Mark W. Johnson is the author of Lead From the Future and cofounder of the consulting firm Innosight. Brian Ardinger, Inside Outside Innovation Founder, and Mark discuss how companies can better prepare for breakthrough growth and how leadership teams can use future back thinking to better understand the opportunities and threats in a world of constant disruption.
Inside Outside Innovation is the podcast that brings you the best and the brightest in the world of startups and innovation. I’m your host, Brian Ardinger, founder of InsideOutside.IO, a provider of research, events, and consulting services that help innovators and entrepreneurs build better products, launch new ideas, and compete in a world of change and disruption. Each week we’ll give you a front row seat to the latest thinking, tools, tactics, and trends in collaborative innovation. Let’s get started.
Interview Transcript
Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I’m your host Brian Ardinger, and as always, we have another amazing guest. Today with me is Mark W. Johnson. Mark is the co-founder of Innosight, a growth strategy consulting company, which he co-founded with the late, great Clayton Christensen. Mark is the author of numerous books on innovation, including Reinvent your Business Model, Dual Transformation, and his new, forthcoming book called Lead from the Future: How to Turn Visionary Thinking into Breakthrough Growth. Welcome to the show, Mark.
Mark W. Johnson: Thank you, Brian. It’s great to be here.
Brian Ardinger: Well, I’m excited to have you on the show. You have been one of the forefront thinkers in this whole world of innovation and very prolific in your writing about it. So, I wanted to start there. Tell us a little bit about why you decided to write another book about innovation and what’s different and what should people be expecting from it.
Writing this book, I look at it almost as the culmination of the 20 years at this effort to help companies in disruptive innovation and transformation. The reason I felt absolutely critical to get this book out is that we can innovate as companies and you know, we can try to figure out how to innovate for new growth. That’s really the definition of what we talk about when companies need to be more innovative. I think their core business is innovating all the time and they’re improving. They’re making efficiency improvements and continuing to do product development and so forth. They’re innovating in the marketing function, but they’re really striving for breakthrough growth.
And what I found was a lot of these breakthrough growth efforts would have good ideas, get the right people behind them, but if you didn’t have the right leadership, the strategy behind it, if you didn’t have the right enterprise strategy, a long term view that was the basis behind the innovation efforts that in the long run or even in the short run, these more breakthrough innovation efforts just didn’t keep the commitment of the individuals that owned the purse strings.
Really, the book is an effort to tie vision and strategy to innovation and even further, think about what is it that leadership teams need to do together in the process of developing a vision and converting that to strategy in order to become more successful as in just overall top line growth. But in particular, driving these new and different innovation efforts and the book is an effort to integrate the thinking around leadership strategy and innovation, which I feel is so important, if you’re going to create sustainability and success in helping companies innovate for the long term and own their future.
Spending Time in the Future
Brian Ardinger: You talk a lot about how leaders in the organization really need to spend some time in the future, wrestling with the ramifications of what that looks like. I don’t know if you can talk about examples of companies you’ve worked with. I know I’ve read your work and seen a lot about you, and one of the examples you’ve shared is around the work you’ve done with a big car manufacturer and how the process of future-back thinking got them to realign with what they were doing.
Mark W. Johnson: I’ll start with that. We worked with the top leadership team of one of the three US-based OEM car manufacturers here in the US. The work there was to look out 10 years into the future and begin to think about what the environment was to be like. This company had been thinking, of course, Hey, we continue to design and develop and produce cars and trucks and other vehicles, but we also have this work around trying to tie into things like connectivity that has become much more of a trend. And how do cars become much more connected in, and of course, that’s linked also to autonomous vehicle technology and artificial intelligence and all these kinds of things.
And then that’s tied also to new business models like Uber and Zipcar and Car To Go, and it’s also tied perhaps biggest towards a technological potential disruption and change around electrification. Much more than just around the fringes. But what if electrification just took over and then you’d be talking about a whole rethinking of the industry since its really founded the whole supply chain and the whole structure is around the internal combustion engine.
We work to help think about all of these critical trends, but we tied it most importantly to where is the customer going? What’s the consumer, and what’s going to be most important in the context of the circumstances of the future and begin to think about that environment. What can looking out 5 to 10 years out do? Well in this case, they just had a really strong point of view about battery technology and electrification and thought justifiably at least based on today, and kind of extrapolating forward, that their best path is to be a follower as to how cars and electric is going to work out, because there was just not any evidence that people would pay a premium currently to be in electric cars, regardless of the implications of global warming and so forth.
