Lessons on Running Cisco’s First Company-Wide Idea Challenge

June 3, 2016

The latest call in our InnoLead Live series featured Alex Goryachev, Director of Innovation Strategy and Programs within the Corporate Strategic Innovation Group at Cisco Systems, the $50 billion networking giant based in San Jose, Calif.

Goryachev shared some of the lessons from Cisco’s recent Innovate Everywhere Challenge, which was designed to ignite a culture of entrepreneurship among Cisco employees. Some stats about the challenge: more than 38,000 Cisco employees (nearly 55 percent of the workforce) logged into and engaged in the competition…more than 1,100 teams and individuals from all seven functions within Cisco submitted venture ideas…and nearly 46,000 votes were cast. Three winning ideas emerged from the competition, and those are now being further developed. (Download a Cisco white paper about the challenge here.)

During the conversation, Goryachev dioscussed:

  • What issues Cisco was trying to address with the challenge.
  • Who resisted the idea of the challenge, and who supported it?
  • The financial incentives and mechanics of getting thousands of Cisco employees to participate.
  • What’s the next step for the winning ideas (and some that weren’t among the top three winners)?
  • The importance of bringing in external judges to help evaluate challenge entries.
  • Why he initially opposed letting innovators interact with customers, but changed his mind.

On that last topic, Goryachev says, “I said, ‘Over my dead body a contestant would talk to a customer.’ I’m still alive, but frankly, I was very afraid of this.” But he eventually came to believe that “if you have no customer interaction, you really have no product. Only the customer knows what’s good and bad. By rapid prototyping with the customers, you can actually validate things pretty quickly, and pivot, or continue.”

Why Cisco Created the Innovate Everywhere Challenge

InnoLead: Cisco is one those companies in Silicon Valley that everyone thinks of as a pretty innovative place. Can you talk about the environment and the culture at Cisco before you started the Innovate Everywhere Challenge, and what you were trying to address?

Alex Goryachev: Sure. We’re an amazing company with 30 years’ history of innovation. It’s a phenomenal place to work. Obviously, as we age, as any company, we are getting older. As we get older, we’re certainly getting smarter and wiser, but we get slower as well.

There are a lot of people, over 70,000. At the same time, the industry is going through a rapid shift. Every day, we’re discovering new startups, new competitors. We’re challenged in every marketplace where we operate. I know our experience is probably not very different from other companies. The world is changing, and it’s changing overnight.

The new ideas, they’re rapidly coming from everywhere. The change is really exponential. …We wanted to make sure that we increase [our] speed, and we create a new culture of innovation.

There are a number of amazing innovation programs at Cisco…[but] they’re very siloed.We have programs for engineering that are best-in-class. We have engineering people that are innovating with engineering people, or we have things for marketing, where marketing people are talking to marketing people. All of those things are happening within either a given function, or a given geography.

You really don’t have a cross-pollination of ideas. …What we wanted to do is mix things up a little, and just think outside of our functions.

InnoLead: Let’s talk a little bit more about the thinking behind the Innovate Everywhere Challenge. Were there other things that you launched around that, or was that your big emphasis, on creating this challenge that would go across all those silos?

Goryachev: At Cisco, the challenges are part of a large initiative that’s called People Deal. People Deal is about listening to our employees, and helping them discover their true potential.

What we said was, it doesn’t really matter if you’re an intern or if you’re a director. Whatever your job function is, we really want to listen to you, and we want to learn about your ideas.

Focusing on Business-Related Ideas, Not Technology

The other thing is, we didn’t limit those ideas on technology. Being a tech company, we have a strong history of tech innovation. What we wanted to do is listen to business ideas. We’ve encouraged people to come up with new business models, [but there is] one catch: as long as it’s not something that they do during their day job at Cisco. If you’re a part of an emerging technologies team, and you work on a new product, that product would be ineligible for the challenge. Whatever is not on the road map is what we were looking to hear from people.

InnoLead: You didn’t give it any other filter, or any other focus, this first time around?

Goryachev: We tried to channel this to the company’s strategic priorities.

We tried to inspire people. We didn’t say, “Hey, give us your ideas about drones,” but we said, “There’s a lot of things that are going on with drones, or Bitcoin, or new technologies, or people that are noticing new business models, like subscription services, or paper consumption.”

