Lessons from 17 years in corporate innovation

Okay. Hello and welcome to the Company Road Podcast. In this week's episode, we're going to go deep on the enablers of corporate growth. And by that, I mean what it takes to really run change at a small level, but also at scale, looking at innovation and looking at innovation at speed, which isn't always a comfortable thing for leaders and teams and customers and partners and anyone really, us as individuals to really get our heads around and actually accomplish at some point. But I'm incredibly excited to introduce my next guest, Jacob Dutton. Jacob, you're CEO and co-founder of Future Foundry in London, which is a growth accelerator. And you're on a mission to really help large companies and give them a superpower, which is the ability to speed up, de-risk, and systematize the development of new propositions, new breakthrough thinking, by combining some of the existing advantages that they have with the innovation methods of the world's leading startups. Which is really cool. And you've spent the last 17 years or so helping some of the world's biggest companies like Hilton and HSBC and Microsoft. They're not small names, and you've helped them overcome innovation inertia in one way or another and invent some ventures and products and services that will take them into the future. And in your intro, you talk a bit about your deep-rooted belief in that innovation is something that's a learned skill. It's not an innate talent that we all have that sits with certain people and not others. So I love that, that sort of democratic lean on innovation, the fact that anyone can do it, and we'll get into that a little bit more. Anyone in the company, anyone on the planet can innovate, it feels, is the message. So, Jacob, welcome to the show. Really lovely to have you here.

Thanks for having me.

Let's maybe start with hearing about you and the sort of things that you do and what you believe your superpower is. How is it that it's come about, and how do you help people do certain things?

Thanks for having me. So, I mean, my background, yes, 17 years working in corporate innovation. I started my career in marketing. and advertising. So I thought that advertising was what I wanted to do. Advertising didn't last very long. So I was only really in advertising for a couple of years. I just thought that I was playing around the edges a little bit here. Advertising is fine. And a lot of respect for people who kind of work in quite a tough sort of industry. But actually, I just found myself more interested in the stuff we're advertising, right? The kind customer experience, the products and services that companies are developing, the business models of those companies were just more interesting to me than the superficial layer of how we tell those stories. I moved on pretty quickly. So after a couple of years working in advertising, went to work in sort of digital product. So felt that was the way that the wind was blowing in the early 2000s, which was like a good hunch in retrospect. And at the time, big companies were trying to figure out what does the internet mean for how we do business in the future. And I joined just beyond the bit where companies were certain that they needed a website and probably like a Facebook page and joined at a time where companies were starting to think about actually this could just fundamentally reshape how we create and capture value. I spent a good sort of 10 years on sort of digital products and services. Weirdly then went sort of full circle, went back to an agency holding group. traditional sort of ad agency holding group and helped them to build a corporate innovation consultancy in there to complement their sort of marketing and advertising offer. And then in 2021, co-founded Future Foundry with Katie, my co-founder. And as you say, our job is to help big companies to accelerate, de-risk, and systematize their approach to developing new ventures, new products, new services. I guess in terms of kind of a superpower, I think you alluded to it, Chris, in the sort of intro, but I'm a big believer that innovation is not the result of some sort of inspired genius, right? Like some sort of eureka moment.

Yeah.

And so tried over the last 20 years to lay bare the mindset, the methods, the approaches of Silicon Valley to help people to understand that this is a process, right? Like it's not an innate talent and it's a process and a handful of repeatable activities that kind of can be learned. And I think that's probably the most transformative impact that I've had on the companies that I've worked with is this sudden realization that, oh, perhaps we don't need new people. Perhaps we don't need to completely overhaul our culture. Perhaps what we need is just a systematic, scalable, repeatable process for uncovering customer pains, developing solutions to those, and scaling them.

Yeah, there's a lot in that. I think that I've seen a systematization. There's a lot of process. It It feels like it's become more and more public and more and more used, definitely in the last decade, where it was the reserve of innovation practitioners back then. But obviously now everyone's jumping in and whiteboarding, they're feeling empowered, and a lot of the similar frameworks come out. You see the same ones day in, day out. We work in a similar field. So I guess, what are you seeing as being the major shifts there, and how is it becoming easier?

I spent half the last 17 years trying to convince big companies that they probably should think about how they build this internal capability for driving new growth, new ventures, products, new services. I haven't had to do that for the last kind of 8 or 9 years. Kind of everybody's on that bus, right? Everybody knows that that's important. And then we went through— that's kind of phase 1. Phase 2 was companies understood that it was important. And so they looked to the design thinking, Lean Startup, Agile, sort of methods of startups and said, this is the way. And I didn't even have to educate around the right methodologies. Everyone kind of understood that those are the right methodologies. I think we're now in phase 3, where it's, we understand the methodologies at a theoretical level inside corporates, but landing them and executing those practically is really hard because bureaucracy, procedures, policy, and muscle memory for waterfall makes that really difficult. And so I think this is what I'd call like the third phase of corporate Right? Where now about everyone understands they need to do it. They understand how. It's about landing those methods and making them a bit more accessible.

