Where Successful Innovation Lives - Strategyzer Webinar - Sept 2021

Hello, welcome, everybody. My name is Nik Kimovic. Welcome to this month's Strap Chat. This is where successful innovation lives. I'm going to share my screen with you because I'm excited to introduce who we've got on the show. You'll be able to see it in just a second. Welcome, everybody. Hello. Oh, interesting. So this is fun because it's not allowing me to share my screen, so I'm going to try one more time. Let's try it. Let's see if this will work now. Excellent. You can all see my screen recording is progress. Good. So welcome, everybody. Thank you for joining the call for this, this month's Strap chat over here. Excellent. So on the show today, we've got Alex Ostevalde. Alex, how's it going?

Pretty good. Very good, actually. Sunny here in Switzerland, so I can't complain.

Excellent. And it's nice here in London as well. Tenday, how are you doing? And you've got some big news for us.

Yeah, I'm Zimbabwe. It's also sunny. And of course, I just got shortlisted for the innovation award with Thinker50. That's pretty cool.

Round of applause.

Thank you.

Congratulations, Rodrigo. We've also got you on the show. It's fantastic. I'm going to do a more formal introduction for you, but you are the CEO of Tenova and you're joining us all the way from Central America. Right. Welcome to the show. How are you doing?

I'm doing great, thank you very much. Thanks for having me here.

Brilliant. Okay, so that's who's on the show, but we'd like to know a little bit about you. Where are you calling from? Let us know in the chat. Let us know from where you're calling from all over the world. I think we've already got a few people sharing.

Hello, Russia, Mexico, Slovenia, Malaysia, Thailand, also people staying up late. Sweden, Russia.

Cool. Brilliant. And keep letting us know in the chat. And also we've got our Strategizer series of books that you definitely need to be checking out as well. Let us know which one's your favorite there. And while we're just waiting to start, if you want to get your phones out and go to mentee.com or you could scan the QR code. That's a great way that you can actually get involved and we can get your perspective throughout the webinar.

We got people from El Salvador. I think they joined with Bitcoin today.

That's the news. What are your thoughts on that, Rodrigo?

Well, this is. I'm a big believer that cryptocurrencies are going to be the future. It's an awkward spot to be in, but we're doing innovation live in El Salora as we speak and the journey just started, so I guess we should talk about it in a couple of weeks if you guys want. This is going to be interesting. Legal tender. So it's for the corporate side, for the business side, for the entrepreneurs, for the individuals.

It's live that's exciting, innovation happening in front of our eyes. So thank you, everybody. It's absolutely the hour on the dot, so we're going to start on Swiss time. Welcome to those of you that have just joined or joined by Alex Osterwalder and Tendai Vicky, as usual. But we're also got the special guest of Rodrigo Tona, the CEO of Tenova. And in terms of what we're doing today, there are going to be four parts. First, we're going to be looking at and answering the question of where does successful innovation live? And Alex is going to be running us through that. Then we're going to go through the invincible company of the month, which is of course Turnova. And Rodrigo will be putting together a little bit of presentation and then we'll have some questions and discussion with Tenday and Alex and Rodrigo. Then we'll move on to what's becoming one of the most popular parts of the session, the Hot or not, where we get a little bit controversial and we kind of divide opinion between what's hot or not around three different topics in the innovation space. And then lastly, we're going to go through the Innovation Readiness Mini assessment, which is where we reflect back on what's kind of been covered and ask some questions that can help us think about how we're doing in our own companies in terms of innovation. So if you haven't already, get your phones out and go to mentee.com or you can scan the QR code that's there. If you're going to go to menti.com, you can do 919-28239 and you can put that number in there. I'm going to share a different screen now, just a second, because we're going to go over to and ask a question that we've got ready for you.

Switching to Menti is always the exciting moment. I was in a webinar with a lot of people and Menti just blew up the whole system, fun and interactive and it was a real innovation death.

I really hope that doesn't happen today. So I hope the Zoom Gods are with us. Thanks. For those of you that are giving us likes, I don't know what it means, but I like that we've got plenty of likes people are sharing with us already. So the first question that we've got to ask you is just to start, just to get the conversation going, where does innovation live in your organization? Just let us know. It's just kind of a fun way to start the session, be interesting to know and see if maybe it relates with what we're going to be talking about later on in the session. So we've got culture in everyone, people everywhere. Culture and DNA. Innovation department, inside product. Lolo. What's Lolo? I'm not sure what that is. Let us know in the chat if you know what that is with the founder.

Like in our dreams. Like in our dreams. It's not really happening. It's just in our dreams. We'd wish to make it happen, but it lives in our dreams. You gotta make dreams reality. And Rodrigo will talk about making dreams reality.

It's possible. Not really anywhere. Oh, I work with local government. Dedicated department hub everywhere. Company Culture. So culture's coming up quite a lot.

Owner's crazy whims.

What was that one? Owner's crazy whims.

Yeah, in the bathroom with my buddy and I have an idea.

So separate Strategy and Innovation department. So lots of good ones. No place sad. Let's see if we can end it on a positive note. From janitor to the CEO. Nice. We'll end it on a positive note there and feel free to keep scrolling through. You'll be able to see more of those. But what I'm going to do now is go back to my presentation. We should be able to see this now. And we're going to be moving on to a couple of things here, so. Oh, I don't think you can see my screen. It's always. It wasn't the mentee that blew up today, it was screen sharing for me for some reason. So let's see if we can get this working now. So before we get into it, I just want to mention that we've got the Testing Business Ideas virtual masterclass. It's going to be with David Bland and also Alex Osterbauder from 21st to 23rd of September. If you haven't already, please register for that if you're interested in attending that. Tenday. I don't know if you could share the link to the kind of sign up page for that.

