Episode 0032 · April 6, 2023

The podcast about what to do next.

Innovation Group

[Unedited Transcript]


Paul Ford: Hi, rich. How are you today?

Rich Ziade: I’m doing well. How are you

Paul Ford: Well, you know, I’m, I’m coming to you. I work for Consolidated, undulating, um,

Rich Ziade: widgets?

Paul Ford: Yes, sweaters consolidated und cuss. And, uh, we own about, we have about 10 per, you don’t know about us, but you’re wearing one of our sweaters right now. Uh, we, we cornered the sweater industry in 1992.

And, uh, ever since all the sheep, all the factories, the whole thing, it’s all us. You don’t even know about us. Uh, and, uh, you know what? I, I, I can’t even, I want to do, um, here’s the thing. In big company, we have over 200 billion employees, uh, when you count the sheep and, uh, and we make over $2 trillion an hour.

But you know what the problem is? I see all these little sheep shearing 3D printing sweater companies coming up and I mean, that’s a threat that’s [00:01:00] worrying me. And I wanted to talk to you about how my organization consolidated undulating sweaters can become a truly innovative player and compete with all these upstarts.

Cuz you know, if we don’t get there first and start doing 3D printing, AI sweaters, they’re gonna do it. So I was wonder. What you think about a company at this scale, global sweater supply, textile chains, container ships, everything. What you think about us getting our innovation going, getting our innovation on is what I like to say.

Let’s get our inno on when I’m, when I’m running the agile standup that I instituted in the innovation group six months ago, uh uh you notice I’m doing all the talking. Let me.

Rich Ziade: Mm-hmm.

Paul Ford: the episode and you tell me as a big organization how to innovate. Cuz I know there’s a plan. I know there’s a way to do it.

It’s gotta work.

Rich Ziade: [00:02:00] Well, first off, congratulations on your success.

Paul Ford: I mean, look at this sweater.

Rich Ziade: happy people and happy sheep actually. You’ve been good to your sheep, uh, throughout, and they keep.

Paul Ford: No, after the, after the eighties, um, you know, we had to open a sheep hospital, but it’s, it’s all now. I mean, oh my God. Yeah. No, they go

Rich Ziade: it’s great. So look,

Paul Ford: Yeah.

Rich Ziade: you succeeded and you became incredibly big cuz you were really good at it in the beginning.

Paul Ford: Thank you. Yes. In the year 1885, a Scottish man named Bob McDermid, um, she his first sheep for us, and here we.

Rich Ziade: There you

Paul Ford: So many

Rich Ziade: you’re now a a, you’re, you’re a monster. You’re a giant megacorp. That is, that, [00:03:00] you know, supplies, sweater to sweater materials to 20 different brands. God bless. That’s great. That’s great. Congratulations on.

Paul Ford: we, we have a motto Rich, one sweater at a time.

Rich Ziade: Oh boy. All right. Well, we don’t have to get into the motto. Maybe we can talk about that another time about mottos. Um, you are not the first to come to me and talk to me about your innovation arm, or incubator or group, or whatever it is.

Paul Ford: Wait a minute. You’re telling me that my innovation group isn’t innovative here at Consolidated undulating sweater.

Rich Ziade: I am sure it is innovative. I’m sure it’s great. You know what else was innovative? Xerox Park was really, really innovative. Really innovative.

Paul Ford: Yeah, they, they created the whole operating system. Good for them.

Rich Ziade: Yeah. So let me tell you a little story about Xerox. Not Xerox Park, but Xerox. Xerox [00:04:00] innovated and became a giant company that made sure every law firm and every bank and every office had a copy machine. And then they sold you parts and materials and toner cartridges. So it was a money making machine.

And you know what happens when you make a lot of money, Paul?

Paul Ford: Only good things.

Rich Ziade: Not always only good things. You take a little bit of that money cuz you’re not sure what to do with all of it. And you create a little sandbox. You’re not even sure why you created the

Paul Ford: No, I know.

Rich Ziade: You, you just like, you know what,

Paul Ford: the future

Rich Ziade: have a lot of money.

