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Those who missed the recent ECLF Virtual Round Table about “Building Innovation Capabilities” can watch the video recording of the session by clicking the image below.
The speakers talked about the complex leadership challenge to drive innovation through the triple lens of strategy, organization, and people. A big THANK YOU to Joseph Pistrui (IE Business School), Karsten Neumann (Roland Berger), and Henning Trill (Bayer) for making this session such a pleasant and thoughtful experience!
Roland Deiser [00:00:10] I am welcoming each and everybody who has joined us for this round table and ECLF round table. Yes. So my first thing is maybe welcoming everybody who is here and I’m really thankful for these three. They represent, as I said in the invitation, academia, business and consulting. We have a kind of an ABC round table. Maybe a couple of words to ECLF and the Center for the Future of Organization itself is a consortium of about 50 or so global corporations with people who are in charge of learning, leadership, transformation and partly innovation. And the Centre for the Future of Organization, which is partnering and which I also happen to chair, is at the Drucker School of Management and is somehow a kind of think tank that deals with how organizations will change and transform because of all that stuff that’s going on in Digitisation. And this will be a pretty big part of our discussion. I want to welcome Joseph [Pistrui], who is with the Institute Empresa from Madrid, a Professor for Innovation and Entrepreneurship. And he will say a few things too about his work soon. I want to also welcome Karsten Neumann, who is with Roland Berger, which is a global consultancy based out of Europe, which is quite unusual because most of the little consultancies are – have been born in the US. And then Henning Trill, who is the V.P. for corporate innovation at Bayer. So thanks, guys, for being here. It’s really a pleasure. And let’s now jump into the whole topic. Our topic is how to build capabilities to actually really have an organization that is able to innovate on all kinds of levels on an ongoing basis. Maybe let’s start with the practitioner. Right. So. So what does innovation mean for you, Henning and maybe a few words about who you are. Before we get into the topic.
Henning Trill [00:02:21] Thank you, Roland and thanks a lot for being here and having me here. So my name is Henning, Henning Trill. I’m responsible for corporate innovation. This is a new function which was created three or four years ago after an innovation strategy project, which I actually also was responsible for. And I was back in business consulting back then and working for BCG prior to that. So I had some consultancy [inaudible]. It’s actually interesting because you see that as a consultant you can also be very innovative. And I think that’s something that the whole community can think and drive forward. What I do here is we have a program called the Innovation Agenda to basically support and enable all employees and buyers to innovate in what they do. And so it’s actually looking at the 120000 people are not only at the ten or fifteen thousand who are really [inaudible] but at 120000 and see, what can we do to have those people to be more innovative in the area where they are in their circle of influence in their sphere of responsibility. On top of this, we also, by being interactive with so many people that we find certain opportunities, ideas that we can elevate to another level. And we have also programs that take these more promising projects and use the Lean Start-Up methodology, which was basically also created where almost you are in San Francisco to drive the projects from the ideation, from the early phases, really all the way into implementation or into scaling. This is what we do here.
Roland Deiser [00:04:04] Great. Well, so you’ve got a really global corporate role and you’re probably going to get a little bit to the issues that come with the fact that you’re corporate and then the business on the other side has to make money as an innovator. Karsten, you are between academia and kind of, you know, practice as a consultant, you somehow hinge between the worlds, maybe a few things about you and what innovation means and what it is in your work.
Karsten Neumann [00:04:36] Yeah. Thanks for the invitation, Roland. I’m working in the digital practice of Roland Berger. Well, of course, we have to change all the time. And we see that our clients, beyond attractive projects, like some digital initiatives, are trying to change their mindset, the organization, et cetera. And we started some years ago with a digital hub, with learning journeys, with workshops, design teaching and design thinking, rapid prototyping and many of the methods that Henning mentioned as well. And in the last year or so, we came to see that many of those interventional measures that many companies have taken are too isolated. And like in every training process, you need a lot of repetition and reinforcement. And what we’re doing now is trying with bigger programs which combine different measures and we looked – and in this case, it’s true that we looked up in academia, we looked at what does science say, like how do you change habits? Which kinds of [inaudible] work and tried to put that together and infrastructure programs, because everyone is underway now and everyone is doing something in the direction of innovation, agility and so on. But many are kind of stuck in the middle and say, look, how do we go on? How can we do the change faster?
Roland Deiser [00:06:02] OK. So, I mean, you know, in the digital practice, I guess that must have been growing quite crazily in the last five years, right?
Karsten Neumann [00:06:12] Yes, that’s right. And like the interesting thing is because I did classical consulting before like every three months, you have a new need in the market. So we have to be very fast and agile as well because the declines are changing rapidly and what we need is changing as well.
Roland Deiser [00:06:27] Yeah, right. Joseph, a few words about you and why do you love innovation and entrepreneurship?