I just did that.

Yeah.

Excellent. You're very good. And Also, we've got a boot camp, that virtual boot camp that we're looking to do. I think that'll be early next year. So if you'd like to register your interest in that, that's a possibility there as well.

I've also shared the link for that one as well. Don't miss that one. It's going to be really cool.

Excellent. We're a good team, we're getting there. But what we want to do is move on to the where successful innovation lives part. Now, this is the part that you've been waiting for, so, well, part of it. Obviously the company of the month is going to be huge. So, Alex, I'm going to pass it over to you. I'll stop sharing.

Okay, let's see if I will succeed in breaking Zoom again like usual. So I'm going to keep it relatively short and just actually insist on one kind of key message. But I want to show it's a good piece of data, actually, that I use a lot with leaders to show them how well startups are funded. So if you look at this state of Venture report from CB Insights, great company, does great research. The numbers are crazy. Startups have never been as well funded ever before. What does that mean? Your core competitors that are going to disrupt you if you're an established company, small or big, they're getting really well financed. Much, much better than most innovation departments. I'm not talking research and development, R and D, I'm talking innovation. Innovation is not as well financed as startups. And then if you look at valuation, the valuation of startups is going through the roof. Now we can think of this, whatever we want and say bubble or so, but it does mean that acquiring companies is getting more and more expensive. So it's less and less a path and say, oh, we don't innovate, we can just buy. Well, look what happened with Discord. If you read in the news they rejected a $10 billion Microsoft offer, right? So it's getting harder and harder to just acquire. Now to the topic of today. Where does innovation live? So we often hear, everybody needs to be an innovator. Yeah, well, kind of. So some of the innovation indeed should live here in what we call exploit in your existing business units. You know, the typical kind of efficiency innovation. But more and more we should focus on exploration because otherwise we'll get disrupted by those really well financed startups that we've seen. So quick repetition. Many of you have maybe seen us talking about this. There are three types of innovation. Efficiency, innovation about processes, Sustaining innovation about products and channels and then transformative innovation, really. New growth engines. They can live in different parts of the organization. Everybody should try to make their business better. Not everybody needs to be an internal entrepreneur. Rodrigo can maybe elaborate on that a little bit later on how that looks like at his company. I'm just going to go into one message where innovation needs to live. One part, one area where innovation needs to live. And I'll start with the illustration of Logitech, Logitech Swiss company. They're very well known for having made computer mice. And so but they needed to pivot and they hired a new CEO a while ago, Bracken Darrell, who infused an entrepreneurial spirit in the company again. And we call this the entrepreneurial CEO, and he spends 40 to 60% of his time on innovation. So what I want to show with this is that innovation needs to live at the very top because otherwise it won't take off. So we can go into details where in the business units it needs to live and where in which areas and where in the org chart. But if it doesn't live at the top, innovation will not happen on a large scale. So if we look at Logitech, just want to show this a little bit. They have five major areas like productivity, gaming, video, music, and smart homes. They said we're going to invest in these areas to become the leading cloud, peripheral player, Bluetooth speakers, tablet accessories, video calibration, PC gaming. And what this means in our little kind of can Google, the portfolio map is that you need to allocate the resources from what Bracken Darrell calls the trees, the established business. They're grown, they're big, but they're going to fall over into the plants, the emerging businesses and the seeds, the businesses of tomorrow. And they reallocated 75% of their resources from peripherals to the new areas like Bluetooth, speakers, tablets, video, collaboration and gaming. So you need to make sure that when you want innovation to happen somewhere and growth to happen somewhere, that you allocate the resources there. Second example, same message, slightly different solution. Innovation needs to live at the top. Could be the CEO, but I'm going to give you a slightly different model. And I'll start first with the business models first and then go into how they made this reality. So kspingan, this was about a decade ago, a traditional finance and banking conglomerate. We actually portrayed them as, as innovators of the month, company of the month, Invincible company of the month. They said, we're going to use these technologies, biometrics, big data, AI blockchain and cloud in order to do two things to boost efficiency, cut costs, improve client experiences and strengthen risk management. So they would make it live, innovation, live in the key businesses. An example of that, kind of a scary example, is how you can apply for loans online. And they would use this technology here to observe micro expressions of your face to see if you're lying. And they would use that to give out loans much faster. And if you look at the data here, how fast it went, it's pretty amazing. So they got a lot new sales, a lot new loans, applied much faster. And this was game changing. This is when innovation lives in your core businesses to make it better. But of course they said, well that's not enough. We are investing in this technology to create completely new growth engines. So innovation needs to live in an exploratory space as well. And I'll show you how they did this. They said we're going to use these technologies to invest in five growth arenas, Financial services, healthcare, auto, real estate in smart cities. And if you look at what happened, they actually I'll give you one growth example where they went from ideation to testing and persevering all the way to transferring it to a core business. The most famous example is Pingan Good Doctor which became the biggest health platform on the planet. Think of it, an insurance and banking conglomerate built the biggest health platform on the planet because they invested in innovation outside of their core businesses in completely new arenas. So innovation lives in the core, but it also lives in a separate space where they can explore. And here's the key. In that space, failure is an option. So you can see here three business models. I'll mention two. Haoche secondhand car platform, Haofeng, a real estate platform. They completely bombed, it was a failure. So they had to retire them successfully retire a failed business. And that's why they could actually succeed. And even based on those learnings, they made some good acquisitions. They invested in Auto Home and finally acquired autohome based on the insights they had from experimentation. So what you can see is that innovation clearly lives in the exploitation engine, existing businesses and in the exploration engine. And to achieve this, they radically invested in new infrastructure. 22,000 IT developers, they hired 500 plus big data specialists and they generated 2,000 global patents. The result is they went from the top 500 companies to the top 20 companies on the planet in about a decade. That's amazing. How did they do this? Because they let innovation live in both sides of the organization. So Peter Ma, the founder, hired a lady Jessica Tan to take care of innovation and she became the co CEO. And then they even experimented with the arc chart and they said, well, I'm going to be the chairman, Peter Ma. And they hired a CEO who completely focused on execution, running the businesses beside Jessica Tan as a co CEO. And they hired a third co CEO, Jason Yao, who would actually build a bridge in between and focusing on technology. So they made sure innovation would live everywhere, but would live in a different way in efficiency, innovation, sustaining innovation and transformative innovation. So I just wanted to leave you with that quick message of two examples. But the key message here is when innovation doesn't live at the top, it will never take off at scale. Over to you, Nick.

