346 The Innovative Leader: Step-By-Step Lessons from Top Innovators For You and Your Organization with Stephen Wuncker | Partnering Leadership Global Thought Leader

[00:00:00] Mahan Tavakoli: Steve Wunker. Welcome to partnering leadership. I am thrilled to have you in this conversation with me. 

[00:00:04] Steve Wunker: I'm thrilled to be here. 

[00:00:06] Mahan Tavakoli: Can't wait to talk about the innovative leader, step by step lessons from top innovators for you and your organization, Steve.

[00:00:15] Love some of the work you've done in the past. We were chatting before we got started about your work with Clay Christensen, who I quote, Repeatedly every single week in my conversations with executives. So a lot to talk about, but before we do, we'd love to know a little bit more about you, Steve.

[00:00:32] Whereabouts did you grow up and how did your upbringing impact the kind of person you've become? 

[00:00:37] Steve Wunker: I actually shuttled around a lot. I primarily grew up in Fort Lauderdale, Florida, but my mom was in Houston. And then I would spend time in the summers with her family, which was in the deepest parts of France and with my stepdad's family in Paris.

[00:00:52] So I actually credit the moving around a lot with the ability to just see things from very different perspectives. And that's quite helpful in this job of trying to help companies innovate. 

[00:01:04]  

[00:01:04] Mahan Tavakoli: We'd love to know about your experience with Clay Christensen as well,  he is associated with innovation in the minds of many people, including me. What was that experience like for you, Steve? 

[00:01:18] Steve Wunker: That was a fantastic experience. Not only was he a great innovation scholar, but he was just an enormous influence on how people acted and behaved and led.

[00:01:29] When he passed away four years ago, it was instructive that the obituaries did not start with him being number one business thinker in the world. Selling a couple of million books knows about how people regarded him as a person. I joined him because I had been a strategy consultant at Bain Company, and then I'd been in tech for six years.

[00:01:48] And he was looking to apply the rigor of The sort of McKinsey, Bain, BCG strategy consulting toolkit to situations of high change, rapid disruption like you had in tech. And so he recruited me and a couple others in to basically start up this consulting firm that would apply his theories into real world situations.

[00:02:10] I knew I was lucky. I didn't realize how lucky I was until years later and how much I could learn from him. 

[00:02:18] Mahan Tavakoli: It's incredible, Steve. I have talked to at least a half a dozen authors who had spent time with Clay Christensen. I've known some people who had spent time with him and they all adored the man even more than the ideas that says a lot.

[00:02:35] Because how you measure your life is one of the concepts or one of the books that did really well for him. And he can rest in peace knowing a lot of people speak highly of him. Now you mentioned that innovation that he talked about was primarily, focused on industries and organizations ripe for disruption, fast moving.

[00:02:59] I'm finding that to be the case with all kinds of organizations, which is why your thoughts on innovation now aren't necessarily just relevant to companies in one sector for companies, organizations across industries. 

[00:03:17] Steve Wunker: That is so true. It was a surprise when we started up Clay's Consulting Work.

[00:03:22] We thought a lot of the focus would be in tech, and that's where I had come from. But actually, the first decline through the door was in healthcare. And so I became the healthcare guy, which takes some learning, let me tell you. But eventually, it's been 20 years now, so I think I have learned. We saw a tremendous amount of disruption in life sciences and healthcare provision.

[00:03:44] So it is Throughout we've done a lot of business recently in agriculture, which I did not seek, but it just happened that there is actually quite a lot of disruption in food and agriculture. So these patterns, as Clay was the first one to point out, , these patterns would repeat in industry after industry.

[00:04:03] He would milkshakes or steel because they were pretty straightforward, but it could get into arcane fields that you'd never heard of. Heard of before the discussion with a client and you could see the patterns play out there too. 

[00:04:17] Mahan Tavakoli: So one of the things you do in your book, Steve, is you also address some of the myths about innovation, and one of them that I struggle with is this lone genius.

[00:04:30] We think about the Steve Jobs of the world, or now more Elon Musks of the world, or Jeff Bezos. We see innovation as the purview of these individuals, and you say that's not the case. 

