The CEO’s Role in Navigating the “Gray Zone” of Innovation
Listen to Episode 90:
Episode 90 Transcript:
This episode is brought to you by Business Advancement Incorporated − enabling successful leaders and companies to accelerate to their next level of success. On the web at businessadvance.com. And now, here’s Pam and Scott.
Pam Harper: Thanks, Chris. I’m Pam Harper, Founding Partner and CEO of Business Advancement Incorporated. Right across from me, as always, is my business partner and husband, Scott Harper. Hi, Scott.
Scott Harper: Hi, Pam. As always, it’s wonderful to be joining you again for another episode of Growth Igniters Radio with Pam Harper and Scott Harper. If this is your first time listening, our purpose is to spark new insights, inspiration, and immediately useful ideas for visionary leaders − and their companies − to accelerate to their next level of growth and success. So Pam, what are we talking about today?
Pam Harper: The CEO’s role in navigating the gray zone of innovation.
Scott Harper: “Gray zone” − that sounds a little ominous. We’re coming up on Halloween. Does it have anything to do with that?
Pam Harper: Not quite. Actually, it comes from the fact that we’re seeing a lot of innovation that’s out there right now. New products like phones, and cars that self-drive, and services that make reservations for us in new types of places, and deliver foods, and all kinds of things.
Scott Harper: Innovation is the name of the game.
Pam Harper: You bet. It’s what we need in order to get to the next level of growth and success as a company. Yet, here’s the thing. The same innovation that holds great promise for a company and its stakeholders also carries a great risk. Not just for quality, but also financially, reputation-wise, trust. The impact is huge.
Naturally, what happens is there’s this gray zone that every company needs to navigate − every CEO, every executive team, everybody − which is, when is “good enough” good enough to go to market? It’s a defining decision, and it’s a tough one that has no easy answers.
Scott Harper: Yeah. It can slow down, or even derail the best innovation initiatives. Sometimes it’s very clear when something is really good, “Let’s move with it.” Sometimes, “This is …. No, let’s not do this.” But all too often, it’s not so clear.
Pam Harper: It complicates things when we’re talking about that window of opportunity.
Scott Harper: Of course. You have issues of time. You have issues of budget and so on. The thing is you can’t get away from the gray zone. It exists because every single innovation effort is based upon a whole series of decisions around conflicting needs.
Examples of these conflicts include: We need to go fast, and we need to make sure that this thing is going to work the way it should work and it’s going to have the quality it needs to have. We need to have the best margins for our product or service, and it has to be good enough to meet basic needs of the consumer. We need to have ground-breaking features that our customers really value, and we need the thing to work…
Pam Harper: That’s a good thing.
Scott Harper: … and be intuitive, and be easy to use, and meet the customer’s needs.
These needs are all ultimately judgment calls. There is no, “Ta-da,” this is the right answer and everybody knows it. That’s why it’s gray. The problem is that these discussions can go on way too long and slow things down and you miss your window of opportunity or you go way over budget. It’s also a problem when they go too fast and all the things that should be considered aren’t being considered adequately.
Who’s ultimately accountable for ensuring that all of these gray zone issues are navigated through in the best possible way? A lot of these decisions happen in the groups that are involved in the innovation initiatives. But, ultimately, the accountability for navigating the gray zone and how it’s done has to rest at the top of the organization.
Pam Harper: The CEO really is in a very challenging role, because obviously the role is not to get into the nitty gritties of the innovation, whatever it is, the development of it. At the same time, you have this accountability.
I remember one CEO saying to me, “You know what keeps me up at night? What keeps me up at night is that I have to be everywhere. Execution is everything. That’s not my role. I know it and yet, I need to know what’s going on.”
Scott Harper: “I need to know what I don’t know.”
Pam Harper: Exactly. This episode is dedicated to talking about how we as CEOs can get more comfortable with navigating that gray zone, taking advantage of the window of opportunity and yet, doing it in a way that is going to be best for everyone involved.
Scott Harper: And being comfortable with the inevitable ambiguity. It comes down to, as I was talking about a little bit ago, having the right conversations and having the right ideas of when are we successful. What does success look like? When can we let go? What level of uncertainty and unknowability are we willing to accept?
Pam Harper: Exactly. We’re going to dig deeper into that in our next segment. But right now we’re going to take a quick break. Stay with us…
Scott Harper: Thanks for joining us for Growth Igniters Radio with Pam Harper and Scott Harper. We’re brought to you by Business Advancement Incorporated. We focus on enabling visionary leaders to dramatically increase momentum for game-changing results, and we’re on the web at businessadvance.com.