Brilliant. Thank you so much, Alex. That, wow, you packed so many insights there. I saw Tendai even taking pictures of your slides. I think he's going to tweet those out. It was just packed full of insights. Thank you. We're going to move on to our next section now. In this next section it is our Invincible Company of the month. And as I was mentioning before, we have Rodrigo Tona from Turnover, the CEO of Turnover. And just to do a quick introduction of him.

Here we go.

That's the Invincible Company of the Month, Rodrigo Turner, CEO of Tenova Group. Tenova is a sustainable packaging company based in El Salvador and they have five industrial plants across four continents. They have 2,000 employees and they supply customers in 39 countries. We thought Tanova would be a really great example for this month because they're not too huge like a Fortune 500 company. They're that it's almost inaccessible for some of the smaller companies to understand what they've done. But also they're a good sized company. So there's a lot that they've done and that we can learn from. So Rodrigo was named most influential entrepreneur by Directo y Negocios magazine and he's considered one of the 15 most ethical executives in Central America by Summer magazine and was named Sustainable Champion 2021 by Purchaser magazine for helping some of the world's largest companies in achieving sustainable and environmentally harmonious business models. So with that I would like to hand over to Rodrigo.

Thank you, Nick and thank you Alex and Tenday for having me here. It's a pleasure. Let me go ahead and share my screen. Is it good, Nick? Perfect. So first of all, it's lovely to be here. Amazing people from all over the world. We all have to learn from each other. We like to consider ourselves that we are a 50 year old entrepreneurial venture so even though we are 52 years exactly today, which is really nice to share with everyone, we are always learning how to do new stuff. Let me see if I can. Is my projection going right? Perfect. Okay, so I'm going to share a little bit the story of us to how we're changing and how we're transforming. The thing that I want to leave everyone here is we have been a packaging company, but in the last four years we've moved from making just flexible packaging to being the largest participant in the last mile delivery of Central America and the Caribbean. All of this has come through a turbine of innovation all over the place. How we have become a resilient company is by constantly reinventing who we are, by really betting on competing on superior business models, but really transcending the industry and the products that we make. That's really simple to say, but it's hard to do. There are many examples as to how companies have transformed themselves. We like to think that we are a group that we started in the plastics business, but really we're moving into the sustainable, technology driven innovation business. I'll just use a couple of very simple images to show what we are. So we were this company that we were growing extremely fast, you know, exponential for a brick and mortar business. We were doing everything great and then all of a sudden, four or five years ago, we get hit by this disruption which is the impact of plastics in the world. We had been doing a lot in sustainability we had been doing, but all of a sudden our product was no longer going to be used. So we had two decisions. Either we dial with the business and the product or, or we try to reinvent who we are. In this journey that Alex was mentioning, we had a big challenge. We not only had to protect our core business, we had to transform our core business, make it able to develop new businesses and then from there grow into completely new areas. That green little box over there, which were businesses, we had no idea we could participate. So this is really what you're looking at right now. It's our value strategy. So we're trying to double the value of our company every five years and we're no longer doing it doing the same thing that we were doing five years ago. And this is a 52 year company. So the challenge here is how do we double value without doing what we've been doing for the last 50 years. We had to create this corporate space where we had to transform the core. And I'm just simplifying this. It's very similar to what you were showing Alex where our core business has to undergo significant transformation. So we need transformation to happen at the core. We were a company that believed a lot in operational excellence. We were experts at Lean Six Sigma. We were very precise, we were very systematic. And we had to transform just continuous improvement into innovation, transformational continuous improvement, which is very different. It's very different. I told Alex this. I felt very proud that we were making the best typewriter in the world. But I realized that we were going to die making the best model of typewriters that you could make. So we had to move further from just making the best things that we could to reinvent and destroy ourselves. So when we hit that wall, which was really not a physical wall, it was just, we knew that it was going to happen. We didn't know when disruption was going, but we were going to die. At some point we said, okay, if we want to extend the life of our business, the first thing that we need to do and the first strategy that we set out five years ago, is we transform the core. And the core needs to be transformed by bringing innovation to a group that was experts at exploiting the business. And that's where the first challenge came around. The second one is while we were doing innovation internally, we started to see that we had a lot of things going on internally that we could share with the outside world and we could partner with entrepreneurs, we could partner with new people that were challenging the same challenges as us. And we decided to open up and move into the venture space with a very focused mindset that we were going to co build because we had a lot of expertise from the core business that we could expand to the outside. Then eventually it was a reverse. What we've been learning from the venture side, how do we bring it back to the core and transform it? So we decided that we needed to reorganize, create this group of corporate people that were living, breathing innovation consistently, and they were in charge of sustaining the transformation of a core business while promoting and giving enough combustion to the venture side so that both were growing simultaneously. Amazingly, the venture side is now proving that it can grow faster and bring added value, incremental added value to the core business, which was something we had no idea we could do five years ago. Doubling the size of the business through innovation is really possible and we're doing it. This is the innovation roadmap, just to give everyone, I guess a lot of people have done this exercise or this is a tool that everyone can use. When we started, we needed to set a Baseline. Where are we at right now? And we're very systematic. We approach everything as a system. We don't believe in random experiments. We believe in forcing experimentation through a systematic approach. We wanted to understand how our culture, our strategy and our practice was going. We partnered with Mexico that they're using, the tools they're using. They brought the model from Strategizer to us. This is what we ended up. This is an X ray of where we started. It's crucial for anyone that wants to do a transformation process or an innovation engine next to a core business to really understand where you're good at and where you're not good at. Because it's not as simple as going to HR and saying we need to hire a new function, which is innovation that doesn't exist. We need to transform our culture and it's going to take time and it's going to take resources and it's going to be painful for everyone. And so we wanted to do a little pull. Nick, if it's okay with you, to share where people think that innovation is, where the biggest contribution comes from, the cultural changes.