That's it. I think the accessibility is really key, but also the understanding really in and around what the tools are, how to use them, what they can output. And I think the translation of what you do with them to value is always the harder part. I also think that breakthrough thinking, it's not all frameworks and outputs are created equal because I think the practitioner, what you can train yourself to see can actually be hugely, vastly different from just raw data and observations on the way through to many more kind of elevated and crafted insights and the sorts of things that would give you not only a much richer understanding of what the landscape is that you were looking at, if you were using it as a research tool, for example, but also thinking about how you might pivot from that to take a leap into something new. So I'm wondering what other barriers you're seeing to great ideas becoming possible in one way or another.

Most leaders that I speak to, most chief execs, I rarely talk to them about this threat of disruption, right? This looming threat of disruption. I think the consulting industry, and I think that the particularly the sort of innovation component of the consulting industry, has for years banged the disruption drum. Change is happening faster than ever. X percentage of the Fortune 500 are going to be replaced in the next sort of 10 years. The reality is that I found that's rarely what keeps leaders up at night. What really keeps them up at night is the money that they're leaving on the table, the opportunity that they're not grappling with. The reality is that disruption is beyond their tenure. So who cares, right? What's important is that their compensation is linked to share price, right? So if we're leaving opportunity on the table, that is a bad thing personally and professionally for chief execs and senior leadership teams.

Okay.

And there's probably never been more opportunity, right? Like customer behavior, some fundamental shifts there post-COVID. Some things changed more than we thought. Some things snapped back pretty quickly. There's some really interesting sort of emerging business models out in the world. It's a very interesting sort of technology that we can leverage. And this all presents opportunity. Most of that opportunity has been captured by startups, right? It hasn't really been captured by the corporate world at all. And if you look at the growth in terms of the number of unicorns that are being produced every year, startups have captured around like $4 trillion worth of this opportunity. The big barrier really is that there's a, there's an expectation gap, right? So chief execs will say, the vast majority of them will say, innovation is absolutely critical to our growth strategy. Really small proportion of them are happy with their company's innovation performance. And in my experience over the last sort of 17 years, I think there's probably like 3 things that tend to get in the way.

Yeah.

The first is that large companies tend to be just slow. But I think there's a reason for that. And the reason is that most people, most of the time, are focused on optimizing The business models, the products and services that they operate today. They're not really concerned with figuring out what might tomorrow's business model, product or service be, which is right. Like, we probably should be spending most of our time there. But it tends to be that, like, it's the default, everybody kind of snaps back to that. I think there's another blocker around sort of risk, right? So yes, we get design thinking, Lean Startup and Agile at a theoretical level, we're still actually operating in a completely waterfall environment. And when you're using waterfall to develop new ventures, new product, new service ideas, it becomes inherently risky, right? Because you're running the risk of not testing assumptions, investing too early in different initiatives.

Mm-hmm.

And I think the third sort of big blocker is that big companies are just kind of complex beasts, right? They don't enjoy the advantage of a startup where, like, starting from zero, like, there's thing to navigate. Big companies, there's a lot to navigate. Might be internal systems, legacy technologies, old-school sort of policies. Those are the things that tend to frustrate and really hamper changemakers.

I think there's an interesting point around innovation, and it's the conditions for success, I want to say, because actually big companies are not set up that way. It feels like there's a bias towards delivery or bias towards implementation, status quo in one way or another, and you're up against that. So if you come up with a breakthrough idea and new products or a service or whatever it is, you're having to align that and its expectation and its delivery model to something that exists in the organisation already. So what have you found as being some of the most helpful ways to really bring breakthrough thinking and business as usual together?