Pam Harper: Does this topic resonate with you? If so, we have more. Check out related episodes to expand your perspectives and take away even more immediately actionable ideas. Just go to growthignitersradio.com, select episode 90, and scroll down to resources.
Scott Harper: And while you’re there, sign up for our weekly alert of upcoming episodes, so you’ll always be up to date.
Pam Harper: Welcome back to Growth Igniters Radio with Pam Harper − that’s me − and Scott Harper. Scott and I are talking today about the CEO’s role in navigating the gray zone of innovation, and how this can be done in a way that’s best and most effective for everyone involved.
Scott Harper: Obviously, as we said, the CEO doesn’t get immersed in everyday aspects of innovation. It’s not their job; it’s frequently not their expertise. However, they’re so important in creating an environment that really helps the people who are involved in all aspects of the innovation do it as quickly and effectively as possible.
Pam Harper: I want to emphasize again that this is not just about products. This is about services. It goes across industries. We ourselves feel it personally in so many regards when we’re looking at launching anything new.
Scott Harper: Even a podcast like this. We’re in a gray zone right now.
Pam Harper: [laughing] No, we’re not. We’ve navigated it.
Now, let’s talk about this. The first thing that the CEO needs to ensure, can ensure, to navigate this gray zone is that the right people are involved at the right time in these conversations that we been talking about. In my experience, it’s so easy to overlook people that you wouldn’t ordinarily consider as key stakeholders. Let’s talk about who some key stakeholders are.
It isn’t a stagnant group. That’s why it’s so easy to overlook them. At certain times, we’re talking about employees that are within the organization itself. Increasingly, especially as companies are incorporating partnerships into the act, it’s important to look at when do we bring in certain partners as well.
Scott Harper: Or even customers.
Pam Harper: That’s right. For example, many people who listen regularly know that I chair a conference every year called the ACG New Jersey Corporate Growth Conference and Awards. We find these companies that have innovated and it’s led to revenue generation and demonstrated corporate growth.
One of the things that we heard from one of the honorees this past year, in 2016, is that his company largely consisted of key vendor partners. These companies were, in his mind, people he needed to speak with every week.
Scott Harper: Treated them as part of his company.
Pam Harper: That’s right. That’s not necessarily true for other companies. This is a case of a middle market company, solidly growing, in fact growing dynamically − he’s looking beyond just the employees in the organization and saying, “Who else and under what conditions do I need to include them in discussions?”
Scott Harper: In addition to partners, as you said, there are also people inside the company in functional areas that need to be involved. The question is when. When do you get them involved?
There’s an example I can think of, going back to my corporate career in Fortune 100 consumer healthcare products companies where I was part of a exploratory and development team. I was the R&D function working with the marketing function. We had an opportunity to partner with a company that had a revolutionary new technology that had the potential of really changing our industry.
Pam Harper: Changing the game.
Scott Harper: Changing the game completely. The question was should we go ahead and partner with this company and explore the technology, which was at a fairly early stage. We had that conversation, “Does it make economic sense? Is it technically feasible in theory?” and so on − all the things that we would normally expect to discuss. However, we also − because we were following a innovation process that had been set up under the direction of our president, who was working in concurrence with the CEO of the company − we also engaged our regulatory, and legal, and manufacturing functions in the discussion. Because of the revolutionary nature of this initiative and the fact that we were really at the cutting edge, there was a lot or risk.
Eventually, we bubbled these levels of risk and these levels of potential profit versus potential risk up through our president. It eventually went up to the CEO, and I eventually was part of a team that went and talked to the board about this project.
Pam Harper: This is big. This was not a CEO and board that micromanaged.
Scott Harper: Not at all.
Pam Harper: The process was set up that under certain conditions, at certain levels, in this gray zone, you who were maybe 4 or 5 levels …
Scott Harper: I was 4 levels down, yeah.
Pam Harper: … were going up to the board to talk about this.
Scott Harper: That’s right. Because it was important. It was important economically and important from the legal standpoint. Ultimately in this case, the accountability for that level of risk and resolving that gray zone fell to the CEO and the board.
Pam Harper: Bringing this all together, as a CEO, of course you’re not involved in every single conversation; but looking more creatively and expansively at who the stakeholders are that need to be involved at certain times and when it makes sense for certain conversations to go up to your level − no matter what size company you are − is a key way that you can navigate the gray zone.
