Connecting Dots explores the psychology of digital innovation leadership. Published by digital innovation leader, educator and investor Brett Macfarlane. Subscribe.
LONDON GB Last week I was delighted to connect with Paul Polman the ex-CEO of Unilever. In 2010/11 I helped run the Lipton Ice Tea brand globally. At the time Unilever attracted me because there was genuine work to improve sustainability and health outcomes in the RTD (ready to drink) sector. It was part of Unilever’s wider commercially-driven sustainability vision under Paul.
He’s a fan of my research but I’m more a fan of his effort to improve corporate governance. His organization Imagine aims to develop a capability and capacity for more long term builders. His analysis argues that the current bias to cost-cutter profiles on boards and c-suites delivers relatively poor commercial returns and resilience.
We long term builders accept the future is a moving target where changes and innovation are inherently part of the work. Long term builders don’t have to have an innovation focus, but it certainly accelerates performance and builds resilience. The ability to deliver innovation to the market is an indicator of an organization’s tolerance for change of any sort.
Can companies even change?
While there is a compelling rational argument for long term building, most shareholders and board members aren’t of this mindset. We know that any change requires sufficient motivation to change. If change is merely “essential” but not truly seen as “vital” there isn’t sufficient motivation to change let alone innovate.
So what motivates the drive to want to innovate in the first place? One research thread I’m digging into is the function of a morally worthy goal to generate sufficient courage to take intentional action in the face of risk. The emerging data suggest that innovation leaders are driven by a purpose greater than themselves, goals that benefit many people not just an individual’s needs. So what goals might generate growth, innovation and purpose that drives the next generation of firms?
What motivates change?
Paul’s passion for addressing climate, plastics and human rights issues through regenerative business models is inspiring. There is growing evidence and belief that doing good and doing well are mutually inclusive. We can create supply chains that regenerate to create products that are better, with greater social and environmental sustainability and commercial returns.
Most talk of sustainability smells too much like CSR or virtue signalling. It serves a purpose but isn’t reformulating the mindset to drive the next generation of leaders. Let alone develop new and better ways to meet the world’s needs, which is where innovation has a role.
But it’s hard. Just to think about it takes a lot of cognitive energy, even for seasoned repeat innovators. To focus energy productively it is essential to create some boundaries. As well as to avoid the traps of euphoric abstract generalization or depressive technical skepticism. This is why I like the idea of regenerative business models, as a goal they are something tangible to invent and build.
How far can a company change?
I am regularly finding successful innovators, who have the job of pushing boundaries are exceptional at finding an organization’s invisible boundary of possibility.
The boundary of possibility is an ever-moving boundary that sits in the air more than at hand. It helps define how much tolerance for change an organization can bear while building and progressing. Everything beyond the boundary is a distraction that sucks energy from the hard work of doing innovation.
This is why Paul’s work is important. It’s obvious that boards (and shareholders) set the tone and grant authority for how much innovation is possible. Even if they are many degrees removed from the front lines of innovation.
This is why we need to reflect on why only one in ten executives are satisfied with their innovation efforts. Executives for whom innovation is a top-three priority. They want to but aren’t truly motivated to. It is not a rational problem, it is an emotional problem. It is the difference between Kodak who died and Fuji who thrived in response to the same market changes.
What does changes look like?
Kodak’s boundary of possibility was its current reality. Whereas Fuji’s executive and board expanded the boundary of possibility. They granted authority for managers to look at their technology and find different uses and customers. For example, it turned out some consumer film developing technologies could massively improve medical screening.
One of my working hypotheses is that innovation leaders scare board members, which causes emotionally rather than rationally driven reductions of the innovation tolerance boundary. There are multiple ways they might scare them and how they respond unbeknownst to themselves. A misdirection of energy taking teams off task or even anti task.
This is an unexpected path of my research, but it’s proving quite provocative. Discomfort is necessary for real change, so maybe I’m onto something.
“Rules are for the guidance of wise men and the obedience of fools.”
Hits and Misses
Grieg Seafood - HIT 🤩
A former client, four years after we reframed their social contract it’s great to see them take a new approach to financing. Tying a $105m capital raise to pressure supply chain improvements to reduce deforestation is a great new application of the green bond model.
Monzo Plus - MISS 🤔
After the hype and great app UX, the challenger banks sure look like traditional banks. Monzo can call Monzo Plus a subscription or SAAS all they want but it’s just a monthly fee.
Netflix auto cancellation - HIT 🤩
Principles are what you do when nobody’s looking. Netflix will auto cancel paying subscribers who haven’t used the service in two years. Sure it avoids future liabilities and bad PR, but mostly it builds trust and keeps the customer base active so they can continue developing quality content.
Movements
My second wave of innovation leader research interviews is wrapping up. I am beginning the third wave which focuses on the experiences of executives and board members setting the “air” for innovation. It’s an exercise in mapping the array of experiences not a hunt for a single truth. If you can propose someone you know, or even yourself, nominations are most appreciated.
Beyond the research, I’m starting to explore advisory roles and consider projects to help design leadership development programs for change and innovation. Also, there is a podcast in development (working title: Failcast) and a book on Leading in Transition.
If you’re keen to chat or share feedback/thoughts let’s do a virtual coffee. ☕️
Stay safe out there and keep pushing boundaries.
Brett
Image Credit: The above is from a series I took on the Aguille du Midi towering above Chamonix FR on a day ski touring the Vallée Blanche.