That combined with for the anticipation that regulation would ultimately turn their hand that they would follow that path. But through the course of this discussion and really thinking more closely about technology trends and technology road mapping and what was happening around the world and the implication if they were not just behind but really behind, it completely opened their eyes and it created a whole different view about the future and the implications of electrification.
In that, what we would call insight that came from looking out or that change point of view, led to a practicality that there was a complete change in their level of investment and breadth of effort, as it related to putting electric vehicles on the road sooner and not just cars, but trucks and thinking about vans and how that would work in cities and so forth. That was the power of doing this, was to be able to get those aha moments that would not otherwise come again and spend time in the future.
Focusing on Transformation
Brian Ardinger: I’m curious of how you get management to carve off the time to focus on that transformation and not the traditional optimization stuff that they’re doing and think into the future. Is it having them start with a blank slate and imagining things, or what’s the process that companies really need to be thinking about to get to that new level?
Mark W. Johnson: First and foremost, Brian, how do you get companies in general or leadership teams to appreciate the 5 to 10-year horizon? We work to really try to help build a language first, to get rid of biases, that the future’s not predictable so why, why bother? And explain, you know, it’s not about having a perfect certainty about the future, but it’s about building clarity and trying to get and understanding about it is much more informative and much more manageable than one would think.
And also, the risks of not looking into the future. It’s not just the threats, but it’s the opportunity costs and helping them understand the benefits that by looking in the future, you can actually make things less contentious about areas of your business that actually need to be slowed down or shut down, that are easier when you’re talking about them first out in the future.
So, we first try to build a language about the importance. Then we talk about the specifics you’re saying about it’s not 50/50, you still should spend 90% of your time operating and executing the business and dealing with the short term or, you know, the next couple of years. Carve out that 10% to be able to talk about what could and should be in your future and to plan for it. And we say this is more relevant than ever with the COVID-19 crisis. Thinking about the future. So, carving out that time, giving them the case for it and examples, and then putting them in a process and recognizing that that process is different than what happens, are the underpinnings of being able to do this.
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Protecting the Company from Disruption
Brian Ardinger: You bring up an interesting point. So, you’ve been talking about disruption and how companies can be forward thinking and protect themselves from disruptions from outside. Do you think with the coronavirus pandemic and everything ongoing right now, that message has sunk into corporations at a greater capacity and they’re beginning to understand that at a fundamental level because everything’s disrupted right now, or what are your thoughts on that? I know you’ve got a Harvard business piece coming up shortly about that as well.
Mark W. Johnson: Yeah. You know, I think Brian it’s mixed. I mean, I think there are some companies that are just so heads down with just reacting and dealing with the immediate crisis at hand, and the implications of broken supply chains and moving people to work from home and doing things permanently from a more tele kind of way, whether in healthcare, telehealth, or telecommute or all those kinds of things. Of course, it’s critically important to do that, but there are some not all that are recognizing they also need to plan for what’s on the other side of this crisis. What’s going to be things 12 to 24 months from now.
And that’s what we tried to do in the Harvard Business Review piece is to explain…the book talks more about the 5 to 10 year horizon, the concept is the same, it’s just that that 5 to 10 now has been moved, because of a major disruption, towards planning for a discontinuity into the future that could play out as early as 12 to 24 months out. But it can also bring opportunity.
The process to envision the future at the right level of, of understanding, you know, not as precise certainty, but with clarity. Because there’s a lot of uncertainty, especially when you look this close out, you’re going to have to develop scenarios too, but those that can build the discipline to inspire their organization for a better future and a vision that’s more than just a statement of what they’re trying to make the organization become and make that purpose driven.
Then tie that the next 12 to 24 months in a set of scenarios, of what things need to be prioritized, and then work that back to today to a set of experiments or investments, in addition to just running the core. Those are the ones that are forward looking that are going to be able to take advantage of the opportunities and better address the threats. And I think that’s what critically important for companies to be doing is to again, to be doing both. Address the crisis in the short term, but also be planning for this midterm out.
Changing the Innovation Portfolio
Brian Ardinger: Do you think that portfolio mix needs to switch because of the disruptions going on? So, 90% optimization, 10% future. Do you think that needs to change at all?
Mark W. Johnson: I think the answer likely is yes, but that’s where it requires time, not just to be reactive and operating and execute, but being exploring and discovery oriented. Because I think to answer that question, you have to ask, you know, optimization and efficiency improvement is about playing the game better. Well, if that game no longer applies or the rules have changed and you have to play a new game, then you can keep optimizing, but at marginal or no impact or negative impacts. First have the discussion about what’s the game to be played. Are there new games to be played? Does the existing game need to be changed?
