm a leader and I want to drive innovation through entrepreneurship, or I want to disrupt it myself, what's my next step?
Simone Bhan Ahuja:
If you're a manager or a leader, I think there are two things that you can do pretty immediately. Number one is, take a moment to identify the entrepreneurs in your organization, those people who color out of the lines a little bit, and get in touch with them and talk with them about what is it that they're working on? What are they passionate about? What is their purpose? And then identify three specific things that you could do to help them advance their approach to entrepreneurship and whatever experiment it is they're working on. I think that would be a first step in your entrepreneurial journey as a manager or leader.
Don MacPherson:
Fantastic. Where can people learn more about you and about Blood Orange?
Simone Bhan Ahuja:
So, you can learn more about blood orange at blood-orange.com. We've got information on there about what we do, about the book, Disrupt It Yourself, and how to get ahold of us. I'm also on Twitter, on @SimoneAhuja. If your listeners want to learn more, if they want a blog that I wrote on the Harvard Business Review about the entrepreneur's mindset and a short assessment about entrepreneurship, they can text DIY to 66866, then they can enter their email address, and we'll send that over to you.
Don MacPherson:
And we'll put those in the show notes. Simone, fabulous conversation. Thank you for being a genius.
Simone Bhan Ahuja:
Thanks Don. It was really great to be here.
Don MacPherson:
Thank you for listening to 12 Geniuses. Thanks also to the amazing team that makes this show possible: Devon McGrath is our production assistant; Brian Bierbaum is our research and historical consultant; Toby, Tony, Jay, and the rest of the team at GL Productions in London make sure the sound and editing are top-notch. To learn how 12 Geniuses can prepare leaders for a rapidly changing business world influenced by shifting demographics, new technologies, and innovative business models, please go to 12geniuses.com.