In this episode, authors  Safi Bahcall and Hugh Molotsi discuss intrapreneurship and how companies should deal with crazy employee ideas that just might work. Bahcall also explains how the secrets of innovation can be unlocked by a glass of water, and Molotsi compares life at a startup to the culture at a big companies. To get best practices from other innovators, watch other videos from our Impact main stage.

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Transcript

[THEME MUSIC]

Kaitlin Milliken: Hey! You’re listening to Innovation Answered, the podcast for corporate innovators. I’m Kaitlin Milliken from Innovation Leader. We’re in between seasons right now. But we’ll be back officially this spring. Until then, we’ve got a quick bonus episode for you.

Today we’re focusing on moonshots — ideas that seem crazy, but just might work. These projects have the potential to reshape industries, but they also have a high probability of getting mired in meetings, or stuck on the shelf. How can companies embrace risky yet remarkable ideas, and make them a reality?

Innovation Leader’s CEO Scott Kirsner sat down with authors Hugh Molotsi and Safi Bahcall to find out. Hugh is the former Vice President of Intuit and the current CEO of Ujama, a startup that helps parents pool their resources. Safi is the former CEO of Synta Pharmaceuticals. His most recent book — Loonshots: How to Nurture the Crazy Ideas That Win Wars, Cure Diseases, and Transform Industries — was released last year.

We recorded the conversation on our main stage at our 2019 Impact event in San Francisco.

[CLAPPING]

Scott Kirsner: So the reason that we’ve called this session loonshots and entrepreneurship is there two books that both came out this year. One is called, The Intrapreneur’s Journey that Hugh wrote with a former colleague, Jeff Zias, who was leading a session earlier today. And Safi’s book is called Loonshots. The book was mentioned just last month as one of Bill Gates’ recent favorite books. … That’s like the nerd version of Oprah’s book club. I guess. When Bill Gates is carrying your book around in a tote.

Safi Bahcall: First, thanks for having me here. And thanks for inviting me. We’ve known each other for many, many years. I used to go to conferences you organized 15 years ago. So first, I’m delighted to be here. About 18 years ago, I started a biotech company to develop new drugs for treating cancer. Not long afterwards, my father got diagnosed with a rare type of leukemia, and I figured, “Oh, now I’m in the field, I can do something about this. I have access to all the latest science and technology and drugs.” But unfortunately, nothing I could do made any difference, and he died Not long afterwards. And over the years, as our company grew, everywhere, I looked inside big companies, small startups, there were promising ideas trapped inside the basements of those organizations that could have helped my father.

Not because any of the people involved are bad people. Everyone wants to go back home to their loved ones and say I’m making a difference, but because of something strange that happens when people come together into a group. All of which boils down to one mystery: Why is it that good teams, with the best intentions and excellent people, will kill great ideas? Why do good teams kill great ideas?

If you look over the course of science, business, or history, you find that pattern over and over and over. At Nokia, for example, in 2004 they were the top of the planet, making one out of every two smartphones on the planet — a far greater market share than Apple has today. And a small team of engineers comes up with this crazy idea. Let’s make a phone with a big beautiful touchscreen. Put an amazing camera. And here’s another crazy idea: Let’s do these things called applications. They’re going to be in the cloud. You can download them onto your phone. You’ll pay for them, and everybody can customize… The same group that transformed Nokia from this boring conglomerate that was famous for toilet paper and rubber boots, which is what they were known for, into the leading technology company in the world, shut down those ideas.

And that small team of engineers three years later watched from a distance as their ideas came to life a few blocks from here on a stage in San Francisco when Steve Jobs unveiled the iPhone. Nokia at the time was worth about $300 billion, a leading company in Europe. A few years later it was irrelevant. Then, it was sold for $13 billion to Microsoft, the loss of a quarter trillion dollars.

Why do good teams kill great ideas? And you need to answer that question first. That’s what prevented Blockbuster from becoming Netflix. That’s what prevented Nokia from developing that awesome smartphone. That’s what prevented all these things. So to answer that question, all you need to do is look inside a glass of water. And that’s what I do in this book. I explained how understanding what happens inside a glass of water — an idea from physics can help us understand how the Allies won the second World War, how the US led the world and science and technology ever since. It gives us a new way to think about why good teams will kill great ideas, and more importantly, what you can do to turn that around. And that’s a very different angle. So maybe we will talk about that later. Maybe not, but I just wanted to set it up.