I've shared that. That should be on people's screens now.

We should put Covid to contributors to cultural change.

Oh, yeah.

Always good stuff going on in the chat as well.

Right. Okay. I'm going to give people another 10 seconds, I think. How many people have we got? 250 responses already. So we're doing pretty well.

Yeah.

Oh, now nearly 400. So I'll give people 10 more seconds and then we'll. Then we'll close it.

Nice. Three, two, one.

Spatian.

Awesome.

Yeah, So that's amazing. And it's really interesting to get everyone's feedback. Strategic guidance and resource allocation are definitely two critical components. It doesn't matter how much resources you have, if you don't have a strategy and you don't know where you're going, then you're just burning cash along the way. So let me take the poll down, Nick, and share a little bit. If I can go back to my presentation. There we go. For us, we were doing pretty good in the strategic guidance we had. Had someone advise us that in order for us to tackle a transformation of our business and do a diversification strategy, the best thing that we could do was instead of going and trying to do random diversification, we needed to do diversification throughout our value chain, which is what we need. We understood, we knew our value chain that's going all the way upstream up to raw materials, going all the way downstream into Customer interaction with products. And that's where last mile delivery came in, because it was the final place where packaging was going to be disrupted. So for us, strategic guidance was not a big pain. But resource allocation and portfolio management were critical components. Like Alex was mentioning, five years into it, I am a very operational CEO, so I like to understand my operations. We're manufacturing, we have sites everywhere, we're working in seven countries, customers in 30 countries. So I'm on the ground. But now we had to reorganize how we were going to transform our core business. This core business is still growing, but we needed to start working with other people from outside, investing our money, investing other people's money into ventures. And this really required a shift in the allocation of my time. I can tell you that now I'm at least spending anywhere between 40 to 50% of my time in innovation, which is setting up businesses outside of our company, integrating knowledge from our group to these ventures, and then understanding where value leaves in the business models of innovators and how we can bring that and reincorporate it back into our core business. And therefore then we're getting a new type of strategic vision to the organization. I haven't gotten to the point where I have two co CEOs or CEOs under me. Eventually that would be a great idea, but this is life and we have limited resources. So when we started this, I used to have my hair as nice as Alex's and look at me. And then in portfolio management, this is another critical component. When we start running portfolios, you're no longer running just a single business or a core business or product. You're trying to run a portfolio that makes sense in your innovation strategy. So it's not just setting up one product or one innovation, it's setting up a set of innovation strategies that simultaneously are going to start making sense. So, you know, we created an entrepreneurial model within our core business and now we have entrepreneurs in every part of the organization. But we also bring entrepreneurs from outside to work with us. We learn from them, they learn from us, and we start creating this entrepreneurial culture by working together. And with everything that I've said were still great at operational excellence. Not everyone is doing disruptive innovation consistently, but we want everyone to feel it around them that disruption and innovation are happening and it has to come from within. We can't just wait for it to come from outside to end it. I think that we like to say that before we were always improving today, now we're trying to improve tomorrow. We were great at OPEX operational excellence. Now we're extremely focused at value creation. We used to be an asset based, asset driven asset allocation strategy and now we're moving into becoming a knowledge based, knowledge driven organization. And with that, Nick, I'll hand it back to you.

Brilliant. No, I think this is. First of all, thank you so much, Rodrigo, for the fantastic presentation and for sharing your insights. But I think now is the part where Alex Tendai, if you've got some questions and have a short discussion in relation to what we've just covered, I.