Joseph Pistrui [00:06:36] Thank you, Roland, again for inviting me with such a distinguished group of professionals. I represent the A of the ABC. And that’s because of my role as professor of entrepreneurship and innovation. But I will try to establish a little bit of credibility amongst this group by reminding you that I spent 15 years in industry before I became a professor. I worked for Bristol-Myers Squibb in the United States and in the fast-moving consumer goods sector. And so I may only be masquerading as an academic for the purposes of our equilibrium today. I think there’s a couple of things that I want to say. First one is that I do believe deeply that innovation is a capability and I think it’s a capability that’s distinct from the more fundamental management capabilities that we might teach at business school or learn in our practice lives as professionals. And so really the underpinning element behind it is a distinct capability. It has one layer more of complexity, which is that all innovations are not created equal. And so I always think and talk about innovation on a continuum or a spectrum from it’s very important to innovate in the things that we’re doing on a day to day basis. And, you know, things like continuous improvement in the Toyota method and the like are focussed on that type of innovation. Then there’s more the creating the future of your organization and imagining, you know, on a time horizon into the future and the capabilities required across that spectrum are quite different and quite important and so one of the things I’ll try to contribute to our discussion today is, is the nuances I discovered in working with start-ups, who have a greenfield and a blank slate and working with large organizations like Henning’s, in which there’s a lot of legacy issues. And in day to day activities that require the attention of managing at the same time that we’re asked to innovate.
Roland Deiser [00:08:57] Yeah, I mean, it’s an interesting thing. Joseph, you know, because and you said this too I think, we have a originally really a kind of a notion of innovation that was more or less in R and D [inaudible] products. We tried to bring on new ideas, but in the last years, especially with digital transformation, innovation really has become something that is much more comprehensive. Right. That includes organizational processes and systems. That includes obviously also business model innovation. And it could be very disruptive and radical that actually disrupts and uproots, the way you organize, the way you live, the way you strategized before. So the whole transformation and innovation has become almost a twin, whereas in the past I remember there was one company I’ve been working with that hired a Head of Transformation and put him into R and D, because they thought, well, innovation is coming out of R and D. Maybe Henning. I think when we had our briefing called you briefly talked also about that. Right. Your position in the company being a corporate innovation guy and having this global responsibility, but still being in corporate a little bit away may be from the business. How does innovation and what are the issues you’re facing and you know, how do you influence building innovation capabilities where you’re sitting here in that position at Bayer?
Henning Trill [00:10:30] Yeah, lots of questions, and I think they’re around the core topic because organizations and also here in Germany, I’m connected to a lot of people who run and have similar or lower roots like me in other DAX companies and resource companies. The challenge we all have is that the organization is not sure where to put this. Like you said, you know, they got a head of transformational innovation and put them in R and D, and R and D is absolutely the existing business model, the cash cow business model of the rest of the organization and definitely in our R and D and I know in many others, the focus is really to create new products, to sustain the business. All products get out of the market. You need to create new products. So it’s not a good place for something, I mean, if you do incremental innovation, we do it with a large network of people who are decentralized, there in the countries, in the functions and they do kind of continuous improvement stuff there, which is exactly the right place. But for more transformational new business models, where’s the right place? And I’m not sure if that has been like really saw it. And you see it sometimes it’s attached to marketing organizations because marketing is closer to the to repeat customer. So a lot of the ideas actually come through this channel and say it. So there is a tendency to put things there. The challenge is the type of innovation is probably also too disruptive for a lot of marketing activities. So a really good place for my personal perspective would be really on the side. So to have your basically established execution business model on the one hand and you have kind of a place for the new business models on another hand. And if you look like how Google is organized or how Amazon organize themselves, I think they do this. Yes. They have an overarching umbrella. They run their core business and then they start getting their new businesses on the side, maybe having some incubation, something where these things grow. Now, the challenge for me, to be very frank here is I’m part of the corporate centre. What do you think would be a good position? Because it’s you know, it’s overarching. I can work with all the three divisions to drive those business models. The challenge is, however, that other than companies like Merck, for example, where they have this innovation centre as a centre to really create completely new stuff, which becomes an own division possibly in the future. And the focus of our activities is more on the horizon to timeline and innovation type, if you want to say. And that basically means everything we create here we need to move into the business at some point. It can be, you know, a new field, new area, but it has to fit into pharmaceuticals, consumer heads or crop science. So, this means that we rely on a lot of alignment when we take projects into our programs to make sure they’re actually later accepted in the division. One term, which was new to me, so I knew – not invented here. I guess everybody knows that. I learned a new term, which is not decided here. Right. So if you and your program for our program is in this corporate centre, if we make decisions that are not aligned with the business, although they are in line with the strategy of the business, it’s really difficult to get these projects in there. So what we have. So we are in our third in our fourth season actually to do this. And what we have learned quickly, it is super important. While we have a global program where kind of the teams interact and exchange on what they do, all the decision is taken through the divisional level. So we have a division of venture partners which have always two members of the executive board of the divisions and then another four members from areas which are in focus and from our innovation network. And they take the decisions and I don’t even have a say in their decisions. We sit together, but it’s really their decision. So if they decide to move a project from exploration to incubation, they know that if this project survives incubation, they’re responsible to pick it up. This is good if you want to make it happen, of course, it’s also a challenge because the horizon on which you can do this is there not Horizon 3. So we actually have another vehicle, our leaps. It’s like a venture fund leaps which looks into external innovation where we drive this. But from what I do, I have to kind of stop at Horizon 2 because otherwise I never get those things.
Roland Deiser [00:15:11] And by the way, you know Joseph and Karsten, just jump in, right. It’s not me asking questions, but really just a chat.