Paul Ford: No, no. There’s always this, there’s always this. Let me, let me, let me break character for a minute. There’s always this, which is like, you know, we disrupted the industry. It used to be that you had all these people, we, we, you know, Xerox came in and was like, we are going to, you, you think carbon paper is interesting here?

You think [00:05:00] you’re gonna just like, type things and get one copy, we’ll make you hundreds of copies. God helped the people in the carbon paper industry, you know, they were, they had a bad couple of years, so Xerox. Hold on a minute. Future’s gonna keep coming. We better be right there. We’re gonna capture it.

We are gonna be the ones

Rich Ziade: Somebody in, somebody in Xerox cared enough to stand up Xerox Park and look, let me tell you something that happens to

Paul Ford: It’s actually a very good book about this. There’s a good book about this. It’s called Dealers Enlightening. It’s a good book.

Rich Ziade: Okay? Excellent. Here, let me tell you something that happens with with money at.

Paul Ford: Okay.

Rich Ziade: Humans can’t process it. When Xerox was making, and I’m pulling this out of thin air, you know, 10 billion a year. Someone strolled in and said, look, it’s 10 billion. I just need 200 million. There’s some really smart PhDs, some psych social [00:06:00] psychologists, some really innovative thinkers in Northern California.

Let’s give ’em a place to play because some good things may come out of it that is not coming from a place of paranoia that is not coming from like a fearing the future place that is literally coming from. Sure. Take a little play money. Go get yourself something nice.

Paul Ford: Sure.

Rich Ziade: Do you know why?

Paul Ford: Why.

Rich Ziade: And, and well, well, the why is we just can’t understand money at that scale.

We actually can’t. We can’t. We simply can’t. Like apple’s, r and d is notoriously gigantic. Apple threw away a car. They designed a car for five years and they’re like, Nope.

Paul Ford: one car. Like you could throw, you could imagine a big company being like, I don’t need that Chrysler anymore, that that Ford Taurus is getting old. No, they, they, as far as anyone can tell, they’ve just gone, eh, we’re not gonna do self-driving cars. That’s enough.

Rich Ziade: There is a cyber punk garage in the side of a mountain [00:07:00] with some really interesting designs

Paul Ford: You know, I, I imagine it

Rich Ziade: of left on the shelf.

Paul Ford: Remember those Macs that were like translucent, uh, translucent plastic in like bright primer in bright colors, like

Rich Ziade: Yeah, yeah,

Paul Ford: that, that’s what you got, like cars that look like that imax.

Rich Ziade: look, your, your heart’s in the right place, Paul, in thinking we gotta do something about this and innovate cuz people are 3D printing it. So that’s where it always starts. The heart’s always in the right place. The issue arises when you take your little toy that you put together in your sandbox back to the larger org, back to the monolith.

And then you’re like, guys, look, look, it’s, it’s, is it that different than a seven year old showing up with a cool drawing of like Space Mountain?

Paul Ford: It’s true.

Rich Ziade: thing.

Paul Ford: And always in hindsight, it’s easy to go, man, those Xerox Park executives were a bunch of morons. They saw the future and they [00:08:00] said, no, we’re gonna sell more photocopies. You guys get back to California. Meanwhile, apple literally came over to Xerox Park and said, how about we license all of this and look at which one is the largest company in the world right now?

Right. So that’s, that’s.

Rich Ziade: It,

Paul Ford: Consensus narrative. The consensus narrative is like Steve Jobs came over and knew what to do, but those executives back in Rochester, New York, what a bunch of idiots.

Rich Ziade: I can think of two examples. Um, uh, where the innovate, the leadership, or the, you know, the higher ups in the org saw. Felt the rumble of a tsunami coming felt they had a very limited amount of time and said, we are nothing. We are dead. You have to absolutely kill a part of yourself to take that seed of innovation and [00:09:00] actually bet everything.