Scott Kirsner: Do you want to ask why? Because there’s a glass of water right here. Coincidentally.

Safi Bahcall: Total coincidence.

Scott Kirsner: Yeah.

Safi Bahcall: Not planned at all.

Scott Kirsner: Give us a little more on the glass of water idea, Safi. And then I want to throw maybe that same question to Hugh also.

Safi Bahcall: When I stick my finger in here, I can swirl it around. Molecules just slosh around my finger. That’s always true for every liquid in the case of water, except when I lower the temperature at 32 Fahrenheit. Boom, the behavior of those molecules suddenly changes. I can’t stick my finger in anymore. The water suddenly freezes. What was sloshing around becomes completely rigid. Why? The molecules inside are exactly the same, so how did they know to suddenly change behavior? There’s no CEO molecule there saying, “Oh, it’s 33 Fahrenheit everybody slosh around be loosey goosey. Nope. Wait, wait, wait. It’s 31 [degrees]. Everybody line up and be rigid. Oh, no, no, no, wait, it’s 33 [degrees].” They just do it.

So it’s understanding the answer to that question that gives us a new way to think about why companies suddenly change why they go from being wildly innovative, embracing wild new ideas to rigidly rejecting them. No matter what the CEO says. No matter what he’s pounding the table. “Kumbaya everybody, let’s hold hands and watch two-hour movies about brotherhood. Culture, culture, culture.” They’ll freeze and become rigid. And they’ll start shooting down new ideas. And the way it works is you can think of culture — there’s all this stuff about culture, culture, culture, blah, blah, blah — as the patterns of behavior you see on the surface.

Molecules are sloshing around, or they’re totally rigid. You can think of structure as

what’s underneath that’s driving those patterns of behavior. And it’s small changes in structure, like temperature in the glass of water, that can transform that behavior.

You have an innovative culture. You have a political culture. If you reward rank and hierarchy, you will get a political culture. If you celebrate intelligent risk taking and ideas, you will get an innovative culture, and there are ways to transform that. And the reason it’s so important, is that no amount of this sort of singing Kumbaya is going to transform culture, just like no amount of yelling at a block of ice — “Hey, molecules, could you loosen up a little bit?” — is going to melt that block of ice. But a small change in temperature can get that job done.

So the answer to your question is once we understand those forces, and those two forces that are work, a tug of war between two forces that’s responsible for every phase transition in nature. Once you understand what are those two forces inside companies, you can begin to manage them and design more innovative teams and companies. Then you can get

Big companies have enormous advantages over small companies, if they can understand those aspects of structure and liberate those ideas that are trapped inside basements.

Scott Kirsner: All right, there’s a lot to come back to there. Hugh, I want to ask, was that one of the things that was happening… Intuit was one of these companies that had gotten to be a couple decades old, probably had gotten some level of bureaucracy and that 32 degrees and lower issue that Safi was talking about. Was that why you started to try to foster intrapreneurship and unlock some of the employee ideas?

Hugh Molotsi: Yeah, definitely. I mean, I’ll start off by saying, I don’t have a colorful metaphor the same way Safi has and probably that’s why his book is being read by Bill Gates and mine is not, but

Scott Krisner: There’s always next month, you know.

Hugh Molotsi: That’s right. That’s right.

Scott Krisner: He reads a lot.

Hugh Molotsi: What I will say is we do come at the very same idea maybe from a different place. The way we think about our provocative statement, which is maybe not so provocative, is that the biggest underutilized asset in most companies are the ideas in their employees heads. And so why do we say that? Well, it’s because if you think about a typical company, a frontline employee spends most of their time working on products or helping serve customers. So they’re bombarded with insights on how to serve customers better, how to improve products. But they’re typically not the ones making those decisions.

