The founding members of corporate innovation units often face an identity crisis without understanding what they are experiencing. The reason for this crisis is quite easy to understand, though, once they take a step back and reflect.
New business units generally will rely on traditional corporate governance structures and behaviors to define the rules by which that new unit will operate. Innovation teams, by the very nature of their charter, must define their own rules, but they face a daunting task as they try to get traditional corporate governance structures to support those new rules.
The core challenge innovation teams face is that most large organizations don’t recognize, much less deeply understand, how the skills and behaviors that make a corporate executive successful differ from those that let startup founders thrive. This challenge of understanding these differences becomes a compounding problem when the innovation team becomes responsible for selecting and managing the talent needed to successfully launch the new concepts that emerge from innovation units.
To assist corporations with innovation talent management, many tools have been used, such as 360-degree feedback questionnaires that include a self-assessment component. Over the course of many engagements and years of innovation consulting, I have seen the results highlight the most common attributes among corporate-based innovation leadership and how they differ from those of highly successful early-stage founders. Understanding the behavior of a successful innovation team will translate into greater success in talent selection, especially when it comes to scaling an initiative.
It’s also crucial to understand the differences in how startup founding teams work together vs. how corporate new venture teams function.
Most successful startup teams are composed of three to five founders who have known each other on a personal or professional basis for more than a year, share a passion for the problem they are solving, spend more time together than with anyone else in their lives and become bound by the risk they are sharing. In other words, successful founding teams choose each other, and scaled success comes from filling roles that offset each other’s skill gaps. When a member of the team gets in the way, he or she walks away or is voted out.
The corporate innovation team most likely came together via a selection process and shares a passion for making an impact, which is broadly defined. They initially become bound by creating an innovation process, but often without recognizing that these processes are a solution to a problem.
The more that corporate leadership encourages adoption of a founding team mindset, the greater the odds of success at innovation within a corporate environment. The deeper the team members understand both themselves and their “co-founders,” the more they will achieve.
How the 360-degree study was done
A study of client company corporate executives, utilizing 360-degree assessment illustrates the talent characteristics of an innovation team. The specific tool used is based on several studies on the traits of successful entrepreneurs. This assessment process was designed to guide incumbent companies as they put teams together expressly for the purpose of advancing innovation based growth strategies. Some of these studies are cited below.
Dan Bricklin, co-founder of VisiCalc and inventor of the computer spreadsheet, has provided thousands of entrepreneurs with the same advice:
- Understand your true talent and value so you can appreciate the talents in others on your team, and what is needed by your team.
- Don’t wait to act. The longer you wait, the more you will hesitate over the sacrifices required for success.
- Success as an entrepreneur is tricky, requiring all involved with a new venture to operate confidently even though you are both in control and not in control at the same time.
Anthony Tjan, CEO of the venture capital firm Cue Ball, looks for founding teams that fill three basic roles. In his New York Times best seller, “Heart, Smarts, Guts, and Luck,” he defines these roles as:
- An Architect (Planning)
- The Storyteller (Selling)
- The Disciplinarian (Execution)
Target Training International CEO Bill J. Bonnstetter goes into greater segmentation of the key traits of entrepreneurs after completing in-depth research of 17,000 working adults and serial entrepreneurs. After establishing a baseline average, he established that successful entrepreneurs score above and below the average as indicated in Figure 1.
Finally, Walter Kuemmerle, president of Kuemmerle Research Group in Boston, has developed a significant body of research on risk-taking by successful entrepreneurs and found the following traits:
- Non-conformity with rules that hinder,
- Committed enough to take significant risks and disrupt others,
- Willing to start small and hustle for each deal,
- Able to shift strategies quickly and learn on the fly,
- Co-develop continuously with customers to win their confidence.
Results from the cre8tfutures™ 360-degree assessment process
Based on well-established literature and accepted practices, the results from the instrument utilized resulted in 5 overarching categories seen in Figure 2. These 5 categories represent personality traits and skill based attributes that are consistent whether one is assessing early stage founders or corporate based innovators. This consistency is essential for comparative purposes.
The innovation team may well be considered risk takers within the corporate culture of ABC Insurance Co. but generally don’t measure up to the risk-taking attributes of successful startup founders. Among corporate innovation teams, the need to increase risk-taking is essential and applies more broadly than just in the products and services developed.
A second area of stark contrast between startup founders and corporate innovators is in knowing the customer. Entrepreneurs who launch and scale do so in collaboration with customers. They see risk in waiting too long, such as holding off on soliciting customer feedback until a solution is fully developed. This need to collaborate with customers is among the most contrary notions for large, successful financial services organizations.
Figure 3 highlights the differences and similarities among corporate innovation leadership teams with those of early stage founding teams.