Paul Ford: What are the

Rich Ziade: absolutely everything. One example is Netflix. Netflix used to mail you DVDs. Now

Paul Ford: competing with. It was competing with Blockbuster at the time. Right? Like, Hey, you know what’ll be better, better choice, more options. You go, instead of having to go to a place where they overcharge, you laid fees and you get that microwave popcorn,

Rich Ziade: ’em. I did

Paul Ford: yeah, you can have any DVD you want and you can watch it.

So that was exciting.

Rich Ziade: It was exciting. And it wasn’t like, oh my God, they see streaming was kind of around, there was videos on the internet. Still the idea of streaming a whole movie or a whole show felt crazy and expensive with your internet connection back then. Like it was still, it was still the beginning of it, so, but it wasn’t like this incredible technological leap.

But what you had was leadership at Netflix saying, The [00:10:00] party is about to end. We are going off a cliff, right? And the only thing we have, the only hope we have is something fundamentally entirely different. They probably spent millions of dollars on like envelope sorting machines.

Paul Ford: There’s a factory somewhere rich, with like a pile of D V D sleeves with the dot matrix printed. Um, Adam Sandler movie information, just sitting there in a corner. Never gonna get sent out.

Rich Ziade: Uh, and so we, you know, when we ran, we used to run an agency. When we ran that agency, um, we would meet a lot of innovation groups. We’d meet them in banks. We’d meet them in, in, uh, in public se, public sector companies, um, transit systems. There’s always, everybody’s always like, we gotta put some money aside for innovation.

Like, that’s really, really important. The thing that happens and, and sometimes interesting things materialize, [00:11:00] right? The issue is it slams into the absolutely overwhelming political inertia of a large organization and then dies

Paul Ford: I wouldn’t. Look,

Rich Ziade: All the ways.

Paul Ford: let’s do what no one ever does and just be utterly empathetic to the people back in Rochester, New York for once. Because all anyone has said for 50 years is that they were idiots who myth the whole thing, right? I have an amazing business with photocopier and law offices, and you come back to me and you are.

Obviously really smart. You are the cool kids and you have made something that looks like science fiction. It moves the documents around on the screen, it prints them on a laser printer, and it is just fantastic. And I go, that’s the coolest thing I’ve ever seen. And then I think, I have to go to a law office and convince them to spend $30,000 per secretary to become to print world class stuff that looks [00:12:00] absolutely beautiful.

And they’re gonna say, I’ll just take three more copiers. Thanks. Okay. So

Rich Ziade: hundred percent.

Paul Ford: absolutely. And then I’m gonna go, I mean, this is amazing, but, and here’s the real gap. Here’s the real challenge. I’m not gonna be able to sell. This might be 20 years in the future, and I have to deal with q3. Right. This is the integration point.

That’s actually where it employs. It’s not that they’re dumb. They were, they knew were their business. They knew they couldn’t walk in with 10 xerox altos and sell them at, you know, some giant law firm in Manhattan. What they knew, and they, they probably knew they were seeing the future and then they went, okay, because who’s gonna turn it into the future?

People who have absolutely no investment in the past and that you can’t have inside the. You can’t have someone who’s like, I don’t really care what lawyers think. I don’t care what our customers want to do. Uh, I just want to go ahead and sell [00:13:00] this all day. You have to go set up a new venture outside.

There’s no way to do that in the giant company.

Rich Ziade: Yes, you, you, you can do it in the jar. There is a way to do it and it has happened. And the on, from what I have seen, the only thing that makes it happen is an absolutely obsessive, almost like nearly tyrannical leadership that just loses its mind. They can’t believe you ordered so many pizzas in the kitchen

Paul Ford: Well, this person. This person has to be able to look at their managers and say, I know you think you’re doing well. You’ve met all the goals that I’ve put

Rich Ziade: It’s over.

Paul Ford: but it doesn’t matter because we’re failing. And then the, the managers have to go, they’re not, they haven’t lost their marbles. They see the future and I want to get on board.

Okay, so you’ve now that’s like, that’s very hard. Netflix still, you know, [00:14:00] you know who can. Founders inside of giant companies.

