Andy Binns, Co-author of Corporate Explorer, on Beating Startups at the Innovation Game
This podcast transcript is shared with permission from the Inside Outside
On this week’s episode of Inside Outside Innovation, we sit down with Andy Binns, Coauthor of the new book, Corporate Explorer. Andy and I talk about the innovation imperative facing corporations today. And what they can do to foster an entrepreneurial environment, to create corporate explorers within their companies. Let’s get started.
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Interview Transcript with Andy Binns, Coauthor of Corporate Explorer
Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I’m your host Brian Ardinger. And as always, we have another amazing guest. Today, we have Andy Binns. Andy is the Cofounder of ChangeLogic and coauthor of a new book called Corporate Explorer: How Corporations Beat Startups at the Innovation Game. Welcome to the show, Andy.
Andy Binns: Hey Brian, thanks very much for the invitation. I’m delighted to be here.
Brian Ardinger: I’m excited to have you on the show. You have been in this innovation space for a while with McKinsey and IBM. Now you have a new book called corporate Explorer, which is exploring a lot of topics that I think are near and dear to the heart of a lot of our listeners is how can we, as corporations, become better at this whole innovation stuff? Why is innovation becoming so important for corporations to figure out?
Andy Binns: That is really actually the point isn’t it. And we try to open the book Corporate Explorer by saying, look, a lot of what we’re talking about is really old. It’s been around forever, right? And even the notion of a corporate explorer didn’t turn up in the last few years.
You know, one of the earliest ones that I know of is the creation of the ATM machine. The ATM machine, Della Ru a UK based currency printer literally has the license to print money. It’s like, well, surely people want to access this differently. And this guy comes up with the notion of the ATM machine somewhere in, Surry in south of London, with Barclays Bank in the 1960s. And this was a 300-year-old corporation.
This can be done by corporations, but to your point, it’s got more important. And it’s got more important because we know that digital is there. And transforming not only a business, but an industry. You cannot safely set within automotive and say, all those guys over in consumer devices no longer have anything to do with us. That’s true there, but it’s there in a dozen other industries you care to name.
And so, this notion of disruption that Clay Christiansen taught us all about. It’s kind of like it’s present. We don’t dispute it. And we certainly don’t dispute it after the last two years we’ve had. This high degree of uncertainty is present.
And so, a lot of corporations, even those who are doing really well today, I think see that the dynamics of their industry are changing at such a pace that they can’t ignore a bunch of different innovations. Either because they want new revenue streams and or they need new capability. Both of these stories are going on.
Brian Ardinger: Yeah, they’re being forced to. It’s kind of spot on. We’ve got technology advancements that are coming on and we’ve got new changes in marketplaces. We’ve got a pandemic. All these things are colliding at once requiring companies to think and act to move faster than they’ve ever had before. And yet, we still find example after example of companies that are struggling with this. And overcoming obstacles that you would think that they’d be able to overcome. Because they have quite a few advantages from a corporate perspective.
Andy Binns: Absolutely. And that’s why corporate innovations beat startups at the innovation game. Now they don’t beat them every time. They may not even beat them half the time. But they do. And the point about assets is exactly why they do that. Right. It’s when you can leverage brands customer access, technical capabilities, whatever it might be, then that’s, what’s going to bring you success.
Brian Ardinger: So, let’s dig into that a little bit more. What are the key advantages that corporations maybe aren’t recognizing or aren’t using to the fullest extent when they are wanting to do more innovation initiatives?
Andy Binns: One of the stories we tell in Corporate Explorer is that analog devices, a really strong technology innovation company, electrical engineers. Running around making phenomenal semiconductors. Worrying about the speeds and feeds of that circuits. And then they start to observe a change in the world, particularly the industrial markets where there’s this opportunity to connect their sensors, accelerometers, and various other ones to the cloud. And to use analytics, to observe the functioning of the machine.
Right. It’s a great space, a lot of startups are active in. And they build this product line around condition-based monitoring. They make some acquisitions to build it out so they can do acoustic sensing as well as motion and all the rest of it.
But if you’re a startup and you go into, tell the same solution. No one’s ever heard of you. You go into Analog Devices, you’re 60 years old, and your brand is based on never retiring a product and always meeting your supply commitments. But totally different conversation.
The market access is a real opportunity in many cases for these corporations. And also, they can access customers in different ways because they matter as a supplier to a bunch of automotive industry clients or whatever it might be. So, I think that’s a big area.