In many respects, corporate innovation team members do share traits with successful startup founders. However, as the arrows indicate, the corporate innovation team can fall into a trap of not taking enough risk in managing the constructive conflicts that are typical among early-stage startups. Secondly, note the difference in measures regarding customer interaction during development and post launch. Early stage founders do not have access to the same resources as incumbent companies. The very survival of these new companies relies on direct user/customer feedback. Corporate innovation teams tend to be overly reliant on internal research functions.
Figure 4 represents aggregate study results, including an aggregation of the colleagues and peers who completed 360 assessment tools on behalf of the various peers tasked with leading innovation teams. The significance in this table is not the scores per group, but the difference between them.
For example, corporate innovation leaders tend to overestimate their persuasive communication skills compared to the assessment of their peers outside of the innovation team, while still underestimating their communication capabilities when compared to early stage founders. This begs the question, why? Based on follow-up engagements, Innovation Leaders in corporate environments tend to communicate ideals, using terminology that represents a lack of conformity to the existing corporate culture. In short this finding is an indicator as to how culture trumps strategy.
Understanding the underlying motivators of innovators
So what drives these behaviors and habits? Hay/McBer co-founder David Clarence McClelland was an American psychologist noted for his work on motivation, which he titled “Need Theory.” McClelland claimed that motivation is “a recurrent concern for a goal which drives, directs and selects the behavior of the individual.”
He focused on three particular motives: Need for Achievement; Need for Affiliation; and Need for Power. Achievement is the desire to excel in relation to a set of standards. It is the drive to succeed. Affiliation is the desire for close personal relationships. Power is the desire to be influential and have an impact. McClelland’s three needs, or underlying motivators, are non-sequential, but instead are used in relation to each other.
According to McClelland, most people possess and portray a mixture of these needs: Those with a high need for achievement have an attraction to situations offering personal accountability; individuals with a dominating need for authority and power have a desire to influence; and finally, those with a great need for affiliation value building strong relationships and belonging to groups or organizations.
Among his groundbreaking findings was his discovery that a window into these three motivators is our choice of words and phrases. The methodology he developed in collaboration with others, the story exercise, is still in use today. In my study group, the story exercise completed by the corporate innovation team members was an abbreviated approach, as a deeply reliable approach requires three to five stories, each with a minimum of 250 words. However, feedback received following the introduction of the results suggest the results were fairly accurate, not just illustrative.
The reasons a story exercise was suggested and facilitated in conjunction with the 360-degree entrepreneurial study are:
- By having a deeper understanding of our “hardwired” motivators, we can better understand the circumstances and experiences that bring about anxiety and negative reactions as well as the ideal circumstances that result in our best work. For example, if a person has a high achievement drive, but is decidedly not a risk taker, then one of the remaining motivators is probably the source of hitting the brakes. Does a high affiliation drive create unwarranted anxiety around disrupting co-workers? Conversely, a person who has a high achievement drive, or a high-power drive, and exhibits comfort with risk taking may want to take a step back and get peer input on certain decisions as a way of keeping adversely risky behavior in check.
- These results create an opportunity for team members to better understand their own goals and frustrations by also reflecting upon the potential value that peers can bring while working together.
- Finally, as certain concepts are launched into the marketplace with the specific goal of achieving scaled success, additional team members may be needed to nurture that new product. For most of the concepts that undergo focused development, small teams may be formed. One goal of this exercise is to gain additional clarity about what drives a person that can translate into consistently forming highly effective small teams.
Figure 5 comes from the work done by both Hay/McBer and Daniel Goldman on “emotional intelligence” in leadership. Founding CEOs tend to be driven more by achievement and power than relationships. Those who rise to the top spot in large corporations have a higher affiliation drive, which plays out as success among polite corporate cultures as these execs tend to be known for their people skills.
Figure 6 is a summary chart of selected innovation teams from multiple incumbent companies. The main take-away from this chart is the diversity of core motivational drivers across team. This can help align people with role and tasks. The team would certainly benefit from a more in-depth discussion about how this information can improve effectiveness among team members.
Figure 7 is an aggregate comparison of where corporate innovation teams, corporate executives and successful early-stage founders across the three needs.
Again, corporate innovation teams are often constructed using traditional corporate hiring and team building methods. Successful founding teams are bound by the diversity of motivations and experiences plus a shared deep belief in the solution they have created together.
Pulling it all together for your team
In conclusion, ask any experienced venture capital partner which carries the greater weight in the investment decision: the solution or the team of founders? Most responses will be along the lines of, “it’s the team first and foremost—it takes people to grow a company no matter how innovative the solution may be.”
As corporate innovation teams move into taking new products and services to market, the ability to dedicate small teams to launching and nurturing additional development through direct contact with customers is a defining success factor – even though the innovation team will continue to be challenged by the tug-of-war with the traditional corporate way of doing business.
Defining the goal of the innovation process as a product or service will lead to greater internal branding as a start-up. This will, in turn, create the conditions needed for a highly effective team to set their own rules for success.
Guy Fraker
Chief Innovation Officer
gfraker@innovatorsedge.io