Andrew Binns speaks to Peggy Smedley host of the Peggy Smedley show. Peggy and Andy talk about how to spark innovation in the next generation. He explains why large corporations are in a good place for innovation, explaining that it is because they have assets that startups might lack to get to the innovation destination faster.
They also discuss:
- How Netflix managed to go from DVDs by mail to streaming and how it ideated, incubated, and scaled innovations.
- How to give corporate explorers a license to explore and be innovative.
- The people who stand out and how they see a problem in the world they want to solve.
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Transcript of the Podcast
Peggy Smedley: Hello, listeners. And welcome back to The Peggy Smedley Show. I’m your host, Peggy Smedley. My next guest works with CEOs, boards, and senior teams as they lead significant business change. His goal is to help organizations liberate their potential to excite the world with innovation. He has 25 years of consulting experience as both an external and internal consultant for McKinsey and Company, IBM, and Change Logic.
Please join me in welcoming Andy Binns, cofounder of Change Logic. Andy, welcome to the show.
Andy Binns: Hi, Peggy. It’s great to be here. Thank you very much for the invitation.
PS: So, Andy, I’m excited to have you on the show. I’ve got your book in front of me and I’m really excited to have that. And I’m excited right now because this is a time in history, I think, where we have to spark innovation. We have to spark the next generation to want to do things differently. So, talk to me a little bit about why a large corporation–and I think you wrote this in your book–is in a better place for innovation than, let’s say, a startup, because that really goes against what most of us think. But I think right now we really need to do a lot of different things.
AB: Yeah, I think, Peggy, you’re right. When a lot of people read the subtitle to our book, Corporate Explorer, the subtitle is why corporations beat startups of the innovation game. And mostly their question is what are you smoking and where can I get it? Because this runs so counter to everything we think about corporations. And having done this work over many years, I know that that’s not the whole story. And of course, corporations don’t beat startups every time. Maybe they’re batting averages even above .500. But it does happen. And when it happens, it’s because they have the assets that the startups lack. They have brands, they have manufacturing, they have engineering, whatever it might be they can bring to the party to get to the innovation destination faster. When we look at companies today, what makes that perfect company? Because that’s an interesting thing, because I think of things like now and we all look at the tragedy that happened with Blockbuster.
PS: I think you even talked about in your book how Netflix disrupted Blockbuster because that kind of somewhat goes against, but yet doesn’t go against what you said. Because when you think about who helped Blockbuster, Netflix was all the big brands, and most people don’t realize that that’s probably the only reason Netflix survived or is surviving, yet in some way struggles in its own way.
AB: Yeah. I mean, Netflix is a great story, not only because of the Blockbuster comparison, but then also they managed to go from DVDs by mail to online streaming. And there’s a great Harvard case that explains how they’ll fail at that. And they didn’t. And the reason they didn’t is because they were able to do this thing we described in Corporate Explorer–of ideating, incubating, and scaling their innovations using some of their assets. In their case, their brand, their customer base, and so on. And then the relationships, as you say, that they developed in the industry. And there are many other examples. I’m sitting today at a technology company in Massachusetts, Analog Devices, and they’ve kind of developed a bit of a formula for how they do this. And they put a lot of responsibility on the individual leader, what we call the “Corporate Explorer”, who really scopes out the customer problem that they want to solve. They get excited by what they can deliver as an outcome for customers and then experiment their way towards the answer. One of the big challenges that corporations have is not spending too quickly. Peggy, the thing about big companies is they get used to being right every time. And when they’re serious, they’ll spend a lot of money on stuff. But actually learning by spending little amounts, learning how to move through incremental steps very rapidly. That’s what innovation is really about. And so, some firms have figured out, others still have to learn it.
PS: You talk about a company like Analog Devices that’s been around a very long time. They understand they’ve been around and understand in the manufacturing space how to do things from high-speed logic. Are there lessons for a company like that that’s been in with sensors and things like that that other companies should learn? Because that is a really good example. When we look at what manufacturers today have to take out to be competitive, to understand how to actually innovate, to be that innovative entrepreneur that you talk about.
AB: That’s right. The thing about a firm like this that people can learn about is really on two levels. One of them is the sort of innovation disciplines, the practices of how you go about creating ideas, testing them, and then investing in scale. There are learnable practices, but the other side is more intangible. It’s about leadership at the top, for sure, the CEO. But it’s not all about the CEO. It’s also about those managers who get fired up with a passion to go solve a customer problem. And those corporate explorers are sort of a little bit unsung heroes because we talk a lot about entrepreneurs, about the bosses and Elon Musk and whatever. But many corporations have these leaders who manage to do extraordinary things from inside. And what they need is the space to do it and some of the freedom to act. And the belief from senior managers sometimes that what they’re doing is something that can, over time, yield extraordinary results. And we tell those stories in this book of where sometimes you get billion dollar businesses being built from within large old corporations.
PS: So really, one of the things you talk about is how CEOs have to empower those corporate explorers as the engines for future growth. Is that what we’re really talking about?