What every company wants to do is to leverage the stuff that they're really good at today. So it's most of the companies that we work with have very good established reputations, been established over the race of the long term. They've got access to like thousands, if not millions of customers. They've got really deep expertise, maybe in R&D or supply chain, whatever category they might be in. What they really want to be able to do is to leverage and blend that with the customer obsessiveness of startups, the lean experimentation approach of startups, the agile development approach of startups. I think that's the holy grail. And I think that companies have tried to solve that in a few ways. A lot of companies have built internal sort of innovation teams or units, which are good because they're very closely aligned with sort of corporate strategy, culture, process, etc., etc. But they tend to get frustrated very quickly. They can try and act like a startup, but in reality, they're still susceptible to all the bureaucracy, risk aversion that everybody else is. And I do think that they find it hard to bring external perspectives. A lot of companies try and solve it with strategy consultancies, right? It's going to get like a McKinsey, Bain, like a BCG in, see if they can help us straddle these 2 worlds of like corporate and startup. And I think it's obviously reassuring to get those names in, but it's also really expensive and the advice is pretty generic and the output is what, like PowerPoint? It's not implementation, it's not doing anything. And I think some companies have tried to straddle the 2 worlds by saying, we'll get startups in, we'll run some sort of accelerator or Demo day and by some form of osmosis, like the startup founder gene will just rub off on our employees. And I think that those programs are engaging. To what end? At some stage, you're either going to need to work with them really hard to integrate startup inside the corporate culture, or you're gonna have to buy them, right? And at today's valuations, that just feels like a really expensive way to innovate. But think about all of the advantages of corporate, right? Yeah, really great reputation, access to thousands, if not millions of customers, really deep domain knowledge. These are all of the things that a startup would kill for. I'd argue that it's easier for a corporate to be more startup than it is for a startup to be more corporate.

Yeah, interesting perspective there. They would love that in some cases to be as nimble. But I think, yeah, you're definitely right. There's definitely this element of the grass is always greener. The startup is seeking that establishment. The establishment is seeking more of that maneuverability. And somewhere in the middle is the answer. You borrow from the behaviors of other companies and other leaders in those companies and other practices in those companies to bring in. So I think maybe it's around levels of comfort, levels of awareness around the things that you would do, the procedures, the tools, the frameworks, and all of that. You've got to be backing yourself. I think there's one big theme around risk and probably around trust as well. Within a large corporate or large enterprise company, things are humming along and all of a sudden you're heading down a different direction. So how can you be sure, do you think, that you're innovating in the right way when you get around? You may have done your business casing, you're all set up, everyone's ready to go. But in terms of forging the path and then Making sure that it's kept on track? How do you feel you can safeguard for that?

I think there's a thing that every company who wants to innovate well needs, and that's a bit of a growth thesis, right? Where do we believe that growth is going to come from in the future? In the same way that a venture capitalist, private equity firm will have an investment thesis, and that's going to describe the different markets, industries, sort of technologies that they're interested in. I think that every corporate who wants to innovate needs one of those, because without it, you tend to become quite directionless, a little bit rudderless. Sometimes it's hard to know where are we going to point this capability? Where are we going to point this capital, these kind of resources? I think you've got to work that out first, right? Which big macroeconomic forces, market trends, customer trends, technology trends do we want to respond to? And where do we think we can win? I think that's kind of the first question. The second question then is within each of those territories, what are the opportunities that make sense for us to capture? So there's tons of things that you could do, but the job then is to work out what is it that we should do and which opportunities are most attractive to us as an organization? Once you've worked that out, I think then you can kind of start the work of sort of proposition development, understanding customer problems, developing, prototyping, testing potential sort of solutions to those, doing some sort of problem market sizing on that. And then eventually, obviously, hopefully being able to kind of pilot those, run an MVP, run some in-market experimentation and kind of build that business case that you're talking about. But I think one of the big sort of errors that a lot of big companies make is that The thesis isn't there, and innovation just becomes really like sporadic, accidental, a little bit random, you know. And the number one reason that we hear for business cases being shut down is, well, it doesn't align with corporate strategy. It's like, okay, maybe we need to work from the corporate strategy and figure out what our growth thesis and what our interesting sort of territories are.

The extent to which you have to prove or display or demonstrate where are you going, what do you think it'll deliver? Often that is put in front of, say, the board or the leadership team, and it feels like there are questions asked, you go back, you might I've answered some of them, but it feels like there's obviously a set of steps involved in getting it over the line. What have you found have been some of the surefire ways to get things through a lot easier?