[00:04:44] Steve Wunker: It is not the case. Look, I've interviewed Jeff Bezos, and he would be the first to tell you it's not the case. He knows that he needs to win on the company culture innovation happens in the lunchroom, not in the boardroom or the CEO's office.

[00:04:59]  I have a keynote speech on the book as many authors do. And I actually start by talking about a person who I think is a real villain of innovation and it's Leonardo da Vinci. Because it's that myth of Leonardo that you have to be this lone genius. And if you look at what Leonardo actually did, he observed rigorously.

[00:05:22] He questioned constantly. He experimented relentlessly. In other words, He followed the scientific method nobody called it that we didn't have a word for that back at that time But the reason he was so much better than his contemporaries is because he was one of the first people ever To use the scientific method.

[00:05:42] So genius is a wonderful thing But the title of my keynote is actually called no genius required if you have a Systematic approach and you can learn from people who have done it. You don't have to be brilliant You just have to be Really adherent to those mindsets and approaches. 

[00:06:00] Mahan Tavakoli: So with those mindsets and approaches, it does take.

[00:06:03] Some time and focus to be able to do that, Steve, you talked about Leonardo da Vinci having used a scientific method, looked at the world around him, studied it, the genius. those observations at least with the CEOs and executive teams that I interact with, they have less and less time to observe barely keeping up with the flow of work.

[00:06:32] So it's not allowing them the time or focus that you talk about. It takes for that innovation. 

[00:06:37] Steve Wunker: Yes, and that is such a hazardous thing to do. I start the book with Satya Nadella, who was gracious enough to provide several quotes for the book. When Satya took over as CEO of Microsoft, he was dealt a really rough hand by the Steve Ballmer era.

[00:06:53] The stock had gone nowhere in 14 years. And the first thing he did was not to just say, this is the new strategy, he listened. He actually wanted to make himself a role model for the company. For listening, and he told us the empathy is the root of all innovation. And then he listened again, even when his cloud strategy was massively succeeding, he was still out there investigating.

[00:07:12] And that's how they pivoted into AI in 2019. Not just content to read the reports from Forrester or Gartner. He was playing with these AI models himself. So obviously get the research reports. That's great, but you have to get out there directly and understand what are the customer demands, the trends, the new technologies that gives you that visceral sense, which is really critical to making good judgments 

[00:07:40] Mahan Tavakoli: in doing that.

[00:07:40] You share the create framework connected. role model, evolving, audacious, 360 thinker, and enabler. I would love to touch on a couple of them, including being connected to customers needs. I don't think I've run into a single CEO or executive that thinks they are not connected to customers needs. So what are the ones that you see are connected doing differently?

[00:08:06] Steve Wunker: So Ag Laffy, when he was CEO of Procter and Gamble, one of my co-authors is a VP of RD at p and g. When he would visit a new country, which he did often 'cause they're truly a global organization, he would spend time on each of those visits going to a consumer's house for half a day.

[00:08:24] He really wanted to understand in detail how are they washing the dishes, how are they doing laundry? How are they cleaning the floors? You can get it through the market research reports, but being there yourself is something different. I use another example in the book of the head of a major credit card issuer who I was working with years ago, and we had given him as consultants reams of data about why they should lower their merchant fees.

[00:08:50] And he was very resistant to doing that. And then we found a street in Winnetka, Illinois. Where we said, okay, let's walk down the street and you're going to interview these 20 merchants and let's see what you hear. And okay, I may have actually done that walk in preparation for that myself. And he came out of that a changed man.

[00:09:14] And they changed their strategy. Hearing it directly just counts for a lot more than seeing a lot of data and some pretty PowerPoint slides. 

[00:09:23] Mahan Tavakoli:  It is something that I challenge all of us to do

[00:09:26] now you also talk about five behaviors of innovators observing is a big part of it. Questioning is another element. I wonder how can that questioning be incorporated in a way that leads to innovation rather than the tinkering on the side, which a lot of organizations do well. 

[00:09:48] Steve Wunker: So there's the questioning of taking a lot of potshots, which sometimes you need to do, right?