Where are those decisions made? Typically, in a typical company, and made by senior executives, now think about how they spend most of their day in meetings with other senior executives, right? So they don’t have that same access to insights, and yet they’re making the decisions. And so in the book, we call that the insight/decision divide. And that’s why over time, these large companies start to make fewer and fewer good decisions. And so for us, we say the key to and to unlocking all these great assets is really around autonomy. How do you use the word liberate? How do you say, “Look, let’s allow employees to passionately pursue these great ideas that they have. And let’s take away this whole notion of there are these executives who supposedly have this wisdom to choose what’s a good idea or a bad idea?”

Because, again ironically part of what happens as we move up in a corporation and we become more senior in the corporation. It really is a representation of how much we have excelled in acquiring conventional wisdom. And so almost by definition, we’re going to be the ones who are least equipped in recognizing what’s truly disruptive, what’s going to be great, in terms of taking the company to a next level.

Scott Kirsener: Yeah. I think probably most people in this room have been in the meeting where the senior executive is relating a customer insight from like, 25 years ago, right? “This is why this isn’t gonna work because back in ‘86, I talked to a customer who said…”

Hugh Molotsi: Yeah, an example I like to give because I consider myself a very open minded guy, very innovative guy, and I know where good ideas are. Well, you may not know that, before he became the CEO and started Snapchat, Evan was actually an intern at Intuit. Cery smart guy. He had the the wherewithal to go to Scott Cook and pitch him his idea…

Scott Kirsner: And Scott Cook was the CEO…chairman…

Hugh Molotsi: Founder, and he still is. Today, he’s still active at Intuit. Now, stunningly, Scott actually did invest in his company, but I actually thought at the time, it’ probably the worst idea I’ve ever heard. It’s like, “I’m going to build a company where you send a message and it disappears after 30 seconds?” And it’s like, “Okay, and then what?” And it gets worse when you start to figure out, “Okay, why do people want to send pictures that disappear?” And excuse my french, but it’s like, “It’s the dick pic app.”

[CROWD LAUGHS]

Hugh Molotsi: So I was just like, “It’s a terrible idea is horrible, it’s stupid.” Well, here you have snapped today. It has achieved a pretty good level of success. So the point being that even someone like myself who was involved in innovation, has helped create lots of new ideas, lots of things. I myself am not a millennial. I am not necessarily seeing things in a way that other folks who are living in a different way are. And I think what it comes down [to] in our book and what we prescribe is it’s about freedom. Give employees time and freedom to work on the ideas that they’re passionate about. Remove this notion of management, trying to be the arbiters of what they think is good.

Scott Kirsener: So just one follow up, and then we’ll go back to Safi. In a concrete way, what does freedom mean? Like, what is it? Google has the legendary 20 percent time, which probably doesn’t exist. How did you create freedom and give people the time and resources in a concrete way?

Hugh Molotsi: Yeah, the Google 20 percent time, I think it gets a lot of bad press. As far as I know, it still exists. I know it’s a challenge for companies to make these autonomous time programs work and work in a sustainable way. And that’s one of the topics we talk about quite at length in the book is how to do that, right. 3M is credited with really being the first company to come up with a structured program like that. They have a 15 percent time program. Intuit has a similar program. But really what I tell people, the notion of whether it’s 10 percent, 15 percent, 20 percent, is not as important as more the signaling to employees that, “Yes, you have the freedom to go and work on things. And if your manager’s giving you a hard time, you at least have something to lean on and say, Look, no other company wants me to do this.”

That’s really what’s important. And yes, it’s true that we all get very busy with our day job, our assigned work. But I think that’s where, you can have leadership, build programs and structures. So that may not be every day may not be every month. But there are times and places where people can go to say, “Look, I really want to deeply explore an idea.” And of course, a big part of what we talk about is experimentation. Because ultimately, what you want people to do is to explore the idea in a way where they will really discover, “Okay, this is going to work, this has a chance of working or not.” And it’s really, if you can turn it into a true meritocracy of ideas, I feel like you’re on the right path to building a truly productive culture of innovation.

Scott Kirsner: Question for you [Safi,] and then and then maybe you have a thought on this, Hugh. But you built a startup from one person to a couple hundred people, right? What would you observe is the difference in the culture of a startup versus the culture of these bigger companies that you’ve studied and that you’ve interacted with? There’s a lot there, but what are some of the things you’ve observed?

