TACKLING THE WICKED PROBLEMS OF INNOVATION IN LARGE NEW ZEALAND ORGANISATIONS

Insights and learnings from the CEOs of New Zealand’s biggest companies and most successful startups Tackling the Wicked Problems of Innovation in Large New Zealand Organisations

Insights and learnings from the CEOs of New Zealand’s biggest companies and most successful startups

A report by Previously Unavailable in association with Auckland Tourism, Events and Economic Development

bigilittlei.co.nz Contents

About this study 5

Participating CEOs 6

Executive Summary 9

Part One: The definition & importance of innovation 17

Part Two: The wicked problems of innovation 23

How do we compare globally? 38

Laying a foundation for success: 6 top tips for (I)nnovation strategy & ideation 40

Part Three: Overcoming innovation’s challenges 43

Innoculating against innovation’s antibodies 53

Part Four: What can we learn from our founder CEOs? 54

Three principles for agile governance 60

Last word 63

About Previously Unavailable 64

About the authors 68

2 A word from our partner

Kiwis have always had an innovative streak. We’re known for thinking outside the square and coming up with world-class ideas. When you’re isolated from the rest of the world at the edge, as we have been historically, you’re often required to come up with your own solutions.

But the need for our country, and the organisations and individuals that call it home, to continue to innovate has never been greater. The world is growing smaller every day, and we are competing for talent, skills and investment with the rest of the globe.

Innovation is a key driver of economic and social growth, and critical to delivering a prosperous economy. But to be innovative isn’t easy; if it was, everyone would be doing it.

I share Previously Unavailable’s belief that New Zealand can become the world’s most innovative nation. In Auckland, we’re aiming to be recognised as an innovation hub of the Asia-Pacific region, and we’re on the road to achieving this. We have a great foundation of tertiaries and CRIs to build from.

We are working with organisations large and small in pursuit of this goal, building a culture of innovation and entrepreneurship under the spirit of kotahitanga (or partnership), through infrastructure like GridAKL, the AR/VR Garage, and the FoodBowl, and a set of programs driven across the eco-system with our partners like Grow North.

As a nation, New Zealand is good at innovating. The challenge is to be great at it including successful commercialisation and exits, not to mention developing unicorns. Initiating a conversation about how to overcome the difficulties of innovating, as this report does, is an important part of this journey.

If we’re able to harness our innovative potential, our businesses will grow faster, and employ more skilled people in higher paid jobs. We need to be flexible and well positioned to take advantage of emerging opportunities – both nationally and globally – for everyone’s benefit.

This report is a collection of provocations and insights, and a call to action. Thank you to James and the team for inspiring us to be great.

Brett O’Riley CEO, Auckland Tourism, Events & Economic Development October 2016

3 This report was conceived, planned, researched, written, designed and produced by Previously Unavailable with the help of Jude Rutherford of Juice Research.

© 2016 Previously Unavailable

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written permission of Previously Unavailable

Our special thanks to Auckland Tourism, Events and Economic Development for their kind assistance in making this report possible. About this study

In 2010, McKinsey surveyed 2,240 global We’d go out and speak to every CEO of executives on the topic of innovation. One a major New Zealand organisation that of the most enlightening findings was that, would give us the time. while 84% said innovation was ‘extremely or very important to their companies’ We would talk to them in detail about their growth’, just 6% said they were satisfied highs and lows of innovation. We would with their innovation efforts to date. understand their challenges. We would uncover their success stories. We started Previously Unavailable obsessed with this chasm between the And we would share the learnings among importance of innovation, and large our clients and the wider New Zealand organisations’ ability to innovate business community. successfully. We believe that New Zealand can become We have experienced that chasm during the world’s most innovative nation. That our two and a half years operating as New being so would not only be in the interests Zealand’s first innovation consultancy. of our clients, but in the interests of NZ Inc and indeed New Zealand as a whole. Innovation in large organisations is hard. We work with talented clients who have a We also believe that to accelerate that true passion for innovation, and the ability journey, we should share our challenges to generate powerful innovation strategies and learnings among each other – so that and concepts. Yet they face seemingly New Zealand organisations might all rise unending challenges transforming their on a tide of growing innovation vision and passion into tangible outputs understanding and success. and results.

In order to be a more effective partner to the New Zealand business community, we wanted to explore this issue in a more concerted and structured way.

So we set ourselves a challenge.

5 Participating CEOs

We are grateful to the 44 CEOs who gave their time and perspective to this study. We intentionally chose leaders of large organisations, or in the case of our founder CEOs, successful ‘startup’ companies.

Our panel spotlights an uncomfortable truth. Leadership of large organ- isations in New Zealand is a sea of male, pākehā faces. It is commonly noted that we do not currently have a single female CEO of an NZX 50 company, and ethnic diversity among senior ranks is even less common.

While our selection criteria was strictly about CEOs of large businesses, and Adrian Ailsa Claire thus slave to the realities of the makeup of that group, we sought out as Littlewood many female leaders as would give us the time, in an attempt to balance CEO CEO Auckland District the scorecard as best we could. We feel it important to note this lack of Auckland Airport Health Board diversity as an area for improvement in our business community.

Andrew Garey Andy Routley Barbara Chapman Barrie Sheers Brett O’Riley Brian Roche CEO CEO CEO Managing Director CEO CEO New Zealand DB Breweries ASB Microsoft NZ ATEED NZ Post Steel

Cecilia Robinson Chris Litchfield Chris Quin David McLean Dennis Barnes Derek Co Founder & Managing Director CEO CEO CEO McCormack Co-CEO Coca-Cola Amatil Foodstuffs Westpac NZ Contact Energy Vice Chancellor My Food Bag North Island AUT

Fraser Whineray Gráinne Moss Greg Davidson Ian McCrae Jane Hastings Kevin Kenrick CEO CEO CEO Founder & CEO CEO CEO Mercury Ministry for Datacom Orion Health NZME TVNZ Vulnerable Children (former) Leon Clement Mark Callaghan Mark Ratcliffe Mike Bennetts Neil Cowie Peter Chrisp Managing Director CEO CEO CEO CEO CEO Fonterra Brands NZ Frucor Beverages Chorus Z Energy Mitre 10 NZTE (former)

Peter Peter Reidy Peter Tynan Rob Chemaly Rob Lee Rod Drury Cullinane CEO CEO CEO Managing Director Founder & CEO Founder & CEO KiwiRail Southern Cross Liquorland IBM NZ Xero Lewis Road Health Society Creamery

Rod Snodgrass Russell Stanners Scott Hadley Scott Pickering Simon Moutter Simon Tong CEO CEO CCO CEO Managing Director Managing Director Spark Ventures Vodafone NZ Independent ACC Spark NZ Fairfax NZ Liquor

Stephen Steven Carden Stephen Town Stuart Vaughan Rowsell Wayne Pickup England-Hall CEO CEO McCutcheon Founder & CEO CEO CEO Landcorp Auckland Council Vice-Chancellor Vend Lotto NZ Loyalty NZ Auckland (former) University Executive Summary

9 “ I’d love to say it’s everybody’s obligation to innovate, but that’s probably more little ‘i’, like innovate to improve. But the really big, what I’d call ‘capital I’ innovation, that tends to be at the more senior levels.

”

Brian Roche, NZ Post

10 EXECUTIVE SUMMARY Tackling the wicked problems of innovation in large New Zealand organisations

What couldn’t be clearer from this research is that innovation is front of mind for the leaders of New Zealand’s large organisations. Most give innovation a 10 out of 10 in terms of importance to their near-term commercial performance.

But while we’re all making progress on our innovation journeys, most CEOs score their recent innovation performance as a 6 or under.

Innovation is not easy, and this study sought to understand the difficulties, and uncover clues as to how we might better overcome them.

One key insight is that innovation comes in two primary forms for large organisations – and that the two have very distinct requirements in terms of people, process, culture and structure.

We’d describe the first form as ‘creating new innovations - new products or services or offerings that meet customer or market needs to drive growth’. This is about inventing new things and commercialising them for the benefit of the customer (and then as a result, the business). This is very much about ‘what’ we deliver as a business, and what we could deliver to grow future sales revenue.

The second form could be described as ‘thinking innovatively about how we do what we do in new, smarter and better ways’. In classical terms, this is about ‘continuous improvement’ – everybody in the organisation challenging how they do what they do to find more efficient and effective ways of working. This second form isn’t about ‘what’ we deliver, but about ‘how’ we deliver it more proficiently.

In thinking about how to activate innovation, these two forms tend to cross over and often blend into one, leading to oscillating conversations about whether, for example, innovation should be everyone’s job, or that of particular experts.

In exploring this dilemma, NZ Post’s Brian Roche suggested an interesting categorisation:

“I’d love to say it’s everybody’s obligation to innovate, but that’s probably more little ‘i’, like innovate to improve. But the really big, what I’d call ‘capital I’ innovation, that tends to be at the more senior levels.”

In order to make innovation a little easier to talk about and problem-solve around, we propose categorizing innovation in this simple way – ‘Big I’ Innovation and ‘little i’ innovation.

11 EXECUTIVE SUMMARY

Big I Innovation is the development of new world. And while the potential is certainly there, customer offerings. Little i innovation is finding we can’t export little i innovation. new, smarter ways of operating. Nor would (i)nnovation have saved companies Both are of commercial value. Little i innovation like Kodak or Blockbuster. creates efficiency and ultimately leads to better margin performance or room in the And when leaders in New Zealand talk about who system to allocate resource in new ways. Big I they admire, it’s always the (I)nnovators. Air New Innovation opens up new revenue streams and Zealand. Xero. My Food Bag. can even reorient categories in favour of the organisation. We believe we need to start a conversation around how to improve the (I)nnovation output Today, we over-index on little i. Many of the CEOs of our large organisations. in this study reflected on little i innovation being much easier to activate than big I. It’s easy to feel innovative because we’ve made a few clever changes to our systems or struc- This sentiment is reflected in the research ture. But while we might be good (i)nnovators, of Motu and the New Zealand Productivity we need to challenge ourselves to become great Commission, who in 2015 reported that the (I)nnovators. innovation output of New Zealand companies has been decreasing over time, despite increased Our large organisations have the clout to sell the ‘inputs’ such as R&D. Their data shows the biggest ideas to the world. But first they need percentage of New Zealand companies to get those ideas through the bureaucracy and introducing new goods and services declining, out the door. It was commonly acknowledged and consequently, sales of new goods and that the challenges around (I)nnovation rarely services also declining as a percentage of all come from outside the organisation. We can be sales. our own worst enemies in terms of suffocating and self-sabotaging our (I)nnovation efforts with This decline skews toward larger organisations. legacy culture and process norms that are unsuit- As is the case in most countries, the innovation able for today’s competitive environment. output of the smaller, younger companies was higher. This study highlights many of While we might accept that smaller companies will always run a little faster, having innovation the challenges our large outputs in decline in our large organisations organisations face when it doesn’t bode well from an economic standpoint. comes to (I)nnovation.