Rich Ziade: Yes, yes. Founders can do that, that they’re about the only ones who can do it. That’s a great

Paul Ford: Steve Jobs goes back to Apple founder mentality, read uh, Hastings at Netflix, founder mentality, and everybody has to kind of go with them, not because they’re the greatest business geniuses ever, um, but because founder mentality is this thing is always five seconds away from total disaster.

Doesn’t matter how big it is, doesn’t matter. Right. Whereas ceo, classic CEO mentality, I’m, I’m at my sweater company. It’s 118 years old or 180 years old. The CEO is like going to be a guy named Jeff. Could be spelled with a J, could be spelled with a G, but it’s almost definitely Jeff. He’s got 12 MBAs. He went to every MBA program in America and he is gonna optimize and then you’re gonna come to him and you’re gonna say, in the future, sheep will be AI powered and we will [00:15:00] print sweaters in our houses and he’s gonna go. What, like he’s not like, there’s no way that guy is then gonna turn to his executive, like recruitment recruited team of super CEOs who are all wool experts and say, guess what? We’re blowing it up. That’s just not gonna

Rich Ziade: Mm-hmm. Right, right. Um,

Paul Ford: All right. So now the innovation group

Rich Ziade: let’s cover another. Yeah. The innovative look, the, the,

Paul Ford: Is this worth it? Why have an innovation group? Why do this? Why do companies keep doing this?

Rich Ziade: Well, let me talk about the structural flaw here. Innovation group is, is, um, you’re kind of de dead on arrival if you are in an innovation. You’re kind of already been relegated to the playground, like the, the, you know, the little playground that’s attached to the McDonald’s, not the actual McDonald’s. And so you’re already,

Paul Ford: it is. It is the, an [00:16:00] innovation group is the spay neuter program for corporate politics.

Rich Ziade: It’s bad. It’s, it’s not good because innovation is like, okay, you do your thing Pat on the head. We’re gonna keep printing money by selling so many copiers. And if you’ve seen the new X 5,000, that’s like 10 pages a minute faster. You, you, you keep doing your thing. Good for you. Right? And so that’s very distinct from everyone all.

This is either the beginning of the end or the beginning of a new beginning. And that is a shattering moment, right?

Paul Ford: Right. And if you’re not on,

Rich Ziade: were good at,

Paul Ford: if you’re not on the boat, you know, like, like that’s the other part of this is like often they’ll be like, all right, well, you know, it might be time for you to go there.

Rich Ziade: mm-hmm. Mm-hmm. Yep. Exactly. Um, so. Okay, so we, this is the Audi and Ford advisors.

Paul Ford: All [00:17:00] right.

Rich Ziade: Um, how, let, let’s, let’s give a giant Fortune 100 company, fortune 100 company, a piece of advice, a couple of pieces of advice.

Paul Ford: the sweater company what to do with its innovation group.

Rich Ziade: Here’s the thing to keep in mind. There’s many years of money left to make anyway, even for your sweater company in 3D printing. And that the idea of foregoing that, and I’ve been inside of big organizations that. Sell disposable refills of something. I don’t wanna say what.

And we’ll, they see another 10 years of really good money. Yeah. It’s declining, it’s not growing. It’s like, whoa, whoa, whoa. Yeah, we wanna go play in the new stuff. But man, there’s still a lot of money to be made. So how do you get an organization to keep going steady as she goes, make your billions, but at the same time, right.

Effectively stand up. Something that innovates, the [00:18:00] biggest mistake organizations make is they’re like, they say to themselves, we have to change news. Berlin, you’re not gonna change unless you have that tyrant. You’re just not gonna change. So what you’re better off doing actually is starting to stand up something that doesn’t have the, the legacy.

The arrogance, the comfort, the muscle memory, the organizational muscle, muscle memory that made you successful today because the things that made you good today. Are actually liabilities telling that to a billion, trillion dollar company, that’s like a crazy thing to say. And there’s another 10 years of sweater sales.