The other area is sort of some of the permission to play. So, another case that we give in Corporate Explorer is of the insurance company, Unica in Austria, where they move into sort of a digital insurance product. And again, they already have the actuaries. They can already design the insurance product. They already have the licenses from the relevant European authorities to sell insurance. So again, they can just move that a little bit faster when they are using these assets to make things happen.
Brian Ardinger: So, having said that corporations still aren’t necessarily good at innovation. They stumble on the fact that a lot of times they get focused on executing and optimizing their existing business model. For fear of messing up that apple cart, they don’t necessarily take the next steps and that. How do you create that culture of innovation such that they are willing to take risks and leverage those advantages they do have?
Andy Binns: We talk in the book about these being the silent killers of exploration. A term we borrowed from Mike Beer and the silent killers is that actually there isn’t a deliberate agenda to stop innovators. Right? Sometimes it feels that way, but it’s rarely the case. Mostly they’re on autopilot.
They’re on autopilot because they’re focused on the short term. They wanted to eliminate risk to the degree that that’s possible. They want to preserve the way they think business should be done. Right. Which is that power of sort of professional skills and identity, which has such an influence on corporations.
And so, I think what they need to do is to learn. It’s a learning agenda for them. And I think we are those teachers. You are that teacher, the listeners on the podcast are their teachers. And what they’ve got to learn about is experimentation. Moving into small increments. Rather than spending a lot that needs to spend little amounts. So that they are in a position to find out where the markets are and where the opportunities lie.
I think that they need to trust their Corporate Explorers. Get off this notion that importing people who’ve been in a series of failed startups, that they’re going to know how to get this done. It’s very disrespectful for all the many people who’ve done fabulous work in startups, and then moved to corporations. Done spectacularly well. But why would you trust them? They failed, right?
The point is that inside the company, there are Explorers, and you need to give them the space, the license. We need to talk about what license means to make that happen. And then finally, the Corporate Explorers themselves need to see themselves not simply as innovators, but also as leaders of change. Too many innovators or potential Corporate Explorers in corporations go hide their project and try to get on with it without getting too much interference.
And what they need to do is build a movement behind what they’re doing. They need to win allies and they need to win advocates. They need to figure out how to get that movement going behind what they’re doing, so that when they hit roadblocks, which we know they always will, they have people who are willing to support them and explain what it means, why this is learning. Not failure.
If I had a criticism of our colleagues in that function in organizations is that sometimes they miss that change, that human social building this network inside the company toolkit. Which is actually one of those big things that’s critical to success.
Brian Ardinger: So, let’s dig into the book a little bit. This idea of a Corporate Explorer. Can an average person within a company become a Corporate Explorer? Is there a certain skillset or knowledge or our mindset that’s required? Talk a little bit about what it means to be a Corporate Explorer and tasks behind that.
Andy Binns: To a large degree, the Corporate Explorer is exactly the Samsung Entrepreneur. They see a problem in the world. They want to solve. They’re dissatisfied with something that’s happening. We tell the story of Sara Carvalho at Bosch. That Sara is out hiking through the Andes, the lovely sounding image, right. And she gets home to the home of the people who are hosting her. And she says, I want to take a hot shower. Well, they don’t have hot water in Peru. That’s not something. Essentially then sets about how do we use Bosch’s technology to create a solution to providing hot water.
It could be Sara and these other examples I gave the same. We’ve told the story of Balaji Bondili at Deloitte. He gets involved in the tsunami relief in Asia. And he sees the power of the crowd. He’s ah, the power of the crowd. This is something that could transform consulting. And like 10 years later, he gets into it right. So there’s this passion behind something in the world you think you can fix.
And some way you think you might be able to do something about. And that’s true in entrepreneurs and in Corporate Explorers, the same. What’s different is this social ability. The corporate explorers that succeed, are those that firstly can articulate a case in wagon gets attention. They’re really good storytellers. They can bring the possibility and opportunity of what they’re proposing to attention.
And they do so not because they say, oh, we can just get a little bit better. Yeah. If you back me, it will be, yeah. There’s a small piece of revenue that I can build. Know they’ve got ambition. They said this is transformative. And the thing is that that actually gets more senior attention than the safe I can do a little bit better. Because it starts to hit the scale of what a senior manager is interested in. So, they do that really well. And then they build out this network of support around that idea so that they’re able to then execute it and sustain it.
That’s the piece of differences, is this great ambition and storytelling, combined with the social network. So that their building. And I’ll tell you, there’s another thing, Brian, I’ve learned as I’ve met these people. I hope it comes out in the book as we tell the stories, is that they’re humble. They don’t mind if other people make them successful.