It’s our belief that for the good of NZ Inc and There’s no lack of effort being our economy, our large organisations need to improve their big I Innovation capability and made in every one of the performance. organisations we researched.

While we champion and celebrate the inter- But the problems are indeed national success of our clever start-ups, we wicked ones, and the intention also need the world to be looking at our large organisations as impressive innovators. If New of our research was to begin to Zealand is to attract the best talent and be unpick them, to reveal stories regarded among the most innovative nations and learnings that will help globally, we can’t leave all the work to tech us to tackle them, and to share startups. those for the beneft of all New

We talk about being a great test market for the Zealand organisations.

12 Big I Innovation Little i innovation (I)nnovation (i)nnovation

The development and The discovery and implementation commercialisation of new of new and smarter ways to customer offerings - products, organise or operate. services, experiences. The commercial effect of The commercial effect of (i)nnovation is bottom line growth - (I)nnovation is top line growth - uncovering operational efficiencies. opening up new revenue streams. (i)nnovation is inwardly focused - (I)nnovation is outwardly focused - identifying opportunities to change uncovering unmet customer needs the way we do what we do for the or unsolved customer problems. better.

Good ideas can come from (i)nnovation is most effectively anywhere, but the process of achieved when everybody within developing and commercialising the organisation is given the (I)nnovation is best executed by freedom and encouragement to dedicated, experienced experts. find new and better ways.

13 EXECUTIVE SUMMARY

Leaning in to the challenges of (I)nnovation

Our biggest challenge of all is speed. As the rate of innovation reaching consumers speeds up, it’s becoming apparent that the pace at which we’re moving is no longer fast enough.

There are many contributing factors, and the key challenges and actions we could explore fall into three broad categories: PROCESS, CULTURE and GOVERNANCE

1 PROCESS

Creating a sense of Creating smaller, cross a d crisis to change gear functional teams

Waiting for the platform to start burning Startups run fast because they’re small, has proven life-threatening to a multitude usually diverse teams. Replicating these of once-great companies. Alibaba’s finan- inside larger organisations will lead cial services organisation (I)nnovates not to greater focus and higher collective with a sense of urgency, but a sense of accountability. ‘crisis’ which they consciously impose on themselves to insure against complacen- cy and low momentum. (I)nnovating in e parallel, not serial Setting more ambitious b in-market deadlines The reality that only some (I)nnovations will be stars means that we need to be placing more small bets earlier, rather The open deadlines on most (I)nnovation than committing wholesale to doing one projects means there is always room to big thing at a time. hesitate and delay. Rarely do companies arrive unprepared for their AGM or delay advertising past the date of the media booking – even though it is often a her- Taking (I)nnovation culean effort to coordinate these things ideas more quickly into in time. We need to impose equally strict f early prototyping and and challenging (I)nnovation deadlines if we want to ensure (I)nnovation sees testing, to rapidly assess the light of day in time to capture the potential and prioritise opportunity. We suffer from paralysis by analysis, Getting closer to rather than having a clear process to c quickly and cost effectively build and test the customer prototypes with customers. Removing the subjectivity from evaluation would The spark of seeing a customer’s pain allow us to avoid the bureaucratic guess- first hand and being hit with an obvious ing and agonising that often leads to solution rarely happens when insights sluggish progress. are Chinese-whispered from real life experience to focus group to PowerPoint presentation. (I)nnovation teams need to be connected to customers in a much closer, more authentic way than tradi- tional research allows.

14 EXECUTIVE SUMMARY

Defning the ‘massive’, Deprioritising c g and being okay with consensus starting tiny The long-held corporate practice of Good ideas often look like niche oppor- seeking broad-based consensus before tunities at first – especially to companies moving forward removes most of the risk that are used to mass scale. But every around collective decisions. But in an age category-busting idea started small. We where risk is an essential component of need to be able to see past the current success, we need to become more com- state to properly evaluate the future fortable with only some people around potential of (I)nnovations. the table agreeing at the outset.

h Killing failures faster

It’s in our nature to persist, and killing 3 GOVERNANCE projects puts the icing on failures we’d rather not acknowledge. We need to Assigning responsibility become more disciplined at reducing our a (I)nnovation efforts back to those that are effectively showing genuine promise. We need to consider how responsibility for (I)nnovation is distributed. While (i)nnovation should be in everybody’s job description, we need to give 2 CULTURE (I)nnovation to people who are passion- ate about innovation, whose brains are Protecting (I)nnovation wired in the right way, and who will make effective leaders of a difficult process. a from the organisational And they need to be given unambiguous anti-bodies accountability of getting the (I)nnovation to market. Corporate culture has a way of rejecting the foreign body of a new idea. Venturing Creating clear objectives b units have their challenges, but the inten- and benchmarks tion of protecting (I)nnovative thinking is the right one. Some companies target a certain per- centage of revenue coming from new b Minimising ‘No’ products. For many others, assessing innovation output is much more subjec- As My Food Bag’s Cecilia Robinson puts it, tive. What gets measured gets done, and corporate executives can often become we need to find ways of setting quan- ‘experts at saying no’. There is always a tifiable targets around our (I)nnovation conceivable reason not to do anything, outputs to ensure we’re not contributing but we need a culture of ‘yes’ being the to New Zealand’s innovation declines. default position if we’re to change gear.

We believe that New Zealand can accelerate its journey toward being the world’s most innovative nation. And we hope that this research inspires, provokes, and ultimately helps our larger organisations contribute even more successfully to that outcome.

15 PART ONE The Defnition and Importance of Innovation

17 PART ONE Defning Innovation

The first question we asked CEOs was how they defined innovation.

As you’d expect, the answers varied consid- erably. Many, like Contact’s Dennis Barnes, noted that the concept of innovation can be nebulous: “I think ‘innovation’ is a bit like ‘sustainability’ - it can cover a multitude of activities.”

Some defined innovation very broadly. ‘Any pos- itive change’, ‘useful changes’, ‘new ways to do things’, ‘anything we’re doing that’s different’, ‘do- ing things smarter.’

For these leaders, the concept of innovation stretched to cover virtually anything their organi- sation did that departed from their norms. “ For us it’s about taking ideas that our frontline people have. Innovation as We’re running a program improvement here called “High Performance, High Engagement”, working Many gravitated toward innovation as a pursuit of closely with our union continuous improvement. stakeholders and employees about how we engage our Like Toyota’s ‘kaizen’ programmes, this defini- people in the front line to tion of innovation seeks to optimize systems, processes and culture to create efficiencies in a improve the daily processes company’s operations and delivery. and tasks. Ideas or inventions from our teams that will This is about thinking innovatively to do what deliver cost effective and they do better - innovating around ‘how’ they de- higher quality outcomes, liver, more than ‘what’ they deliver. improved reliability for In the journey of transformation, this continuous customers and build strong improvement is a powerful force, and an activity working conditions for that can involve the entire workforce. our employees.

Many leaders spoke of programmes that involve ” their frontline staff - gathering insight and ideas and putting them through a process to integrate Peter Reidy, KiwiRail good thinking into the day-to-day of their organ- isation.

18 PART ONE

We found many great stories of new efficiencies Sunday Star Times innovation. What I would con- gained through this process of engaging employ- sider innovation is a completely new business ees in a process of questioning and improve- model, potentially a new business. That’s what I ment. consider it to be. Innovation is about completely stepping off the ledge.”

“It’s about uncovering new areas of growth”, agreed others. “Innovation is something that is higher risk and something that is newer and out- side the category convention and norms.”

These leaders spoke of innovation more in terms of new products, services or experiences designed for customers to create new revenue streams.

In particular, the founder CEOs we spoke to de- fined innovation in terms of the creation of some- thing new, rather than simply doing something old in a different or better way.

“So, I would define innovation as bringing a new set of eyes to a category,” says Lewis Road “ Creamery’s Peter Cullinane. “And through seeing that category through new eyes, creating prod- A good example - someone ucts that others had not seen the opportunity came up and said that, if you for.” need a blood transfusion we normally give two lots of blood, They also showed a much greater tendency to and well actually is that define innovation by what actually reaches the customer. necessary? So we had a whole

campaign of ‘why use two “It’s basically getting ideas all the way through when one will do?’, which the process and shipped actually alive in custom- halved the blood budget. So er sights,” said Orion Health’s Ian McCrae. that came from someone saying ‘I’m not sure that this is actually necessary’. Big I and little i

” innovation

Ailsa Claire, Auckland District Health Board Of the two definitions, the former was the one we’re currently most comfortable with and adept at. It’s the latter that is more elusive, and subject to greater challenges. Innovation for growth - what we’ve labeled ‘Big I’ innovation - is where we Innovation as growth have the greatest opportunity, and the greatest need for learning and progress.

At the other end of the spectrum, many defined As such, the remainder of our study focuses on innovation in much more specific and growth-re- the challenges and learnings around (I)nnovation. lated terms.

“It is creating the new world for us,” says Fairfax’s Simon Tong. “So I don’t consider a revamp of the

19 PART ONE Innovate or Die

It’s fair to say that innovation has become a major concern for the leaders of New Zealand’s large or- ganisations. 60% of our CEOs gave innovation a 10 out of 10 in terms of importance to their near- term commercial performance. 81% gave it an 8 or higher. While only 3 respondents of the 44 ranked innovation’s importance as a 6 or under.

