On this week's episode of Inside Outside Innovation, we sit down with the legendary Tendayi Viki. Tendayi is co-author of the book, The Corporate Startup. He's an Associate Partner at Strategizer and one of the major influencers in the world of lean startup and corporate innovation. On this episode, we explore the evolution of the lean startup movement, how corporations are developing the skills to compete and become more innovative, and we talk about Tendayi's brand new book called Pirates in the Navy.  Let's get started.

Find the Interview transcript and more at insideoutside.io.

Interview Transcript with Tendayi Viki, Coauthor of The Corporate Startup & Pirates in the Navy

Brian Ardinger:  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 Inside Outside.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, and collaborative innovation. Let's get started. 

Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger, and as always, we have another amazing guest. Today, all the way from across the pond in London, England, we have Tendayi Viki. Tendayi, welcome to the show. 

Tendayi Viki: Thank you, Brian. It's a pleasure to be here. 

Brian Ardinger: Hey, I'm excited to have you on the show. We had you out in Lincoln at the last IO Summit. For those folks out in the audience, that have not heard of you. He's an author, innovation consultant, Associate Partner at Strategizer. You're the coauthor of the book, The Corporate Startup, which took a lot of the Lean Startup stuff and applied it to big organizations. You've got a new book coming out called Pirates in the Navy, so I could go on and on, but welcome to the show. 

Tendayi Viki: Thank you, man. Thank you. no, it’s an honor to be here.  And I had a lot of fun when I was in LIncoln. It was a fun conference and good people all in. 

Brian Ardinger: Yeah.  I think I want to jump in. You've been in this space, this lean startup movement for a long time, and you really did open the door to a lot of this lean startup stuff that started in the startup world. I think applied it to bigger corporations, this whole innovation process, whether you're doing it in a startup or you're doing it in a bigger company, a lot of the same principles apply. What are the biggest challenges or changes that you've seen over the last decade of how this movement is evolved and what's gotten better? What's gotten worse in the whole process? 

Tendayi Viki: Yeah, so it was a really interesting movement because it came out with an interesting philosophy, which is that one of the reasons why any innovation, either from a startup or from a large company, any innovation fails when people that are working on the innovations starts scaling their idea prematurely. Which means they start building the full product and launching it and investing a lot of resources and taking it to market before they really understand who the customer is. What the customer wants. How to reach that customer. How to earn from that customer repeatedly.  How to retain that customer. How to create value basically in a sustainable way. And also, how to deliver profits and whether customers are willing to pay. And how much they will have to pay. So that was the philosophy meeting, which was test your ideas before you scale them.

The big challenge then became, well, we understand, we agree. How do we do that? And that's where the movement has been sort of incrementally building all the tools and resources you need to be able to do that work over the last year. 

Brian Ardinger: Talk a little bit about now where you're at. A lot of the times at the early stages when I started consulting or you started consulting, you had to explain the process. You had to get into the weeds of why this was even important. What's changed from that perspective? It seems like people have at least heard of the movement and heard of some of the processes, but maybe they're doing it wrong or there's different assumptions that they've made about the process in the first place. What are some of the things that you're seeing that are challenging in today's world? 

Tendayi Viki: Yeah, so I mean, it's not, it's not as hard as it used to be to convince leaders inside established, successful companies that they need to innovate. I think what's harder is getting them to change how they run their companies day-to-day because some of those processes are so calcified. It's so hard to break into those and have them change. I mean, one of the habits that companies have, for example, it's an annual budget cycle. Things that are on road maps that I executed against. You need to complete a five-year projection with a business case in order to get investments. Those are things that have been harder to break down.

How do you have a conversation with the head of finance that they should invest in an idea, but that idea is not promising them any return. What is the sense of comfort that you can give them with that? You have to sort of take into them like a newer tool that was created to say, think about your investments as a portfolio of investments and think about your returns as returns from a portfolio rather than retrench from one idea. That's the way you allow these to fail, but these are concepts that are just emerging. That we're going to have the conversation with leaders around inside the company. 

Brian Ardinger: I'm curious to get your insight into whether you think this problem should be tackled across the entire organization. Should it be siloed? We've heard experts in different areas tackle this from different sides with different areas of effectiveness. What's your thought on how innovation should be attacked from an organization perspective? 

Tendayi Viki: So that's interesting, especially when you're talking about the Lean Startup Movement, right.  One of the problems we had at the beginning of our movement was being allowed to do the work.  How do we even get the space to be allowed to test ideas, run experiments, do Agile, Design Thinking? And so what we did was we fought really hard to get these spaces created for us because we needed to show that you can actually work this way. And now I think we have a different problem. I think the problem we have now is what we call the problem of success.

If you are in a discussion of whether innovation should happen inside or outside your organization, you have to ask yourself a question. What happens when you find something that works? What happens when you find a business model that works? What happens when you find that idea that works and now you need light resources to scale. And you know what? I've heard people flippantly say, well, the company will just spin me out. Creating a spinout, it's actually more difficult. And requires much more leadership, attention, and legal and procurement than actually just scaling a product. And so even getting spun out requires some integration back into the company so that these decisions can be made.