We said, “Look at the key markets that are important — transportation or manufacturing, or education — and try to come up with ideas within those things,” but we didn’t really limit it to that.

If there [was] one thing that we purposely tried to emphasize, is let’s not focus purely on technology, but let’s focus on a business. We really tried to encourage people to come up with ventures.

InnoLead: Not just build a cool demo in their free time…

Goryachev: Right, because the demo has to sell. First of all, it has to actually meet a customer need. This is not an engineering contest. [It’s a] business challenge, where you have all the components from product development, engineering, marketing, finance, and everything else.

Incentives: Money and Paid Innovation Time

InnoLead: Talk a little bit about the incentives before we move on. What did you think would be the big motivators to get so many people participating in the Innovate Everywhere Challenge, and were you right about what was going to motivate people?

Goryachev: Frankly, I never really expected that so many people would participate. We were a bit blown away by that. The incentives were very simple. First of all, we really designed this as a grassroots effort.

We went to employees, and we listened to them, and we listened to what their challenges are.

We discovered [all] the innovation teams at Cisco — we have more than a dozen that are running their programs — and we worked with all of them to design one program that benefits every single function, and overlaps with them.

We came up with incentives in terms of dollars…where people get thousands of dollars if their idea goes forward. We’ve actually given them seed money to move their venture forward. Most importantly, in our day jobs, we have a lot of great ideas, but we don’t have time to put them forward.

One of the key things that we did is, if you win the challenge, you and your team get three months off, paid innovation time, to go and innovate, and focus on your ideas. That was the most important incentive.

InnoLead: There were three winners. Did everybody get the time off, or only the top winner got the time off?

Goryachev: There were three winners. All of them are getting time off, if they choose to. It’s certainly their choice. They get time off to focus on their ideas. They get lots of access to innovation centers, mentors, coaches, and money to make this happen.

InnoLead: Tell us the scale of the money that you’re talking about here.

Goryachev: The scale of the money is the winning team gets $25,000. That’s just in prize money. Think of it as just in addition to your payroll. Relative to investment, it’s $25,000 in seed money that they could use in any way that they want to. [And] there are certain projects that won the challenge, where the investment is far more superior than $25,000.

InnoLead: Alex, you have this saying,”Focus on the innovator, not the innovation.” Can you talk about what that means?

Goryachev: Sure. At the end of the day, everything comes down to people, not technology. It’s the people that create value. …Our goal was changing the mindset. It’s making sure that [employees] know that they don’t need a permission from anyone to innovate. They can innovate in their day jobs. They can act more like entrepreneurs.

…Roughly a third of all challenge ideas [submitted] were process improvements. If we would have focused on technology, we would have never gotten those ideas. If you empower people, they come back with ideas on how we avoid costs, or how we do things faster, and better.

The other thing is we focused on team building. We encouraged cross-functional teams. We’ve told people that, “Well, it’s great that they’re a bunch of engineers, but do you have a marketing person?” Or, “It’s great that they’re a bunch of finance people, but you probably need an engineer.” That’s what I mean by focusing on the innovator.

The Importance of Following Through

InnoLead: Every company has pockets of resistance — people who think, “Hey, my group is already pretty innovative, and we don’t need more innovation.” Is that something you had to address in getting this program off the ground?

Goryachev: Definitely. If there is change, there is resistance. You’ll always have that. It’s valid for any company, big and small. I

If I think about the key blocks…one thing is people are not aware. There are a lot of great things that are happening, but people are not aware about innovation programs….

The other one is there are a lot of lonely innovators in the company, but they’re not empowered. They actually don’t know anybody who cares about things, so they’re a bit demotivated.

[Then] you get into managers. Most of the managers were very supportive, but at the end of the day, they’re paid on managing scope. There was some resistance, because we were pushing their employees to work outside the scope. At certain points, that caused conflict.

The other one is, in any large company — and Cisco is no exception — in order to survive, to move forward, to be promoted, you have to win. With innovation, there comes failure. There’s a lot of resistance in the fact that we don’t celebrate risk-taking in the company.