Many talked of the need for innovation as being a matter of corporate life and death. “We’re dead without it… like survival stakes,” “if we do not in- novate we will dead in a decade’s time,” and “we have to innovate or we’re gone” were typical re- sponses when probed about the importance of innovation.

“ For a while we’ve been How important (out of 10) do you consider reframing our language: innovation to your we’re not a bank, we’re a near-term commercial technology company with a performance? license to operate in banking.

2 ” 6 4 Barbara Chapman, ASB 7

Average ensure their organisations adapt.

8 8.9 There is also rising awareness that this ‘transfor- 10 mation’ isn’t a one-off exercise. That the status quo for any successful organisation will be con- tinual transformation. 9 ASB’s reframing of themselves as a ‘tech compa- ny’ providing banking services is an overt com- mitment to changing the mindset of the bank, enabling the culture to step into a space of con- A ubiquitous push tinuous transformation by emulating the tech sector who are the most comfortable with this to transform constant change.

The need for innovation sits within a broader con- Things will be different in the future, we know text of changing times. It was clear from almost this for sure,” says Chris Litchfield. “Our defini- every interview that CEOs not only recognize tion of innovation is change and it is incredibly that legacy business models are in jeopardy, but important.” are leading significant transformation efforts to

20 PART ONE

A sea-change in customer expectations

New Zealanders’ interactions with world-leading companies like Apple, Amazon and Facebook is changing the expectations they have of every company they deal with.

In the old days, customers may have compared companies to others in their category. Today, they compare the experience they have with any company to the best customer experience they’ve had, full stop.

“They don’t measure us by virtue of any other “ bank,” says Barbara Chapman. “They say ‘if I can do everything self-service at Air New Zealand, If we’re not investing to fgure out how to play in a world that’s going to be heavily disrupted, we’re just writing our death warrant early. ”

Simon Moutter, Spark

why can’t I do everything self-service at ASB? If I can do one-click at Amazon, why are you peo- ple insisting that I fill in all this paperwork and do all this silly stuff when you know me better than Amazon does?’.”

“ Naturally, our expectations are set by the com- panies we spend the most time with. And today, How do you take an many New Zealanders spend far more time with external view rather than Facebook, Apple, Google, Uber and Amazon than an internal view? We’re no they do with their bank, supermarket, health care longer benchmarked with the provider or council. other utility companies. We’re The implication is that if we’re not delivering a benchmarked against Air customer experience that lives up to those ex- New Zealand and Uber. So it’s pectations, we’re actively creating room in our actually taking that external industry for disruption. perspective then working back to what you have to do For example, it’s commonly observed that, had the taxi industry proactively re-thought and to satisfy that. improved their customer experience, there ” wouldn’t have been room for Uber to disrupt their category. Dennis Barnes, Contact Energy

21 PART TWO The Wicked Problems of (I)nnovation “ A lot of people talk about innovation, but I’m not sure a lot of people actually do innovation. Innovation isn’t easy and if it was then everyone would be doing it and we wouldn’t have these studies tying to fgure out how to do it better. Because it’s hard. ”

Russell Stanners, Vodafone

24 PART TWO The Wicked Problems of (I)nnovation

you get a bit lazier. We did a lot of really exciting How satisfed (out stuff in the first 18 months, and then people just of 10) are you with your start to get fat, dumb and lazy. So I call it out as innovation success over corporate spread and say I’m sick of it.” the last three years?

3 2 10 8

4

Average 7 5.9

5

6

“ While most CEOs rated innovation as an 8 or If you’re a big organisation above in terms of importance, only 3 of the 44 gave themselves an 8 or higher when asked to like us, a big organisation is rate their own innovation performance. like a biological organism, and when a foreign body enters it, 56% gave themselves a 6 or under when asked it will surround it and it will how they felt about their innovation outcomes either make it look like itself over the past 3 years. or it will expel it. So the anti- Kiwi humility? Perhaps. But the nature of most bodies surround innovation of the conversations centred around an acknowl- and either absorb it and make edgement that we’ve a way to go in terms of ac- it bureaucratised or resist it tivating innovation successfully within our large and kick it out. organisations. ”

Why so hard? David McLean, Westpac

Innovation’s challenges come down to an array of issues endemic in large organisations and relat- ed to the inevitable politics and complexities of Difficulties with innovation rarely come down to scale. Z’s Mike Bennetts had an amusing descrip- external forces. Nor do they tend to stem from tion of the biology of corporate life. “We take way functional restrictions such as lack of money or too long… way too long,” he says. “It’s what I call resource. Most often it was acknowledged that, corporate spread, a bit like middle age spread. when it comes to innovation, we tend to be our The older you get, you pack on a few pounds, own worst enemies.

25 PART TWO

“I believe one of the most obvious things that could stop us, is us,” says Chris Litchfield. “If we are not careful we can allow ourselves to get in the way of progress. We can end up arguing the issue, rather than looking for the innovation and motivation to succeed. So there are no obsta- cles to prevent us from innovating – I believe it’s important to look at what we can achieve rather than limiting our objectives.”

Perhaps the main enemy of innovation in large organisations is a silent one. The quiet de-prior- itising of projects by individuals can, over time, deprive them of enough oxygen to put them safely off to sleep. “ While there is an intent This resistance is often less to do with active op- across the organisation - they position to the innovation, and more with reali- ties about workload and personal priorities. “You want to see transformation - get to people’s day to day responsibilities and it actually impacts on individuals, teams or operations areas. That’s when there’s that resistance to change. For us we’re very mindful of that as a challenge and a risk. I think that actually goes across all organisations - the courage to unpack the way things have always been done to drive a way forward, when it may not necessarily be totally proven. That’s the risk factor that I think is involved in any form of innovation. “ ” You’ve got to take a lot of people on the journey. And if Scott Pickering, ACC they don’t want to change you can be faced with passive resistance. That for us would be a big blocker of innovation. they just don’t see the rational for it, says Simon Tong. “You’ve given me this to do and now I’m Making sure that we don’t supposed to help this guy out with some random have passive resistance is idea that I can’t see any value in. Why would I do just another challenging that when I have two outstanding roles here and part of the journey. you’re not giving me the headcount for it? You’re no help at all!” ” The issue is complicated by the lack of silver bul- Chris Litchfield, Coca-Cola Amatil lets in terms of structure or process. “We’ve tried every flavour of ice cream,” says NZ Post’s Brian

26 PART TWO

Roche. “And, because, I think innovation – there’s Innovation tends to be a little like archaeology – an element of exploring. The only thing I know is we know we’re looking for treasure, and we have there’s no golden way of doing this. There is an some idea of where to start looking, but we don’t element of consciously exploring anything that know what we’re going to find and we don’t know adds to our core business and makes us either how we’ll find it. more efficient or differentiated from our compe- tition.” Trowels out!

Unpacking the Challenges

We asked the CEOs to score their organisations The attuned diplomacy of our CEO panel caused on four key aspects of innovation – (1) strategy - something of a regression to the mean, as most discovering the right role for innovation and the gave ‘7’ as their default answer – but within that right territories to innovate in, (2) ideation - com- abnormal distribution, it was clear that most or- ing up with innovation ideas for new products ganisations are confident in the areas of strategy, or businesses, (3) prioritisation and buy-in – effi- ideation and to a slightly lesser extent execution. ciently achieving alignment around which innova- tion territories or ideas to move forward with, and (4) execution – producing and operationalising The Prioritisation new innovations in a way that successfully fulfils the vision for those innovations. Challenge

Where they commonly marked themselves down was prioritisation and buy-in. While the average score was 7.1 for strategy, 6.7 for ideation and 6.6 for execution, prioritisation and buy-in dropped How does your organisation rate to 6.0. (out of 10) on the following four aspects Almost everyone felt confident in their strategic of innovation? process and ideation. In fact, there was a sense that large organisations have more good strategy and ideas than they know what to do with.

“We have no shortage of ideas, just our capacity 7.1 to do them all, which is why prioritising hard mat- 6.7 ters,” says Auckland Airport’s Adrian Littlewood. 6.6 And the capacity issue tends not to stem from a 6.0 lack of money. “Money isn’t necessarily our con- straint,” says Barbara Chapman. “Our constraint Prioritisa is prioritising and just the flow and the ability

Executio to make change.” While this may seem easy for & Buy-In Stra Idea a bank to say, the sentiment was echoed across most of the interviews. tegy tio tion n n The difficulties associated with getting stake- holders to agree what to move forward with tend to be more to do with difficulties prioritising inno- vation over the BAU emergencies which almost always appear more pressing than future-gazing.

27 “ Ideation, we’re probably a 15, there is never a lack of ideas. But how do you prioritize and get buy-in from across the organisation? There are conversations about what might be possible, there’s so much possibility. But once you’ve fgured out what’s possible you go ‘what should we do? What must we do?’.

”

Stephen England-Hall, Loyalty NZ

28 PART TWO

Corporate teams are also used to making deci- Although most leaders were confident of a lack of sions with a greater basis of fact than innovation politics in their organisations, the realities of peo- allows. What is ‘a good idea’ can seem highly sub- ples’ personal investment in their own thinking jective. Selecting a diving board from which to persists. “If you’ve got twenty people in the busi- leap into the unknown can seem fraught enough ness all who think twenty different ideas will de- to put people off entirely. liver on the strategy, simply by agreeing to 10 of them will require buy-in to be lost,” says Stephen There’s also a question of politics and ego. England-Hall. “So when you get down to one, you certainly have a lack of buy-in because there will be people who were wedded to their ideas. 70% are usually on the bus. 20% are ambivalent to the bus. And 10% are standing in front of it.”

Sometimes conflicting agendas, however, pro- duce better results. Greg Davidson observed that, at Datacom, the natural tension created by having competing internal teams lead to a better outcome for the customer and in turn the busi- ness.

The Speed Challenge

“ We accept that at times there are going to be differing agendas. When we frst started offering our virtual private cloud offering we offered it to all of our customer base. That effectively cannibalised everything we were doing in product re-sell. It was intensely frustrating for the “ product re-sell guys that their Technology has made the number one competitor was world we operate in much internal. But having that smaller…you just have to fnd natural tension meant that ways to stay ahead whilst at instead of us pushing the same time dealing with the customers one way or exponential speed of change. another, the tension between the two produced a better ” outcome. Neil Cowie, Mitre 10 ”

Greg Davidson, Datacom As the rate of innovation reaching the consum- er speeds up, it’s becoming apparent that the

29 PART TWO pace at which we used to move is no longer fast enough. “I think a really critical part of success is speed,” says Kevin Kenrick. “And you can’t afford to have parts of the business running at an ana- logue pace in a digital race.”

