Nancy Shea has been a senior innovation and marketing executive at both consumer products and business-to-business companies such as Kraft Foods, World Kitchen and, most recently, the $7.8 billion specialty chemical company Ashland, Inc. She wrote this piece exclusively for InnoLead after we asked her this question: How can innovation executives build a constructive working relationship with their CEOs?
“You really have to be careful what you wish for when you talk about getting your CEO involved with innovation,” Shea says. “Often, a CEO wants results now, now, now. And you need to get them to think about the risks you are taking, the long-term nature of what you are working on. It’s not the same thing managing a business unit.”
Here’s her advice.
As I think about the success of the innovation portfolios I have led, I always come to back who supported the programs. The best innovation programs truly had a vested partner in the CEO or President’s office. Here’s my 10-point plan for making sure that you have the support from the uppermost reaches of your company — and why it is so crucial.
1. Understand the context that your CEO/President is working within when they say they want “innovation.”
Most of the Presidents and CEOs for whom I’ve worked do not have much experience with leading or developing an innovation program. Their mindset is more operational and business-oriented. That means, “Set the goal, achieve the goal as quickly as you can, and make money fast.” This approach can work for most close-in line extensions, but it will not work for the most transformative innovation programs. You need to talk about their experience with innovation, the types of new products they are most comfortable with, and if they understand the value of an “innovation portfolio” that includes both quick projects and longer-term disruptive projects. Some CEOs just do not want to invest in the longer-term projects. You need to know this upfront, and be clear with the CEO about the implications and value of a portfolio that consists only of short-term line extensions.
2. Together, define the purpose and financial goals for the five-year innovation portfolio.
I recommend a five-year planning cycle for innovation portfolios. This longer planning cycle is a better timeframe for developing the longer-term, disruptive new ideas, and it points to the level of investment required for this type of initiative. I also recommend that you walk the CEO through the financial recap of the portfolio on a monthly basis, to show your projects moving through the pipeline and hitting annual launch goals. Quarterly, show the progress and key learning on the “big ideas” (longer-term projects), so you are keeping front and center the key challenges those projects face. (It’s never a good idea to wait to do reviews only when something has gone astray.)
Ideally, after this, your CEO should communicate her confidence and enthusiasm for the key projects to the rest of the leadership team and to the organization.
3. Spell out the roles and support required from senior business leaders and execute the plan.
The CEO should align her business leaders to support the innovation group’s financial goals and build accountability into the system. Without the support and accountability of the leadership team, especially sales and R&D, you do not have an attainable plan. The CEO can make a really strong support statement for innovation by reassigning a top-performing business leader to work in the innovation group. This shows top-level support, but also lends the business leader experience in innovation that will help him as he moves up the ranks.
4. Understand how the CEO wants to communicate the role of innovation and the annual financial goals to Wall Street.
This will help you develop the right communication points that accurately describe your five-year innovation plan in a manner that’s compelling to investors, and not just for internal audiences. This also helps the CEO think through the different types of innovation in the portfolio, and why each is important to the business’ success in the near- and long-term. It also helps the CEO invest in your talent and other resource requirements for the long-term, because the projects have been discussed at the public level and everyone is now committed to moving them forward.
In today’s investing world, especially when activist investors get involved, short-term gains often seem to overshadow more ambitious long-term plans. So without the proper support for your longer-term projects communicated to the Street, you are putting that portion of your portfolio at risk. Plus, it makes it more difficult for your CEO to support them and feel comfortable with the risk associated with these longer-term projects.
Your goal is to supply sufficient data and talking points for your entire innovation portfolio so that your CEO can support and promote the innovation pipeline, the resources required, and future capital investments.
5. Start the discussion about what type of culture it will take to achieve your innovation goals.
A robust innovation portfolio cannot be achieved without the whole organization supporting it. Why? Because every level of the organization will and should have a role to play in innovation, from the sales team working with customers and delivering new solutions to the supply chain and regulatory teams, to the plant engineers and production leaders bringing new products into being. A culture of innovation makes all sorts of great things possible, and the leadership team needs to create the right incentives and bulldoze bureaucratic structures that inhibit innovation. It’s important to be honest about how work gets done now, versus what you really need to be more innovative. The CEO needs to lead this effort, and not leave it up to distinct functions to try to “cheerlead” for cultural change.