Karsten Neumann [00:15:18] If I may ask the question, because I have one here, Henning. What would you say? I understand it fully under on the side of acceptance. But by the divisions that it’s easier for them to take the time. Would you say that it has sufficient radicality then, by this way, or is it like more or less they stick to core business and have some nice amendments on the side? When we were in car making, for example, [inaudible] make an iPhone and then say, OK, that’s a new thing, that’s great. Or is it really a new…?
Henning Trill [00:16:01] Yeah. So if you look into the cost base, I would say its ability around the car. What we would do maybe even drive a less driverless attendance, but it wouldn’t be new mobility concepts for cities. So and because the mobility concept for a city, I wouldn’t have somebody to kind of drive this forward autonomously driving car. I’d find somebody who does it. And I mean, to give you an example, we created the business model in our animal heads space where we have products, for example, that protect cats and dogs from ticks and fleas. And we said as a transactional business, now when they created the business model, actually, as a – it’s a platform where the veterinarian can talk to the dog owner and develop a prevention plan for the dog. So that includes maybe our products, but other products as well. And there’s also an insurance included that if the dog gets sick the veterinarian is covered. And this whole thing is clearly a new standalone business model in itself. It’s a platform. It has an app. We worked with two start-ups to make it in the end happen. But it can still be promoted by our sales force and it’s still very close to our business. I mean, there are some options that the data will teach us something and we will grow this in the future. But at the stage where it is and it’s public now in France and we do it in Italy. So I think it’s a nice thing, but it’s not radical. Right. It’s not kind of replacing or creating something that it is. It has a new revenue stream.
Roland Deiser [00:17:41] And it somehow transforms the way you organize. Right. I mean, you tap suddenly into a new stakeholder environment outside by doing a platform for instance, which goes until the Eco-system discussion, which recently had Joseph. Right. I mean, how do you see that Joseph, just jumping in here, maybe from a more conceptual point of view and let’s not forget our key topic is the capability angle. Right? What does it take to do that, both on a personal level, of course, you as an executive in innovation thing are probably the system to do that. But there are executives who are just operating business or in other functions. And what does it take organization-wise? Joseph.
Joseph Pistrui [00:18:26] Yeah, I think there’s two areas that are distinct but not mutually exclusive. And we’ve been talking mostly about the former and I want to bring in the latter. The two areas are the engineering problem of innovation? Right. That is, how do you design the organization? How do you develop the processes and things? And then for me, the other component is the people element. And how do people think and behave and interact when they’re innovating? And so if we talk about the engineering challenge for a minute and then connect to some of the things that Henning said, but also Karsten, that the idea of the universal now application of things like Lean, Lean Start-Up Tools. I mean, this is a really important element in building capabilities because it not only does it give us some tools that we can share across boundaries and across units, but it gives us a common vocabulary. And this is really important when you’re trying to engineer, as Henning said, all employees in some size, shape or form have some responsibility here. It’s not an R and D function anymore. And so we need a common vocabulary. We need to be able to to work up an idea on a template and share that with three other people so that they can quickly understand it and engage with it. And I think this is really the power of the tools that have emerged around this, that have from for all of 10 purposes come from from the Start-Up world. And I think that’s fine. You mentioned, Henning, I thought was an interesting comment, “not decided here” and an analogy that I’ve used to illustrate this, the tension here between the life of a Silicon Valley or Munich based or Cambridge, UK based, and entrepreneur who’s independent.
Roland Deiser [00:20:25] Berlin-based!
Joseph Pistrui [00:20:28] Berlin-based. Sorry, I didn’t want. I didn’t mean to leave anyone out! But the idea that when you’re a Start-Up and independent, you can be rejected by 99 investors. And the minute that a single investor says yes, your business is launched. And inside an organization, you can actually get 99 yeses and someone in the organization can say no. And the business can be killed. And one of the things that I’ve learned over the years about organizations that do innovation well is that they create an appeals court process in which no single initiative can be killed by a single individual, that there’s always a second place for that to go. And I think that’s really important that the democratization of decision making, to deal with this “not decided here” element is quite important and I’ll stop there. I’ve got more to say about it.
Roland Deiser [00:21:29] When I drove here this morning, it’s in the morning here in Los Angeles, you know on the radio you had actually now the Judiciary Committee talking about the constitution and what’s going on with the impeachment and what you have to do. It reminds me that for innovation, you need a constitution to have it work. You need an organizational constitution that the rules and principles are agreed upon, that things like what you just said, Joseph, can happen. Right. That maybe you have real blockbusters, that, you know, it’s an architectural element of the Constitution maybe that is part of the capability. Do you come across these things, Karsten? I mean, what do you think about that? It’s just a thought.