The politics and bureaucracy surrounding priori- tisation and incremental approvals leads to inno- vation happening at a speed that simply isn’t fast enough to sustainably compete.

“I’d say it’s not fast moving consumer goods anymore,” said Frucor’s Mark Callaghan. “I think

“ I’ve always been of the view that you never get stuff perfect, it just doesn’t happen in today’s world, especially if you’re moving quickly. There’ll be some stuff you get wrong and we do get stuff wrong. To be big enough to say, yep, we got that wrong, let’s put it behind us, forget about it, move on to the next thing, that’s really important in “ my mind. I want to help create an environment where we can run ”

innovation cycles in parallel. Rob Chemaly, Liquorland The frustration that I have – and I think a lot of businesses and organisations are like this it’s actually extra-fast consumer goods.” – is that initiatives happen in a And with the rate of change only increasing, solv- serial fashion. We’ve done some ing this speed issue seems critical. “I’m a great things well, and we’ve executed believer in ‘yesterday’s fast is this year’s slow’,” them well, but they’ve become says Russell Stanners. “The game is always all encompassing. Before you changing. We can’t do what was acceptable last year. We need to actually do a whole lot better know it nine months goes by this year.” and you may have delivered on that program of change, but Besides the need for speed to competitively seize what else could have also or defend opportunities, there was also consen- happened at the same time? sus that the slower innovation goes, the less like- ly it is to make it into the world at all. ” The reality seems to be that deceleration even- Wayne Pickup, Lotto NZ tually leads to stopping altogether. That slowing things down or putting things off, even for what

30 PART TWO seem to be the right reasons, sounds a death Alongside the complaints about not creating and knell, especially for (I)nnovation projects. executing fast enough was the same complaint about being too slow to kill innovations that There was a shared frustration about bottlenecks aren’t showing returns. “The famous saying ‘fail in corporate hierarchies that mean that innova- fast, fail cheap’, which every big business quotes, tions happen one at a time. but hardly any big New Zealand businesses ac- tually do,” says Simon Moutter. “Because we all To compete in the future we’re going to need get too wedded to our ideas, not being willing to learn how to activate much more innovation, enough to make the big calls.” happening side by side. Our reluctance to kill poor performers probably One of the major handbrakes is over-analysis, and stems in part from our discomfort with putting waiting until all questions are put to bed or some- the icing on failure. It may also have been drilled thing is perfect before moving forward. into us as kids, being chided for giving up on pursuits and praised for ‘seeing things through’. Pulling out of something just because we haven’t seen instant success feels flighty to many of us.

The outcome is not only poor performance, but also a build up of unnecessary workload.

“ I’m a believer of ‘do it. Contain the cost to do it, but do it’. It’s incredible how analysis can talk you out of innovating. “ We’re not very good at ” stopping things that are low Jane Hastings, NZME (formerly) value-add. So we tend to keep everything going and then we just keep adding stuff on top.

”

Stephen Town, Auckland Council

31 “ I often talk about fast failure. I have no issue with fast failure. I’ve failed fast, and slow-failed actually in my career. I use that language because it’s language I’m familiar with, but for some people around the public sector, it terrifes them. Because in the public sector, failing is getting your photo on the front of the newspaper, or being named and shamed in some way, it’s seen as career limiting.

”

Brett O’Riley, ATEED

32 PART TWO

The Failure Challenge

The idea of celebrating failure has become a core theme in innovation. The mythology suggests that Silicon Valley VC firms only embrace entre- preneurs with sufficient failures beneath their belts. And the ‘fail fast’ mantra of Lean Startup has been adopted wholesale into the vernacular of corporate innovation for its undeniable logic.

But failing remains an emotionally difficult place for most people. “Because there’s an ego as well, admitting you’ve made a mistake,” says Brian Roche. “In traditional business, when you make “ a mistake, you’ve failed. When you’ve failed, If I’m a product or technology you’re vulnerable. When you’re vulnerable you’re person, there’s always in trouble. There’s a whole lot of human dimen- solutions. Solutions up the sions to it, so you persevere.” wazoo. Can you build me one Cultures of genuinely embracing and celebrating of these? ‘Course I can. But the failure are still scarce, but creating them is on the question is ‘why?’ Now we go agenda in many businesses. “One of the things ‘why’, then ‘how’ then ‘what’. that I’d like to see is that we remove that fear of Everyone used to go ‘what’, mistakes, that fear of failure,” says Wayne Pickup. ‘how’, then they’d do the ‘why’ And in many organisations, particularly in the last, just to justify all the rest. public sector, it’s easy for leadership to talk about You really need to go ‘why are failure, but harder for staff to embrace it. we doing this, why do we think we should do it’ then Changing the way we look for and respond to fail- ure is one important step. “One of the issues that ‘how are we going to do it and we had is that failure finds a way to hide, and suc- what would we do?’ You have to cess finds a way to the MD’s desk,” says Chris Li- start with what is the customer tchfield. “So culturally for us it meant leadership problem you are trying to solve. had to be prepared to look for failure, and then That will give you your ‘why’. change our behaviour when we found it.” ” And the language that goes around failure, to take the onus off individuals, can be powerful. “At Rod Snodgrass, Spark Ventures Z we hardly ever talk about what’s wrong”, says Mike Bennetts. “We’ll ask what was missing. So if something doesn’t turn out the way we thought Transforming our processes from ‘building from the first question we ask is what was missing the factory out’ to ‘designing from the custom- here, not what went wrong.” er back’ has become an ideal that’s widely em- braced, but still only occasionally achieved.

The Insight Being close to the customer is easier said than done. Although we expect all of our employees Challenge to think innovatively, it’s a huge challenge to have them regularly spending time with customers in Alongside innovation, customer focus is another real-life situations. core theme in the 21st century corporate zeit- geist. As Chris Quin points out, it’s not a lack of ability

33 PART TWO to think innovatively that’s holding us back, but a lack of insight to fuel that ability. “If you come back to that core belief that observation drives innovation, our problem is not that we have peo- ple who don’t wish to be innovative, our problem is we don’t have the observation that drives in- novation.”

Research companies surely help – but only in terms of connecting business with consumers in second-hand ways. The spark of seeing a cus- tomer’s pain first hand and being hit with an ob- vious solution rarely happens when insights are Chinese-whispered from real life experience to focus group to PowerPoint presentation.

“ The Measurement How you defne it? The Challenge percentage of two years’ worth of back sales value against It remains difficult for most businesses to assess your total portfolio. So we whether they’re ‘doing enough innovation’. Anec- classify it as somewhere dotally from this study, most CEOs think they’re between 12% and 15% of our improving, but admit they’re still not doing sales (in our category and enough. But they’ve scant ways of quantifying this, or of benchmarking their innovation in any business) need to be in that sense beyond subjective guesses. innovation space to keep our business going. The packaged goods companies, however, have tidy enough metrics to be able to goal-set in a ” common sense way. Mark Callaghan, Frucor Beverages (formerly)

Perhaps there’s something in this for organisa- tions in other sectors. organisation, as it then implies that others aren’t expected to think innovatively, nor to share in the The Responsibility excitement of innovation. Challenge “Innovation is about new and different and ex- citing. It’s about the future,” says Kevin Kenrick. Perhaps the biggest challenge is deciding who is “So if you’re saying ‘here’s a subset of the organ- responsible for innovation and under what condi- isation whose job is the future’, the risk is you’re tions they should be innovating. also saying everyone else’s job is about yester- day.” Leaders oscillate between a very democratic view of innovation being ‘for everybody’ and the para- But perhaps this reveals a bias in some CEOs’ dox of ‘everybody’s job’ being nobody’s respon- thinking. Because they tend to be excited by in- sibility. novation themselves, they presume their people will be offended by not being treated as innova- “I think your classic textbook answer would be tors. ‘everybody’s responsible for innovation’,” says Leon Clement. “It’s important that we’re all think- In fact, for many, innovation is extra work that’s ing about how we respond.” best left for those who are personally drawn to it. “People are flat out and are concerned about Many leaders felt reluctant to give responsibili- their existence and whether they have a job and ty for innovation to a person or team within the they’ve got a sick child, or rugby practice or ballet

34 PART TWO on the other side of the city or whatever it is,” don’t have the ability to step back and say ‘if this says Simon Tong. Brett O’Riley agrees: “People world was completely different what would it are always very busy and have more to do than look like?’.” they have time. So there’s always the ‘what’s in it for me?’ mentality.”

Innovation does tend to call for energy and ef- fort beyond the day to day – and it takes people compelled enough to want to summon up those things. “Innovation requires people who want to go the extra mile, want to make a difference,” says Jane Hastings. ”Not everyone’s in for inno- vation.”

Even among those who are in, BAU realities persist.

There is also a reality that, willing or not, not everybody is built for innovation. Just as some people make great accountants and others make great salespeople, there are a set of natural skills and passions that make some people good at “ thinking innovatively. I would say probably 80-85% of the staff in most organisations Stuart McCutcheon observes: “Most people don’t often think about doing their jobs signifcantly differently. It’s only a few who have the freedom, either intuitively or explicitly given, to think quite differently about their roles, what they’re doing, and the solution that they’re after.

