How can you align leaders, captivate customers, mobilize employees and reward investors?
Push ahead from today. Pull forward from tomorrow.
Every thoughtful organization sets a clear mission and charts out activities and projects to achieve their goals. In other words, they craft a strategy.
TODD A. MCCULLOUGH, LEADER, TEACHER, ENTREPRENEUR, ADVISOR
Traditional strategies look at the competition. They forecast the industry. They assess core competencies. They debate trade offs. We can enter new markets. Or we can design new products. Or we can invest in new capabilities. In his many years guiding clients through “innovation strategy”, Ampersand cofounder Todd McCullough originated another way of thinking about the way companies approach their planning process.
This workshop clarifies one of the least understood mechanisms for growth.
Learn to distinguish conventional planning methods from innovation methods. Tradition starts with the current state of your business. You stand in the present and project the business forward. Here we are. Where should we go? Here you will practice the inverse approach. Innovation, born of design theory, demands this method—a differentiating competence used by serial innovators, from P&G to Google. Participants step out of the constraints of today’s reality to explore probable future scenarios. When executives find comfort in new possibilities, it opens their eyes to pull the business forward to a brighter future. To clarify their mission, leaders set a goal for the business achieve. Traditional strategies assess the gap between those aspirations and present realities, and translate their ambitions into a series of priority projects. The skew for the present, along the left side of this framework – Mission, assessed against the Present to prioritize Projects. This approach reveals an unconscious myopia, as though companies see their options as either/or. Either we take the “rational” route to plan from the present, OR we go through some type of unrelated visioning or scenario planning exercise to find other possible futures. They think that veering down the right side of this diagram requires executives to veer from reality. As you’d expect, it therefore seldom occurs. This workshop provides a lab to expose this false trade-off. Instead of an “either/or” constraint, what if sides are valid and can produce a better overall strategy if taken together?
Business Strategy pushes the present forward.
Most plans—typically defined as business strategies—produce incremental improvements. They “push” your team forward from the present, plotting a path from a clear understanding of where you stand today. “Push” strategies are essential. They recognize your position and trajectory and present smart options for your next moves. But in changing times, they fail to anticipate the future fully, and inevitably prove insufficient.
Innovation Strategy pulls forward from the future.
A great innovation strategy “pulls” the organization forward to a more compelling future. It employs a different method and produces a different path. This is the big benefit that organizations hope to get from introducing “design” into the fiber of the organization. It’s not just to get a prettier product. It’s not about shiny objects. It’s about using research methods to consider the future markets and find your place within them. Designing the eventual “products” to serve that future market comes later.
Rather than branching down the left side of the prior diagram, Todd proposes we replace OR with AND (conveniently symbolized as an ampersand – our firm’s logo – by way of full disclosure). Leaders should plan from both the present and the future to build a balanced portfolio of projects. Blending the Presen/Push with the Future/Pull strategies adjusts risk while optimizing growth. We call this your Growth Diamond.
Push = Brawn > Brain
How do you plan for next year’s growth?
Participants will bring their plans into this session. They will review them against this insight and determine how they may have narrowed their vision.
Many companies find it sufficient to review the past years’ actual performance, plot it against the rate of growth they experienced, bump it up to beat inflation, and then project that forward – growth through business as usual. Next, they look for growth by adding more sales to the same customers (sales penetration), or more customers for the same offerings (marketing acquisition). And finally, they look at the pipeline of new offerings or acquisitions – what are the new things to sell? Pushing forward from the present requires limited creative thought in favor of some heavy lifting. Not that it’s thoughtless by any means. It’s just more familiar, and driven by known data. If you find yourself pushing numbers around in a spreadsheet -thats the brawny bit. You’re crunching known data against current assumptions – an exercise more invested in labor than speculation.
Pull = Brain > Brawn
Pulling forward from the future with confidence requires a different data source. It demands risk tolerant creative thought, and often less labor.
Think about who invests effectively in innovation. In a corporate setting, Bell Labs set the curve historically. Apple, Virgin, Amazon, Google and Tesla stand out today. Despite their scale, each operates as a founder-led startup (even Apple under Cook still presents as a first generation leadership team). Founder entrepreneurs take risks as a matter of course because their personal sense of ownership liberates them to pursue their vision boldly. Contrast these behaviors to the predictable path and risk aversion almost all companies exhibit once the founding generation turns over the helm to professional external managers.
Session 2: PE + VC
In the longer program—where teams draft their innovation plans—we explore another important source for lessons: the venture capital (VC) firms that propel innovation portfolios in Silicon Valley and other capitols of capital. They recognize that innovation is a high-risk, high-return proposition, and have learned to spread their bets. Nine failures are just part of the calculus to allow for the tenth bet to cover all losses. By contrast, private equity (PE) firms invest in turning around existing businesses. They review underperforming assets to reform, remove or replace them. They invest in the business by cutting costs and improving the offering. Private equity investors use the same predictable push strategies that you find in most companies. Lower risk, lower return, reliable, steady. For companies to lead, promote, fund, guide and nurture innovation, they will need to add the capabilities that VCs have honed. Participants will determine how they can supplement their Private Equity Push model with VC-style Pull strategies. An eight step process and several corporate examples illustrate you how you can produce an effective innovation strategy to balance your company’s growth.