The Paradox of Innovation
Many years ago, I created and delivered training for resellers of LiveVault, one of the first online backup services. At the time, what we were selling was very new and counterintuitive to most of our target customers. We were basically telling them that what they were doing and had been doing for many years (often 10+ years) was not only suboptimal, but fatally flawed.
To demonstrate why it was fatally flawed, I would lead a fun exercise. I would ask the people in my class to help me create the perfectly unreliable process. I set it up like this:
If you, being a ruthless competitor, could design a process that your closest competitor would have to follow that would absolutely, positively fail, what would that process look like?
Each of the dozen or so times I ran this class, I’d get much the same answers. The perfectly unreliableprocess would have these traits:
The person doing the task would be penalized for failure, but not rewarded for success
It would be tough or impossible to measure success until it was often too late
The process would run when nobody was around to watch it
The work itself would be tedious, repetitive and tough to automate
The work would be done by the lowest ranking person and would be considered a rite of passage, not something they’d be proud of
The list usually went on a bit longer. The punchline was always the same; all of these apply to how companies are doing backup today. In other words, it was the perfectly unreliable process.
How does this apply to new product development? Let’s try the same exercise. Let’s try to define the traits of the perfectly worst person to be responsible for building an innovative new product at a medium or large company.
They’d be far removed from real, unfiltered customers day-to-day
They’d be very focused on their own career development and managing internal politics
They’d be risk-adverse
They’d be measured and incentivized on this month’s and this quarter’s performance
They’d favor strong hierarchical control
They’d believe that customers know what they want (next)
They’d be highly decisive, inflexible and resistant to changing course with new information
They’d avoid admitting mistakes and/or correcting them
They’d be wired to say no first
They’d demand predictability and specificity by people who work for them (3–5 year projections, KPIs, etc)
Their vision of the future would be defined by KPIs, not by solving big customer problems
What do these traits all have in common? They are the traits of most corporate General Managers.
The very traits that make GMs succeed in large companies — maintaining control, playing politics well, avoiding risk, saying no quickly — are exactly the opposite of the traits of (innovative) entrepreneurs.
Great entrepreneurs are always learning, correcting, improving. They take feedback from everyone, everywhere. This means spending lots of time with customers, listening to people across their organizations, being flexible, being willing to be wrong.
So, why do so many new products get moved so quickly to (or start in) Operations — i.e. the GMs who run the core existing business lines and products? Because CEOs and other executives know and trust them. And, many CEOs have the same personas. Many non-founder CEOs rose through that or another similar corporation by pursuing and winning at general management — running existing businesses.
I’m not suggesting that GMs are bad or ineffective. Instead, I’m arguing that the traits that make an exceptional GM are the opposite of the traits of someone exceptional at building a new product or business.
I believe that this is the paradox of innovation at large, successful businesses. The very things that it takes to run a large business make it inhospitable to the founder personas required to build breakthrough products. It’s not just about incentives or recruiting smart millennials.
Building innovative new products is much more complicated and nuanced. It requires deliberate moves to insulate the founders from the GM personas and to get comfortable with more ambiguity and less control. It requires trust and respect for the internal founders, not resentment and a shortening leash. It’s not easy.