”

Steven Carden, Landcorp

Orion’s Ian Macrae, having run a highly innovative organisation for 23 years, has a keen sense of the “ kind of person required to conceive and deliver There is a culture of appetite breakthrough innovation. for risk and new ideas. But I “You hire people who have their brains wired that think that is counterbalanced way. It’s a certain type of person. I mean, the idea by the workload problem. that everybody can be innovative, well to some There’s a lot on and people are extent that’s correct, but for the breakthrough up for change but they’ve also product innovations, I don’t think you can really got to do their day jobs. train that sort of unusual way of thinking. Those really big breakthrough ideas come from those ” really innovative people. The really innovative people can take what a customer says, instead Stuart McCutcheon, Auckland University of just doing it verbatim, they can actually then

35 PART TWO say ‘well they’ve asked for that, but what they Interestingly, we didn’t have one CEO tell us that really want is this’. Innovation doesn’t happen they gave the job of innovation to those who from Monday to Friday. If you’re not Googling in were passionate about innovation. the weekend about some topic you’re passionate about, then chances are being a product innova- Whatever their views on whether innovation is tor isn’t your first calling. So the really innovative ‘everyone’s job’ or ‘someone’s’, CEOs tend to people, they come in Monday morning with all agree that ultimate responsibility lies with them sorts of new ideas on things. That’s just the way and their executive team. it works. They’re always curious. You can’t be an innovator if you’re not naturally curious.” “The person who has to be ultimately respon- sible for innovation is the CEO,” says Rod Snod- The other inevitable danger of making innovation grass. “Because if they don’t support it, have everybody’s responsibility is that it becomes no some passion for it, create the space for it, al- one’s. locate the funds for it, allow the sorts of people you need (who tend to be risk takers who chal- “One of my initiatives for the year is to build an lenge the norms and can offend) it simply won’t innovation hub in the business,” says Chris Quin. happen. The organisational antibodies will take “Because in the end you have to have a place over and reject it.” where innovation comes from, and it gets talked about and reported on and driven and has the NZTE’s Peter Chrisp went as far as saying the job spotlight on it. Because if you don’t, then that of leadership is no longer to run the organisation, classic shared responsibility is no responsibility.” but to change it.

“ The enthusiasm of a group never rises above that of its “ leader, and this is especially I’m very clear with our true for innovation. Growth leadership team, and we’re hacking comes from all clear amongst each other, employees, so it is the that the purpose of the responsibility of the CEO to leadership team is to change be looking out for these within the organisation. The purpose companies and nurturing of the leadership team is not wherever possible. to run the organisation.

” ”

Barrie Sheers, Microsoft NZ Peter Chrisp, NZTE

36 PART TWO

Though innovation’s responsibility might be dis- tributed right across the organisation, the ques- tion of whether to centre innovation projects within the business or outside of it quickly arises.

“So actually that’s a key question,” says Dennis Barnes. “Do you take the separate group report- ing to the CEO without any of the boundaries and controls of the existing business, or do you do it in the existing business? It really is a key question for us.”

Setting up New Ventures units that don’t operate by the same rules as the mothership has been a global trend, now being explored inside many of our large organisations. Although it comes with “ We’ve got a very large membership, and access to a unique set of information and data. When we look to partner with organisations, we look for those that have fantastic ideas about how we can use our data in unique ways that add greater value to our members.

”

Peter Tynan, Southern Cross

“ its cultural challenges. “Why are they getting a We made a decision that the free run over there when I’ve got all these prob- innovation was going to come lems?” says Simon Moutter. “Just the very exist- ence of Ventures happily spending money doing from outside. It’s impossible cool stuff while the rest of the business is going for us to maintain operational through massive cost cutting, to fund it, creates excellence and focus on that a few buy-in issues. We’ve navigated through day-to-day and be experts in them, but imperfectly.” innovation. So let’s partner with people who actually think about disruption or innovation on a day-to-day basis, and not build that capability as part of our day-to-day DNA. ”

Gráinne Moss, Ministry for Vulnerable Children (CEO BUPA at time of interview)

37 How do we compare?

New Zealand organisations are not alone in their innovation challenges. Recent similar studies in the US and UK show many consistencies with our research.

?WhatIf! Innovation Partners is the world’s largest inde- pendent innovation consultancy, headquartered in London and operating across Europe, North America and Asia.

In 2014, ?WhatIf! interviewed 400 leaders from the UK’s largest companies to complete their ‘Eyes Wide Shut: Leading for Innovation in Post-Recession Britain’ report - prvs.ly/wieyes

Just as we found an Just as we found that New abundance of ideas, with Zealand organisations were enormous challenges taking Just as we found a major better at (i)nnovation than those ideas forward, so struggle with speed to (I)nnovation, so did they: did they: innovate, so did they:

of UK leadership of UK leaders fnd it 68% of UK corporates teams are better at almost impossible to take just as long, or bottom-line effciency gain support to test even longer, to innovate than top-line growth new ideas in 2014 than in 2009

Only 3% can get a new idea to market in 6 months or less Most take at least a year just to prototype and test an idea

What does this tell us?

The challenges that our large organisations face are common ones. However – these studies also reveal an opportunity for New Zealand. By comparison to ‘large organisations’ in the US and UK, we run relatively contained and nimble organisations in a small market with a very different risk profile.

Which is exactly why Heineken views DB Breweries as an incubator for their global business. DB can move at a speed that’s far greater than that of their bigger stablemates. As could most ‘large’ New Zealand organ- isations well outpace their global competitors.

We believe that applying this perception and mindset just might help us decide that it’s not so hard after all.

38 Consulting firm Accenture carried out a similar study in 2015, surveying 500 executives with roles in innovation at large US companies to complete their report ‘Innovation: Clear Vision, Cloudy Execution’ - prvs.ly/auscvce

Just as we found that New Zealand organisations weren’t Just as we found that leaders in the habit of prototyping Just as we found a focus on use the same thinking for several innovation ideas ‘in (i)nnovation over (I)nnovation, (i)nnovation as they do for parallel’, so did they: so did they: (I)nnovation, so did they:

of US executives say of US executives say of US executives do not their organisation is their organisation distinguish how they looking for the next tends to pursue innovate from how they silver bullet/single product line go about achieving market shifting extensions rather incremental innovation over than developing performance gains. pursuing a portfolio of totally new products opportunities or services

And in fact, Accenture went on to recommend, as we have, that large organisations need to distinguish these types of innovation more clearly in order to more effectively pursue ‘Big Innovation’. They proposed two ‘engines’ of innovation, with distinct requirements in terms of speed, risk management, measurement and people.

“ One of the things that we set ourselves up to do for Heineken here in New Zealand is to be an incubator market. A place where Heineken can have a go, can test different products and concepts. And we’ve got one of the highest innovation rates across the Heineken world. We aim to be very very rapid with our innovation. Andy Routley, DB Breweries ”

39 PREVIOUSLY UNAVAILABLE’S POINT OF VIEW

Laying a Foundation for Success: The power of 6 Top Tips for a reframe Rethinking and reframing what business (I)nnovation you are really in can be one of the most powerful ‘unlocks’ for inspiring new waves Strategy & of (I)nnovation, especially in long- established industries. But this can’t be a Ideation desktop exercise. It’s important that this reframe comes from deepening insight into the broader role your products and With the accelerating rate of technology services play in customers lives today as well as foresight about how this might advancement, market disruption and change in the future. When done well, escalating consumer expectations, it’s such a reframe will quickly and radically becoming increasingly challenging for open up the set of challenges to solve and opportunities where the business can businesses to know where to best focus create value in consumers lives. Ultimately, their often constrained (I)nnovation that’s what (I)nnovation is all about. resources. These vital ‘discovery and direction-setting’ activities at the beginning of any (I)nnovation journey are critical not only for defensive (I)nnova- tion awareness (early warning of coming disruption), but more importantly, for knowing where to direct front-footed (I)nnovation efforts (becoming the disruptor).

Corporates with the best long-term Rethink your success rates all have well-established competitor set and effective (I)nnovation strategy and ideation processes, that serve to contin- Along with the new opportunities from ually identify potential opportunities and a powerful reframe, comes a new set of competitors – some obvious and some foresights relevant to both their current unseen. This isn’t as simple as identifying and future business ecosystems. the big corporate players your looking to disrupt or the cohort of well-heeled start- ups going after the same prize – which is of These are 6 things that companies course critical to understand. This process looking to become (I)nnovation leaders should also be an expansive and creative should know when looking to get their exercise that’s grounded in the new in- sights that can only come from deeper and (I)nnovation engine humming: more meaningful interactions with your consumers. It’s also a process of under- standing who else occupies this space in your customer’s hearts and minds? What individuals, brands or self-solved hacks are serving part of this new role today? Who else has their attention at critical occasions and experiences? Answering these types of questions will ensure you have a 360° view of who, what and where your real completion will be.

40 Keep one eye to Turn fction into the horizon reality

Scanning markets and technologies for Identifying opportunities means nothing threats and opportunities isn’t a new if you don’t turn them into action. And as concept in business. However, widening more businesses seek to build their competitor sets create more and varied (I)nnovation capability and the lines blind spots, and disruption is exacerbating between industries blur, big opportuni- this. The result? Horizons that used to be ties don’t remain that way for long. As 5-years can now be 2-years or less. This discussed in detail later in this report, makes horizon scanning more complex, the ability to experiment, learn fast and more involved, more assumptive and more successfully capitalise on the opportu- important than ever before. The key is to nity the fastest is possibly the biggest have structures in place to ensure the vital opportunity and greatest (I)nnovation connections and collisions between teams, challenge NZ corporates face today. While data points and hunches happen quickly it’s not always possible to create the future and often. This is fundamental to finding today, investing to build capability around and capitalising on opportunities before the critical areas early is another common they become a published ‘trend’ – by then, theme among successful (I)nnovators - it’s normally too late. baby steps at a sprinter’s pace.

Start story-telling This isn’t a the future one-night stand

When searching for opportunities on These cycling activities of reframing, more ambitious horizons, it’s necessary horizon scanning, storytelling and taking to transport yourself into future scenarios immediate action cannot be a one-time that don’t yet exist. Some of the biggest thing. The rate of change in local and (I)nnovation successes for corporate global markets will continue to force busi- juggernauts like BP-Castrol, Electronic Arts nesses, whether proactively or reactively, and Jaguar Land Rover have come from through this exercise more and more co-creating and colliding character-rich nar- frequently. The front-end (I)nnovation ratives about the future ecosystems which process of discovery and direction-setting they hope to play central role in. For BP/ necessarily needs to become an ever-turn- Castrol’s InnoVentures group, the ‘Nexcel ing flywheel that keeps the business Platform’ - an intelligent, closed-loop thinking three steps ahead. The inputs and oil system, worth more than $20bn for outputs of this critical function should have their automotive lubricants business and equal footing in Boardrooms and CEOs larger than their business at the time, was offices as the core businesses quarterly developed following such an exercise. For operational and financial reporting. What them, creating informed but currently fic- gets measured, get managed. tional narratives about the future of green connected cities rather than the future of automotive lubricants was the key. What futures are you living in today?

