Flashpoint

The seeds, of course, are the ideas. They may be brilliant, but as both farmers and innovators understand all too well, the seeds do not matter if the soil is not prepared. Examples of great ideas that were not exploited by those who first created them are legion, ranging from digital photography to the search engine. The first job of a business leader, then, is not to perfect the seeds or seek to gather more seeds but to prepare the soil. Sometimes we focus on bioengineering super seeds and forget about tilling the garden.

The path in the parable can be compared to a company’s existing strategy and its associated operating model. The existing model dominates everything (and, by the way, pays the salaries of the innovation teams). The path is paved and optimized. Anything foreign on it gets run over. To succeed with new business innovation, a company needs a way to go off the beaten path; new ideas need a sheltered place to grow. That growth path should be defined by an opportunity space, a clearly articulated domain that the company believes can be the source of new offerings that can win in the marketplace. Too often, companies look to ideas (the seeds) to define the growth strategy, not the other way around. To succeed, executives need to define a growth strategy, one that they believe in and that can provide guidance to those at the front lines of innovation. Good seeds do not make a good strategy; rather, they are an element in the successful implementation of a strong growth strategy.

Too often, good seeds fall on the rocky ground created by gaps or weaknesses in a company’s organizational capability for innovation. A lot has been learned over the past 20 years about the methods and processes needed to succeed with new business innovation. Key among these are a focus on customer-centered innovation using design methods; the use of Lean Startup approaches and iterative methods to create minimum viable solutions; the flexing of business models to match the needs of the new business, rather than the strictures of the existing business; and disciplined learning in the market prior to bringing a business to scale. With all this knowledge, though, too many companies are still focusing on the ideas (the seeds) and not the soil (the capabilities). Some new ideas sprout up from this ground, in the form of cool demos or exciting presentations, but the corporate capability to move these ideas from concept to profitable business is not there. Left without sustaining roots, the ideas whither and die, often after substantial investment.

The thorns in the parable almost need no explanation, at least to practitioners in the field. They are the internal politics that are present in any organization. The roots of the thorns are often legitimate concerns that the new will disrupt the old, steal resources, confuse customers, and increase business risk. They manifest themselves in budget discussions and in resistance to doing something new from existing functions, like sales, procurement, and legal. These resistances can all be managed if they are constructively engaged, but leadership is needed to resolve them. In practice, dedicated resources and sequestered budgets are often required for success, in addition to visible sanctioning of innovation initiatives by company leadership. Without such leadership, the thorns will choke any innovation that threatens the core business or its smooth operation.

Constructively addressing these issues, and then leveraging success by betting to win, will allow a company’s seeds to produce fruit “a hundredfold,” but companies often miss the second step. Venture capitalists double down on proven business concepts with the potential for significant growth, but executives in large companies often do not. There is a strong tendency in many public corporations, driven by the exigencies of quarterly earnings expectations, to bet to minimize the downside risk rather than to win in the marketplace. Making a big bet takes guts, but it also requires engagement with the substance of the new business. Executives must spend time understanding the industry they are seeking to enter, meeting with customers who might use their offering, and experiencing the ecosystem they are seeking to enter. Without this commitment—a commitment many venture capitalists make—they cannot become comfortable with betting to win; the risks of the new will always loom large, especially in comparison to any investment in the core business.

This issue’s Conversations interview, with Satya Nadella, CEO of Microsoft, offers an example of how leadership can prepare the soil to allow seeds to flourish. The interview focuses on Nadella’s views on digital innovation for industrial companies, but it also gives a window into the broader transformation he is leading at Microsoft. He talks about the ways his company is addressing the challenges of generating new growth, both for itself and for its customers. As you read the interview, and perhaps as you read his recently published book Hit Refresh (HarperCollins, 2017), you will see how he has defined the growth paths for the company, invested in organizational capability in critical areas, and shifted the internal political dynamics to focus on what he calls a “growth mindset.” Nadella is tilling the soil, so the seeds—when they come—have a place to grow and produce fruit.

I have been learning how to be a good farmer in corporate contexts for my whole career. I can pretty much guarantee that if you address these issues positively—if you manage your innovation farm—you will succeed. I will also take long odds that if you do not, you are wasting your time and your money (and, perhaps, your career).