Safi Bahcall: It’s a fascinating question, because they go through that phase. So I’ve been called, I get the same call now, all the time. I have to say this has been just an amazing kind of month or two. I, you know, I spent a couple hours on a nuclear submarine with the admiral who’s responsible for transforming the Navy for the 21st century. I’ve been up on a stage at Viacom getting a selfie with Martha Stewart. I was here, in front of 2000 people at the Masonic Temple. It’s just a wild… And at all of these places where I get these calls, it’s the same question, two flavors, and it comes back to one of the examples that you mentioned.

The question is, how do we balance the core and the new? How do we balance the core and the new? Now, two flavors there. When I’m talking to, let’s say, a Goldman Sachs or a Fidelity or companies have been around for a long time, it’s, “Well, our core has been around for a long time. And we’re sort of feeling like we’re going like this. So how do we balance, not taking our eyes off the ball and the core, but still grow the new?”

Then I get calls from folks like, some of them I actually can’t say the name. But let’s say the Spotify guys I can say or some of these tech companies that have gone from five people to 5000 people. And it’s the same guy who was a young CEO. And it’s, “Okay, when we were five people, we were all new. And I did a great job of incubating these early ideas and focusing on execution and operational excellence. But now I can feel it hardening. So how do we balance the core and the new?”

In one case, they’re going like this and they want to get ahead of the curve, in the other case you’re going down like this. And the problem comes down to this: Inside every organization, you have to do both. You need to do both in the case of this glass of water as an analogy, but actually underlying that if you look at the incentives inside employees, that’s where you’ll see the phase transition. You can write down the equation and you see that a certain size, the incentives on every individual employee inside the organization, shift from favoring project work, equity, to salary to cash to promotion. You shift from project to politics, and that’s a phase transition from innovative to career. And that’s when people start moving from being able to nurture loonshots these crazy ideas that everybody writes off as nuts — like Evan’s early idea, or Airbnb or Uber all those early ideas that abrasiveness, “there’s no way that could work” — to how do we make the 27 iPhone, the 56 James Bond movie.

And then someone walks in the door by I’ve got this idea for a new movie. It’s really big turtles who carry swords and eat a lot of pizza. “Oh, that’s the stupidest thing I’ve ever heard. Get out of my office.” Well, of course that became Teenage Mutant Ninja Turtles a multi-billion dollar franchise. So how do you balance the core and the new because you need both. You need to deliver on your core business on time, on budget, on spec consistently to customers. And you need to encourage the new and the problem is a system can’t be in two phases at the same time. A glass of water can’t be solid and liquid. So there’s one answer to that. And that is right at the cusp of a phase transition. Right at 32 Fahrenheit. You get a delicate balance. You get separation between blocks of ice and pools of liquid. You get dynamic equilibrium going back and forth, and neither side dominates the other.

The reason that’s so challenging is if the artists on the one side the creators who are coming up with new ideas, this is to kind of to your point, they are trying to maximize risk. You’re trying to try ten things, nine of which won’t work. The one that does work changes how we see the world. Is a revolution in our industry.

Now, imagine going to the soldiers who are responsible for on time on budget on spec. Let’s say you really are a soldier. The word risk is a terrible word. You think these groups are speaking the same language, but they’re not because that one word, that English word, four letters, means totally opposite things. To one group it’s a great thing. To the other, if you’re a soldier and going to high risk battlefield, that’s a terrible thing. You want to minimize risk.

Imagine you’re a solider, your job is to manufacture plans, and say, “Here’s my strategy, I’m gonna put 10 planes in the sky. Let’s see which nine fall down.” Totally opposite things. Totally opposite languages. The group that makes the money rarely likes the group that spends the money and vice versa. They don’t like each other. They don’t understand each other.

It comes down to a beautiful baby problem, and then I’ll wrap it up. The beautiful baby problem is this. I usually show pictures of my beautiful babies when I do this. The beautiful baby problem is this. The artists, the designers, the creators, the programmers, the biologists in the lab, the chemists making new molecules, they see their creations as beautiful babies. The soldiers see a shriveled up raisins covered in vomit and poop. And that’s the core of the problem.