Evidence, right? I think a lot of companies, particularly companies that engage in sort of innovation theater, so, you know, hack days, ideation competitions, all of that sort of stuff, innovate in a vacuum, right? They don't have any evidence for the ideas that they're presenting. Evidence removes opinion, right? And what I've been advocating for over the last 20 years and what we do at Future Foundry is to try and help companies to collect evidence for the ideas that they're proposing. What's hard, I think, is that a lot of people get stuck in a bit of a paradoxical death spiral because like you need some money to gather evidence for your ideas. And sometimes you can't get that money without a business case, but you can't build the business case without the money. So that becomes a doom loop. But ultimately, I think you need to collect evidence in 3 different areas. The first is company opportunity. Does this feel like a really well strategically aligned opportunity area for us as a company to pursue? Does it align with our kind of corporate strategy? Does it align with our goals? Does it align with our objectives? And you've got to gather evidence for that fit. I think the second thing that you've got to do is to say, do customers really have this problem? And is this a better or more efficient solution to that problem? Not just do customers have this problem, but do customers care about this problem, right? Do they care about it to the extent that it causes them a deep enough amount of pain for them to want to pay To alleviate it. Problem-solution fit is the next sort of evidence set usually that we're looking for. And then the third sort of set of evidence that we're looking for is product-market fit. So we've got a solution that solves a customer problem we think better or more efficiently than anything else that exists today. What does the market think? Right? Like, how do we turn that solution into a product and generate evidence around customer acquisition, revenue, sort of organic growth in market. And it's only really then that I would say you're fit to be able to build a business case that people can believe in. Now, the challenge is that a lot of companies that I speak to don't do that work to gather that evidence, and they just put fantasy sort of numbers. And that's just like widely accepted within those kind of corporations that, hey, it's just a guess. But I think that, you know, our job as innovators is not just to help companies to search for the next breakthrough new venture product or service. It's to use design thinking, lean startup, agile to collect evidence for the things that we shouldn't do as well. And that's going to be probably 90% of the things that you try. And so that is just incredibly risky, right? Creating a business plan, putting some fake sort of numbers in there, very unlikely to succeed. And it's why we see such a high sort of failure rate in corporates using traditional approaches to develop new products and services.

Yeah, I want to say that's what probably gives innovation a bad name, really, that you're basing it on an idea that cannot be substantiated in a way that people have confidence in, really. And I think that a lot of people struggle with that justification. They may have the idea, but maybe not the mindset, the toolset, the skillset, whatever it is, the way in which they can gather the data that will evidence their idea and take it to the next step and step it through the hoops that you've just been describing. I think the leap from historic data to something that's then projected around results and what it might deliver is always a big one. So you can usually substantiate a need quite easily with your evidence base if you look at your existing existing customers, and you might look at trends and you say, well, they're now behaving this way, and we think this might be an opportunity. It might be an emerging market trend as well, as you say, to hook into. But it's like, how do we get better at evolving those propositions in line with those needs? And if the evidence isn't surfaced and it doesn't present itself in a very transparent and obvious way, and in a way that a lot of people would think they would need it to for that board endorsement, then how do people still create some level of confidence around the future numbers and the things that it might deliver? It's a hard one. You can base it on something that's kind of the But you probably won't be exactly in the ballpark. Any thoughts on how to cook in that business case in a way that presents future value, but in a way looks pretty robust?

Unit economics are usually the way that we would do that, particularly if we're building some sort of digital business model, product, or service. Really what we're interested in is throughout our pilot, we'll usually run some sort of in-market pilot to collect evidence for around sort of 6 months. And over the course of that 6 months, We're usually interested in running experiments around customer acquisition and what's the best way for us to onboard new customers. We're interested in running experiments around the product itself, like how it works, how people use it, how do we make it better, how do we make it stickier, but also experiments around the business model. Is this the best, like, value exchange? Is it the best pricing model, etc., etc.? Over the course of that 6 months, what we're really doing is capturing some key unit economics, right? How much does it cost us to acquire sort of a customer over the course of those 6 months, what is the value then of that customer and what is the ratio between the two? Right. I think by distilling down to sort of unit economics, you can really use those then to play with different total addressable markets, obtainable market sort of projections and arrive at a figure that sort of makes sense. I went to the Museum of Failure a couple of weeks ago in D.C. and looked at a lot of failed new products.

Failure.

Yeah. Everything from like the Betamax to the DeLorean. I think the reason there's not many like digital ventures, product services in there. I think it's because it's easier to de-risk those than it is physical product development, because digital product development, I can collect those unit economics. We can do some level of sort of extrapolation on those. That's much, much harder to do, I think, when you're building physical sort of new products, that becomes a lot harder.

Oh, I haven't been to the Museum of Failure. I'm going to put it on the bucket list, I think. But yeah, you're right. The reason for there being not many digital products shown was maybe because there were too many that had failed. It's just second nature, it feels like, digital product development now that 9 out of 10 is just going to be water under the bridge and you're just, you're trying to push it forward towards that epiphany moment. But actually there's so much, because innovation seems to be a constant in so many of those companies that it's, like you say, it's not like we're shifting the whole of the business model one day because it's just a different application of the software or whatever it is. So I'm wanting to explore what's behind the people that make this all work well. And who are the champions when it comes to this level of growth acceleration? Because we talked about data analysis just then. Do you need a data scientist? to do that? Can you do it yourself? If you were listening to this, how would you take on some of these behaviors yourself? And who would you seek out as being some of the allies that could help you along the way?