41 PART THREE Overcoming (I)nnovation’s Challenges

43 PART THREE Lessons to Learn From

The final question we asked our CEOs was what “Knowledge sharing or knowledge stealing,” they’d learned about how to innovate more effec- says Derek McCormack. “Steal like an artist. We tively. try and get our senior people out of the country visiting other places every year so that they’re seeing what’s happening.” Create a sense Although there is glory in invention, the success- of crisis ful commercialisation of new ideas doesn’t nec- essarily mean having those ideas. “We gave birth Many spoke of impending disruption, but of the to the company’s new strategy to shift from in- lack of a clear burning platform just yet. This cre- frastructure company to digital services retailer ates a feeling of little urgency around innovation. in May 2013,” says Simon Moutter. “We published But as David McLean learned, companies at the it for our investors, and said to them ‘one of the edge can be much more adept at manufacturing things I really like about this strategy is there’s urgency. not one bit of original thinking in it’. We copied the whole lot. We just looked around the world, “One of our people went to Silicon Valley about 3 saw what was working and said ‘well, we’ll do weeks ago and met a venture capitalist. He said that then’.” ‘you banks are history’. And our guy said ‘why’s that?’ And the VC said ‘my funds have $5 billion invested in fintech start-ups which are going to push you out of business”. So you come back in Create breathing a slight panic. So that’s good because it creates a space sense of urgency. Actually, meeting Ant Financial (Alibaba’s Financial Services Group), we said to There was widespread acknowledgement that them ‘how do you get so much done, how do you legacy processes of multiple and incremental get that sense of urgency?’. And they said ‘we sign-offs suffocates innovation. Many organisa- don’t have a sense of urgency, we have a sense tions are experimenting with ways of creating en- of crisis. Because Alibaba is only seventeen years vironments in which their people can safely make old – and we have this feeling that we’re going to faster progress. be out of business soon, any day, unless we keep running really really hard. We talk about running “OK, if this is going to make a difference to health hard to stay in business.’ The average person in care and it’s within our values and it’s not going the bank will say ‘we’re making a lot of money, to bust us financially, have a go at it,” says Ailsa what’s the problem?’. That’s what the taxi drivers Claire. “We’ve got a devolved management pro- used to think.” cess where people have authority, as close to the patient as possible, to make change within cer- tain parameters. So people can just get on and Steal like an artist do some of these things without ever having to be logged.” If one key role of innovation is to meet custom- ers’ evolving needs as best as possible with At Chorus, Mark Ratcliffe had a similar approach. emerging ideas and technology, then a big ques- “We try not to constrain people too much with tion is whether it matters to innovate ourselves, rules around what they are and aren’t allowed to or simply to arrange the right innovation from do. We prefer to let people experiment around elsewhere around our customers. with things and if they come up with something clever then we are willing to back it.”

44 “ More and more, I’m coming back to the ‘permission-less environment’. That you actually have to let people do what they think will improve things. If we said everyone’s got to have 20 sign-offs before they do anything, and it’s got to be worked through in detail with internal audits and quality assurance etc, etc, we wouldn’t get anything done. We’ve had to go hard and fast, so the best way to do that has been to let people, as far as possible, do what they think they should be doing.

”

Derek McCormack, AUT

45 PART THREE

Many leaders, like Mark, spoke of internal pro- grammes being run to surface new thinking from staff, and tentatively fund those ideas to see if they prove successful.

“ I’ve learned from start-up thinking around ‘defning your massive’. I think it’s a “ really good challenge. It’s ok We have a mechanism where to start small as long as you small projects can get going can see a future that has through a low-key dragon’s global domination around it den affair where you can take right? So this thinking is ideas to that group and gain really helping us sharpen some small seed funding for it. how we think about new ideas So a bunch of wise managers and bring stuff forward. will say ‘that looks like a ” pretty good idea, I can see how that would work, here’s Leon Clement, Fonterra Brands this little bit of money to go away with and develop it’.

” Learn by doing Mark Ratcliffe, Chorus Design Thinking and Lean Startup have a core principle in common which is about testing ideas through building rough, early mockups and get- ting them into the hands of customers. Aim big, start small In Design Thinking they’re referred to as proto- For most large organisations, early innovation types. Lean calls them ‘minimum viable prod- ideas can seem like tiny opportunities with niche ucts’. audiences. They’re overlooked, when in fact they’re often the seeds that will eventually be the Either way, the idea is that getting feedback to category’s trees. something tangible and useable is a far safer bet than pre-supposing what customers really want. Fonterra looks not only at the immediate oppor- tunity, but has discipline around imagining the Evidence, both anecdotal and statistical, demon- future opportunity so as to understand where to strates consumers’ inability to predict their own place early bets. behavior when asked to imagine new products

46 PART THREE and experiences in traditional research situations. Clever Kash, but at the time, it was one of those rare examples where we talked about something Z’s Mike Bennetts described to us how the Kiwi- before it actually happened. We wanted to test owned service station’s famed forecourt service consumer response to Clever Kash while we de- was a product of gut feel and piloting rather than veloped it for a commercial launch. So we said using research to approve and then rolling out ‘here’s what we’ve got, if you want to be involved wholesale. (See page overleaf) in the pilot, like us on Facebook. The response was massive and as well as receiving input into So it’s no wonder this new way of exploring inno- the design process, we created a community of vation ideas has caught on. Prototyping is prov- pre-registered customers who were engaged ing useful across many businesses in terms of and excited about the product.” speed and buy-in. “If you want to change some- thing, you don’t talk about it, you bring a proto- Another benefit of ‘doing to learn’ is that experi- type to the table and say ‘that’s what I think the mentation keeps the organisation learning, and direction is’,” says Peter Chrisp. “You bring an ar- keeps them ‘innovation fit’. “What allocation tefact of what you want to change and you have of your total spend is going to be something a go and then you learn from doing.”

The other effect of getting ideas out early in pro- totype form is that it engages customers early in the product and can build an audience for the innovation even before money has been spent executing. This was one of the happy side-effects for ASB on their Clever Kash project...

“Everyone was really excited when we announced

“ I think it’s really important to get started – we’ve done things with sticky tape and bits of string in the background, to get trials started, and then learned fast how to do it. And in doing “ that, we’ve learned what All those little things can really matters rather than the add up to a huge amount. classic, traditional approach The Waikato River in full of ‘build the ultimate product’ fow is a phenomenonal or ‘the ultimate capability’ sight, but it starts with and then fnd out what you innocuous raindrops. didn’t need.

” ”

Fraser Whineray, Mercury Adrian Littlewood, Auckland Airport

47 PART THREE

“ I’m sure you’ll fnd this in your research, what people tell you that they do, often they don’t. They’ll say it to look good, particularly in a focus group, and when they tell us what they want and what they do, when we watch them on camera in store they don’t do that. It’s not that they lie or put a prettier picture on it, they’re just subconsciously behaving inconsistently to what they think they do. So when we did all the work around brand and strategy back in 2010 we did a very, very large piece of research, big- gest bit of research ever conducted in New Zealand in any sector for at least a decade. We had 16,000 bits of interaction that gave us insights into stuff. Putting service onto fore- courts was not one of those things. It was gut that said, ‘the forecourts, there’s something in this’. It never came through in the research. But we just didn’t go bet the farm, we rolled out ten pilot sites and gave ourselves 5 or 6 months to see how that went.

”

Mike Bennetts, Z Energy

48 PART THREE that is truly innovative and for the purposes of learning?” asks Kevin Kenrick. “So you’ve got the things that are going to drive the business. You’ve got the things that you’re really confident that are the future. And you’ve got to do some stuff that’s purely there to learn. And we’re con- stantly tweaking that.”

“ There’s this DRI philosophy that Apple has - a ‘Direct Responsible Individual’. There’s always a person responsible for getting stuff done. DRI is a very powerful “ way, I think, to drive Trial small, engage your accountability. There are customer base early. As an many large organisations that industry dominated by don’t have anything close to engineers, we can worry too that - there are 20 people in much about the technical a meeting and no one’s got solution and the capital the ball. implications. We don’t worry enough about the market ” suitability and market Simon Tong, Fairfax feedback - so get it out early in whatever form you can and get that feedback. Look for quality of ” people over quality Andrew Garey, New Zealand Steel of idea

“I think the thing that improves the probability of success is actually the quality of the leader of the Put somebody initiative,” says Brian Roche. “His or her ability to in charge both take people with them and tell people to get lost when they need to. There’s something about Because innovation usually sits to the side of the strength of the character, because there are peoples’ day jobs, and involves a broad team, the lots of good ideas - but lots of good ideas fail be- potential is always there for responsibility to slip cause they’re not well executed.” through the cracks. Though everybody may be able to participate, one necessary part of driving When startup accelerator programmes (like Tech innovation is making somebody clearly account- Stars in the US or Lightning Lab here in New Zea- able for outcomes. land) evaluate companies keen for a place, they

49 PART THREE

ing time with them, and many leaders spoke of tend to focus on the quality of the team more this being a key driver of successful innovation than the quality of the idea. projects.

This is because execution is much more difficult than ideation. Anyone can have ideas, but it takes a special kind of tenacity and talent to drive an idea through the minefield to execution.

“ On average, we only select about 1% of applicants. We look for six things in order. We think about them very much in order, and so all of our managing directors that are out around the geographies look at it the same way. Those 6 things “ are: Team, team, team, If you’re going to over invest market, progress, idea. in anything, you should over ” invest in speaking to the

David Cohen, Tech Stars Founder consumer. Don’t just assume that you know what they want. We are so focused internally that we probably lose sight of what the real consumer looks like. Consumer insights coupled with our own instincts and knowledge will guide us down the right path. Tech Stars is considered the leading global startup accelerator programme, ” having accelerated more than 800 companies and raised over $2.3B Scott Hadley, Independent Liquor in funding.

