Financial Landscape vs. Authority - Getting the money right for innovation investment

Have you ever worked with an external partner who has something great for your organization but asks for too much money to do the initial project together?  At this moment in an innovator's cycle you have three choices; you can take the price and try to get it funded, you can think their screwing you and reject the partnership or you can get strategic on the issue.  Most innovators have a never say die attitude in moments like this, but as with most efforts as a change agent, I believe you need a simple principle to handle every situation.  In this special case, I call it thinking about FINANCIAL LANDSCAPE VERSUS AUTHORITY.

What is financial landscape versus authority?

If your partner asks for some amount of money for a project, in most organizations there is a distinct financial authority someone has before they must ask their superior.  And if they have to ask their superior there is a chance that the "landscape" they can spend that money on widens.  As the landscape widens the odds of getting your idea funded diminish greatly.  So if your partner asks for say $250,000 to do a project, in most cases this level of funding will be taken on by a Vice President and when you get to this level stop and think about the number of choices that person could spend that money on.  Odds are their are so many you could be dead in the water, because most innovations are riskier investments than standard ones and unless that leader is special or you have major credibility it can be hard to get to yes.

How do you deal with this?

What is most important is to know what your internal partner's financial authority for spending is.  You want the amount you are asking for be within their authority AND to be something they want to do.  If you get the level of investment within those two parameters you will find a strong internal partner for doing the innovation experiment that can help your company win on the marketplace.

How do you deal with your external partner?

It is imperative that you deal openly and honestly about this issue as you negotiate pricing.  Do it collaboratively, don't do it positionally.  The greatest successes in innovation come from collaborative and trusting partnerships, not ones that are steeped in questions.  There is always time for tough questions, but it can often be less valuable than using trust and clarity.  In the case of financial landscape versus authority, simply telling your partner it won't get funded and exactly why is the best course to make it happen.  If they believe in you they will work with you, if they are merely interested in short term gains, they might walk away.  Better to find that early than after you start and learn the price of doing business is too high to move forward.

Should you never go big? 

Of course not...going big is in the innovator's DNA, but for you "infection" of the corporate body, you want to get started small and cheap with a focus on developing data and a partner champion that will allow you to go bigger next time.  If you get a business partner who is championing your effort, then you sound less like an heroic evangelist and more like a savvy innovator who is "connected to the business".


Financial Landscape versus authority in action...

One of greatest successes involved getting my company to fund an experiment in social media.  When I first discussed the price with my partner, they asked for $250,000 for a 16 week partner.  And while I believe the project would give more that $250,000 in value, I realized quite quickly that I needed to go the that dreaded VP level to get the funding.  I had a good director level partner who was eager to do the work because of the situation he was in.  So rather than try to get him to fund it and end up in front of the VP who probably would look out on the horizon and choose not to, I told my external partner it wouldn't work.  Instead, I figured that my internal partner could fund the project for about $100,000 and told my external partner that the chances of funding at this level were faster and easier.  It worked, the internal partner funded it and we did the project.

What happened afterwards?

After the initial $100,000 project, the external partner has enjoyed a 5 year relationship with my company.  This partnership yielded over $1,000,000 dollars over that four year period with the second deal totaling $275,000 dollars about 4 months later (funded by a vice president).  In addition, I left the company two years into the partnership and the relationship has survived in some financial form even today.

When can you go big right away?

There are many principles that make an innovator successful.  And this is something I will talk about in a later post....

If you lead the horse to water...its your responsibility to make him drink

Often times as an innovator, I have found myself feeling like an outsider looking in.  Why?  Because as a born contrarian and a natural divergent thinker, my process and method for doing things is often different from others.  Over the years, I have come to learn that this style difference is merely that a difference in how I like to innovate versus others.  And while that is the topic for another longer post, I will say this...regardless of how different we are as innovators, to bring change to others it is up to us to figure out the coping mechanisms to "get along" with those we encounter everyday.

How often in your quest to work on novel and different ideas that often go against the grain do you get frustrated because others don't understand where you are going, how you are getting them there and most often even what you are trying to say?  I would say in the beginning of my career way more often than now.  And while this frustration will always remain, I have learned to accept that if I can't get the horse to drink it is my fault not theirs.  Too many times, it is too easy to say to others who are different from us that they just don't get it or their too afraid.  In reality, if you are really pushing the envelope, you need to take responsibility that this in our quest to bring what are often considered risky and different ideas, we must find ways to help other see what we see.

