“Huub, really, if I would be held accountable for the success of our innovation projects, I would kill 70%”
Dear Reader, in this Blog I want to share a story with you that changed my view on the pure rationalized approach of decision making in the innovation process. Mostly innovation decisions “seem” to be based a rational argumentation, supported by market analysis, business case calculations, strategic scorecards, technology feasibility studies, etc. But some time ago I interviewed a senior VP Sales of a large chemical business, Adam, and what he said, see the opening quote, made me think. In his company Adam is an important gatekeeper and he evaluates new product and technology investments as member of a high level management team.
“But you are a decision maker, why do you let 70% of the investments continue while you are convinced they should be killed? 70% is a lot!”
“Well, Huub, decision making is not a matter of 2 plus 2 makes 4. You know, we have meetings with 5 people, including our CEO and CTO. New projects are presented with a lot of enthusiasm, R&D worked on it, marketing researched the market and they present a fine business case. If I disagree with the proposals, I won’t make friends and will not be considered a good team player, so, very often I say “great” and don’t present my doubts. I know they won’t really listen to me. Above that, I need these people for my business”…
Of course it is not abnormal to show socially desirable behavior and feel group pressure, and company politics is not abnormal either, but Adam is a senior person, a well respected commercial man, he has a sales target of about 350 million, he has 20 senior account managers reporting to him, what is the deeper frustration for this attitude? “But Adam, you are in this company already for a longer time, can you talk about the deeper reasons for this?"
Adam continues: “There are multiple reasons: first of all innovation is driven by the technology people and engineering in the first place. They have budgets for research and they have the subject matter experts. They invent stuff and then they look if they can create a product or solution out of it. They ask marketing to research the market, but these guys are very theoretical and produce only beautiful stats. They don’t ask sales to see if we think we can sell it into our customer base. And that is the problem. There is a huge gap between the wishful thinking of R&D and Marketing and the reality of my market and customers. We move to new technologies slowly, and we know that our customers are slower than we are, and their customers again even slower. We know this, it takes several years, that is why we never believe the numbers presented by marketing, and we can never deliver to these numbers. I always say in the meeting that selling the new stuff will be difficult, but they do not stop or delay the projects because of this”.
“And what is the other reason?” Adam: “Culture. In my company there is the tendency to please the colleagues instead of asking the hard questions. We tend to compromise always. Nobody is accountable personally, there is just a group of people discussing things, asking some questions, be nice, compromise in the end. We don’t choose the best 5 opportunities and go for it. There are too many projects, and the good resources are distributed over too many initiatives. And, we are inside out instead of outside in. In my view we should ask customers and external experts: would you buy this? We should see hard buy-in”.
I was amazed. “Do you still like it here?” Adam: “Of course Huub. You know we are not an exception. Our competitors have the same culture so we are in a kind of balance with our market. We do well. You know, only 5% of my business has to come from new products. However, I am convinced we could do a lot better. And to be honest, I think that I should be tougher and clearer in the meetings. Your questions make me think”.
Well, Adam made me think too. How should we take these social aspects into account in the Governance? How can we improve the decision making process, how can we avoid easy social choices and be more responsible and accountable? How can we make people feel safe to be open and honest?
More about how to do this in a next Blog