[00:09:54] But if that's all that you're doing, you're closing things down. What happens when you do that is you make big ideas small so that you can make sure you can answer the questions very appropriately. You have very rock solid data and ignore the big stuff. Maybe you'll get to that one day. Of course people don't.

[00:10:12] What instead people need to do is ask why and what if. Those are two really powerful ways to start to understand the root causes and to explore possibility, which by the way can be both positive and negative. One of the root causes of innovation failure is that people don't ask what if enough in terms of the risks that innovations entail.

[00:10:38] So many pitches about innovation ideas are sales pitches. And really they should be discussions where questions like why and what if should predominate those questions are super powerful. 

[00:10:52] Mahan Tavakoli: So when should this happen? Steve, how do we do this? 

[00:10:56] Steve Wunker: So you need to think about culture like you would a brick wall. The bricks in the wall are your hard levers of management control.

[00:11:06] The projects that you fund, the people you promote, how you hire them, how you assess performance. You need to lay them out in the overall structure of an organization that you want. And it might be bottom up, it might be top down, could be outside in. There are many different ways to have a successful organization.

[00:11:23] The culture is the mortar in the brick wall. It holds everything together, but in and of itself it's useless. You cannot start by changing the culture. Culture lags. It doesn't lead. So start with the bricks and then you can think about the cultural practices that can be changed one by one. You can't rip and replace a culture.

[00:11:45] You need to really Target your shots. So it might be in how you do performance assessments. It might be in how you consider whether to fund something or not. The questions that you ask of innovations as they progress towards maturity. Those sorts of things are very discrete shots that you can take that collectively will start to impact the more during the wall, the culture.

[00:12:06] Mahan Tavakoli: So as you impact that mortar wall, part of it is also systems that enable the teams and the organization to become more innovative. What are some of the systems that you see are essential in supporting? that culture. 

[00:12:23] Steve Wunker: So there are many, but I'll give you a handful to start with. After you've have a clear aspiration.

[00:12:30] So let's assume that you have a clear aspiration that's set out. There need to be processes. Processes are often given a bad rap because they're senseless. They don't have to be, but people need Some level of predictability in order to deal with whether it's innovation or surprising events, organizations, especially as they grow big, but even when they're quite small, need some way to deal with that. You don't meet chaos with chaos. You meet chaos with predictable ways of dealing with chaos. So first, the processes to ensure that innovation ideas have somewhere to go. They don't just get forgotten like dust in the wind.

[00:13:09] Secondly, there needs to be systems for coordination. Who is doing what? Now, that doesn't mean that you have to have a consensus culture where everything has to be agreed. But there need to be decision rights. Oftentimes, people err too far in the direction of let me just check with this and that. No, if you have clear decision rights, people can just get on with it and get stuff done.

[00:13:29] Thirdly, there need to be systems about resourcing. So how are you going to ensure that you spread your bets appropriately? You don't just have a bunch of tiny incremental innovations you're going for. And then maybe there's some wild swing for the fences attempt, which seldom works out well, but rather you have a real portfolio approach to resourcing.

[00:13:49] And finally, the metrics, how are you going to measure your achievements appropriately that are both leading indicators as well as lagging indicators. Things that really give you control, but also ensure that you are directing people towards those metrics so that they make the hundreds of daily decisions that you as a leader can never make yourself.

[00:14:09] Mahan Tavakoli:  You share both examples and these frameworks in the book as well, Steve. You somewhat went through the ABCs of innovation leadership. The aspire stage goes well, there is clarity on the aspiration. It's some of the build and cultivate some of the measures, some of the alignment, some of the transparency and communication that falls apart in being more innovative.

[00:14:34] It's not just that aspiration at the beginning that happens sometimes in a three day retreat, one week retreat or brainstorming. 

[00:14:43] Steve Wunker: That's right. Look, there are many organizations that don't get that aspiration set in detail, right? They might have it at a high level, but not the detail you need to actually do something.

[00:14:52] But the ideas are the easy part of innovation. If you have a clear set of aspirations and boundaries, the ideas will come. Then what happens with them? What often will occur if people can get any traction at all is that they'll start to amend the idea so they can form with existing ways of thinking, or they'll make them less disruptive to the core business, or they'll make them a little more modest so they can get more easily funded.