The best teams that I've worked with have been staffed with sort of frustrated entrepreneurs, people who would love to go and do— build something. Like, the level of risk that presents is just too high. Sometimes people who have been entrepreneurs. So a lot of corporate innovation teams tend to be staffed with People who have exited that corporation have been kept on for a period of time to replicate the sort of magic, or they're kind of staffed with teams who you look at the people in that team and you think like they'll go and do their own thing. Like at some stage, entrepreneurial mindset I think is the most important trait. You're looking for people really who are comfortable with ambiguity. I think definitely like in the very early stages of does this problem even exist? Is this the best way of solving for that problem? I think you're looking for people who are. are adaptable to changing circumstances. As new evidence presents itself, are you able to take on board the implications of that? And are you able to pivot and adapt, not just as a team, but to pivot and adapt the value proposition, the business model? And I guess you're looking for people who are quite comfortable with limited resources. Corporate innovation departments are not dripping in cash and large budgets. It's mad when you think about The budgets that are wasted on marketing guff, faffing about in the metaverse or virtual reality and stuff. But if you gave corporate innovators a fraction of a marketer's budget, the impact of that would be transformative. But they don't. So you've got to be, I think, comfortable with doing more with less and like bootstrapping and hacking your way to some sort of evidence. Those are really the people that you're looking for. I think that traditional sort of employees or people with kind of an employee mindset, I think that's really, really hard to find amongst a traditional sort of employee base. You've got to work really hard, I think, to seek those people out. What you don't want are a team made up of traditional corporate hires who maybe are there by accident and are really uncomfortable with uncertainty and change and have been used to larger budgets. Attracting that entrepreneurial talent is difficult for a lot of companies, and entrepreneurship in itself is like a little bit of an oxymoron. But I do believe that you can find kind of would-be, have-been, or frustrated Entrepreneurs that make this process like a lot easier.

Yeah, fair enough. So catch them before they leave is the trick and make sure they can do some good with it. Work with that ambiguity, bootstrap, as you say, convert some of the quick wins where possible.

All entrepreneurs want a— or entrepreneurial kind of minded people want a level of sort of autonomy and control. So I think that is really important. If you can give that to people, it'll be a lot easier to hire people of that ilk. I'm still amazed at the incentive structures in corporates that don't really reward innovation talent in the right way. I think you've got to, if you want to hire would-be entrepreneurs, you've got to create an incentive structure that mirrors what they might expect on the outside of the corporation. But promising entrepreneurs that they can access all of your sort of unfair advantages, that's a really strong draw. I think there are a lot of entrepreneurs who've gone into big corporates and are just giddy at the prospect of being able to leverage like the R&D team, the scale of sort of customers, the in-depth knowledge of sort of supply chain. So I think Those are the ways in which you attract them. I think retaining them becomes quite hard, but ultimately what you've got to try and do is give them as much of the upside of entrepreneurship as you possibly can while trying to remove all of the downside really around financial insecurity, risk, reputational risk, that sort of stuff. That feels like the sort of formula.

Yeah, I suppose I've been in some of those situations myself where you're tempted into, say, a tech company and all of those conditions are right and you think, yeah, I'm going to have access to all the global team, and we're going to be able to do this, we're going to be able to do that, and the risk is gone and the reward— I don't know, some of the packages I'm sure are set up slightly differently from a conventional one. But an interesting point around creating the conditions of entrepreneurialism within the confines of the corporate structure of the organization, because sooner or later, and it happens quite soon, was my experience, is that you just feel like you're not in control and you don't have— even if it was a sense of control, you don't have that for Because as soon as you get into the business case and the decisioning, the, I guess, the landscape, you've either got to be comfortable with that or you'd prefer not to have it. I think that's quite a sort of fork in the road type moment.

Yeah. The way that I look at it is that entrepreneurs still have bosses, right? Ultimately, particularly startup entrepreneurs, they still answer to someone. You know, it could be customers, could be investors. I think the way that you've got to look at it as like a corporate entrepreneur, if you like, is that the company is the VC. Ultimately, like, you know, funding the exploration of new problems, new ventures, new products, new services. And there might be a board who are making sort of investment decisions. They're carrying out their fiduciary responsibility on behalf of the corporate. You're the startup and that sort of symbiotic relationship that you have to deal with either in a corporate or outside at some stage. And I'd argue that I'd much rather like a corporate master than like a venture capital master.

Yeah, fair enough. Yeah, I guess better the devil you know. So that's good. I'm also wondering about The, I guess, the concept of speed and the concept of velocity and comfort around speed. It feels anyway, there's a lot of progress in automation of systems and a number of these processes, and there are shortcuts being looked for all the time. But there are a lot of enablers of speed. And I think when it comes to leadership and the followership that then ensues around innovation, it feels like the whole organization can't run at speed. And then there's always a bit of a two-speed type situation where some people are running faster and the others are trying to figure out what's going on. So how do you manage some of those dynamics? Because everyone wants to be involved and everyone would love to run at the same speed, but they're getting frustrated because it's all just happening around them. What have you found works in some of those areas?