This decision of whether or not you should do it inside or outside the organization is whether or not if did you do it outside the organization, the organization is also empowered you and giving you all the resources to scale up front. If they haven't, then eventually, even if you're an innovation lab outside, you have to bring all those ideas back and so why don't we just start collaborating from the beginning?

Brian Ardinger: Are you seeing it, these processes being used primarily under the H3 - Horizon 3 stuff. Or H2 - or how are you seeing the processes of innovation playing out across the different horizons of innovation? You know, optimization of existing stuff, all the way to creation of brand-new stuff?

Tendayi Viki: Yeah. I think that depends on the maturity of the organization. Very few organizations have H3 projects that they're working on.  That's a big ask, you know, sometimes terms of attention and resource. I mean, you find examples like Amazon or Google or Facebook that might be working on like really groundbreaking H3 stuff. A lot of companies are working on H2 stuff, and so Horizon 2 stuff is what people tend to apply lean startup and innovation processes to, creating net incremental innovation, et cetera. 

You can apply the same processes when you're just improving your core products and you should, but sometimes when the movement is just starting inside a company, it's better to say, give us these things that are risky and let's show you how it works, and then you can see which of these techniques you want to then take and apply to your more mature products. . 

Brian Ardinger:  Let's talk about who's doing it well out there. What are some of the case studies or people that you've worked with that seem to be on a little bit better track than others out there?

Tendayi Viki: It's interesting, right, because there's a balance of what's being done well. I think it's rare to find a company that's doing everything well. You might find that companies like Ping An, the Chinese conglomerate. They do really well in terms of having a diverse portfolio, so they're not really focused on just doing like one thing.  They're building a portfolio of very many different business models. Even though they're like a big insurance company. They also like always exploring new business models in their portfolio of products and services is pretty wide. 

And then a couple of companies that we work with at Strategizer we published a blog post on that and a Harvard Business Review article on it. you know Bayer and Bosch and what they have are their innovation growth fund or accelerator programs, where they constantly taking in 10 to 12 ideas per cohort, investing a little bit in those ideas, seeing which ideas are going to work out and see which ideas are not going to work out and then doubling down investment on the best ideas. And what they're doing is they're living this philosophy that as leaders, you can't pick the winning idea on day one. You have to select a whole bunch of ideas that are aligned with the strategy and then create an environment for the best ideas to emerge. And win.

Brian Ardinger: One of the questions I get a lot, and it seems to be one of those areas that is not as covered as much in the lean startup books, and that is around this idea of motivation, compensation, incentive systems to make this work in a bigger corporation. What are some of the things that you've run across that seem to be better at putting that incentive system together for how to make this work?

Tendayi Viki: The classic one that everybody fights all the time is 3M and their stretch goals. One of the problems that teams have is that there's an incentive misalignment with leadership, and so the CEO is talking about let's innovate, let's innovate. But the middle managers that run the teams are being incentivized through returns on currently successful products, increasing sales, increasing profits. The way 3M handled that is that they give their leaders three, what they call stretch goals, which is this idea that the 25 to 30% of revenue in the last year must come from new products that have been launched within the last four years.  And so what that does is that it incentivizes leaders to start managing their teams to create new things. And so you have an incentives alignment there. So that's one really great example. 

Another one was the bank that I can't name for NDA reasons. But what they do is they have an innovation lab and then the teams that apply to join the lab are invited to come to the lab, but they have to take a 50% pay cut. And when what they get in exchange, is a stake in their own idea. And so it's a way to turn them into mini entrepreneurs and align incentives again in that way. 

Brian Ardinger: I would imagine that would probably also weed out the folks that wanted to do more innovation theater around it, but also wanting to keep their safe job in the process.

Tendayi Viki: Exactly, exactly. There are people that are slumming it, right? Like if I spend three months in the innovation lab, I can then come back to my company and go I'm an innovation expert. I was in the lab. Versus people that are really interested in creating net new business models, you know, for the company. So that's a way to incentivize them and keep those things in line.

Brian Ardinger: That's brings up an interesting point. At the end of the day, organizations, it's difficult for them to innovate because it all comes down to the individual. Are there particular core skill sets that folks should be considering and developing to become that innovator within the organization? 

Tendayi Viki: The thing about innovation, right, is that there's a part of innovation that is a personality thing, you create it. Are you comfortable with ambiguity? Are you open to new experiences? And all of that is really great. And you do need folks that are comfortable with ambiguity because a lot of the time you don't know what's going to work and what isn't going to work. But what I'm actually learning is that the core skillset that innovation teams need to grow is management. Innovation is management. They have to be systematic. After you've generated your ideas and you've designed your ideas, you then have to systematically test them. You have to do this in an honest way. You have to really look at the assumptions you're making and run experiments to test those assumptions and come back with that data and really review it against the business model that you're designing and make iterations.

Keep going back and forth and back and forth and make real progress towards finding a business model that works. That's a discipline, right? It's not something that you can just do in a hap-hazard fashion. I think that's the one thing we still don't really have embedded yet in the way that people talk about innovation. It's not as commonly discussed. It was more about creativity and design sprints and hacks and all of these things far more than they are the day-to-day discipline and systematic approach to making the product. 