[00:15:17] And you make this really big idea small happens over and over again, so building the mechanisms to really keep the big ideas big or even make them bigger. That's really critical. And then not just tackling the cultivation of culture as this big woolly beast, but disaggregating it, figuring out what in the culture works, because culture is there for a reason, it is serving a function.

[00:15:38] What works, what might be outmoded or needs to change. And then really taking your targeted shots at how you're going to do that in a way that is cohesive with the build stage of the mechanisms that you have. 

[00:15:51] Mahan Tavakoli:  I love the way you put it where things end up getting watered down and that aspiration ends up getting fit or right size to the culture of the organization and the traditional systems, rather than the systems and the culture being elevated to that aspiration, which is one of the challenges that at least I see in a lot of organizations.

[00:16:14] Steve Wunker: We're sure it is the safest path and look, I've seen this where a big innovation finally got way up the food chain. And the woman said, why did you bring this out as an added ingredient in this consumer product brand? We already had. This is so big. This is the first in the category.

[00:16:33] It is revolutionary. We could have created our own brand around this. We could have made this huge launch, but, oh, there wasn't their job description. Oh, , they reported to this brand, not some brand that didn't exist. It was all the structural issues that made the big idea small.

[00:16:49] Mahan Tavakoli: Part of the challenge executives have with that, Steve, is the need to balance.

[00:16:56] Some of the risk management with this culture of innovation. So part of what you're saying is make sense. This product could have been a category of its own. On the other hand, it could have been a category that would have flopped and would have ended up being part of someone's not meeting their goals, budget, so on and so forth.

[00:17:15] When striving for innovation, how could leaders balance the risk management with innovation?

[00:17:23] Steve Wunker: Of course, it depends what industry you're in, if you're in tech or consumer goods, it's different than if you're making medical devices. But broadly speaking, venture capitalists are the world's best backers of innovation, and they have a fundamentally different process than corporate people do.

[00:17:39] They will have at the outset a sense of how they're going to be distributing their portfolio, the safe sort of follow on investments, the early stage, super speculative things in the middle, different types of risk, technical business model, regulatory risk. And then they will make sure that the portfolio is populated appropriately.

[00:18:00] And look, I've run a VC back company. I've been in those shoes. We had monthly meetings with our VCs. And we would set out very clear objectives for the coming month. And pretty much, I was on my own to figure things out that month. Now, of course, if something big happens, I was going to call the VC.

[00:18:18] But generally, we could just get on with it. That approach really works. OKRs are a first cousin of that, brought to a corporate context. It provides people a lot of latitude without taking undue risks. The governance is there. You're not going to blow up the ship in a month.

[00:18:35] And you can just see where things go. Now, of course, as things get bigger and your risks get larger, yes, there need to be some more controls, but people uniformly apply the same management models to early stage speculative things to much later stage certain bets. And that is a recipe for failure.

[00:18:54]  I couldn't agree with you more with a couple of respects. Yes, it is industry and environment dependent. However, what I find is most people come up with reasons and excuses why they need to be at the most cautious Risk averse extreme. Yes, there are industries and sectors and environments for that, but that's not always the case.

[00:19:17] Mahan Tavakoli: And that's not always the case with every initiative.

[00:19:20] Steve Wunker: For sure. . That irony is that when you get senior executives talking about some initiative, oftentimes the guardrails are much less restrictive than people down in the ranks thought they would be. So there just needs to be some degree of clarity or clear decision rules.

[00:19:39] It goes back to what you were saying earlier. It's about having clear systems. Genius is wonderful, but if you don't have the system, it's not going to work. 

[00:19:46]  It looks like you're also fascinated with you've been around ai for a while and the impact that is going to have and a requirement for innovation for organizations How do you think?

[00:20:00] Mahan Tavakoli: AI generative AI and AI in general is going to impact the need for organizations to become more innovative. 