Speed is a big part of what I've been working on for the last couple of decades. I think clients are— clients tend to be shocked, uncomfortable, a bit disorientated when they work with Future Foundry, which isn't like a great advertisement, but I think it speaks to just how slow they have been moving, right? The way that we overcome kind of a lot of speed challenges is that we timebox everything that we do in 2-week sprints, and there are a number of sprints per phase. And in reality, the timeboxes are completely arbitrary, right? But they're there because unless they were there, it would go on forever, right?

Yeah.

There'd be over-alignment, over-analysis, and speed is important, right? Because if the speed of change outside the organization is exceeding speed of change on the inside, that's bad times, right? So at least somebody within the business has to be working at the speed of the outside world. There's new tools that make it even faster, right? There's a lot of AI tools that we leverage at Future Foundry and teach our clients to use that help us to cut down those kind of timeframes even more. The rest of the organization is not in that timeframe. And I think that's, Chris, kind of the point that you're making, which I think is why it's so important for innovation teams to be able to operate as much as possible as an independent unit and not do so much over-alignment. There's a real death knell, I think, for a lot of corporate innovation teams where they bring in like a lot wider stakeholders and try and sort of collaborate in that way. In reality, I think that things should probably stay within the corporate innovation team until you've got beyond the pilot and into some numbers that you can go and present. And then it might be quite slow to spin a new venture into an existing business unit or spin it out into a new one. But in terms of the discovery of new opportunities, the development of new propositions, validating those in market, I think too many innovation teams involve too many people too soon. That part just shouldn't and cannot be slowed down.

That's definitely evident if you think about design thinking and the usual situations we find ourselves in where it can involve a lot of people in the process. If you want it to, it can be very inviting and it can be very exciting for a lot of people to get involved. I'm wondering, like, maybe to build on the previous question, who to involve to get that optimum. You want the best team in that bubble, but you don't want everyone involved in it. And obviously you're going to bring in the naysayers and everyone too. And if that happens too early, then the timing might not be right. So how do you think about your release strategy from the inside out into the broader realm of the organization?

Involve as few people as you possibly can is the advice. I mean, the dream scenario and like the most effective teams that I've ever worked with have the enthusiastic support of their chief exec or somebody very senior on the leadership and executive team, and they've empowered this team to go away, find the evidence, bring us the evidence. There's a pot of money, and once you can provide us with the evidence, we'll invest the money to go and spin these into existing units or spin them out into new units. That is the most functional way for corporate innovation teams to operate. They really die When they think that their job is to spread like a culture of innovation, like around the organization. My argument would be that probably needs to be a separate group, right? That's people who are looking at the things that you're doing and the approaches and the methods and the mindset of your team and are doing some level of programming around the organization on that where we can do all the happy clappy stuff and like a little bit of sort of theater with the rest of the business. But involving people in the work of like problem discovery, proposition development, in-market experimentation, like Like that's wild, right? Like a marketing team aren't going to involve payroll, IT, finance in the development of a new ad campaign. Why are innovation the only people that need to bring people on the journey? If you need to bring people on the journey, I don't think you have the right level of permission and you need the right level of permission first and you've got to keep it as small as possible, right? Because you will get really bogged down in that sort of discovery and development process. The time for kind of stakeholder management is once you've collected that evidence, right? Now we've got an investment case, we've got a business case, we've extrapolated out some of those key unit economics. We think that this is something that we should pursue based on all of this evidence. Then yeah, absolutely, there's a job to do around securing that investment. But that's as much of the stakeholder management as a corporate innovation team should be doing. And I'm amazed at how many are given the task of spreading this culture of innovation around the business when they've got work to do. No one spreads a culture of marketing around a business.

It's like the secret that everyone wants to know. Are the innovation It raises interest, doesn't it? People want to know what's happening, and some people want to get involved, and it might not fall within their role, but they pay interest. They want to give it some attention, really, see if there's anything they can help with, but it might not be the right fit. But all of that is time-consuming to figure out. It takes somebody to facilitate all of that, all of those conversations too. So it's a good point. Yeah, I'm also thinking a little bit about over here, it's a little bit different. My time in London, I was working in a similar role to you, really, in innovation, product and service, new propositions, new ventures, and it felt like it was very much part of BAE, whereas over here in Australia, radical innovation is really the exception. You're trying to build a lot incrementally and you're trying to— it's much more in favour of that A/B testing and experimentation from empirical evidence that sits within your product somewhere already. You're just evolving things on a product roadmap potentially. So for the people over here that have a lesser mature practice or corporate innovation outfit or structure, what's the best way, do you think, to get started and start to think about new business cases, new options for diversification within products and services? Because if there's no function, if nobody's been officially trained, then who should start and how should it start?