Scott Harper: Good, Pam. What’s next?
Pam Harper: The next thing that the CEO can ensure, in terms of navigating that gray zone, is that the right conversations are taking place. It’s easy to talk about what’s working well. It’s also easy, perhaps, to talk about what we know doesn’t work.
The harder thing is to talk about what we’re comfortable assuming. That is definitely a gray zone issue. We’re going into uncharted territory. We’ve never done this before. There are going to be things that are knowable, but only to a certain extent. The CEO is the one that ensures that all levels of leadership are able to be comfortable with this level of ambiguity that exists in the gray zone.
How do we do this? For starters, it’s being comfortable yourself with what level of risk you are willing to take. If your company is large enough to have a board, that is a C-suite and board decision. Having that conversation − ensuring that there is an alignment between the board and the CEO, the CEO and the C-suite, and other leaders − is something you could practically do. It’s having that level of alignment.
Scott Harper: Making it clear that these are the parameters of the ambiguity, the uncertainly that we need to know about and that we are willing to accept uncertainty at this level, but not at that level.
That’s really having conversations about what would be the consequences if our assumptions are not correct. What if it doesn’t perform like this, or we have a recall situation? Are we willing to accept that level of risk? Then, creating the environment with the conversations about how do we reduce that risk, because we can’t go forever. You can’t go to perfection.
Okay, we’ve talked about two things that the CEO creates the environment for. What’s a third?
Pam Harper: The third area where the CEO plays a critical role is reinforcing the right decisions. By right decisions, I mean the right decisions for the company under the circumstances with what you’re facing. What kind of reinforcement? There are plenty of companies out there that reinforce what’s going well and new innovation.
Scott Harper: I’ll have an award for the group that provides this innovative new product that gets us a lot of profit. Great. Very common.
Pam Harper: That’s true. Here’s another way to look at it. Can you reinforce what not to do? We actually interviewed Colin Day of iCIMS who talked about how, in his company, not only did they look at what was going well, but they also reinforced and rewarded people with what not to do.
Scott Harper: They had awards for people who essentially cut off levels of development, or inquiry that were, in their judgment, not going to produce what they needed to, so stop. Let’s redirect our resources to a better place.
Pam Harper: In other words, navigating the gray zone. How many companies do you and I speak with where there are extensive lists of innovation projects that are going on? The project or the product that refuses to die.
Scott Harper: That’s sucking resources away. Anyway, we’re coming up on Halloween, so we can talk about “zombie projects,” or initiatives. You have to create the atmosphere where, “Yeah, let’s pull the plug, know when to pull the plug.” and that’s more conversations. When is “not good enough” not good enough, as well as when is “good enough” really good enough?
Pam Harper: In summary here, what we’re saying is that in order for a CEO to navigate the innovation gray zone faster, more effectively for the company, is to make sure that the right people are involved at the right times, the right conversations are taking place, and that you’re able to reinforce the right decisions. In the third segment, we’re going talk more about this, so stay with us…
Scott Harper: Thanks for listening to Growth Igniters Radio with Pam Harper and Scott Harper. We’re brought to you by Business Advancement Incorporated. We’re on the web at businessadvance.com.
Pam Harper: Does your company have what it takes to meet all of your many commitments and still move fast enough to respond to new opportunities?
Scott Harper: We’re talking about fast here, yes.
Pam Harper: Take the first step to confirm your perspective by requesting our free resource, 5 Questions to Ask When You Need to Move Even Faster.
Scott Harper: Our questionnaire will help you find out where to begin to focus your energy and focus your resources so that what should be happening really is happening, faster and more effectively.
Pam Harper: Yes. We’ve developed these questions based on our work with clients in over 30 industries. We’ve helped them to scale faster, make innovation happen faster, and more quickly respond to new opportunities − all things that we’re talking about here today. This has generated millions of dollars in top and bottom line growth. Now you can have this resource simply for sharing your valid contact information with us. We promise to keep it strictly confidential.
Scott Harper: Don’t miss out. Go to growthignitersradio.com. Select episode 90. Scroll down to “Resources” and click the link “download 5 Questions to Ask When You Need to Move Even Faster.” And to learn more about our success stories, go to businessadvance.com/client-results.
Pam Harper: Welcome back to Growth Igniter’s Radio with Pam Harper and Scott Harper. Over the last 2 segments, Scott and I have been talking about the CEO’s role in navigating the gray zone of innovation.