AB: Yeah, we talk about it as a “license to explore”. And that comes down to setting an ambition for the company. Take the example of AJ Banger when he was CEO of Mastercard, and he describes his ambition as waging a war on cash to get the 85% of transactions, at that point which were manual, and convert them to digital. So that that was market opportunity to Mastercard, that created an enormous opportunity for his teams to think about. Okay, what are the different problems that customers have right now they’re spending on cash? What could we do for them that would make it easier for them to do these things in digital? And so, they got involved in, for instance, solutions for paying by electronically for transport and so on, which any visitor to a subway in London or New York or whatever benefited from.
PS: So this license to explore is a critical part of the CEO’s role. Are there tips that you talk about in the book? I know a big thing you talk about is ideate and incubate and lessons like that. Are those the things that a lot of companies forget that they have to do in order to get the best out of their individuals, to get the best out of their managers, to get the best out of their companies?
AB: You know, one of the things that we do, Peggy, is we get really excited by ideas, and we think that innovation is all about the ideas. It’s not about the ideas. It’s about do those ideas get used? And for an idea to get used, you need to do this thing called experimentation. You need to test it in the world. And that’s the discipline tough for corporations to get good at, because the idea generation is fun. It’s participative and it’s exciting, but really the action happens when you take it out into the real world and you test it with people and you find out, do they want to use this thing? Is the problem that they have, the one you think they have, or have you got to rethink the way that you do things. And if we can get corporations to learn that much, to sort of have more of respect for the evidence you can get from experiments, and they’ll start down that road towards being able to innovate successfully.
PS: What’s the biggest challenge right now when you look at what’s happening because you’re talking about the next way we talk about this Great Resignation. But it’s really not. It’s that empowerment you talk about, but I think it’s to keep employees engaged like you’re just describing. Are we losing that the excitement of these projects that you just described? Because I think right now there is great opportunity. But I think sometimes it’s the Yin and the Yang that you just described a little bit.
AB: Yeah. The interesting fact is that alongside the Great Resignation, the number of new business registrations has gone up fourfold during the pandemic. Right. And what that says to me is that there’s a lot of people who have unrealized entrepreneurial ambitions. They want to do something that matters. There’s no reason why they can’t do something that matters inside a corporation. We just need to create that space and engage them in this as a systematically really have an intent behind how you’re going to engage or create the opportunity to do it. And if we do that, I think it’s motivating for employees, but potentially highly enriching for the company as well.
PS: Is there something that makes the perfect change leader? Is there something you would describe them as?
AB: I think within the corporation, this one of the difference, entrepreneur versus the Corporate Explorer. The entrepreneurs are really great at engaging with external venture capitalists telling the story. But if you’re a Corporate Explorer inside a company, you need to be really well networked socially. You need to have that sort of social capital, people who are willing to do favors for you, people who trust you. And so the insider, the empowered insider, is often far more successful than somebody you bring in from the outside to make it succeed. So that’s the secret sauce in this is can you help others feel that they make you successful because you’re in a group, in a large group, and if you stand out and you’re arrogant and you’re too noisy about it, then you won’t be successful compared to if you make it. So that it’s something that a group has achieved together.
PS: So through all of this, we have all these emerging social networks that are–I don’t want to call networks, but all the social activities that are occurring out there, we have all the social media. How does that play in the way we develop our best managers, our best Corporate Explorers, our best corporate managers. Is that influencing? Do we have to ignore all that noise? How does that play into how we’re going to evolve in a corporate society?
AB: I think that’s a really key point, Peggy. Because really the thing about innovation today, 2022 is probably where CRM customer relationship management was in 1990 or 2000. Right. And over the period of the last 20 years, firms like Salesforce have kind of professionalized how we do this. They bought it online. We’ve learned to use those data about customers to great effect. We need to think about innovation in the same way, how do we connect people around customer problems, pool our insights into what works? Because one of the things that happens with innovation is an idea that doesn’t work one year will work the next. Right. Because markets change, markets mature. And so you need to see this as a resource. That’s a more dynamic, structured resource than we’ve had previously.
PS: So I think that’s a great sort of opportunity to think about how you use technology to enable your social network inside companies. And as employees are developing, how do they actually then leverage that? And understand that because we get caught up in failure, that we get kind of stuck like cemented shoes, that we don’t realize that that’s not failure last year, that this year is an opportunity. How do we rise above that?
AB: Yeah. One of the things that when we look at these Corporate Explorers in our book, we find is that the people who stand out are those that see a problem in the world they want to solve. We talk about how this one manager at Deloitte, the big consulting firm, he gets involved in the tsunami relief in Asia 1015 years ago. And what he sees is the power of working as a crowd. They work in this sort of crowdsourced way to bring different expertise to the relief effort. And then he gets the opportunity to introduce this sort of crowdsource method to Deloitte, and now it’s changing the way that they do consulting. Similarly, we talk about this manager in an insurance firm, UNACCO in Hungary. He’s a middle manager in this big European company, and he sees the opportunity to sort of reinvent the insurance business model because he is frustrated with the way things are happening today. And so part of this is about trusting those instincts, trusting those personal insights about what we see that frustrates us and then figuring out how do we solve that problem and can we do it then in a way that would scale into being a business.
PS: Well, Andy Binns, co-founder of Change Logic, thank you for your time today. Where can our listeners go to get your book, Corporate Explorer? It’s really been a delight talking to you today.
AB: Thank you, Peggy, you can go to www.thecorporateexplorer.com. It’s available on Amazon and all good ecommerce sellers.
PS: All right. Well, thank you. All right.