[00:20:08] Steve Wunker: I think AI is the most transformative technology of our lifetimes. Maybe ever, but certainly of our lifetimes. It is going to impact not only the way people do business, but the way organizations are run.

[00:20:23] It will have profound impacts on what gets done at the center, what gets done at the periphery, what, if anything, gets done in the middle ranks. On the real time nature of business on smooth collaboration amongst firms on the customization of products and services and pricing and business models on the speed at which we do business.

[00:20:45] It has huge ramifications. I'm working at several materials on that now. , and look, we've been consulting in AI since 2012, so we have a long record here. What people need to do now is to think seriously about how they create that agility to embrace the AI systems that are coming in a way that is disciplined, doesn't take on too much work or risk.

[00:21:10] But it takes full advantage because their competitors are. And then, and this is the tricky two stuff you have to do, but they also have to think about how do they ensure the humanness remains in their companies. Because you could play this out a few years and everybody's going to be AI enabled.

[00:21:27] And it was like in the early days of the web, right? Initially, it was the companies that embraced the technology the best, had the best user interfaces. Yahoo! Great! Yahoo! But it was the people like Facebook that ultimately won in the web because they enabled the human content. They just used the technology appropriately.

[00:21:46] So how do you keep the humanness of your organization while being really aggressive about how you do things? not only embrace the technology to do what you're doing today, but to fundamentally rethink what you might be doing as well. 

[00:21:59] Mahan Tavakoli: . That humanness becomes essential. What I find is some of the more risk averse organizations and executives need to develop the agility with respect to innovation, to be able to get to the point where they have to focus on maintaining the humanness.

[00:22:20] So some don't have the agility within the organizations to take advantage of this opportunity. 

[00:22:27] Steve Wunker: That's right. So you start by understanding, are you monitoring the trends? Do you really understand the potential of the technology? Are you thinking 360 about the different ways that you can deploy this? Not just chatbots, right?

[00:22:41] But fundamentally rethinking major aspects of your business. And then do you have the mechanisms to go experiment at this rapidly? , most organizations are awful at experimentation. It gets worse as you get bigger, but it can be pretty bad as you're smaller too.

[00:22:58] AI is going to require rapid, continuous experimentation. So that is a discipline that has to be learned pretty quickly. 

[00:23:08] Mahan Tavakoli: When you develop those capabilities, those skills, those cultural elements, then as the technology changes, as these transformations come, you're more able to adjust accordingly.

[00:23:21] It's a little bit like. My daughter, Steve is really into volleyball and lots of girls from different sports transition to volleyball, but there are some from other sports that do extremely well because they developed the agility and some of the strength that also transfers well to volleyball.

[00:23:43] So that agility and the strength transfers across sports, the environment we're going to. We are going to need to develop some of the capabilities you talk about with respect to innovation because we need to be more innovative regardless of the technology or the transformation

[00:24:02] Steve Wunker: for sure. , Roger Federer started tennis when he was a teenager, he had been an athlete in many sports, and he credited that multidisciplinary upbringing partly to why he was so great at tennis. We need to be T shaped, both as companies and as individuals. We need to be really good at least one thing, but then there needs to be a broad array of things that you're at least alright at.

[00:24:28] Because they actually make you better in your power alley, and they make you more flexible as the world changes, to reconsider what the power alley really is. 

[00:24:37] Mahan Tavakoli: I love that T shape analogy. I can visualize it. Now you share a lot of cases in the book. There's also extended case, ABC in practice with Princess Cruises.

[00:24:49] Would love for you to share some thoughts, of how they've actually put some of these thoughts in practice. 

[00:24:57] Steve Wunker: Let's talk about Princess, actually, in the crisis of COVID. Because I think this shows how these systems work not just in creating new products, but in dealing with unforeseen events.

[00:25:12] When COVID hit, three of Princess's 20 ships were struck by outbreaks. And authorities won't let them dock because they were afraid of the disease coming into their countries. The ships were literally stranded at sea. People were terrified. Industry analysts thought there wasn't any future for cruising and people were literally dying.