Karsten Neumann [00:22:17] I would like to amend one thing. Well, I’m here, because I think it’s like both. Like you can institutionalize innovation now, like the same way a classical R and D department, you can institutionalize the Lean Start-Up process and many corporates have it already or let’s say the grown-ups have it and you have like every day you have 10 processes running where you have your design thinking and your customer interviews and so on. And as well, I think the appeals court sounds great. And you can institutionalize that as well. So that gives you like a sudden leap forward and, you know, you’re fresher and faster and have a better time to market it and so on. But then you have to go on in the waiting again and say, look, what’s the next step? And I think that’s more of a mindset issue because it’s I mean, it’s hard for us when you say now I’m more innovative because I mean, it’s hard, but I tried to listen to the customers and that’s enough now and I don’t want to change anymore. And then you learn that in our world like two months later, yes. We have the next innovation to be even more radical. And the start-ups are different in the whole eco-system is different. And this is only possible if you are trying to solve a different set and teach people to be open all the time and change themselves all the time, which is the most difficult part. And we all started in our company with lots of symbols like the CEO comes back from a trip to Silicon Valley and then puts a hoodie on, that’s a start, right?! But then you have like the difficult – that’s easy. The difficult part is to say, OK, I let loose, I’m less hierarchical and so on, and change the things that are really important to you. And so I think there are lots of things which you can organize as standard processes really for innovation, which is necessary, but it’s not sufficient, you need the mindset as well.
Roland Deiser [00:24:18] Isn’t there an interplay between the mindset part and the structure? And if so, how do you – how do you see that interplay? Because you separated them. Joseph, you said, you know, there is, on one hand, the engineering and then there is the other end of the people. Can you engineer for mindsets or do you need a mindset to engineer or how does this work?
Joseph Pistrui [00:24:47] Yeah. If I can go back to your analogy about the Constitution, I actually think that the better analogy is the US Bill of Rights, right? I think for a process to cross the line into the human dimension, you want to create rules about what people can do, not what people can’t do. And I think you really have to move, if you want to empower people to innovate, you have to move from a controlling to an enabling mindset – the bill of Rights are things that you are entitled to do, right, versus a set of rules that you can’t do this, you can’t do that, you can’t do this, which is more fitting with our legacy managerial model where we create rules-based rights. But the point that Henning, sorry Karsten made is a good one. Every mindset is somebody’s mindset. And so this really takes it down to the individual level, and I believe that the starting point for any innovation is individual-level thinking. How does one look at the world? How does one see a problem? How does one think about the problem? And then, of course, how does one feel about their relative capacity or latitude to act upon that problem when they see it? And so, yes, I do separate them, but by no means are they in practice mutually exclusive things are quite importantly intertwined. And so when you have tools like Lean Start-Up and you have the skills of interpersonal collaboration and things, but the foundation of that is it is individual thinking and how they think about the responsibility and the possibility of innovating.
Roland Deiser [00:26:42] I mean, it’s easily said, right? So who is taking care of that in organizations? And we have an audience here. And by the way, in a few minutes, we might open also up the conversation for some select member to jump in if they want to, by raising their hands and taking an open chair here in our discussion. But, you know, the ECLF group is the people who are actually in charge in an organization to build mindsets by leadership development activities, to create transformational processes by being in organizational development and stuff like that. How do you see the contribution of – and these factions, by the way, are typically sitting in H.R., which comes with issues, of course. Right. We can discuss this. Well, how do you see the contribution here and the interplay, you know, with business, with for instance in innovation? I mean, at Bayer you have, you know, a change management, everybody has that, right? And do you play with them or not? Or are they more…?
Henning Trill [00:27:50] No, of course. I was just thinking about what Joseph said that actually, it’s about [inaudible] mind, right? You have to take every employee or everyone who is engaged in this and kind of understand how they tick and then kind of enable them to go to the next step and to engage here. When we looked at the whole problem, it’s so innovation and this kind of the Lean Start-Up framework is only one solution. It’s the enablers. So we think in this kind of triangle, where in the centre we have a kind of an innovation thesis on innovation blueprint or how you want to call it, so kind of a strategic goal where you need to go. And this is something where the senior leader or even the CEO needs to get in and say I want this and this is really important because we don’t have this. You get innovation in all the different areas. The other topic is like the Bill of Rights and the Constitution, I might say, because it’s kind of the Governance you put on it and maybe it’s not so necessary if you’re in a Start-Up, but if you are in a super analytical and hierarchical controlled environment, like a company was dealing working in a very regulated environment, I think it’s good. If you work in a regulated environment and you produce products that can either heal or kill people, you want to make sure everything is well organized. Right. But so you can’t give like if you give freedom, people get really confused, because they are they are not used to this and they used to having very clear rules to go by. So you need to install a governance that kind of governs that there’s new rules now, and more freedom and more like a Bill of Rights type of thing for those who engage with it. You need the engine where we have the Lean Start-Up processes, but also the H.R. topic with kind of what is the culture, what is the people, what are the people we want to develop. So for us, it’s, for example, interesting to have in our coach network people who become the future leaders, because they experience innovation firsthand and then they become a leader later. They know about all the problems innovation is, because it looks only funny in the kick-off workshops where everybody has PostIt notes and the whole room is colourful. When you’re in it, it really it’s painful. And so it’s important. And we work immediately from the beginning together with H.R. very closely. So we actually got somebody from H/R. in our team who connected us to talent management. So we were kind of connecting our community to the talent community. But we’re also working with the global change community, who is in charge of different changes in the company. But also they came up with behaviour. So Bayer has LIFE they use for Leadership, Inegrity, Flexibility and Efficiency. But also we have behaviours around experimentation, customer focus, collaboration and trust. And these behaviours were very closely developed together with us based on behaviours that are important for innovation. So we all tried to pull in the same direction that the H.R. people communicate these behaviours which are relevant for the whole company. We have some tools that help it and there’s some governance structure. But in a company like ours, aligning all these processes is actually quite a challenge. Right? So you spend a lot of time and not everything works right and then you expect people to do something and do something completely different. So orchestrating this micro eco-system to get all the things in parallel in place is a challenge.