Get closer to the Invest to learn customer Our growing start-up community in New Zealand Virtually every CEO talked about the importance provides a wellspring of learning for those want- of understanding the consumer better. This ing to understand how to innovate at pace and wasn’t about data and research reports - but without the constraints of legacy organisations. about buidling a genuine empathy for the cus- Observing them is one way. Jumping in and in- tomer and ability to put yourself in their shoes. vesting sharpens the learning focus even more.

Educating our intuition about what customers will want and buy is difficult to do without spend-

50 “ I’m going to get all of my executive team personally investing in start-ups, because you just want to see it, you want to hear an eight-minute pitch, you want to understand how that process works. If you go into one of the shared funds you start getting reports that show you eight or ten companies once a month of how they’re proceeding, you start to fall in love with one, you maybe go on their advisory board. And I just think it brings skills back to us that’ll be really cool.

”

Chris Quin, Foodstuffs

51 PART THREE

Encourage diverse inputs

Innovation studies have long shown the benefits of diversity (gender, cultural, sexual orientation as well as different areas of expertise) to innovative thinking.

“It comes back to setting up the right teams, and that comes back to diversity of thought and in- put,” says Fraser Whineray.

This diversity often brings fresh eyes, enabling an organisation to develop a new perspective on their industry.

“Half of our employees were not with the compa- “ ny on day one so we have this wonderful diversity Diversity is, and has always of bringing people outside our industry in,” says been, core to IBM culture. Mike Bennetts. ”And that’s been deliberate. We didn’t need more oil people and we need other Having a mix of people from perspectives. So we had this wonderful diversity all walks of life is a priority of skill and experience they brought to the table.” for us – because when you assemble teams you can get really interesting and bold ideas coming out. Blending together the young and the not-so-young, different genders and different cultures provides an organisation with new and fresh perspectives to problem solving.

”

Rob Lee, IBM

52 PREVIOUSLY UNAVAILABLE’S POINT OF VIEW Innoculating Against the Anti-bodies

As many of our CEOs alluded to, the challenges of mixing traditional corporate and entrepreneurial innovation cultures can be like mixing oil and water. While there is no one silver-bullet structure to defeat the ‘organisational antibodies’ that Rod Snodgrass and David McLean observe, considering approaches at the two extremes can help shape the first iteration of your own innovation model.

Open model: Closed model: empower every- keep it protected one to support until the ‘point of and enable: instopability’

Make ‘enabling (I)nnovation’ part of every Set up dedicated (I)nnovation teams, employees job description, regardless of ring-fenced from the business. Include suf- department, role or seniority. Either direct- ficient cross-functional and cross-disciple ly (on the team) or indirectly (ensuring no expertise to support discovery, iteration roadblocks). Train the whole organisation and execution activities. Augment internal on (I)nnovation mindsets, behaviours and staff with a high ratio of external talent what’s expected when an (I)nnovation and experience. Partner externally and team comes knocking. Identify your white-label where possible – especially for (I)nnovation secret agents that can act as prototyping and experimentation where culture accelerators and early road-block pace and agility is essential. Engage the removers. Align everyone’s incentives core business as little as possible in the accordingly. Make (I)innovation projects early stages. Deliver the (I)nnovation to visible and tangible to everyone and the business only when it has reached the celebrate the enabling teams who are point of instopability – when the product, putting these values into action. service or business model is sufficiently validated and compelling there’s little ques- tion the business will support it.

Ultimately, finding the right structure for enabling (I)nnovation in an organisation is much like the challenge facing the teams of (I)nnovators themselves. It’s a matter of prototyping, experimenting, learning fast and iterating the structures, systems, processes and people until a model is found that works and you can continuously improve on. Leadership teams can indeed learn something from the (I)nnovators they are trying to enable.

53 PART FOUR What can we learn from our founder CEOs?

Alongside our large organisation CEOs, we also “ spoke to the founders and leaders of five of New Innovation’s not just about Zealand’s most innovative start-ups.* making something slightly better. It’s about trying to Xero’s Rod Drury, Orion Health’s Ian McCrae, imagine where things could Vend’s Vaughan Rowsell, My Food Bag’s Cecil- ia Robinson and Lewis Road Creamery’s Peter go on the horizon. Maybe 5 Cullinane each provided lucid insight into how years, 10 years, or as far out as they’ve managed to catapult their companies you can comfortably project from a standing start to becoming some of the yourself - try and fgure out darlings of New Zealand business success. what the trends are, where’s

*We use the term ‘startup’ loosely in this con- everyone heading without text as Orion Health and Xero especially are now realising it? Trying to imagine enormous and very well established companies. that future state then working backwards and asking ‘how could we ft in that future Skate where the world?’ That forces people to puck is going take some pretty big leaps in thinking. From a product point Each in their own way, the founder CEOs showed of view, where is the industry a natural tendency to project their thinking well going? What do our customers into the future. They are consumed with what their customers will need in years to come, and want in 10 years’ time? We preparing now to meet those needs. want to transform retail. So we’ve got a really clear picture “It’s about continually challenging ourselves about what that is. around what we want My Food Bag to be in three years, five years, ten years’ time,” says Cecilia ” Robinson. “We’re third to Progressive and Food- stuffs, but if we’re going to close that gap we Vaughan Rowsell, Vend have to keep innovating, we have to keep being at the front line of our industry, and so that’s con- tinually challenging our product, challenging our people, challenging our packaging; every single changing the playing field,” says Xero’s Rod Dru- aspect of the operation saying how are we going ry. “So when you’re going into a big wide world, to do better, and so that just becomes funda- you don’t really want to compete with a me-too mentally part of how we operate as a business.” product. You may as well change what the mar- ket expects. Changing the goal posts is how we “We think in very commercial terms about think about it.”

54 PART FOUR

Speed up

Speed is of course an inevitable side effect of be- ing small. And the founder CEOs were adept at harnessing that advantage and exploiting it con- tinually.

LESSONS FROM OUR STARTUPS Three ways to accelerate (I)nnovation

Our interviews with founder CEOs yielded three insights into how to promote speed of innovation, and revealed three key ways to avoid slow progress:

1

Minimise ‘No’

“ My Food Bag’s Cecilia Robinson ensures Where we are good is that we that her organisation finds a way of seeing don’t take much time on the good in ideas, and saying yes to them developing stuff. The chocolate milk took sixty contiguous minutes, probably. When 2 you’re up against (bigger competition), the only way you Create Smaller Teams can win is to just be much faster. Because they can Orion’s Ian McCrae has learned that getting bigger stifles innovation, and absolutely beat us on has consequently created smaller, more distribution, they can beat us autonomous units that can run faster on price, they can beat us on trade merchandising, on trade relationships, on all that sort 3 of stuff – but they can’t move

at anything like our pace. De-prioritise Consensus ” Xero’s Rod Drury looks for consensus Peter Cullinane, Lewis Road Creamery where possible, but not at the expense of slowing down the innovation process

Among them, they had three key ways of organ- ising and leading for speed:

55 PART FOUR

“ Our culture around innovation is to say “yes”. Most people fnd a reason to say no, and so we fnd a way of saying yes. And I harp on about that, but so many times we fnd a way to say no to innovation. When you’re taking teams out of corporates, they’ve been trained for so long to fnd the reason not to make things work – they become experts at saying no. And so you have to retrain them to actually fnd the rea- son to make things work. So we challenge ourselves to fnd a way to say yes. And it is challenging - that culture of saying yes, the culture of thinking on our feet, continually challenging them, ‘why can’t we do that? If it’s what’s right for the customer, why can’t we do it?’ If our customers say ‘we want a gluten free bag’, and I go to my operations team, they’re like, ‘good luck with that’. And I’m like ‘we’re just going to fnd a way to say yes, right? We’re gonna get this’. And so that’s the culture that we drive in our team. ”

Cecilia Robinson, My Food Bag

56 PART FOUR

Minimise ‘no’

For innovation to happen in large organisations, there’s normally a lengthy queue of people who all need to say yes. If just one says no, the chain is broken. Within traditional structures, a select few are given the power to say yes and signoff, but everyone is given a right to say no – creating a gauntlet through which few ideas survive. My Food Bag have tackled that tendency head-on.

“ My presumptive tendency, when I’m presented with a new idea, is not to ask, ‘Is it “ going to work?’ It’s, ‘well, I do believe there’s an optimal what if it does work?’ There size. When you’re too small it’s are people who are wired to be hard to be innovative, and skeptics and there are people when you’re too large it’s hard who are wired to be optimists. to be innovative; there’s an And I can tell you, at least from optimal size. I believe the ide- the last 20 years, if you bet on al size of an innovation unit is the side of the optimists, 20, 30, no more than 40 people. generally you’re right. When it gets bigger than that it gets hard. We had about 500 ” developers in one big group, Marc Andreessen and so it was very hard to see Inventor of Netscape and partner in who was accountable for Andreessen Horowitz, one of Silicon Valley’s most prestigious and successful different products. There are venture capital firms lots of meetings and sometimes people can spend all day just in meetings. So starting about 15 months ago we started breaking the company up into lines of business, with Line of Business Owners, otherwise known as LOBOs. And that’s what we’ve done, we’ve tried to turn them into smaller start-up entities. Break it up, create Create smaller teams these independent business units, give them lots of freedom, Bureaucracy creep happens everywhere, and the and then just get on with it. start-ups feel it even more keenly, remembering the days when they were tiny and things hap- ” pened at lightning pace. Breaking the organisa- tion back down into manageable units is one way Ian McCrae, Orion Health to up the cadence.

57 PART FOUR

De-prioritise consensus

David Ogilvy famously said “search your parks. You’ll find no statues of committees.”

In large organisations, consensus among broad groups of stakeholders has long been necessary in order to move forward. This committee men- tality is perfectly suited to managing the risk out of decisions. But in a world where risk is required to compete and survive, decision by consensus has become dangerous.