And while this isn't easy, it is critical.  Earlier I wrote about the concept approach principle. where understanding that your struggle can often be not your concept but the approach you want to take.  This will often bring instant clarity to any situation, it is only the first step.  Acknowledgement that bringing people along to your way of thinking is your responsibility can often create even more clarity because when we own what is ours (in this case the differential in thinking) we find ourselves moving more quickly towards growth and new skills.

And in the end, we can only improve as innovators and change agents if we are readily willing to take on the constant challenge to grow and change for the good of bringing about the wonderful ideas that give us passion...

Crossing your arms or reach out for a hug - the innovation partnership difference

What is the difference between speed in implementing innovation and never getting it off the ground?  Trust!  That being said, one of the key things to think about when you first encounter an innovative idea is this...

How do you first interact with the idea/concept/solution/product etc?

Do you question and doubt everything you hear until the potential partner proves to you the value they bring? Do you worry about if it is worth the risk?  Do you actually sit there with your arms folded across your chest?

Or do you bring trust and accept what you hear at face value first and then over time determine the positives and negatives of what you have just heard? 

I believe the majority of folks cross their arms rather than reach out and embrace what they hear and because of this attitude/behavior many great opportunities for individuals and companies to shine are lost.  You may say yes, but only about 10% of ideas are really worth launching.  Or you might say, hey that is off strategy for our business.  These things are all true, but resting on the obvious reason to say no only makes the point even more. 

Many of my greatest successes have come by bringing trust to my relationship from the moment I first meet someone.  This does not mean show every single card.  It means being clear (expectation management)about your interests and your company's interests, being honest about what you need to be successful in the partnership, and being forthright about the cultural challenges you may see or have with the path to success.  In my earlier post being the benevolent virus, I talk about this as the first phase of building an innovation partnership.

While I have many examples of this, my current role at NetBase started in this way.  In 2006, when I first came across NetBase's fantastic technology rather than question the value of their solution, I saw potential and shared it very openly with my partners.  I told them very clearly what it would take to succeed and never deviated from the things I promised to them.  This included sharing how Clorox's culture took time to try new things, it involved being open about the amount the company was willing to spend on a pilot for a new idea, and most importantly it involved getting very open with them about the folks they met during the journey (essentially exposing them to the strengths and flaws of those who were involved).  This building of trust enabled us to figure out a creative way to do our first project together and ultimately led to a financial relationship that lasted over 2 years after I left Clorox and was no longer there to champion the effort.  And the financial result?  Over seven figures in sales in total over a 5 year period.

This all started because I was willing to take a risk in how I approached people I didn't know well as well as how I treated an idea that I believe had potential

The concept/approach principle - influencing clarity

How many times have you tried to drive change only to be brushed aside by a critical stakeholder? Have you ever thought why beyond the fact that they just don't get it? Is it possible that you didn't help them get it enough?

This leads to a simple innovation principle called the concept/approach principle.

What is the concept/approach principle? This principle is a simple way to analyze a situation when an innovator is trying to influence someone. When you are trying to share a new idea with a stakeholder if you are having trouble getting your point across you must ask yourself...do they not understand the concept I am presenting them or do they disagree with my proposed approach? This is an extremely critical distinction because if we can separate where our problem is we can have insight into how to fix our arguments to achieve our goals.

It also helps to cut down on frustration because if we recognize that someone doesn't understand our concept, it is easier to understand that we need to work harder to make sure they can get the concept we are selling. We might even decide there is another politcal route to getting this concept understood and ultimately implemented.

As for approach, if we are losing on approach it may be a bit easier to accept because this can be a difference in opinion. And while it is harder to convince someone to change ther emind on approach, at least we can make more sense of our disagreement. In addition, I have found if you can point out to someone that you don't have a concept problem first (they feel understood) so when you poiint out that it is about approach they might even get a bit more open minded to what you are saying because have done aq good job of cliarying the situation.

While it seems so simple, understand the issue in this simple way can help you better react in real time and be successful at driving the change you crave to implement.