[00:25:32] It was incredibly unrelentingly bleak. So what did the leader of Princess Cruises, Jan Swartz, what did a role model of leadership by getting out of her headquarters in Los Angeles and going to the front lines of the outbreak in Asia. She set clear aspirations which were to keep people as safe as possible and to ensure that everybody, passengers and crew, felt cared for.

[00:25:58] She built systems for rapid, continuous, quick response. Coordination, communication to manage the outbreak as they could. And critically, she leaned heavily on culture. She knew that she could never direct events on 20 ships, literally in the middle of the ocean. And so she relied on shared values.

[00:26:17] , she told me everybody had to make decisions on the fly, but they all knew what our true north was because we had articulated our core values incessantly. So that's ABC in action. It's not just for the glitzy new innovations and princesses certainly had those two, but it's for the bad times and how do you manage that as well.

[00:26:38] Mahan Tavakoli: It's a powerful example because we don't know what's ahead with the different transformations can project. necessarily, but we can have the innovative mindset, the culture and what it takes to survive and thrive through it. So as the podcast listeners are listening to this, Steve, what is one thing you would encourage them to do that will help make them a more innovative leader? I don't want to minimize it to just one thing, but what is a first step? 

[00:27:13] Steve Wunker: I will give you one word to minimize it to, and that one word is why. Ask why all the time, like Leonardo da Vinci did. Why do our customers believe that?

[00:27:22] Why do we think the industry is moving in this direction? Why do we have this internal process the way it is? People should think about some of the greatest innovators they know who are actually not famous because they're little kids. Little kids are figuring things out for the very first time.

[00:27:40] They're innovating every day. And what do they do? They ask why. It drives us crazy. Why? Until we train it out of them. But they do it because it works. So rather than just focusing on teaching the kids all the time, let's learn from them too and ask why. 

[00:27:55] Mahan Tavakoli:  I love that, Steve. Just this morning, I was with a client.

[00:27:59] I'm not as familiar with their industry and they are planning on A marketing strategy that they're spending a lot of time and effort on not being as familiar, I asked why, and the main answer in the room was Because that's what everyone in the industry does as opposed to real rationale.

[00:28:22] So sometimes asking that why by itself can help us get to more innovative thoughts.. In addition to your book, Steve, are there Other resources that you typically recommend to executives as they want to lead their organizations through transformation and become more innovative? 

[00:28:43] Steve Wunker: There are so many great ones. I find that Clay Christensen's book, The Innovator's Solution, is really great at telling you what you can do in these situations. His first book, The Innovator's Dilemma was the most famous, but it lays out the problem. It doesn't tell you the solution. The innovator solution is super useful.

[00:29:03] Who says elephants can't dance Rosabeth Moss Kander. It's a great book. I took a course with her business school and I've always loved her writings. That's more about change management. Reading the in depth stories of how people led fundamental change can be so useful. There's an old book by the ex CEO of Continental Airlines, which became part of the United, called From Worst to First, It's a great book about how he engineered a complete turnaround, not just in operations, but in the whole culture of the institution.

[00:29:38] I love books that have a story, but are also just detailed. They're not some polemic. They say, here's what I specifically did. There's a lot of cross applicability there. What 

[00:29:49] Mahan Tavakoli: great recommendations. And I would say that. Yours is also a must read.

[00:29:56] , Steve, where can the audience find out more about your book, follow your work and connect with you.

[00:30:03] Steve Wunker: The book's website is innovative leader book. com. And my company is new markets with an S advisors com and happy to welcome LinkedIn connections at Steven with a pH one curve, W U N K E R. We provide a lot of content twice a month. We have new pieces of content. So if people want to see what we're up to, LinkedIn is a great way to connect and find out.

[00:30:28] More about what we're doing. 

[00:30:31] Mahan Tavakoli: Outstanding. I just recently connected with you and I've been going over the content that you've posted. And again, with the book, there is the innovative leader toolkit, diagnostic surveys. So a lot that can take. conceptual ideas shared with frameworks and great case studies and help transfer that value and those insights to the individual leaders, their teams and organizations.

[00:30:58] Thank you so much for this conversation, Steve Wunker. 

[00:31:01] Steve Wunker: Oh, my pleasure to be here. Thank you.