The CEO’s Innovation Nightmare

By G. Michael Maddockand Raphael Louis VitónSeptember 13, 2010

When chief executives yell “innovation” in the forest, but their management teams cover their ears, did they really yell anything at all? The news cameras roll as the chief executive of one of the nation’s largest companies boldly outlines his well-thought-out, incredibly detailed vision for changing his dinosaur industry. “Innovation will be the cornerstone on which we build our future,” he says. “For too long, we have relied on our great brand, loyal customers and fine workforce to carry the day. But the world is changing, and our customers and shareholders are counting on us to deliver new products and services. Our competitors haven’t recognized this fact. But we have. So from this day forward, I commit to create a culture of innovation. We will be known as the company that reinvented the X industry.”

The next day, a huge plaque is hung in the corporate lobby that boldly proclaims, “Core Value No. 1: Innova-tion.” And you can tell that the CEO believes this with all his heart. Like Paul on the road to Damascus, he has seen the light. In the aftermath of the announcement, we at Maddock Douglas applaud. (Innovation is our business, after all.) Wall Street applauds — and the stock price rises. And there is a renewed optimism among the rank and file in the halls of the sleepy company.

And then something unfortunate happens.

Nothing. Nothing happens. Nothing at all.

After a blizzard of memos outlining what the “new” company is going to look like, everything stays the same. Why? Blame it on the inevitable outcome when a bull meets a grizzly bear — and a bunch of its friends — in the woods.

Surrounded by BearsIn the world of investments, there are bears, and there are bulls. The bears say things are going to get worse, and the bulls optimistically and aggressively place bets that not only won’t that be the case, but also everything is going to get better. (“We can reinvent our industry.”)

In the world of corporate innovation, the CEO is often a bull who makes the unfortunate mistake of surrounding himself or herself with bears.

We love bullish CEOs, but we’re pretty sick of working with bears. They tend to nod a lot in meetings and then passive aggressively do everything in their power to keep any significant change from happening. To the CEO’s face, they say the truly needed innovation effort is, in fact, truly needed. When the CEO is out of sight, they whisper to everyone in the senior ranks that things are just fine as they are. (We all here on the executive level have jobs, don’t we?)

It is incredible how many companies are run by bulls who surround themselves with bears, and “surround” is the right word. The pure-of-heart CEO is hopelessly outnumbered. And so nothing happens.

For fans of innovation, this is like a football team owner who promises the Super Bowl but spends no money on free agency. Eventually the fans — the stockholders, the partners, the employees — give up. They stop believing. They find another team.

What is to be done?

Mike Maddock, CEOmike@maddockdouglas.com630.563.6415

Some Helpful TipsWe know this column could come across as a bit cynical. But we are truly hopeless optimists, so let’s get to some solutions. If you are a bullish CEO or a bullish innovator within the ranks, here are a few tips that will absolutely make your corporate life better — and more fulfilling.

Let’s start with counsel for the CEOs:

Recruit believers. Henry Ford said, “If you believe you can or believe you can’t, you’re right.” If you have people on your staff who don’t really believe change is possible or that the old way is good enough, for God’s sake, release them to find a more fulfilling destiny. If you don’t have the guts to do it, then please stop saying you are going to change the world. Because your people simply won’t let it happen, and you are going to look like a fool.

Hire objective senior managers. This is a nice way of saying you should bring in leaders from outside your industry.

Albert Einstein said, “One should not expect to solve a problem with the same level of intelligence that caused it.” Einstein was really smart (about management, as it turns out). If you have people leading your research, marketing and strategy group with a combined 40 years of industry experience, they are about to help you break your promise to your shareholders. Said differently, they are rolling their eyes at you. “You don’t get it,” they are saying behind your back. They know the rules. They know what’s possible. They know what can and can’t be done. They can and will bend the data to prove their points. Meanwhile, a competitive team with a combined zero years of industry experience is about to reinvent your industry. These people are going to deliver on the promise you made to Wall Street. You must go find those really smart, really capable, really courageous risk takers and offer them jobs. They will get it done. They will help you keep your promise. They believe. Most of your current team does not.

Promote failure. Entrepreneurs understand that each small failure brings them closer to the solution. So find ways to demand lots of baby-step failures that promote learning and create a culture of action. This will get you to the finish line and keep fear of failure from locking up your innovation engine.

Now onto the innovation leaders who report directly to the CEO. Listen to the youngsters. They can see things you cannot. Remember when you used to be the youngest person in the room and all the terrific ideas you had (but had problems getting implemented)? Take this advice:

Fail forward. Get into the habit of creating many experiments and celebrating the learning. For example: “In this experiment we learned that people did not understand our offer.” “In this experiment we learned we were charging too much.” And “in this experiment we learned that the button had to be in a different place.” Each “failure” is actually a success, because the team has learned something important and has moved one more step closer toward getting it right.

Control the framing. Every company has its own language when it comes to the innovation process. Many times this language has been linked to past projects. For example, the last team that created a “working prototype” may have overinvested in the experience and created unrealistic expectations for your team. That’s why we encourage you to invent your own innovation language. For example, calling something a “feedback concept” may be better than calling it a working prototype. If you control the language, you control the expectations.

Finally:

Quit. If you find yourself so afraid, so burned-out, so cynical that you can’t believe a big idea is about to happen, it is time to move on to the next challenge. You have the smarts, the experience, the skills to become an amazing change agent in another industry. Go find it. Your new peers will be amazed at how you can see things that they can’t and have the solutions that have eluded them.

When it comes to innovation, we are bearish on bears and bullish on bulls. We think you should be, too.

One last thing. If you have a favorite example of a company run by a bull and staffed with bears, tell us about it by sending an e-mail to Stephanie.s@maddockdouglas.com. We may do a column on it, we may alert its CEO, or we may just dump its stock.

G. Michael Maddock is chief executive, and Raphael Louis Vitón is president of Maddock Douglas, an innovation consultancy that helps clients invent, brand and launch new products, services and business models. Maddock is author of the upcoming book Brand New: Solving the Innovation Paradox — How Great Brands Invent and Launch New Products, Services and Business Models (Wiley, April 2011).