Just have a quick comment already adding this great presentation, Rodrigo, and really impressive what you're doing and I love that comment that it's possible to double the value of your company within five years. You were with 2,000 employees. It's easy to do, easy when you're a startup, but at your size it's starting to get difficult. Right? But Steve Blank, the inventor of modern entrepreneurship education, likes to say that execution pays your salary and innovation pays your pension. And that's exactly what you show. The now is important and you can't abandon it. You need to pay the salary, but you need to think of your pension. So if you don't innovate, you're not going to get there. And it's a partnership. I really liked what you said about a partnership, Tenday. I'm sure you captured tons of these nuggets. What stood out for you?

I'm just really, I mean, I'm really impressed by the 50% time. And Rodrigo, I just have to ask you because again, today's revenue has an emotional pull and a lot. We see a lot of leaders get emotionally drawn into spending most of their time driving that. How do you keep emotionally composed enough to keep that balance going where you're spending equal time on both driving innovation and running the core business?

Well, first, there's a space for everything and I really like to be very disciplined. That we have to understand the CEO position as a person, as a CEO, but also as an entrepreneur. And I think that having those three mindsets, living a life outside, living a life within the core business, but also having that entrepreneurial block consistently, I think it's critical to be able to achieve this. But in order for me to be able to do this, we had to have a solid organization internally where we could depend that the process and the systems that we had before were going to keep the core business going. This is not something that was done just because we needed to do it. We knew that the system had to be strong. We Have a tremendous, solid team. And I really rely on the best team out there. Teams will make the difference. We like to say cultures as like you were saying, Alex, culture has every single problem for breakfast every morning. And what better way to prove it than Covid? When Covid hit, I was stranded in the US for 111 days. We had to go virtual. Our company had to run virtual, and we grew. So when you rely on your team, when you rely on your systems, then you can really challenge yourself to move forward. I'll just close my remark for that question with this. Yesterday we were running a strategic session with our team. What I was telling them is when we do our waste analysis, the biggest waste that we have in organization is the added value of our strategic team by just doing one single thing. The biggest waste that we have is that we don't push this team to do more stuff to bring more innovation. I don't like waste sitting around in an organization. We need to figure out how to put it to work. Because the value of this team is really what motivates me to go beyond and further.

Quick question. You know, one interesting theme that when we talked before to prepare, you know, I asked you about professional innovators, like people who have this as their job, because I believe in a lot of organizations we see, and this is not just for small ones, it's big companies who say, oh, yeah, 20% of your time you do innovation. It's treating it a little bit like, oh, it's a side hustle you can easily do with 20% of your time if that's your full job. Different for the CEO, you're managing the existing, you're managing the future. But when as an employee you have to do two completely different things gets kind of hard. So what's your take on the professional innovator or professional corporate entrepreneur?

Well, I think that there's two challenges when you look at any type of business. We now have enough systems in place, ERP, support systems, APIs, whatever, to run a business. So once you figure out a business model that's successful, really CEOs, we have to be careful. Our value becomes very little, so we become very strategic guidance. That's the only thing we can bring to the business. Whenever you're an entrepreneur and you're doing this on your own, it's really hard because you're managing everything. You're managing the finances, the raising money, the technology, getting everything right. And I think that that has been my biggest learning experience, is how much value we can add to someone that's just on the entrepreneurial side, and how by coaching and working together, we can really add value. So among my 50%, I would say that 20% is coaching entrepreneurs in the ventures that we're investing.

Excellent. One question that I did see is, did you, like, announce it to the whole organization? That was one question.

We did. And this is interesting. So we started the transformation journey three years before we announced it, which I think it was a challenge. We needed to make sure that we were not going to fail and blow up while we were doing this. So we started to take a little group of people outside, taking them on the side, started investing before we told anyone. We invested without the operational teams even knowing that we were doing investments. And then we started to bring everything together at a corporate level. And then eventually we made a big public launch. Because there's one thing that's very important. Our partners in this process need to understand that we're not moving away from our core business. We're actually transforming it. And we're doing it together with them and together with other people, which just makes it great. Now, I guess when you look at every single corporation, they need their whole value chain to help them transform and reinvent their businesses. When we become an innovator ourselves, we bring value to the table. If we just keep selling products and doing a good service, that's not good enough, because then that little entrepreneurship will come and they'll take our business away.

Thank you so much, Rodrigo. I don't want to be the bad guy, but we've got to move on now. So thank you so much. We're going to move on to now the hot or not section of the show. And you can see hot or not there. So the first one. So to set the context for this, for those of you that might not be familiar with it, this is just a fun part of the show where what we do is we talk about some innovation concepts, and we ask you, the audience, but also our hosts and the panelists, what their perspective is on it, whether you think it's underrated or overrated or hot or not. And the first one we have is innovators as pirates or rebels. Now, Tendai, do you want to explain this one? Because you've written a whole book on pirates, so do you want to share an example? Well, share what that is so people have an example.

See?

Your honor, I plead the fifth. This question is designed to make me disown my own book, But I have to find a way, because the thing about these kinds of conversations is they always end up losing nuance. Right. So the goal is for innovators to not be pirates because you don't want to be a pirate. Because if you are a pirate, and I know that, you know, like, right now, the scoring is staying hot because people think it's really cool, like, got like a rebel culture and we've got like, you know, a pirate culture. But actually, innovation succeeds the most when innovators really embed themselves inside the culture. I mean, Rodrigo is spending 50% of the time on. On innovation. And he's the CEO. Is he a pirate? And so that's. So for me, this is not hot.

This.

This is kind of lukewarm. Luke, you should be a pirate in the Navy.