Beautiful babies vomit and poop. Beautiful babies vomit and poop. And that’s the challenge of the leader. Once you understand that, that is good. That is exactly what you want. All these people say, “Everybody innovate.” That’s wrong. You want one group maximizing risk. You want the other group minimizing risk. You want that conflict. You want that tension. You want the artists trying 10 crazy things because if they’re not your competitor is and then you’ll discover that surprising thing that you thought could never happen when it’s a bullet coming to your head.

So you want them trying all this stuff that you think is idiotic and will never work. The 30 second — I’m not gonna use the word you used — the 30 second crazy snap or the Airbnb or whatever.

And you want the soldiers seeing the vomit poop. “Okay, well, let’s de risk it.” And you need them working together. And so there’s a series of tricks and techniques and tactics, about how to get those artists and soldiers working together. How do you get the benefit of the beautiful babies and the vomit poop? And that’s kind of the crux of it.

Scott Kirsner: Thanks for giving us all these visuals. I think your next book does need to be called, Changing the Innovation Diaper. Let’s just go with it.

[CROWD LAUGHS]

Safi Bahcall: Let’s write that one together.

Scott Kirnser: We have a bunch of copies of Safi’s book. We gave up copies of your book earlier today, Hugh, and so they’re in short supply. I would ask you, what was the biggest thing you noticed going from Intuit this publicly traded you know 10+ thousand person company to your own startup. What felt different? Were there some things that you felt? Did you just feel totally free like, “Hey, I can just experiment all day long.” And also you should kind of give us the quick, “What is your startup Ujama do?”

Hugh Molotsi: Okay. Thanks for asking. I’ll start with what Ujama is. So we’re building a platform where parents can meet other parents so they can help each other with their kids. So this is with things like sharing rides, playdates, and babysitting. And really the motivation for it is that parenting today is much more difficult than it was for my parents generation and generations before. Because so many of us live far away from where we grew up, we don’t have extended family support. And even the way we raise kids is also very different. When I was a kid running around, my parents often didn’t know where I was between when school ended and dinnertime. There were no cell phones to track you down. But that wasn’t unusual. That’s how it was for all the kids. Were just out there in the world.

But my kids, I have two daughters, I know where they are. And I know where they are pretty much every minute of every day of their lives. But that also represents an additional burden that we have. And so parents, especially if you’re two working parents or a single parent, just have a huge challenge trying to deal with the logistics of having kids. But the big missed opportunity, of course, is that we are a community, and we could be helping each other. You see it, if you go to a school and pick up a drop off time, where there’s congestion, and parents are stressed out and trying to rush through. But almost every single car has empty seats. And so that’s just a representation of what we’re trying to make really easy. Let’s create a useful social network where people can help each other. So that’s Ujama.

And I think regarding what’s different. I think part of it is you don’t know what you have until it’s gone. There are just a ton of advantages. Being at Intuit and I could knock on the door that

crazy idea and say, “Hey, I’m from Intuit.” And I’d be more likely for people to say, “Okay, I want to hear what you have to say,” versus this weird Ujama thing which people can’t pronounce. You get a very different kind of response.

So there are definitely pros and cons definitely much freer. Clearly, I don’t have the issue of “I’ve got these golden handcuffs because I’ve got this big business that I’ve got to keep going.” So all in, in terms of trying to make the startup work. But you know, on the other hand, just a lot of resources that we don’t have, either.

But at the end of the day, I think one of the things I valued about my 22 years at Intuit is that it did have a culture of innovation. We did get a lot of opportunity to do some things that were pretty crazy. And the company gave us some amount of rope to go and try it. So in that sense, I feel like it’s a very entrepreneurial culture. So it’s not that different than what I’m having to deal with now.

Scott Kirsner: Please give a warm round of applause to Hugh Molotsi and Safi Bahcall.

[CLAPPING]

[ACKNOWLEDGEMENTS]

Kaitlin Milliken: Thanks for joining us! I’m Kaitlin Milliken. This episode was written and edited by Molli DeRosa. If you liked this show, be sure to subscribe to Innovation Answered wherever you get your podcasts. For more informational nuggets, visit our website at innovationleader.com. You can also learn more about our 2020 Impact gathering, happening in Boston at innovationleader.com/impact2020. Stay tuned for our fourth season starting in May. Thanks for listening, and we’ll see you next time!