You go around Vienna, and my great friends at UNIQA Insurance. And there are a dozen people who think they help make Krisztian Kurtisz successful at building this digital community insurance product Cherrisk. And he just has a way of making other people feel they played a role that also is something, again,
I think different from an Elon Musk that defines the great Corporate Explorer. It sort of takes a community of leaders around it, not just those involved in the project, or the venture themselves. But also, the people who are going to be actively engaged in supporting
Brian Ardinger: If I’m in a corporation and I’m trying to understand, and maybe even find the Corporate Explorers within my own walls and that I can nurture and build that. Are there particular techniques or things that you’ve seen to help identify those Corporate Explorers within your company? And then what number of Corporate Explorers do you really need to have an impact?
Andy Binns: I think this is sort of the proactive and reactive if you will. Right. And the reactive model is simply, are you listening? Are you actually looking out for them? I’ll tell you one of the most successful Corporate Explorers we talk about in the book is Jim Peck at LexisNexis, right?
He built a multibillion-dollar business in 10 years, inside and existing corporation, which does legal and news information. He builds this big data risk analytics business. And Jim saw the insight. He had the idea. He proposed, nobody gave him the responsibility. That this incidentally is true of Krisztian and UNIQA Insurance.
Nobody gave him, here go build me a billion-dollar business. He proposed it. So, there’s a reactive side. Now are you listening. Are you ready to cope with that? Ideally, do you have an ambition. A sort of strategic ambition that says, this is what we want to do, so that if I’m Jim or Krisztian in the business, I feel I have a license to propose those ideas.
One of the great examples is MasterCard. And they had this ambition to wage a war on cash. That’s actually a really empowering thing. That tells me I’ve got to find ways of converting this big number, like that point 85% of transactions on cash to digital. I know wow, those are the ideas, that’s how I evaluate success, right?
That reactive piece. And that inspired. The proactive thing is go looking for them. And I think there your best bet is some sort of participative competitive approach where you’re focused on solving customer problems. What are the top 10 customer problems you want to solve in the world? And invite people to come up with ideas.
And we can talk more about this. I think there’s a problem in corporations of too much idea creation. But I think the, hey, how can we solve these customer problems? How can we add more value to different customer groups? What places are there, where there are customer groups we’ve identified that may have problems we can grow into. That kind of thing is a great place to encourage people to participate and then step forward with their idea.
And then don’t spend too much on any one idea. Startups run through scarcity and so should corporate ventures. They should be, they should be begging for cash. As corporations, in some cases are, they worried much more, particularly in Europe I find, they worry much more about the size of their office. And how big the team is that they can hire. And all this kind of stuff. Which is complete nonsense in comparison to have you validated the idea. Have you done enough to prove out whether that’s a really a market for it or not?
Brian Ardinger: Following on the incentives conversation, a lot of times we think, I mean, you mentioned there’s a lot of intrinsic incentives that seem to be in play for the Corporate Explorers that actually have success within that. How does a company think about incentivizing folks to raise their hand and say, hey, I want to be an entrepreneur within the walls or, or I want to take my ideas forward? Are there things that seem to work better than others?
Andy Binns: It’s a pretty complex area for sure. And there’s a view out there, I think that what we need to do in corporations is in some way mirror the rewards of the, of a startup. So, Intel had this approach. Potentially ended after we published the book. And they said, okay, go and build a venture. We’ll give you what you need.
And if it reaches an external valuation of a billion dollars, we’ll give you 10 million or a business unit, will buy it out for 10 million. It didn’t work. And it didn’t work, also if you think about it, it introduces a perverse incentive to spin out the venture outside of the corporation. So, you don’t get the value from it because you’re going to get far more on the open market than you are in the corporation.
That’s great for the individual Corporate Explorer or entrepreneurs. It’s lousy for the corporation. It’s a flawed notion of incentives. And most of the people I’ve mentioned, who’ve done this successfully, are ones who actually have received very little additional compensation. Now that doesn’t mean that they haven’t done very well for themselves. Because this is a great way to prove your career. To prove that you’re a CEO.
Jim Peck ended up being CEO, not only of LexisNexis Risk, but also of two further corporations. He’s now CEO Nielsen IQ Market Research Fund, and Krisztian’s career has blossomed. Others have blossomed. There are real opportunities. It’s just not the same as an entrepreneur. And so, I think what we need to do is. The issue is less about what we pay them, and it’s more about the environment we create.
That accepts that explore businesses are different than the core business. That how you evaluate them, how you manage the fact that there are high degrees of uncertainty around how fast they’ll generate a return, that’s the point. And if you make it so that that’s accepted and understood and well-managed, then your corporate explorers will emerge.