And then bring that back to implications of portfolio management and talk about what is the right allocation between efficiency or portfolio optimization efforts between core enhancements and real breakthrough efforts to the core, and to things that are, it’s going to be totally new and different, that need to be planting the seeds now for. You first have to have that further out discussion and strategically talk about it. Bring it then back to what’s the right portfolio mix for today?
Innovation From the Mid-Level
Brian Ardinger: You talk a lot about the core management team having to make these decisions and think about this. Are there things that the rank and file employees or mid-level managers can be doing to both accelerate and understand and take advantage of this particular process? Or is this something that truly has to be driven from the top down.
Mark W. Johnson: Another great question. My view in what we talk about in the book, it’s really a partnership between the leadership team, which by the way, I always see often is not involved in things that are about innovation and creative and thinking expansively or less involved. They tend to more just try to operate and execute and be more on the left brain analytical. They need to be focused on learning as much as other groups, but middle managers and innovation teams within those groups and those that are chartered for thinking about marketing and strategy, they need to work as teams and they need to be in concert with leadership teams working on a parallel path together to learn and discover together.
Because these core teams are right in front of the customer. They’re going to put more time into really fleshing out the identification and development of opportunities. But then the management team need to be doing their own work and in parallel with them because they’re the ultimately the ones that are going to make the resource allocation decisions and they’re the ones that are going to have the hard call of how much resources, both people and dollars, are they willing to shift over for things that are a lot less certain and a lot less proven as to what could be their financial and other outcomes.
The long answer to your question is absolutely the mid-level has an important role, and in fact it’s always had the role. It’s more the issue of getting leadership, to be part of this creative process that has existed more underneath the management teams and getting them more tied together and working together.
Innovation focused on the Longer-Term Horizon
Brian Ardinger: Right. And so, having all the teams at least be cognizant of the fact that they need to be having those longer-term horizons and trying to understand how that fits into the bigger global picture of the organization as well.
Mark W. Johnson: Yep. Absolutely.
Innovation Trends…The Learning Process
Brian Ardinger: Are there any other trends or any other things that you’re seeing with your work in innovation that are changing or have significantly changed over the last 15-20 years that are ripe for disruption, even within an innovation space?
Mark W. Johnson: We would say in our work as consultants, which I think lends itself also to thinking of innovation teams, or professional services in general or even legal services, is that I think a lot of things that were done in a more sort of unstructured problem solving way are becoming more in what I call, you know, pattern recognition oriented, or rules based, sort of the automation, you know with big data, and data management and analytics and automation, key tasks and so forth. These things I think are trending towards a lot of the, if you will, lower value-added things, become automated and it enables the teams and this kind of work to be even more higher order. That to me is the big trend that I think, effects innovation work. There’s a whole trend of external innovation and being able to crowdsource and select experts.
I think it all stems…Underneath innovation is…The other side of it is learning. Another huge component of the book is to be able to really get explicit about the learning process, just the way Peter Senge and others talked about it in the early 1990s and truly make it a fifth discipline and get good. at the process of learning because it’s going to be the organizations, and especially in a time like this with all this uncertainty with the COVID crisis.
No one has a crystal ball. No one can say exactly how things are going to land, even with the vision and the viewed scenarios. The trick is to be able to use that as a direction setter, but then the learning process and being able to test and learn and pivot and be agile, that’s what’s going to enable the organization to move in the proper, ultimate place.
And so, we say, you know, just like that automotive manufacturer, nobody could say where it all is going to shake out, but the organization, the company that learns the fastest is the one that’s going to be the one that comes out top.
For More Information
Brian Ardinger: Yeah. It’s basically how you democratize innovation so that every individual can play a role in and have that capability to learn, be curious and grow. Excellent. Well, Mark, I so much appreciate you coming on Inside Outside Innovation to talk about what you’re seeing. You’ve been in that space for such a long time and such a thought leader in it. I really do appreciate you sharing that with our audience. If people want to find out more about yourself or the new book, what’s the best way to do that?
Mark W. Johnson : Either email me directly at MJohnson@innosight.com or you could go onto our website www.innosight.com and you’ll be able to get access to the book there, or of course go to Amazon and buy the book. It has a lot of what we just talked about right there.
Brian Ardinger: Well, Mark, thanks again for being on Inside Outside Innovation. Looking forward to seeing what happens in the future.
Mark W. Johnson : Thank you Brian.
Brian Ardinger: That’s it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.
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