“All of our leadership teams come out of corpo- rates,” says Cecilia Robinson. “And the key thing that they’ve said to us has been “we go into a meeting, we decide something, and then we just expect everyone to leave and execute it”, and the team’s like “normally it’s a 3-month decision mak- ing process and we need to get sign off. And was that actually an instruction for me to go and build this? Do you actually mean that I’m going to go and do it?”. And so it can take some quite a while to just integrate into that. Initially it really freaks them out, I think initially they think it’s going to liberate them, but they go through a deer-in-the- headlight three-month period when they’re like “this is actually quite daunting”. So basically it’s James or me or both of us signing off and off we go and we just do it. I expect my team to speak up if they’ve got an issue or a concern about something. They speak up then and there, they don’t just sit on it, and so they learn that pretty fast. If you’ve got a concern, we’re all in the same room, we don’t have to fluff around, let’s just talk about it now. And if we’re all agreed, then let’s just go and do it. That’s basically the way we manage things.”

58 PART FOUR

“ You know, innovation always ends up being designed out or takes too long. So we’ve learnt not to necessarily get consensus. Give the opportunity for consensus, but don’t let it slow the business down. We don’t need consensus to make a decision.

”

Rod Drury, Xero

59 PREVIOUSLY UNAVAILABLE’S POINT OF VIEW

Three Principles for Agile Ring-fence Governance innovation budgets and place It’s clear that prioritisation, buy-in lots of small bets and decision making in Corporate (I)nnovation can be fraught challenges Corporates committed to delivering inno- that throttle the pace, risk appetite and vation protect innovation funding from the entrepreneurial spirit needed for outset. Ring-fencing budgets intended for successful innovation to thrive. innovation ensures they are shielded from the inevitable pressures of BAU emergen- cies. Setting up appropriate governance The following three principles will help around these central or business unit manage around these inevitable internal budgets is a matter of balancing the need challenges: for control with that of agility – all while having less certainty and data around investment decisions. This will almost certainly mean different approval process- es, more responsive decision making, a higher cadence and a different mindset than those enabling BAU management. Leaders also need to approach funding with a portfolio mindset - placing lots of small bets across different territories and time horizons. To some extent, investing in (I)nnovation is a numbers game – more small bets = more eventual successes. But unlike more passive investments, effective experimentation and agile execution can greatly weigh the dice in your favour.

60 Learn cheap, Invest in tranches learn fast and but encourage add rigor to innovation’s split experimentation personality

The mindset of placing lots of small bets Taking a leaf from venture capitalists play- applies equally well within a specific oppor- books can further encourage momentum. tunity. Inside any new idea lies a long, and Committing investment in tranches allows you at times growing list of assumptions and to progressively back the teams (and ideas) hypotheses about what the idea actually that systematically move through the list of is, how customers are going to behave and hypothesis and learning cycles. It’s impor- how the business model will eventually tant to note however that it’s not only about work. Breaking these assumptions into a validation. Failure that results in constructive prioritised and logical series of fast, cheap learning and the need to pivot an idea can be experiments ensures these learning cycles just as successful if it moves the team closer are deliberate and risks are managed. Every to finding a viable business model. Investing in learning cycle should start with a clear learning means no dollar goes wasted. view of the hypothesis and what you are going to learn, the design of experiment, This touches on one of the dichotomies how it will be measured and what metric inherent in executing innovation. Successful indicates a success or a failure. (I)nnovators need to develop a split person- ality. On one side they need the resilience Adding some science to the madness of and determination to follow their gut and innovation helps cast a clear blue light on vision in the face of the inevitable naysayers the sometimes opaque and subjective and setbacks. On the other side they need parts of developing and validating innova- the humility and bravery to recognise when tions. When teams and stakeholders know enough redlights have said stop and it’s time what measure or metric they are targeting, to move on. Experimentation, learning cycles it becomes clear what and how to move and metrics can introduce guard rails to help things forward. keep these competing personalities in balance. Knowing when to encourage and inspire each personality then becomes a key role of innovation leadership and sponsors.

61 “ We are constantly reminded that the magic comes from creativity. If you can produce something which powerfully and emotionally engages people, the commercial side will probably work itself out. If you’ve got something which is purely driven from a commercial point of view with no magic, it’s probably not going to succeed. You can’t retroft magic by sprinkling a bit of fairy dust on it at the end – it has to be hardwired into the beginning.

”

Kevin Kenrick, TVNZ

62 Last word

In the end, though we can improve the process around innovation, there will always be an ele- ment of creative ‘magic’ that sits at the heart of successful new ideas.

“Sometimes miracles just happen and magic occurs,” says Barbara Chapman. “Clever Kash - it was just magic! And you’ve got to have a little bit of magic around. People love it.”

The events that lead to this magic don’t always happen in tidy, planned-out ways - as Stephen England Hall observes, arguing “that innovation can sometimes be the successful commercialisa- tion of some form of serendipity.”

While ‘luck’ and ‘magic’ are difficult things to plan for, it may be worth asking whether our organisa- tions are good at capitalising on them when they do appear.

Do we leave room for luck? Recognize magic when it appears? And do we nurture and make wise use of these things?

Because while we agonise over how to properly apportion the scarce resources of money, time and people, it’s worth remembering that those creative sparks are the scarcest resource of all.

63 About

Previously Unavailable is New Zealand’s leading innovation partner to the private sector. Based out of the GridAKL Innovation Precinct in Auckland’s Wynyard Quarter, we work with many of New Zealand’s largest organisations including Fonterra, Spark, ASB, DB Breweries and Contact Energy.

We partner with organisations as

of new product and business innovations

We work with teams inside client organisations to conceive, develop and launch new product and business innovations

We bring specialist innovation skills, knowledge and experience to those teams – innovation strategy, design thinking and lean startup methodologies, technical & creative capability, prototyping, commercial modelling and training.

We also work with startups and earlier stage organisations. We led the brand strategy and product development behind Stolen Rum’s market inception and ultimate majority stake sale to Chicago’s Liquid Asset brands for $21M. We also led the brand strategy and product development of recently launched fntech disruptor Simplicity KiwiSaver.

We’re passionate about sharing Our weekly newsletter is an essential innovation insight with the New Zealand guide to the latest in innovation ideas, business community through our free trends and thought leadership from resources: around the world. Sign up at prvs.ly/puweekly Our app, The Amazery, is a weekly video round up of the most innovative and facebook.com/previouslyco . inspiring new global tech, science, products, ideas and businesses. A fast twitter.com/previouslyco . weekly shot of what’s amazing in the world. Download at prvs.ly/amazery www.previously.co

If you’re interested in learning more about working with us, please get in touch at [email protected] 64 About the

Process

This process is our starting point. It’s designed to rapidly take you from ambition to viable business, while also creating the inspiration, buy-in and momentum needed to deliver impact in the market, in your organisation and in your customers’ lives. CONCEIVE & CREATE & CONCEIVE 1 5 DEVELOP & LAUNCH MOBILISE & KICK-OFF IDEA & BUSINESS MODEL BLUEPRINTS

Establish the co-founding team, prepare and train Build-out the leading ideas in more detail – what’s them for the project proper at the heart of the idea and what’s the business?

Align the vision with early stakeholder (‘Investor’) Agree the assumptions that underpin each interviews and dive into existing insights or data blueprint – what do we need to learn or validate?

Create a shared bold ambition, clear scope and an Create an early commercial model and understand aligned plan - the project’s ‘North Star’ early fnancial dynamics to focus value creation 2 6 INSIGHT & INSPIRATION PROTOTYPING & ITERATION

Getting out into the world with customers, partners Design experiments s to test the big and risky and trailblazers assumptions frst

Gather deep consumer insights and market fore- Design and build prototypes or minimum viable sights that will underpin what comes next products (MVPs) for experimentation

Early mapping of potential markets, technologies or Execute rapid sprints (plan-build-measure-review adjacencies, and their commercial backdrop cycles) to iterate and validate ideas and models 3 7 CONSUMER PORTRAITS & PITCH PACKS & GO TO MARKET OPPORTUNITY TERRITORIES Develop compelling pitch packs that bring each Collide the new insights, foresights, stimulus and opportunity to life for ‘Investors’ and stakeholders data points together in expansive workshops Bring each business to life with prototypes and Create a rich set of opportunity territories – fertile engaging experiences and future-focused creative platforms Create a multi-horizon strategy and roadmap for Create insight-based customer portraits, bringing building, launching and scaling the businesses colour and depth to our future customers and needs 4 8 IDEATION & CO-CREATION BUSINESS BUILDING & LAUNCH

Prepare inspirational stimulus around our Augment and accelerate your founding team to opportunity territories build the business and execute the launch plan

Deliver a series of high-energy, expansive ideation Connect your internal teams, suppliers and Previously workshops with internal teams Unavailable’s local and global partner networks

Customer co-creation sessions to generate and Creative, branding and commercial services to iterate ideas – hackathon meets greenhouse support challenges and resource constraints

The breadth, depth and robustness of each phase can be tuned to match the scale, scope and ambition of your innovation challenge. This includes adjusting for the time commitment available from your team and the innovation capability transfer you’re seeking. Each phase in our process can also be broken down into discrete projects to suit a specifc innovation need or intervention. 65 About the authors

JAMES HURMAN CHRIS PAYKEL Founder, Previously Unavailable Partner, Previously Unavailable

James started Previously Unavailable in Chris joined Previously Unavailable in 2014 following a career as a strategic 2016 following 4 years in London at the planner in the advertising industry. UK’s leading Innovation Consultancy In 2013 he was named the world’s #1 ?What If! Innovation Partners. There he planning director, following many years worked with a range of global businesses as head of planning at Auckland ad including Electronic Arts, Jaguar Land agency Colenso BBDO. Rover and International Hotel Group (IHG) to set, invent and execute their innovation Having seen success with innovation and and venture strategies. NPD projects for clients including Westpac, DB, Goodman Fielder, Vodafone Formally trained as a mechanical and Stolen Rum, James’ passion turned engineer, Chris enjoyed the first 5 years from communications to innovation. of his career designing products at Fisher & Paykel Appliances before moving James has spent the last two and a half into the Management Consulting and years working with many of New M&A world with EY, both in Auckland and Zealand’s largest organisations and London. brightest startups, helping them shape their new products and businesses. Chris thrives on bringing these creative and commercial threads together with a James is also the author of The Case for healthy dose of entrepreneurial spirit to Creativity, a book about the link between help our most ambitious and innovative creativity and business success, described companies create the future. by The Coca Cola Company as “beautiful words of wisdom”.

66