But it's interesting to see that. How many people actually voted pirate hot? Right? So, oh, yeah, I'm a rebel in corporate innovation. That is probably the most silliest thing you can do because you'll just undermine the partners in the core business. Right. So actually, rather than breaking the rules, we should probably change the rules and build a culture where it's a clear harmony between the two. That's why I do like your framing of it, Tenday. With pirates in the Navy, so the rules are different. Clearly you need to operate differently, but in partnership with the core. It'll be interesting to hear Rodrigo's take on this.

I think you need to have a little bit of both. I do love the rebel pirate mode, but you need to be grounded. And there's that breaking point when the entrepreneur starts to grow, that the pirate blood needs to come down and it need to open up space for the little corporate site to kick in and then bring the pirate back on board. I guess it's a cycle. And what I've seen is not everyone can switch on and off the pirate. And if you live in a permanent pirate mode, it's extremely dangerous. But if you never bring it on board, it's even more dangerous.

And people, right. Remember Steve Blank always says, whenever venture capitalists invest in your company, there's a point at which they have to decide whether you're the right person to scale it. And if you're still in that kind of disruptive, crazy entrepreneur mode, they might actually replace you with somebody who's now good at that particular phase of the organization. And so you need to be able to ratchet this up and ratchet it down as you need it within context.

Last point. I know Nick is already the next one, but people necessarily know the origin of the pirate story. It's Steve Jobs who raised the pirate flag in the Macintosh division. And ultimately he got kicked out of the company. Right. So I don't know if that's the best message there. What happened afterwards is when Steve Jobs came back, he infused innovation everywhere. So it was not about the pirates anymore. So think of that story. The initial pirate actually got ejected, pushed out, and when he came back, he infused innovation everywhere. Right. So kind of the pirate took over, but he made it the constitution. So I think it's an important lesson to know where that pirate flag or pirate story for innovators actually came from.

Absolutely. Thank you, Alex. And we're going to move on from that one. That was a good one. But we're going to move on to everyone needs to be an innovator, hot or not. Rodrigo, do you want to start on this?

You know, it depends on what you call an innovator, but I think that we need to accept two things. One of them is education was democratized with communications. So now everyone has access to no more than their successor in their previous job. Which means that you need to create a culture where people want to find a new way of doing things. So that's one. That's where you need everyone to have that culture of innovation within them, but you don't want everyone to be disrupting your core business. So I guess living in between understanding that you can give people the opportunity to be innovators, having that venture on the side where people can do entrepreneurship, but then it's a safe spot for them to come back. It's a good spot to be doing it back and forth. At least that's what we're experimenting.

You're the voice of reason, but you're also very middle of the road. You've also. Thank you, Rodrigo. Tendai, go on.

Yeah. I mean, no. Is the question, right? In broad terms, there is certain. I mean, Rodrigo.

Right.

You say that the reason why you were able to innovate is because you had this really nice core business that was running really well, well run with the right systems, et cetera, et cetera. You don't want to turn up one day and have people who are working on that side of the business going, hey, we're now pirates and we're about to disrupt.

Right.

You want them to stay consistently working on that, optimizing, making the right sort of improvements there. And then you want the folks that are working on the transformational innovation or the crazy plays to be quite distinct and managed in a different way, using different systems to the folks that are running the core business. And so this distinction has to be made. And the nuance that qualifies this is, what type of innovation are we talking about? Then we can answer the question more precisely.

And my take on this would be everyone needs to be an innovator. Not like ice cold. Not everyone has the right. The opportunity to become an innovator. Yes. Because I often get asked by CEOs, well, how do I know who the innovators are in my company? You don't. So basically, the only thing you can do is take down all of the blockers, let anybody start with a small amount of time, small amount of money, and start to prove that they are innovators. Right. And the real innovators will emerge. You don't pick innovators, you create the ecosystem for them to prove themselves. It's just like venture capital. Right. So everyone should have the opportunity to prove they're an innovator. But not everybody needs to be an innovator because otherwise, who's going to run the business? Very few innovators are actually good managers.

If I may add to that comment, Alex, we did do a scan using a technical tool to understand who in our organization was an innovator by nature. And it was a very good talk at the C team and the management team to understand that we were all not set up from birth to be innovators. Once you figure that out, you need to find who the innovator is under the guy that's not an innovator to make sure that this innovation concept is a really mature talk. You can't force innovation to people that are not innovators. And you can't make everyone an innovator.

Absolutely. And love that idea of using tools because you can find the characteristics, but then they still have to prove themselves. Right. I love that idea of using those tools. Awesome.

So next up, we have sweat equity. And for those not familiar with sweat equity, what we're talking about is when a company will pay people instead of in salary via equity. So this could be like a compensation and incentive for them to do their best work. So, Alex, we'll jump in with you first. Hot or not?

I think hot when done the right way. So Cisco had a phase where they really allowed internal entrepreneurs to invest in their companies and become part of it. They created a lot of tension because anybody who wasn't part of that wasn't the multimillionaire, sometimes billionaire. So it created enormous tensions when executed the wrong way. We always say with strategizer, you need to invest in a portfolio. And the Winners will emerge, but guess what? You won't get the winners without the losers or nearlings who nearly made it. So people need to get rewarded for being part of the portfolio of the effort. So I think it's not right to only reward the winning teams, the winning projects, without taking into account all of those that helped in the exploration. And then even more complicated, you know, it's the whole ecosystem of the company that led to them succeeding. So it's a difficult task. I think it's extremely hard to do. Right. But it is something that we need to look at seriously. I haven't seen a lot of companies that done it really well.