Culture Based Adoption - Driving Change from the inside or the outside

As a person who has worked on the front end of the business my entire career I have often been curious about how to make bringing new opportunities to life something that have repeatable principles. And over time working inside large organizations (CPG companies) and now working outside at a small innovation organization (social media SAAS startup), I am starting to think through how we can create a simple principle to think through the most complex of changes.

I call this concept CULTURE BASED ADOPTION. What is it? Culture based adoption is the simple principle that getting people to do something new is actually a "2-step dance". The first step in the dance is usually based on getting someone to use something new whether it be a product or a service. If you think about this first step it is a scalable principle. From a business perspective it could be the interaction between your company's product or service and the customer/consumer that interacts with it. So whether you are a SAAS company selling a tool or a CPG company launching a new product concept, we must all get our end-user to understand how and why they should use it. The second step in this process involves the culture part. To explain this best, it is probably better to focus on the corporate side of things. The simple point here is once you get someone to understand how and why they must use this new product/service you must then ask yourself will this involve a culture change that could be rejected by the "others" involved?

A great example comes from the adoption of social media tools/services that are flooding the marketplace. As I work with NetBase solutions, we have a new way to mine social media through understanding the language of the web. This interface give its users the opportunity to interact with consumers anytime anywhere from the comfort of their desk. And essentially for a single price they have the freedom to not only talk to them anytime, but to also perform the same research on brands they never in their right mind would spend money on. Here is the problem with step one. Even when someone really gets this new interface and way of interacting with consumers, they still must decide whether they even like to use tools at all. Think about it...a way to do market research on nearly any subject at about 10% of the cost of their current method of operation. And many users will say, I don't have time. Instead they will not use a tool and simply take more time and money to have someone else do it for them. This is a micro version of the two step dance. First, I need to learn something new and second I personally have to change my way of doing things. And while it may be more efficient and less costly, there is real push back because of the "other work" or the "the way we do business". But what happens when they do want to learn something new and become a champion?

This is where the real second step of the Culture Based Adoption comes into play. While many people may understand this new tool's value, they may shy away from it because we are now asking a company who never even would consider a new data source like social media to be valuable. This is where the champion DNA meets the road. Knowing and being willing to fight your culture to bring new value to it starts with an awareness that your organization is throwing away money by doing it the old way. And from the sale side, it is imperative to understand this because it is not simply enough to wonder why things are going smoothly. You must ask yourself if your offering or idea falls into the concept of culture based adoption. That is learning to do something different and then changing the behavior of others to make it real and continue.

So how do I adjust?

Be Aware: You must analyze your idea/offering to say this...is it hard to use and will it require people to do it differently? If the answer is yes and yes you need to think through a process to help them see why?

Collaborate: While all innovations may be valuable in your mind, you must also realize that only through others can you affect change. Great innovators are born with no budget, authority or people. If you can drive change without these things then you can "innovate in space" and bring change when you need to. I have learned time and time again, if you can be patient and bring others along to your way of thinking then they will own it and help you make it real.

Build Trust: In a sales cycle, many people make the mistake of thinking that selling innovation involves making others believe that everything is perfect and there is no issue. I think this is wrong. Selling the hardest innovation requires a huge measure of trust between you and your clients whoever they are. If you use strong expectation management and negotiate fairly (in terms of what you will commit to doing) you can go far. In addition, sometimes showing your warts and acknowledging the problems will help you bring people closer to what you want to accomplish.

Bring Fortitude to the Party: Delivering innovation is not for the those who can't withstand the heat. My good friend told me that innovation is not a team sport but a contact sport. Be aware of where the contact is coming from and be ready to defend your position to make it happen.

In the end, driving new usage behavior and changing the culture of your customer/consumer is something that is hard, but the biggest breakthroughs in the world are never that easy...make it happen

Innovation Partnerships Talk Final Fei

Check out this SlideShare Presentation: this presentation takes a look at how to create successful innovation partnerships. What is different about this approach is that it challenges the alliance manager to do things in the opposite manner they are used to. This means embracing the unknown, sharing openly with partners, creating loyalty to your partner over your company and most importantly openly negotiating your way to both parties success. Without trust innovation's life span can be zero because it never gets off the ground.

Innovation Partnerships Talk Final Fei

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Check out this SlideShare Presentation: This presentation is a summation of skills and tools that helps any innovator increase their ability to recognize political danger when leading change within an organization

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