Scott Harper: Now we’ve come to the part of the podcast where we like to get practical. We like to say, “We’ve been talking about ideas and concepts, but what are some immediately actionable things that our listeners can do, starting now, to address the issues that we’ve been talking about?”
Pam Harper: The first thing is that by yourself, as soon as you’re done listening, and with your leadership team − do a “risk sort” of your innovation initiatives, including all the functional areas of the company. There could be a lot more going on than we’re even aware of.
Scott Harper: When you say a “risk sort,” obviously many of the companies that we have talked to have multiple initiatives going on of various kinds, product, or service development, new processes in manufacturing, which is innovation as well.
Some of these will be more easy to predict how it’s going, because the gray zone of unknowns is smaller. It’s maybe not as big a reach. Other things will be bigger reaches, like that project that I referred to in the last segment, where there’s a lot that’s not known. Also, not every project, or every initiative is going to have the same amount of potential downside impact, or upside impact.
Right now what we say is, “Look, what are some of the projects that have the greatest potential benefit, the greatest potential risk. Let’s focus on those.” Then you can move on to others as you go along.
With that in mind, as a second thing you can do, identify for particularly high risk, high reward initiatives − who needs to be brought into the conversation in terms of individuals, in terms of functional areas? Don’t leave functional areas out.
Pam Harper: In fact, we have a list of stakeholders to refer to under “Resources” for episode 90.
Scott Harper: That’s right. When you’ve done that, you’re including the issues that need to be addressed. And it goes without saying, but we’ll say it anyhow − in order to make these conversations work, you have to have created an environment throughout the company that makes people feel comfortable talking about and raising these issues of ambiguity. These are not easy conversations.
Pam Harper: That’s right. Remember what we said in the second segment, that it’s very easy for people to tell you what’s going right, but not so easy to talk about uncertainties. How are you ensuring that there is a safe environment? What specific things can you do in your environment immediately that are going to make people feel comfortable? Sometimes these are things you can do on your own. Sometimes it’s a decision to bring in someone from the outside, if you think that there are elephants in the room, or that kind of thing.
Scott Harper: When you have that safe environment − which starts with people sensing that they will be listened to and that there will be a real active, co-creative dialog when it’s appropriate − then you can get into the ambiguity. “What do we know? What don’t we know? What assumptions are we making?” That’s very important.
Pam Harper: It goes faster.
Scott Harper: It goes a lot faster and you get a better outcome.
Third, what’s another practical thing that somebody can do?
Pam Harper: Going along with that, once you have those right people in place, is ensuring that there’s clear criteria and processes that make it easy for the whole organization to know what are we going to be deciding for ourselves, and when is it time to kick this to a different level? That’s something that people need to internalize. Your story was a great example of that. As the CEO, you’re leading the effort, and people know this is a time to bring you in − not are you having to go after people.
Just as the one CEO we spoke of said to me, “I need to know what’s going on.” He was not feeling like people were necessarily bringing things up to him that needed to go there.
Scott Harper: If you have criteria and you go through your executive team and on down, and get people to create criteria − “What does success look like? What has to happen for things to move forward? What are red flags that will make people say, ‘I have to go up the line to get either resources, or help with decisions.’” That way, it’s very clear. There are clear lines of accountability and authority and decision-making.
Pam Harper: The more you can illustrate this with stories, so that people can remember it, the better. It may be hard to remember all the metrics, but sometimes a story can be very helpful as an example of when to do this.
With all that in mind, going back to the CEO who was trying to figure out what was going on in his company − there is a lot you can do to ensure that the processes and systems are in place for sure, and that there is an environment that you’ve created that makes people comfortable with the ambiguity, the gray zone that we’re talking about.
Scott Harper: And fosters the right conversations with the right people at the right time, so that these decisions are made more quickly, are made more effectively, and you have a higher probability of achieving the level of success that you and your company need.
Pam Harper: …No matter what twists and turns are on the journey ahead.
Scott Harper: Thanks, Pam. And thanks to you out there for listening to Growth Igniters Radio with Pam Harper and Scott Harper. To check out resources related to today’s conversation, share on social media, or download 5 Questions to Ask When You Need to Move Even Faster, go to growthignitersradio.com and select episode 90.
Pam Harper: Until next time, this is Pam Harper …
Scott Harper: … and Scott Harper.
Pam Harper: … wishing you continued success, and leaving you with this question to reflect on:
Scott Harper: What conversations can we start − this week − that can help us navigate more surely through our own innovation gray zone?