We celebrate it, but nobody likes failure. The last thing, which is probably the most important one, is we’ve run innovation contests in the past, or people had ideas, but we didn’t necessarily follow-up with them.

It’s very important that if you do something, you actually follow through. We had some credibility issues that we needed to address.

What We Did with the Semi-Finalist Ideas

InnoLead: Let’s start taking some listener questions. George Stenitzer wants to know, what are you doing with the ideas that weren’t winners in the competition?

Goryachev: We had over a thousand ideas. Three were winners, and then we had 15 semi-finalists. We actually went to the semi-finalists, and we told them, “Look, if you have an executive sponsor, and if you come up with a plan,” we will match their funding.

We’ve actually offered funding to all of our semi-finalists. There are two goals. One is if you can find an executive sponsor, your project is going places. The second one is that we’ve actually discovered that some people don’t want to pursue their ideas, because they discovered that there’s no demand, or their technology should not be built, or they’re pivoting, and they’re building on top of that. We want to support that journey….

What we did with the semi-finalists is we actually went back to them, and we released the scores, and how the ideas were judged, and all the comments from judges.

They knew what their perceived strengths and weaknesses were. We’ve encouraged them to get together with judges, internal and external, so that they could hear about why their idea was not necessarily picked. That would allow them to develop their idea, and their personal strengths, too.

InnoLead: Next question is from Nicki Harada, who asks, “How does Cisco find the right business problems to solve?”

Goryachev: That’s a great question. By listening to customers. One of the things that we’ve really wanted to do here, and what we’ve learned from the industry and companies like Adobe is that if you don’t listen to the customer, and if you don’t connect the contestant with a customer, we’re not going to get far.

We’ve really encouraged all of our contestants to listen to customers, and for the semifinalists to get involved with them.

Letting Innovators Interact with Customers

InnoLead: When we’ve spoken before, you said initially, one of the things you resisted was letting the innovators talk to customers, and directly interact with customers.

Talk about why was that something that worried you, and what was it that changed your mind?

Goryachev: I said, “Over my dead body a contestant would talk to a customer.” I’m still alive, but frankly, I was very afraid of this. Again, working with Adobe, and other customers, and actually reaching out to the industry, and learning what they’re doing, it really changed my mind.

If you have no customer interaction, you really have no product. Only the customer knows what’s good and bad. By rapid prototyping with the customers, you can actually validate things pretty quickly, and pivot, or continue.

We’re doing a lot of that at our innovation centers, where we work with customers in a rapid prototyping mode.

InnoLead: Was it a specific person, though, or a specific moment that changed your mind about that?

Goryachev: It’s listening to what Adobe did with their Kickbox [innovation program, which InnoLead has covered previously], and just listening to the industry. We were pretty successful with that. Our contestants actually brought customers, or potential customers, to the final event.

It helped validate their products, and in certain cases, they talked to the customers, and they decided we shouldn’t be developing those products. It helped both ways.

Working Toward Sustainable Funding

InnoLead: We have a really good question here from Gennelle Wilson, who says that she’s part of a team at her company that works on fostering innovation by providing internal R&D funding to innovators with promising ideas.

She says the funding cycle at her company lasts for one fiscal year, and that she’s looking for ideas on how they can support innovation teams better so that at the end of the fiscal year, it doesn’t mean that their idea necessarily reaches its end.

She was looking for experience or advice bridging the gap, when one fiscal year’s funding runs out. She also asks about external sources of funding. I’m not sure if that’s something you’ve thought about. Do you spin an idea out as a separate startup, or a joint venture, where you could get outside funding from it?

Goryachev: I really sympathize with the question. To answer the first part, we are right at the end of the fiscal year at Cisco, and in the middle of fiscal planning. I completely understand. Unfortunately, we do have some ring-fenced funding, but still, it’s very difficult to see the light on what’s going to happen next fiscal year.

We’re pretty much in the same boat. It really comes down to communication. If your program, and if your contestants are well-evangelized across the company, and people know about it, and there is grassroots support, your company is not going to kill it.

For Cisco, half of our employee base participated in this. There is no way we’re going to kill it. The employee force is the lobbying force. To answer the second part of the question, we did invite some [venture capital] firms to participate on our jury.