Tenday.

Yeah, so that is hot in the sense that we're often trying to figure out ways to incentivize innovation beyond just paying salaries, et cetera. And we're always struggling with the question of how often can an entrepreneur create multimillion dollar businesses for your company and, and leave all that money on the table and take home their 50 grand a year. So that's always there, the balance there that you're trying to kind of always manage. And then the question becomes, if we believe, and this is a discussion that you and I, Alex, have been having for a while, if we believe that the best way to find good ideas is to have loads of ideas, a portfolio where we're making multiple bets, but the only people that benefit from that portfolio are the people whose ideas become successful, does that start to disincentivize that? People declaring their ideas as failures and not participating in the success of the portfolio. And so one of the ideas that we're playing around with still is maybe we reward the intrapreneurs at a portfolio level rather than at an individual idea level. And then maybe that might drive the right culture that we want to see within the organization.

You were on a flow there, Tenday. Thank you. And Rodrigo.

I'm a big believer that performance and reward are crucial to having any strategy be successful. The word sweat equity, sometimes it's hard because first of all, legally you can't implement it right everywhere. So there's legal implications of having equity distributed. Then there's another part that is when you get equity given to the wrong person at an early stage and then you're tied to that wrong decision. So I'm a huge believer that performance needs to be set up. We discussed this with Alex. Having a dual transformation where you're transforming your core business, creating a venture business next to it, you're moving people from one area to the other and then having A model for reward for that is much more complex than just having sweat equity. So for me, it's not sweat equity. It seems simple. It's much harder than that. It's a whole strategy to pay for getting the right culture with the right results.

Brilliant. I think this was our least controversial hot or not so far of the series, but I think it was packed full of insights. So thanks everyone, that was a lot of fun. But we're going to move on to innovation readiness mini assessment and I'm going to hand over to Alex for this. But I'll keep sharing my screen though.

Okay, so you're going to share the assessment right away, right?

Yeah, I've got the questions. So we're going to look just to set the scene. Part of this is about exploring how your company's doing and reflecting on some of the things that we've covered in the session so far using one of strategize tools.

We're going to go back to the innovation readiness scorecard that Rotrigo showed. And you did this, right? To assess where you are, we're just going to pick three of those questions, right? So we, we have the scorecard here. We're going to zoom on one of each of the areas. One question on leadership support, one question on organizational design, one question on innovation practice and you judge your organization. Okay, so let's start with the first one. We're going to start in leadership support and the first question, the scale is you're on the very left hand side if you don't have resource allocation. So we put there as a label. We just went through a restructuring and killed all innovation funding. I've seen that in very large companies where very successful innovation projects have been or portfolios have been taken apart. No names shall be mentioned. But it's very sad. Level 2 is resource for innovation are bootstrapped or on an ad hoc basis. We score this as a minus one because people have to fight for survival all the time. A +1 is resource for innovation. Are available but they're not institutionalized, so they're not substantially protected. And then plus two is when it's almost as institutionalized as research and development. And R and D is not an innovation budget. Let me just make that very explicit. R and D is generally just about technology innovation and product innovation. Innovation is about embedding those in great value propositions in great business models. Okay, so looks interesting. So lot of scoring, kind of the plus one. Yeah, we're not that bad. Resources. Resources generally we don't see them as the biggest challenge. Right. So there are often resources available, not always very well spent. Maybe Tenday and Rodrigo, quick take on resource allocation.

Go ahead, Rodrigo.

Well, we all live in the limited resource world and I guess the biggest, for me, the biggest challenge here is creating this movement from assets, hard assets, into knowledge and then converting knowledge into the biggest resource that you have. So yes, resources are the most critical component, I guess. And how you distribute them, how you share them, how you allocate them will surely determine the future of any transformation.

It's interesting to see that not that many have institutionalized innovation budgets yet. Right. So they exist, but they're not institutionalized. That's the kind of the last barrier. Just like R and D budgets, they're institutionalized. Right?

Yeah. And I really wonder what that would have looked like if you had made that distinction between R and D and not innovation budget. I wonder whether that would have looked different. But anyway, on to the next one.

Okay. Organizational design. So it's one of the things that, you know, I mentioned at the very beginning, legitimacy and power. We really believe at Strategizer that one of the reasons why all this money is not always put to very good use is that innovation still has in many, many organizations. Rodrigo showed the contrary example, which is awesome. But in many organizations we don't see innovation yet equipped with power. Meaning in the org chart. They're in the basement of the org chart reporting to the person who reports to the person who reports to the person who reports to the CTO who reports to the head of innovation. It doesn't really make that much sense. Put money into something that's not recognized in the org chart. Now here I'm surprised how many are actually still positive and say innovation is at the very top of the org chart. We didn't make that explicit. That means CEO or co CEO. Somebody reporting to the CEO who is taking care of innovation for me is not at the very top. Right. So very top means CEO or CO CEO. So I'd be curious of those 34 if that's really the case. Beyond one person enterprises, of course.

Yeah. Well, what's interesting about this, Alex, is with the 68 people now, as you can see that the kind of zeitgeist is innovation movement is like sweeping through all the companies we run into. It's very rare now to walk into a company that doesn't have some innovation thing happening. But it's always like the head of innovation. That title doesn't mean anything about the level at which they sit within the organization. So they'll be officially in org charts, but then like they really lack power and influence and really can't drive any strategic change.

