Vistage Research Center

Get actionable, data-driven insights and expert perspectives from our global community of CEOs and thought leaders. Led by Joe Galvin, Chief Research Officer

The path to agile innovation


Innovation, most would agree, is the secret of sustained success. But maintaining innovation for the long haul is hard. Just look at companies like Blackberry and Sony, who used to be among the most innovative companies on the planet and now aren’t.

What caused these companies to fall? Their approach to innovation wasn’t agile enough.

GE recognized this when its share price was in the doldrums. Despite a long history as one of the most innovative companies on the planet (making everything from aircraft engines to CAT scanners to washing machines), GE recognized it had to pivot in how it approached innovation, shifting from lean to agile. (More on this topic in “5 reasons why agile is the new lean.”) Since changing course, GE’s share price has started to bounce back.

To follow GE’s lead, start by looking at your share price. If your company is private and doesn’t have a publicly listed share price, it’s still worth calculating the value equation, NPV: DCF (QQC). Calculate the Net Present Value (NPV) of your share by doing a Discounted Cash-Flow (DCF) analysis and comparing it with your current share price to make a buy, hold or sell recommendation accordingly. Investors are interested in the Quantity, Quality and Cadence (QQC) of your cash flow.

A leading indictor of cash flow is conversation flow. I call it C2C: Conversation-Flow to Cash-Flow. Your cash flow and share price also follow the trajectory of your conversation flow. Indeed, as GE has adopted an agile approach, it has shifted the QQC of its innovation dialogue and changed the trajectory of its conversation flow — and its cash flow and share price have followed. You must do the same.

Taking the following steps can change the trajectory of your C2C and get you on the path to agile innovation:

Revolutionize your business model

Let’s call your current business model 1.0. It’s the only thing you have to work with this week, this month and this quarter; it pays the bills and keeps the lights on. You are no doubt continuously evolving and improving the model to version 1.1, 1.2, 1.3 and so on. That’s sustaining innovation.

But in an increasingly fast-paced world, you have to be more revolutionary with discontinuous improvement, advancing to business models 2.0 and 3.0. That’s disruptive innovation. This involves a journey, during which you must reinvent some combination of the content, process and context of your business and its equation of efficiency, effectiveness and efficacy. It will test your agility.

Focus on the future more than the present

Most of us prefer to focus on dangers and opportunities that are clear and present; this is our comfort zone. Consequently, we avoid the discomfort of working on unclear and futuristic dangers and opportunities. In other words, it’s easy to shift your attention from working on the future of your business (e.g., version 3.0) to working on your business at it presently stands (e.g., version 1.2). However, if you let that happen, your company may suffer the same fate as Blackberry or Sony — faster and sooner than you think.

Watch out for:

  • Excuses. Statements like “I don’t have time, I am too busy, I don’t know how” are excuses that rob you of your agility every day.
  • Wishful thinking. Don’t believe that “hopefully our industry won’t be disrupted.” Hope is not a strategy!
  • “Stupid simplicity.” “Stupid simplicity” ignores complexity, while “elegant simplicity” embeds complexity.
  • OR dialogue. Avoid thinking in terms of what I call “OR dialogue,” which focuses on dividing who’s right, us or them, me or you, left-brain-analysis or right-brain-intuition. By contrast, “AND dialogue” emphasizes whole-brained design thinking, systems thinking and an agile mindset.
  • Overly planned, traditional project management. This is often called “waterfall” and it sets the feel-good pretense that you are going to do something complex without experiencing failure. It contrasts with “agile,” which emphasizes experimentation, testing, iteration, willing to fail early and often, and learning as you go. (More on this topic here.)

Write your ‘fragility epitaph’

Innovation that lacks agility can cause a business to flat line or die. To help companies avoid this fate, I often put CEOs and teams through an exercise: I ask them to write a “fragility epitaph” for their company, which serves as a eulogy to the inevitable when innovation isn’t agile enough. It typically reads something like this:

We failed to innovate with sufficient agility, falling behind the pace of industry disruption. We ended up being the disruptee not the disruptor because we tolerated excuses, wishful thinking and stupid-simplicity. We had plans, but they were way too waterfall, in a futile attempt to avoid failure, rigidly sticking to one view of the future rather than testing, verifying and learning from failure as we went along. We had eternal debates about who was right about which was the right future and the best direction to go, unable to resolve the chasm between left-brained analysis and right-brained intuition. Our trajectory as a business derailed in the chasm.

We produce a poster-sized version of this “fragility epitaph” and put it up on the wall (alongside the company’s core values/behaviors and excuses posters, which I also help with). Then, when anyone sees those behaviors playing out, they can use the poster as a mirror, pointing out complacency and promoting productive paranoia. Only the paranoid survive!

You show me an organization with poor cash-flow and I will show you an organization with poor conversation-flow. It usually doesn’t take very long to point out to the CEO and executive team that they are already writing their own fragility epitaph. Don’t let that be you.

Print Friendly, PDF & Email
One comment
  1. Avatar

    Tom O'Shea, CMC

    September 20, 2016 at 4:56 am

    Mike – excellent insights and perspective …. as always. Your future focused orientation is ever so important. So many times as we work with our clients who are “stuck” in the quicksand of the present – it seems natural to some to be looking down into the quicksand instead of looking externally to anchor their extraction strategy. I especially like the callout of warning sign words to watch out for as leaders try to determine if they need to PIVOT. Hopefully their fragility epitaph is not written in stone by the time they recognize the need to shift to agile.

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Predefined Skins

Primary Color

Background Color

Example Patterns

demo demo demo demo demo demo demo demo demo demo

Privacy Policy Settings

  • Required Cookies
  • Performance Cookies
  • Functional Cookies
  • Advertising Cookies
Required Cookies These cookies are essential in order to enable you to move around the Sites and use its features, such as accessing secure areas of the Sites and using Vistage’s Services. Since these cookies are essential to operate Vistage’s Sites and Services, there is no option to opt out of these cookies.
Performance Cookies These cookies collect information about how visitors our Sites, for instance which pages visitors go to most often. These cookies don’t collect information that identifies a visitor. All information these cookies collect is aggregated and therefore anonymous. If you do not allow these cookies we will not know when you have visited our site, and will not be able to monitor its performance.

Cookies used

Visual Web Optimizer
Functional Cookies These cookies remember information you have entered or choices you make (e.g. as your username, language, or your region), and provide enhanced, more personal features. They may also be used to provide services you have asked for such as watching a video or commenting on a blog. They may be set by us or by third party providers whose services we have added to our pages. If you do not allow these cookies then some or all of these services may not function properly.

Cookies used

Google Analytics
GTM
Gravity Forms
Advertising Cookies These cookies are used to make advertising more relevant to you and your interests. The cookies are usually placed by third party advertising networks. They remember the websites you visit and that information is shared with other parties such as advertisers. If you do not allow these cookies, you will experience less targeted advertising.