I think that is interesting. It's something that we see a difference in geographically. I think maybe it's slightly unfair. Like, I think that a lot of companies are very good at PR around innovation. And the reality, like when you lift the lid, is that people are faffing about with Meta headsets and stuff. We're not really building anything of value. I wonder if Australian companies maybe need better PR potentially, or whether it is maturity I think it can only start with one person, right? Like it has to be a chief exec really. I've yet to successfully convince a chief executive who doesn't want to invest in the development of new ventures, products, services. I think there are ways to like open eyes. And ultimately, I guess I would say that there are probably only 3 ways to grow, right? So every chief exec, but particularly of publicly traded firms, that the compensation is directly linked to share price. And you've got to demonstrate that you're doing something that growth or sort of capitalizing on sort of new opportunities. But there are only really 3 ways to grow. You can either decouple growth from production volume so you can increase your income proportionately without increasing the amount of stuff that you have to produce. I think asking that question, like, how might we decouple growth from production volume is a really good sort of question to ask to a CEO to get them to think about maybe a shift from sort of product into services. There's a question, I think, around underutilized assets. Like, how do we leverage those in new ways? Like, how do we maximize the potential of the resources that we've got and create some additional shareholder value without investing in kind of new things? And the third way to grow is to think about new geographies, new customer segments. How do we find new customers, new applications for the products and services that we've already got? Like, those are the 3. sort of questions that I would ask. But you can't, as an employee, I don't think, instigate this. It can only be instigated from chief exec, because ultimately the support that you need is theirs.

Yeah, no, good answer. It's great advice there. I'm wondering if I can also flip the question, which is maybe because in your experience, the hard lessons learned, I guess, is probably how I'd frame it. But what would be some of the things that you would definitely avoid in the innovation space that you think, I learned the hard way there, I'm going to have to share it so that other people don't fall into that trap?

Yeah, absolutely. I think that I was quite a big believer, I think, in the early days of, in like open innovation. How do we as a company put our challenges out into the world and have other people with existing solutions or have got solutions? How do we get them to respond and bring those solutions in? And I spent 3 or 4 years helping companies to design and implement open innovation programs. Some of them were startups, some of them were online platforms. And that didn't work for a ton of reasons. And I've come to believe that open innovation sits a little bit more in the innovation theater camp. Like, it's quite an easy activity to do, to throw a problem out into the world and see which kind of solutions come back. But it's a challenge, I think, for a few reasons. One is, I don't think that we understood fundamentally enough the sort of the problem really. And so because it was quite easy to put problems out out there and get solutions. Every and any problem, like we just fired out into the kind of ether, I think, without really understanding it. And I think the closed innovation, which is what I would advocate for, forces you to understand those kind of problems a little bit more, a little bit more deeply. The second reason that open innovation as an approach, I don't think worked for what I was trying to do, is that it's very hard to sort of integrate things that like aren't invented here. There's a lot of not invented here syndrome. If it's a product or service, if it's a startup, like it becomes really difficult, right? Because yes, you can be a customer of that startup. They rarely pass kind of procurement or like quite basic sort of data security sort of checks. And like it's impossible to acquire them or like impossible to acquire most of them. And I think the other reason that it failed is very like like problem-driven, which I think is good, but incremental because it's only known problems, right? We're not solving it. We're not figuring out what the unknown problems are. Everything felt a little bit like, here's a more efficient way to produce the widget. Here's a way to reduce the cost base here. Wasn't really unlocking sort of transformative growth. And 3 or 4 years working in that space, I think it's really good from a programming perspective and getting people quite excited about new ways to problems, but it is not the best way to accelerate, de-risk, and systematize the search for new growth.

You almost need to take the more objective stance, but I'm sure you've seen this, like plenty of innovators are out there to design the thing that they want to design. It's not always for the good of the company. That's the flip side to entrepreneurship, which is channeled. It's definitely there and it's present, it's alive, but it's heading in the wrong direction. Do you see some of that?

Yeah, there's— I think the process makes it quite hard for people to get away with that. I guess what I definitely do see quite a lot of the time is companies being quite solution-led. And by that, I don't know, like the exec have heard about generative AI or large language models or metaverse, and now it's, oh, we've got to go and find a problem for this kind of solution to solve. We see that quite a lot. And then like reverse engineering in that sense. So that's a challenge. I think, as I say, like our process makes it quite hard to do that because Everything is kind of problem rooted, but we definitely see people with hammers looking for nails.

That's the one. That sort of behavior has been around for a long time. Obviously it's pretty ingrained. We're talking a little about marketing. It's a classic example. There's a new bit of technology or there's a new widget, you know, and you've got to make something, you've got to find the problem that it solves, and then there's your campaign idea.