Roland Deiser [00:31:31] I mean, Karsten, in your consulting practice, do you run across these issues a lot? And if yes, how do you intervene to make them better?
Karsten Neumann [00:31:40] But all the time, all the time. And I can underline everything he said, Henning, and maybe at some point said things like IoT tools, which can help in the interchange process and so on. I think in the year it’s the same thing, yeah, like the Constitution was a Bill of Rights. There always is it like the way people live in that Constitution. Constitutions, different states can look quite similar. Nevertheless, the societies are different. And we’ve seen as in Europe, a lot of course. And so culture is a very important thing here as well. And. What do you see, if you look at successful transformations of passive companies, you always see that they tackled all those things like talking to you have you have different incentive systems. You have of course a lot of inspiration and there were all sorts of leadership journeys. You have to startup hubs. And as Henning said, the separate entities, which experimental fields learn. And but of course, what you almost always have as well is like a certain exchange of people. You get new people on board which bring in a new spirit because very difficult to only with the old teams so to say. And in most of the cases, some people leave as well because it’s necessary and you need someone to symbolize the change. So there’s no golden or silver bullet. You have to orchestrate a lot of measures to get it done.
Joseph Pistrui [00:33:21] Roland, I mentioned earlier that the continuum of innovation and I gave him a managerial example of the concept of control vs. enabling. Right? A closely related variable to that, the attitude toward process is about control versus enabling. But the attitude towards performance then is about productivity versus learning, right. And so you tend to want to control productivity because it’s something that you’ve codified and you’re looking for reliability and predictability and operations. And in the case of a health company, you’re looking for safety. Right. But when you’re enabling people, you’re handing over the baton and you’re giving them more degrees of freedom, then really the metric of performance has to be more about learning and making progress, not about landing on the perfect place that you set out to land, because you may find that you’re learning takes you in very different places. And so as a manager of innovation, you’re constantly juggling control and performance with enabling and learning. And I think it’s a quite an important challenge. At the thinking level, which is at the individual level, you really you know, you’re dealing with your your attitudes towards risk and uncertainty. And you’re dealing with your attitudes about possibility. Right. And so, again, you’re mixing two sets of ingredients in a uniquely individual way and then eventually you’re doing that inside of a small team or workgroup, but you’re constantly, as Henning and Karsten have both indicated, doing that in an environment, a cultural environment, that shapes expectations sometimes silently and from very far away. And so that’s where for me, the third level so that the first level is thinking, the second level is managing, the third level is leading. And this is where the leadership of the organization really has to set a tone about and this is where time horizon comes in. So what are your attitudes toward the system itself and what are your attitudes towards time? Is this sort of a short term return where you’re using financial metrics to measure how well you’re doing? Or is it about future time horizons, Horizon 2 and 3, as Henning mentioned? And in that case, then you have to take a more macro systemic view of how things work.
Henning Trill [00:36:02] Joseph, because you mentioned learning. We work also with freelance, not directly with freelancers. We work with agencies that work with a lot of freelancers. And what we came across is actually that freelancers take way more time into educating themselves, learning new skills than we would allow anybody in the company to do. And I think in a corporate environment with five to 10 days learning, you’re on the good side. But freelancers spend 20 per cent of their time looking into new things, learning new skills, familiarizing themselves with new tools. So to be teacher-ready, this topic of learning is extremely important and investing a few hours in learning and a new tool, an efficiency tool can drive up productivity dramatically in many cases, especially these days for like these hacks created everywhere. But I think this is a big challenge because it’s a completely different way of learning from what we traditionally teach in our learning organizations, at least how I perceive it.
Karsten Neumann [00:37:09] Which means management, if I can follow on that, it means for management they have to be able to take risky positions, right? I mean, it’s like you always have those examples around give to people Friday-free, in the end, the company is not productive, but almost no one dares to do that. And people think it’s too radical. But the same thing would be to say instead of five days, 15, 20 days of learning, which sounds I mean, it sounds crazy to anyone, but maybe some risky business that makes the direction necessary.
Roland Deiser [00:37:45] I guess that gets us into a whole new kind of environment, you know what means learning at all? Can you put it into days? Do you learn in days you don’t learn because eventually maybe you build a learning architecture that, you know, sees that the whole business is a learning journey all the time? Right. I’m just seeing there is a couple of people putting something into a chat. There’s some interest in talking about the leadership. And I think leadership, of course, is a very important element in the whole thing. Joseph, you guys do leadership programs, right, at the business school. So how do you prepare leaders and programs and then asking Henning, maybe, you know, if you know, if you have experience with that? And does it really help what those schools do? Or is it too far away from practice?