6. Define what you expect the CEO to do for the innovation plan, and agree to the role you want the CEO to play and the time required of her.
I mentioned above discussing the innovation portfolio at least quarterly and the financials monthly with the CEO (this can be part of the monthly financial reviews of the business). In addition to the plan reviews, the CEO needs to be visible and involved in the front end of innovation discussions on a regular basis for all types of innovation. But the majority of the CEO’s time should be spent on the disruptive innovation projects, so she can understand the assumptions the teams are making and coach them on key risk or data points she wants clarified further. Quarterly reviews, or reviews when the teams have significant new information, work well.
The time the CEO spends understanding projects in the early stages is vital. It typically means the best projects move forward in the innovation process, and that the assumptions around them meet the CEO’s threshold for risk.
7. Coach the CEO on how to interact with your innovation teams.
Many CEOs and senior executives simply want to approve or make decisions. But the most successful innovation teams, in my experience, benefit from a more consultative relationship with the CEO — it is about sharing and having a “safe” venue to discuss new information that may change the direction of the project.
Some CEOs are comfortable in this “consulting” role, while others seem to want to make decisions even if the team is not ready. It’s up to you to help set up the objective of the project reviews, and to do this prior to the meeting with the team. There is nothing worse than a CEO taking charge of these meetings, deciding the fate of your project, and leaving your team feeling like it has been hijacked.
If at any point you begin to sense a lack of coordination or communication with the CEO, it is very important that you as the leader set up separate time to discuss what you are observing with the team and the CEO. You need your team to feel heard, and that you are capable of presenting their point-of-view to the CEO. And you need to listen to what the CEO would like done differently. The CEO is balancing what needs to get done for the short- and long-term goals, and she needs to know you understand the bigger picture. Your team needs to also understand the bigger picture and how their work “fits into” the overall business results. You need to motivate your team while you build trust with the CEO that you all have the bigger picture in mind.
8. Be totally transparent and be ready for tough decisions.
When interacting with CEOs and Presidents, you need to be transparent with the data, and fully disclose the amount of risk projects face. Since you’ve spelled out the impact that more or less investment in your innovation portfolio will have, if you’re faced with cost-cutting or other challenges related to the macro business environment, the leadership may choose to reduce or eliminate innovation investment — but they now understand the implications this will have on achieving their annual financial targets. On the upside, you may find increased investment, because they urgently feel the need for the revenue.
9. Help the CEO understand and act on disruptive market trends, because the consequences are huge.
A key role for CEO is to not only understand the market trends but to select the ones that could significantly disrupt the business. Each year, the CEO should make sure that the innovation and business unit leaders are aware and working on these disruptive market trends. The CEO should encourage discussion and ideas about what the trends will mean to the business, and help highlight and shepherd along solutions from all levels of the organization. The CEO should be supporting, if not driving, the innovation challenges that the teams will working on.
Just a few examples of missing disruptive trends: General Mills didn’t see the Greek yogurt trend coming, or did not act in a timely manner, and now it is playing catch-up. Microsoft missed the tablet trend, and the company is now well behind Apple and Samsung.
10. Work together to create an environment where experiments, learning, and failure are discussed and celebrated.
Most CEO’s just want to hear about forward progress, but I have found the CEOs who discuss with the innovation teams what didn’t work — and what the team learned from each situation — help the teams develop a more nuanced understanding of risk and reward. The CEO should expect everyone to share what they’ve learned, and create an environment where it is “safe” to do so.
You already understand that managing innovation is very different from managing an operating business. Businesses are charged with consistently producing the financial goals and maintaining solid relationships with customers. Innovation is responsible for taking the business to where it wants to go. Managing each effectively requires different mindsets, talents, and the full commitment of your senior leadership team – especially your CEO.
What else have you learned about creating productive working relationships with the CEO, COO, or President? Post a comment below…