If you make it, oh, you’ve got a great idea. I want to see a five-year cash projection on how you’re going to deliver the same margin as the core business, then you going to throw them out, right? You’re going to eject them over time. That’s really the area of incentive that I think we should focus on much more than the individual payment.
Brian Ardinger: So, my question I want to ask about is how do you know if you’re making progress? How do you know if your corporation is getting more innovative? What are some key measurements or ways to know if you’re making progress?
Andy Binns: You know, I think that it is for me about how many revenue generating businesses have you created. Again, there are some who would say, this is about how many billion-dollar external valuations. This is nonsense. I know the valuations matter. If I had a billion-dollar corporation and I was selling it, putting in my money in my pocket, I’d be delighted. Many people would. Of course.
But that’s not what corporate life is about. It’s something else. And so, you’ve got to understand that that you’re fulfilling different objectives. So, I want to see that I’ve got revenue generating businesses that in the markets I define on winning, we talk a lot about how, if you’re going down this path of creating new businesses, you want to have a really clear ambition. Like this way to wage a war on cash.
And then you want to know what are the hunting zones you’re going to play in. In order to achieve it. So, I want to know how many ventures have I got in my hunting zones? And how many of those are on track towards the kind of revenue goals that I have for them or the kind of milestones that I need in order to get that? Because it’s all about ideating, incubating, and scaling ventures. That’s success, you know, activity is not success. And so, I want to ultimately see that happen.
Brian Ardinger: And knowing that you can’t bet on the winners at the very beginning. You have to have a portfolio of ideas that are coming through at all times. So that you can see the progress with evidence and, and, bet on the ones that are moving forward.
Andy Binns: Absolutely. And this whole area of portfolio managing your innovation is something that I think is critical.
Brian Ardinger: So last topic I want to talk about is we are in this great resignation. And this area where people are moving around and trying different things, and the world has completely changed. What are your thoughts when it comes to retention or hiring of innovators? And these corporate explorers?
Andy Binns: I think it’s a tough moment for corporations. One where they should be fairly concerned that they’re going to lose their best talent. Because if you look at the stats, what goes side by side with great resignation is a record number of new business formations in the U.S. Some of those are going to set up coffee shops, coffee roasters, breweries, distilleries. People who are enjoying themselves, doing something different from corporate life.
But there’s a large number which are people seeking to realize their entrepreneurial ambition. And so, if I’m a manager in a corporate business or senior executive, and I’m seeing this happen, I should be asking myself, why am I losing my most entrepreneurial talent when I could be using that to sponsor growth in my business.
That’s where I think that needs it. So, all of the stuff we’ve talked about, about creating the license to explore. Giving them customer problems, to solve. Investing small amounts and making things happen, and then scaling the ones that work. I think that actually is a key part. It’s not the whole answer to this story of, of the great resignation, but it’s a piece of it.
And it also is about, you know, people want a future. They want to believe in something. They want a why. And doing new stuff, demonstrating like in sustainability. Is one of the interesting things is that most of the ideas, you know, we do a little bit work with Wazoku is one of the idea management platforms. And Simon Hill told me that more than half of the ideas on the Wazoku platform across all of their client base has to do with sustainability right now.
People want to see you’re making progress on something like. And that’s a story of innovation. How can you scale that to a level that actually has business impact? And I think again, that creates purpose, commitment, a sense of being a part of something that matters. Again, a key level of the innovation component.
Brian Ardinger: Like you said, it’s really never been a better time to tap into new and exciting projects. There are far more problems out there that people need solved. And they’re constantly changing. So, you’re in a good spot, if you, again, encourage folks to raise their hand and find those problems and have the ability to solve them.
Andy Binns: Yeah. I think that’s exactly right, Brian. Yeah. Very well said.
For More Information
Brian Ardinger: So, Andy, I want to thank you for coming on Inside Outside Innovation. If people want to find out more about yourself or about the book Corporate Explorer, what’s the best way to do that?
Andy Binns: Yeah, you could go to thecorporateexplorer.com or changelogic.com and learn about us. Learn about our research. I’ve written this book with two professors. Mike Tushman from Harvard. Charles O’Reilly from Stanford. They’ve also written some other books on the topic. Lead and Disrupt in its second edition, is another excellent text to dig into this whole area of how corporations can win and do win at innovation.
Brian Ardinger: Excellent. Well, Andy, thanks again for coming on Inside Outside Innovation. Really appreciate your time. Really appreciate your insights and look forward to continuing the conversation in the years to come.
Andy Binns: Likewise. Thanks Brian.
Brian Ardinger: That’s it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.