That actually was the second idea I resisted, and I came to see the light. I know they talked to us about supporting some of the ideas, so there could be potential conversations there. My advice is yes, get the VCs involved in your judging panel.

InnoLead: Every company has that question about sustainable sources of funding, because everyone deals with the changes in priorities from one fiscal year to another. Certainly, projects that are very nascent, and may just have a little bit of revenue, or be pre-revenue can suffer the most, when priorities change.

Goryachev: Befriend your finance person — absolutely.

Getting Outsiders to Serve as Judges

InnoLead: You mentioned that you did invite some venture capitalists from outside of Cisco to come in and judge the ideas.

That’s something that has been really sensitive to a lot of companies that run these internal competitions and challenges, just because they just worry about the intellectual property, and do we want to share what’s going on, and what these people are developing with people from the outside world at this early stage?

How did you make that happen? You said you weren’t initially for it, but you felt like it would have some value.

Goryachev: I wasn’t initially for it, because I really never believed that our executives would have a candid conversation with third parties in front of a live audience, and broadcast it on Cisco TV. I was certainly wrong.

What helped me see the light is, much like with customers, we really don’t know everything [at] Cisco. It’s the outside world that knows things, together with us, as part of the ecosystem. The opportunity ahead of us is just so tremendous.

No single company can do this alone. In order for us to move forward, and build value, we have to get perspective from the outside world. Perhaps we can get an early start on the partnerships. What we did is baby steps.

…We brought in two external judges, and they were friendly to Cisco. One was an accelerator, and we’ve invested in them. We are an equity partner there. The second one was a venture fund that we do a lot of business with.

Both were very prominent. I must tell you, they really changed some of our voting as well, and they really helped us see the outside perspective.

Leveraging Partners to Design the Challenge

InnoLead: We have another listener question. You mentioned Adobe. To what extent did you rely on partners to design your innovation challenge?

Goryachev: We worked with Adobe, and we’ve leveraged Adobe Kickbox. We talked to a number of companies. We worked with a company called Liguori Innovation that helped us design parts of this. We worked with a company called Moves The Needle, that helped us build our training programs.

Most importantly, we’ve listened to a lot of companies, big and small, and how they’re doing their innovation programs, and the things that they learned, or learning. That really helped us a lot. I was actually amazed at how many people are willing to talk to their peers in other companies, and help shape the program.

InnoLead: That’s certainly a lot of what we do at InnoLead. It does surprise us when people are very generous, and it also doesn’t surprise us sometimes when people feel really sensitive about, “We think we’ve developed the unified field theory of innovation in our company,” and maybe they don’t want to let it out of the bottle.

Why Not Let Employees Crowdfund the Best Ideas?

InnoLead: I want to ask just one last question, which is what’s on your agenda next? What are you focused on in mid-2016?

Goryachev: …If you think about all the people that participated, the mentors, the coaches, we really have a community of people that want to invest their time in innovation.

Having our Chief People Officer, Fran Katsoudas, and our CEO, Chuck Robbins, as our passionate supporters, we will run probably a couple of these challenges every year. We’ll focus on big problems to solve, but we’re not going to stop at that.

We’re looking at how do we bring innovation spaces [into] our buildings — a place for people to play with not only 3D printers and technology, but to collaborate on new business models. How do we extend the [employees’] time off, and how we do figure out a crowdsourcing platform for people at Cisco to chip in their dollars, and crowdfund some of these ideas?

InnoLead: That’s an interesting idea. A business unit leader might be able to say, “Hey, that’s a potentially interesting idea to me. I want to put some money toward that”?

Goryachev: I’d love to find a way to give money to all of our 70,000 employees, and figure out a way that they could go and crowdfund the idea.

InnoLead: It wouldn’t just be the senior folks at a business unit, it could be anybody?

Goryachev: Right. What we’ve discovered is, again, senior folks know a lot, but they don’t know everything. It’s when you mix people up across grade levels and geographies, great ideas come up. That’s when they challenge each other.

InnoLead: That’s a great note to end on. We’ll look forward to hearing more about what you guys are up to at Cisco. I want to thank you, Alex, for joining us. You really covered a lot of material here. We really appreciate it.

Goryachev: Thanks for having me. It’s a pleasure.