Joseph Pistrui [00:38:40] Yeah, in an ideal scenario, Roland, when we work with organizations, we try to do the following things. We first of all, for learning and development to take place around innovation in your organization. there has to be an explicitly applied dimension to it. People have to learn by doing things. And so there needs to be a salient organizational project that the people are working on and that has meaning and urgency to it. It needs the endorsements. And I don’t mean coming in and welcoming the group and then going off. I’m talking about an endorsement at the level…When people are solving new problems, they need to be protected. It’s a difficult challenge. And they need cover from senior leadership and they need to know that if they’ve got permission to experiment and to try and fail. And so you have to have senior leaders, you know, endorsing the work that they’re about to embark upon. You probably need to integrate one or a team of internal what I’ll call them mentors who are of a level in the organization that they can open doors for those teams so they can get access to a piece of technology or report that they might not have the salience and numbers to do on their own. And then the role that we play as educators is we provide kind of a neutral, non-political process consultant coach or we say, hey, have you used that tool in the proper way? Have you thought about this? And so you really have to bring different elements to bear. So it’s real projects with people doing real work. Sponsorship at the executive level. Mentoring, so that the organizational resources are brought to bear on what the team is working on and an apolitical facilitator that’s more of a process expert, not a content expert that helps the teams when they get stuck, process out loud and things of that nature. So that’s typically how we would approach developing leaders. And of course, at that level, when you do it that way, learning takes place at the sponsorship level, the sponsors are close enough and active enough that they actually are able to experience both the joys and the frustrations of this kind of work. The mentors are learning, because they’re understanding, you know, how important information is and how it flows in organizations and how perhaps they can play a role in a less formalized environment in making that happen. And the individuals learn just by doing. And that’s probably the most powerful way to learn.
Roland Deiser [00:41:51] I mean, there is a guy in our audience, Fritz Lebowski, who asks, you know what at Bayer the leadership principles are that foster innovation. So can you relate to that a bit?
Henning Trill [00:42:06] Yes. Because officially this is a very, very easy. And we have the LIFE values, they are for leadership, integrity, flexibility and efficiency. So you see already the ambidexterity between flexibility and efficiency. And you can play this game. You know, we want to be flexible with your new stuff and efficient with your old stuff. And we have the behaviours which are on customer focus and experimentation, which is basically the core of what you want to find new innovation and also trust and collaboration. And this is also what, you know, the age of the leadership development comes up with. And I think what would be really helpful is because when I talk to Lee, if they ask me also, Henning, what can I do? Right. Because I can install this structure, I can put away a budget which is not already tacked on other things and maybe flexible use. What can I really do? And I think it’s about those micro-moments like those questions a leader can ask. Right. So I believe that actually goes down to an innovation team and visits seminars. So what have you learned from the failure this week? And there were things like we have like f*ck-up lunches or things like failure. What? It’s not about the failure. It’s about the learning. And I think this is so different. If you come from science, all the learning goes through failure. But nobody talks about failure, because it’s experiments. Right. So you try to discover that you know what’s there and then 100 things go wrong. One actually confirms your hypothesis. So by leaders really asking the questions, “what have you learned from this?”, if somebody comes with a project proposal, but to say, oh, yeah, here’s some money or no. But what data have you that can actually give me a reason to invest more? So to understand what are the real small questions, the smallest things a leader can do in the day to day to trigger their people, to do new stuff, to try out stuff. When was the last time you did something for the first time? So if somebody doesn’t know an answer to that, you know you’re working. But I think these are the small things. The education, the executive education could provide, they might look profane, but they could provide to really help people want to be innovative and to kind of trigger this.
Roland Deiser [00:44:32] So, I mean, when we’re quite into our round table here, I wanted to ask those who are listening. And if there are ECLF members [inaudible], for instance, here, Jez is here. I’ve seen quite a few [inaudible] here. You know, if some of you want to raise your hand or aren’t, for instance, who maybe want to jump into this conversation, if you want to do so, you just type, you know, into the chat and I’ll find you and give you the rights to become a panellist. I’ll just be waiting here. And while we’re waiting with somebody wants to do that, then maybe we will just continue the conversation. I will take this opportunity. Christian, by the way. Christian, you’re allowed too. Christian [inaudible} Mittal Steel Company has interesting things to innovate. Christian, don’t you want to maybe jump in? Let me give you here the allowance to talk so they allow you. So this is… yeah.
Christian Standaert [00:45:35] I think I’m unmuted now.
Roland Deiser [00:45:41] Who is muted?
Christian Standaert [00:45:42] No, thank you.
Roland Deiser [00:45:44] This is Christian?
Christian Standaert [00:45:45] Yes, it’s Christian here.
Roland Deiser [00:45:46] Christian, you know what, I’m trying to get you… I give you more. I make you a panellist. Let’s see. He will join you as an experiment. I’m trying, this is the first time. Yes. Here you go. Christian, maybe you introduce yourself real quick.