Brian Ardinger: It talks to the difficulty that organizations have having that ambidextrous hat on where half of them, if not more, are focused on existing business models and optimizing that versus the new and the same thing would apply in the innovation space. You have to think new and differently about what you're doing, but also have the discipline and the rigor to make something happen around it. 

Tendayi Viki: Exactly. I mean, we have a lot of rigor in the way we run our core business. I mean, we count every cent and penny. And we measure every little metric, but when it comes to innovation, we try to treat it like a black box, like go over there and do some cool stuff and then tell us what you've got. One of the conversations I have with leaders all the time, if asked to pull out 10 or 12 of the innovations that are being worked on right now in your organization, to what extent do you have a handle on how much progress those teams have made towards finding something that works. 

And a lot of leaders don't have the handle. They don't have any handle on that at all. They're waiting for the teams to come and tell them after three months what they've done. We could be measuring and tracking progress very systematically with innovation. We have the tools now. 

Brian Ardinger: That brings me to the next topic. I want to talk a little bit about your new book Pirates in the Navy. You're a prolific author. You've written a number of drum books. Tell us a little bit about the new one that's coming out and why you to write it. 

Tendayi Viki: Pirates in the Navy, the title, is based off the time when Steve Jobs said that it was better to be a pirate than to join the Navy, and he was talking about the difference between large companies and startups, right. It was like it's been to be a startup that you joined the Navy. As we've been doing this work and working with innovation teams inside of large companies. They have to be pirates in the Navy. And that's where I got that. The book really aims at like heads of innovation and innovation teams working inside large companies. And it challenges them to say, you know what, you want to be a pirate, but you're a pirate in the Navy. And so what you're trying to do is to make innovation a more systematic and accepted part of the culture of your company. And so the question is, how do you do that? How did you start to make sure that the practices that we're teaching and using become more widely accepted?

How do you address that concern that when you finally find something that works, you may have no one in the company, that's ready to take it to scale. Well, how do you build those bridges and how do you work inside the Raj organization to make sure that innovation becomes a repeatable process? And so the way I did it was I took the pirate metaphor and I said, actually, you know, not all pirates are the same. When you look at the history of piracy, there's actually like pirates and Buccaneers and privateers, but the key distinction there between a pirate and a Privateer, the typical pirate or Buccaneer is just a criminal basically on the high seas, unaffiliated living, their best life looting and raiding. But if they're caught, they get into real big trouble. 

Whereas a privateer is a pirate that is commissioned by a state to attack the ships, of an enemy state. They go out on the high seas and they do their pirate thing, but they can bring all the stuff that they've gotten back home to the home country and they'll be accepted and that stuff will be celebrated and they'll get their share or whatever it is that they've done. And so when you're thinking about being a pirate inside the large company, you want to be a privateer rather than just a straightforward, buccaneering, free spirit, because if you are straightforward buccaneering free spirt, you're likely to get fired. Will need to walk the plank.  But if you're a privateer, you've built the relationships. You have a charter to do the exploration work? And people are interested in the results? What's your exploration? And the question is how do you create that interest? And that's what the book is about. 

Brian Ardinger:  Talk a little bit about some of the case studies or skillsets that you cover in the book that people will be excited to find out about. 

Tendayi Viki: The first thing I say is like, you have to be authentic. You have to be genuinely interested in creating business models that work. You have to be genuinely interested in developing skills and tools to do that. Not innovation theater, right? Not just like hanging around and doing sticky note stuff that doesn't create value. You have to be authentically interested. The biggest piece of advice that I give people in the book is that you cannot start by targeting the entire company. If you do that, you are dead on day one. 

What you want to do in every large organization that I worked with, is a small group of people, small group of leaders that get. There's always a division or a department where there's early adopters that are trying these methods, right? And so that's the way you want to go. You want to start working with early adopters. Just like we tell startups and our teams to go find the early adopter customers. When you're trying to implement an innovation process inside your company, you also want to start working with early adopters inside your company. You know, leaders that get it. The cool thing about working with early adopter leaders is that they're more tolerant of the mistakes you make. And at the beginning you can make kilos of mistakes. But the goal of working with early adopters is to get an early win. 

Brian Ardinger: Absolutely

Tendayi Viki: The early win is then what buys you legitimacy to then start talking about innovation inside the rest of the organization. 

Brian Ardinger: I can't wait for it to come out. If people want to find out more about yourself and the book, what's the best way to do that? 

Tendayi Viki: You go to TehdayiViki.com and the book will be there. There'll be links. Pirates in the Navy is also just on Amazon, so you can just Google that as well and you can preorder. So yeah, I'm looking forward, the book is coming out. I think its May 14 I've already submitted the manuscript. It's just going to final editorial now. 

Brian Ardinger: Well, Tendai thank you again for jumping on the call early in the morning here to tell us a little about what's going on in the world of innovation. Appreciate you being on Inside Outside innovation. 

Tendayi Viki: Thank you, Brian. Thank you so much.

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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Originally published in April 2020.