Rodrigo, what convinced you to really take part of this? Because it sounded like you were a big fan of Six Sigma and now you really had to pivot your whole knowledge base right towards a completely new area. So what made you take over yourself?

Well, you know, I always like to answer this question and it's where do you see your value creation in the next 10 years? And really, innovation needs to be creating the value of the future. Innovation is not R and D of a product. Innovation is not just doing something differently internally. It's really building the company of the future. That's really the concept of innovation that we're talking about here. And what I had in front of me was a great team that could do a transformation for our core business. But we had no organization thinking of the disruption of the future. We were only looking at the problems, not the opportunities. So I needed to be the one in front of it. I needed to take the stand on that. And that really forced me to transform the way that I thought of my time allocation, how I run systems, and how a lot of this could be delegated with a lot of responsibility, with the right resources and we could move forward. That's why that transformational process came aboard.

And Rex explained why so many people voted for plus two. Because those are all in your company, Rodrigo. Now we have the explanation. So last one, quickly. Innovation practice the skills. Minus two is we fire innovators. I've seen that happen. Plus two is we hire and develop world class innovation talent with extensive experience, meaning they've done it four times or more. You know, they've either built a business, they've been, you know, substantially leading innovation at the head of an organization in the past. Plus one is occasionally we hire experienced innovation talent and train some specialized staff. Rodrigo, I'd be curious. Over the last years, you on your innovation journey, did you specifically hire outside innovation talent? Did you make that one of the things on your list or did you go completely internally?

No. So we did three things internally. First one was the innovation capability assessment to understand who internally was the best group to be delegated to this small swat team to start the innovation culture. Everyone that joined the innovation team originally, they all had the mindset so we needed to have a fertile ground. Second thing was we need a mentor. We need someone to teach us the way. And so we had to find a mentor to help us. And this is where we found help. And then the third part is we need to talk to people that are way ahead of us. So we needed to talk to people in the entrepreneurial world. We needed to talk to venture capitalists, we needed to talk to people that were running corporate venture engines at big corporations, but we also needed to bring entrepreneurs inside to talk to us. So it's not a simple answer and you're not going to get it straight. I really loved the Boulder model when you understand that this is a grassroots movement that eventually made them what they are. And so the biggest challenge that I had is how do you create a transformation as Boulder within your organization? So how do you create that cultural thing that's going to come from inside, but you're going to mix it from people coming from the outside and getting everyone on board and having that open conversation.

Thank you so much. I can just see that we're starting to count down on time. So thank you so much for the Innovation Readiness Mini assessment. Let us know what you thought of that in the chat. Also, like I say, you can find that on the website as well. And we'll put a link in the chat in just a second. But before we do that, what I'd like to do is put a quick poll to get your perspective on on the session. So I'm going to move forward. Let's get to the second one. The feedback poll should be up on your screens now. So if you hadn't participated in this month's Strat Chat webinar, you'd be very disappointed, somewhat disappointed, not disappointed or. Well, I wouldn't have wasted my time, you know. So if you could let us know in that, that would be great. Really, really helpful. And while you're doing that, I want to mention that we've got the virtual Boot Camp that's coming up next year. So if you want to register for that, you can go there. And I think Tendai, if you could share the link again, that would be amazing in the chat. And don't worry because we'll also send it in an email afterwards, so you'll get it that way as well.

And if you click.

Yeah, yeah.

If you click one more time after. Sorry, I was. The discount code will come up.

Yes. So Alex is keen to get the discount code out for everybody for the test. I don't know why you want to give everyone a discount, Alex. You just want to do it.

Feeling generous today. Feeling generous today.

So there's a 10% discount code which is. Join us underscore webinar 10. If you go to the website for the testing business ideas virtual masterclass on the 21st, 23rd September. So I'm going to move forward because on the 28th of October we've got a webinar with Uber Jolie, the former CEO of Best Buy, which is going to be fantastic. It's going to have some excellent insights that you can share with us. Alex, I know you're super excited about that one too, coming up soon, so.

Can'T wait for that one. Uber is an amazing executive who, who went through a pretty big transition towards really in a turnaround situation, bringing in people and not going for the traditional cost cutting approach. So amazing story and you should definitely join and also get his book that just came out a couple of weeks ago.

Definitely. And I'll put in the chat the link to that one so you can sign up for it.

I just did that too.

Oh, you've done that as well. Tendites dream team. We're doing it. I'm going to close the poll so if you haven't given us your feedback, please do so in the next five seconds because I'm about to close that because we're going to end the session so I'm going to stop sharing my screen as well.

Great.

So that's pretty much it for us for today. I want to say thank you so much to Rodrigo for joining us. Thank you as always to Tenday and Alex and thank you, all of you for joining us. Alex, Tenday, Rodrigo, any last things you want to say before we end the session?

Congratulations, Rodrigo, because you know, what you've done is not easy and pretty amazing and we see a lot of companies, Tendai and I, so I absolutely loved what you talked about, what you did and how you presented today. Thank you for joining.

Yeah, really inspiring, Rodrigo, really inspiring.

Thank you guys for the opportunity. And you know, this is not simple. There's not a single book that has written every single solution. So we're all learning along the way and it's great to have this community where we can come and share and learn from each other. Great to be here, guys.

Thank you so much. So wherever you're calling from in the world, hope you have a fantastic morning, afternoon or evening or night. And we'll see you on the 28th of October. See you all later. Thank you.