Christian Standaert [00:46:07] Yeah. I’m a Christian Standaert. I’m heading up the ArcelorMittal University for 15 years almost. ArcelorMittal is a world steel making company also active in mining, much in the press nowadays in Europe for the Italian business and worldwide for the takeover of a major Indian steel producer as our steel. So, yeah, I think that we want to embrace innovation, but we are not really a first mover. That being said, I think that we are a world leader on the part that has been researched. So we have a very strong research department and we are, I think in many elements, the work leader. And I think the big dilemma that we face is indeed that and that has been addressed in the [inaudible] as well is that there is a big risk that, R and D becomes the owner of innovation. And that is, of course, I would say not positive to generate an innovative mindset in the organization. What we see is that our benchmark plans have a culture of continuous improvement and are open to embrace what they see outside. And I think that is the key that we have people that are thinking in the organization and to test in how far we are ready for innovation. I always ask if somebody on the shop floor has an idea, what needs to happen in order to bring that idea to the attention? I know that there are many ideas of promoting innovation and that there are, of course, ideal boxes, et cetera. But if if somebody has an idea, how could that be implemented? And then you see that even those I think that are innovative put so many hurdles between the implementation of a bright idea on the shop floor that in fact, it’s not pushing for innovation at all. After the second or third attempt, they give up because ideas are not being heard. And I think that this is the big dilemma. How do you open that at the moment that you also want standardization of processes, efficiency, et cetera? So I think that the topics that are important to us have been covered in the discussion, are indeed claiming to be the innovative part of the organization, which to a certain extent is true. But it’s not. It’s in fact, inhibiting innovation. And then we are we really making that people can participate by making proposals and being active or our internal processes and procedures so heavy that, in fact, nothing happens. And of course, WCM and other initiatives certainly promote more ideas from the shop floor. But I think that is with the challenge that we face today.
Roland Deiser [00:49:35] Any comments from you guys on Christian’s situation? I mean, Christian, you, of course, in an industry which is heavy in assets. You know, for me, all an interesting thing in innovation is if you are heavy, heavy in assets and a lot of capital is really buried in fixed assets, it’s much harder to do things than if you’re just a software company. Right. That is where the tangible assets primarily.
Christian Standaert [00:50:00] Sure. Sure. And we had a thematic conference two weeks ago now on, I would say, carbon-neutral steel making, which is one of the biggest challenges. As you might know, the steel industry worldwide represents 7 to 8 percent of worldwide CO2 production. So we are in most every almost every country known as the biggest polluter. And of course, there is a big challenge which requires fundamental review of, I would say, capital intensive installations to be changed to be carbon neutral. It’s amazing what we are able to do. Of course, we need to find solutions for cheap and CO2-neutral electricity and large quantities of hydrogen making, etc. So there are a lot of ideas and I must say again that that is again an R and D driven subject where we are really outperforming and which is fantastic. When I am asked to help people to be more innovative, I think this is the biggest challenge to make them understand that innovation is something that they have in their hands every day as Henning has said, what have you done new? How open are you to even to critical commands? Abrasive discussions. Not feeling challenged when somebody wants to improve the things that you do. It requires a lot of even soft skills to become an innovative company, because it requires that you are able to challenge the way you work today. You have to take a certain risk. And the big challenge, of course, and then it’s even a question on our bi-yearly speak-up survey. “Are we allowed to make mistakes?” And the perception is that we can’t. I think it’s not true, but at least the perception is there. And as you all know, perception is the reality.
Roland Deiser [00:52:23] So, I mean, it’s a lot of psychological issues. Apparently it’s a lot of organizational issues. It’s also a strategy. I mean, we haven’t talked about strategy a lot. You know, there is something like strategic innovation also where you really redefined the industry space here, for instance, right, as is a kind of a way, I remember way back a client when I did consulting myself that the switch that they made welding wires and they saw themselves being with the steel industry in specialty steel and they changed their mindset, being in the welding industry, which suddenly brought them into a very different environment of gases and other tools and service stuff that was not related to steel it at all. This kind of big, big shifts, which happens in some industries right now. For instance, look at automotive where, you know, maybe the car itself is not the centre anymore of mobility, but it’s more comprehensive concept is the shifting industries that’s shifting the mindset. You are in a different space. How do you deal with that? Because I think it’s an important part of innovation as well. It’s not only these skills of thinking more flexible and team agile and all these kind of things. Any thoughts on industry shifts? Because Digitisation brings us a lot of shifts in industry, right? Or make them fuzzy at least.
Karsten Neumann [00:53:47] Well, I think it underlines the point we had before, that it’s necessary to be radical and late fall for management or leadership, it’s important to have an idea of where they want to go. I mean, we have talked a lot about measures and interventions, and we have not talked so much about purpose. I mean, the term is somewhat overused there, but in the beginning, you have to explain and to be able to take the employees and your managers with you, to be able to explain to them why they should do it, which is the sense, what is the content of all the thing? And only pouring lots of measures and interventions onto them because we all could put together a long list of of measures. That’s right. So there has to be a discussion. Where do we want to go? Like, how free are we? Are we so free that we can think of going into an entirely different industry and doing it? And how far shall we go? I think that must be in the beginning. And what we see often in our clients is that they want to change. But it’s I mean, it’s not easy to define which change you want. We say I want my company to be more innovative, more agile is not very precise. So I would delay a certain feeling as a director, I want to go on to define what you want to do. Because only then you can choose the right measures. And maybe that relates to what you asked about for strategy.
Roland Deiser [00:55:19] Is there any… go ahead, Henning, sorry.
Henning Trill [00:55:23] [Inaudible] I think is absolutely right. And it’s a big challenge to be in the right corridor. And the question is who sets the corridor for the board of management? Because you would think that the board of management. But of course, as analysts, we have certain expectations. Right. And if you’re in an industry that has a very high-profit margin, then it becomes really difficult to venture into things that don’t. And also, the advisory board is a part that sets these corridors. So I think that there’s the question of where else could we involve into this discussion to open up the corridors for companies so they actually have the capability to explore broader and see in which other industry could the capabilities we have as a company be valuable and we could create value for customers there.