But I'm pretty sure that marketing is the only industry in the world that kind of— I see this format every week is what does latest technology mean for insert technology here. And it's like very guilty of we need to try to shoehorn this into something somewhere for a can line or something like that.

I think your point around closed and open innovation is a really interesting one. I think there's a lot of dynamics and shifts there happening between, I guess, more of a centralized business model and decentralization through blockchain and other things. Do you feel like there's going to be a split in the can between who goes where in terms of innovation? Do you think that innovation will stay in both areas? As in open or closed?

I think you've probably got to be doing both and being a bit ambidextrous in that sense. I think under the understanding that innovation is most likely to solve your horizon 1 problems, right? But it's not going to unlock horizon 2 or horizon 3 growth. I think the best stack for most companies is probably like a closed innovation capability, discovering problems, developing solutions, testing those kind of in-market. An open innovation capability where we can just throw problems out into the ether, see what comes back, see if we're capable of integrating that, and then some sort of corporate venture capital unit that can go out and invest in interesting startups. That feels like kind of the most optimum stack. I guess I've always been focused on closed, and I'm most interested in closed because that's the method that I see generating the largest returns in the most exciting areas.

I think the broader question, stepping back, is also where to focus and when to choose your battles in a way. So in terms of an organization needing to change, are there certain telltale Are there any signs that you're looking for that kind of just speak to you and that's, that's why we need to do this right now? Are there signals like that that you see?

It's really interesting because we always talk about a good fit client for Future Foundry is if you imagine a growth curve of a company, like it's not here. So we're no good for like startups and stuff because they've solved, they're able to move quickly, do a lot of things. It's not companies who are like at the peak of their powers because they believe that they're completely invincible. But it's also not companies who are just like sliding towards irrelevance at the bottom of that curve either. It's probably people who are just like, they've come off the sort of chain on the roller coaster. They're just at the top and they're just facing over the edge. That is the market for Future Foundry and kind of what we do. And how do you know if you're on the edge of a precipice? Which sort of products and services that you sell today are in decline? Why are they in decline? What opportunities are you not capturing? Do you see opportunities passing you by? Is there a lot of we should have done that 5 years ago talk? So it's the, what are the fundamental problems in the existing business model? But also, is there a level of opportunity that's being captured by others that you're not? Like, those are the telltales.

Yeah, no, that's really good. I think you've got to be tuned in, obviously, to the climate of your organization. And in that situation that you were describing, it'd be hard to see because everyone would think, oh, we're doing brilliantly. And you'd either be exposed to some conversations, you may not see that picture. So yeah, it feels like something would come from the leadership unless there was some kind of insights team or maybe a product team would have a clue if they were seeing how people were responding to products and that there was a decline, as you say, in sales or in engagement or something. But yeah, I think having your finger on the pulse, obviously the measurement frameworks that sit around it, the governance. In and around how performance is running, very important to then figuring out. So if you as the person within that organization are close to some of those signs and signals from the results and the metrics that you're seeing, then that can be the starting point for some of the things that we were discussing earlier as well. So really good to hear. So Jacob, like we've talked about a lot of things today, and I'd love to just finish with a final one, which is probably more around innovation and the fact that it really wears people down. It takes a lot of energy to do what you do and to keep doing it. And I'd love to know on a more personal note, what keeps you energized and And what keeps you focused on the right things?

I think we do quite a good job of measuring. Last year, I think we worked on around 7,500 different opportunities with clients. Of those, only 1,700 made it to the next phase of developing a new proposition. Of those, like, we killed about 1,200. Like, only 400 made it through into pilots, but we launched like 100 new new ventures, products, services. Of those, like 90-odd are still like running and revenue generating and growth contributive. And so I think it's really important to take a step back and realize that, okay, you've launched 90-odd things out of 7,500. You know, that's 7,400 things that have died over the course of the year, but that's what led you to the 90, right? And those failures, those things that didn't work or didn't pass the stage gates, your winners are going to pay for those kind of 10 times over. And I think it's a question of sequencing, right? If the last 10 things you've worked on have failed, it feels quite hard to carry on. And so I think what's important is that you take more of a portfolio-level view in terms of like how you're performing and recognize that the vast majority of the things that you're working on are going to fail, but the things that don't are going to pay for those 10 times over. And that's how we stay positive. Pivoted through 7,400 failures, and I think how other corporate innovators can do it too.

Yeah, I love it. That's a quantified view on failure is okay, which is good. And the light at the end of the tunnel is always there. So it's really encouraging to hear. Thank you for the chat today, Jacob. It's been really interesting talking to you about your perspective on the world of innovation, products and services, and all the twists and turns that it takes along the way. So really appreciate your time. Thank you.

Really enjoyed it. Thanks, guys. Thanks, Chris.

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