Roland Deiser [00:56:10] When the question sometimes comes to my mind, if you’re big, everything has to be big, right? I had that conversation the other day with the CEO of a, I think, about 40 billion dollar corporation and he said, you know, “we’re not looking at start-ups or innovations that are below 100 million.” Yeah, because it doesn’t really get on their radar. Ten million is just a click. It’s kind of something, you know, nobody really wants to take a management attention to. And I feel if you are large, you might run exactly into that issue that everything needs to be big. Any thoughts on that?
Karsten Neumann [00:56:50] May I just come back to Henning’s question, because I think that’s a big challenge for many corporates to say what is the reason we stopped this whole process? And like many times you have a negative reasoning with fear, like people say, OK, we have to digitise ourselves because if not, Hoover will come or Tencent or anyone and disrupt our business. But then, of course, when you’re in a business, which is I mean, like pills as well as steel are difficult to replace with bits and bytes. Right. So that’s not a good reason. But of course, the whole trading in the customer interface can be disrupted. And maybe it’s I mean, I prefer actually to have a positive reasoning and say we can open up a new business, we can change or we can be more sustainable as Christian said and so on. But it’s a very important path to have a reason why you do it. Because if not, you always run into these difficulties, especially when you have such high margins.
Roland Deiser [00:57:52] I mean, we’re coming soon to the top of the hour. You know, maybe we, you know, just started the conversation in many ways and it’s a very multifaceted issue, of course. Can we make a last round maybe saying in two or three words, the key things you see as insight or that you, you know, not maybe take away from here, but that, you in a way really feel the essential issues when it comes to innovation capability. Should we make it just… I don’t know if everybody sees the picture, but on my upper left would be Joseph. Let’s start with you.
Joseph Pistrui [00:58:32] If we’re really serious and committed to the notion of changing people’s mindsets, a change in mindset is a divergent concept. You want to abandon what you’ve known and you want to create space for learning new things. And I’ve found that one of the best ways to do this is to do two things. Get people out of their normal role and out of their normal routine. If you think if you reflect as a manager when’s the last time you attended a meeting in which you didn’t represent your function or your unit or your short term objectives? So what I’m suggesting here is if you want divergent thinking as you have to take people and release them from the responsibility of being the finance guy or the operations gal, and in this group of people, you are a peer and your only responsibility is not to represent your unit, but to embrace Horizon to Horizon three opportunities based on your experience in the organization. And you’ll be surprised how quickly people are able to unleash a more divergent approach to things when they feel that they’re not responsible for their role or their day job. That’s what I would do to encourage people to think more divergently.
Roland Deiser [01:00:08] Karsten?
Karsten Neumann [01:00:11] Well, I would like to take that just up, because I think it’s great [inaudible] and just start with yourself, because the only way to be credible as a leader, if you are not only putting other people in junior roles, but also put yourself in junior roles and be aware that it never stops.
Roland Deiser [01:00:33] So it’s really the leader. Okay. Henning.
Henning Trill [01:00:37] Yeah, I think it’s a great idea if the leader actually takes part in some type of innovation project herself and an experience with a team, what’s going on. That gives a lot of street credibility and then it also really changes the mindset. And what I would really build on what Joseph said on the intervention: give people the opportunity to be in a different role, not, you know, playing the old role where they’re the expert on this, but [inaudible]. And then on top of this, I mean, if it’s just a workshop, there’s this danger of going back and then, you know, you’re in your old environment. But keeping an opportunity for them to continue with this new way of thinking, so embedded in a longer learning experience than just two days, that maybe something which comes back after a couple of weeks and so to build reinforcement.
Roland Deiser [01:01:32] And Christian, you know, I mean, you jumped in, you know, 45 minutes into the discussion. How do you like the format and how do you see this as a participant who signed up for this and suddenly was put on the spot? I mean. Your microphone is off. Is your microphone off, Christian?
Christian Standaert [01:01:56] Sorry. Sorry, I had muted myself. So it was a surprise. And thank you for the confidence and making me exposed to the others. I do like the format. I think it’s high quality. It’s an important and interesting panel that is sitting together. And it’s a very I would say as if we are having a conversation in one room. And it’s certainly a very nice experience. And of course, as always, the big question is, how could we have a stronger link to what people have asked questions? But in a limited timeframe, this is always the challenge. And the tool allows it. I think the box allows it. And you see, that if a topic pops up, you can even go further, so the technology allows us now to have such conversations and interesting panel discussions without having to travel and without having making them big time investment in order to do that. So great experience. Thank you for that.
Roland Deiser [01:03:04] OK. Well done, Christian. It was fabulous to have you as well. Quickly, how can I remove you and say goodbye? I hope you keep in touch. You want to remove Christian. OK. And to all the others, to us four, thank you so much for being here. I think was a great experience to the audience. You know, a video recording of this will be available and everybody who is registered will automatically receive a link to that. I want also to thank everybody who, you know, stayed a whole hour to listen to our musings here and yeah, Joseph, Karsten and Henning. It was a big pleasure to have you. Thank you again.
All [01:03:54] Thank you very much.
Roland Deiser [01:03:55] So I say goodbye, everybody and you have a great day. Thank you, bye-bye.
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