Dude, everybody needs sweaters. Calm down. And so what you have is a, a, an opportunity to essentially parallel path, lets something take hold that is connected to you but [00:19:00] is really has autonomy to. Most innovation groups don’t have auto, they have nothing. And it is depressing to watch because they can go five years without shipping shit.

And that is reality always. And I’m not saying that to put any specific company down. It is the reality of being in that innovation group. And the bigger the company, the more meaningless you are in that organization. You need freedom. You need autonomy and you need, and if you ha can get the advocate, great.

Look, the Reed Hastings in Steve Jobs of the world, they are rare, rare cases because they essentially took the whole damn ship and said gut it and refit it. Nobody does it. It’s very rare.

Paul Ford: it’s worth dividing innovation group away from r and d. Like IBM had r and d that defined chunks of the industry for 75 years. Cuz it’d be like, you know what, we can do this with [00:20:00] transistors. And everybody was like, and then they would. Turn that into a product, like there was a funnel where people would sit in a room, do Science, bell Labs, you know, they would turn ideas into products related to the larger efforts of the organization.

The innovation group as a concept is more like future’s coming. We better be ready. It’s gonna be really different, but we want to keep it close. So there there is, r and d is fundamental. You can’t be a giant organization. Sort of invest in growing new products from, from seed and figuring out how that fits into your bigger world.

But this is a different thing. This is like this concept where you’re gonna bring, you know, a lot of times like startup style mentality into the big org.

Rich Ziade: I, I think this is, this is why they struggle to hire. This is why they struggle to create culture because you can’t escape the, the, the beast. It’s too big. And so how do you do it? And there are examples of companies that they keep arms linked. You can see their, they’re owned by them in the fine print, but [00:21:00] they have their own brand, they have their own cool offices with, and, and you know, they try that.

Um, and, and that’s better. That is better. But yeah. How do you get someone who’s been eating steak every day to all of a sudden be.

Paul Ford: You know what

Rich Ziade: was like, oh, we’re going back to carrots, everybody.

Paul Ford: But then what’s funny, that’s why it’s so hard, rich, cuz then it’s like, okay, well obviously what we should do is set up a venture fund, keep arms length, get the, you know, put a lot of little bets down and see what happens now what?

Rich Ziade: That’s the other move, right? Buy stuff, buy the stuff, and they do it. Um, and, and you know, uh, you know, famously, um, you know, Gillette is like maybe as long as people’s facial hair grows and armpit hairs grow or something. There was re, there was, you know, disposable razors to be bought. Man, it is a jewel.

And then [00:22:00] Dollar Shave Club shows up and you know, the, the real innovation there is like, we’ll mail ’em to you on a regular basis. And Gillette, I don’t know if it was Gillette or what, I think it was Gillette lost their minds. They’re like, oh God. Oh my God. They used the mail to ship appraisers. They bought them from some, like, for

Paul Ford: Oh, no, no. It.

Rich Ziade: amount of money.

Paul Ford: It was Unilever. They bought ’em for like a billion dollars. Then they started a magazine. It was a

Rich Ziade: you just, they just lost their shit. It’s like, oh my God. Okay. Either this is eat or be eaten. Look, this is, you know, the more cynical view of this is a lot of times they’re bought to sort of cut the oxygen on them and let ’em die, all, you know, out in the back so that you can go back to selling what you sell.

Right? And, you know, that is, that’s a, that’s a very sort of grim view of it. But look, people, you know, people buy companies cuz they see them as threats, not as additive very often. Right?

Paul Ford: let’s solve this though. I run the, I’m a big part of the giant sweater company. I’m willing to accept that maybe my innovation group isn’t all it’s cracked up to be. Maybe we [00:23:00] oversold it, but what the hell do I do, man? Because the future’s coming for me.

Rich Ziade: The Inva, oh, well, okay. If you, if you’re really ha you really believe in something and you got the passion for it, and you can stomach some risk, go start it outside because your old employer will probably buy it off you. So get out, get some funding and try it out if you, if you’ve got the appetite. Right.

That’s, that’s

Paul Ford: move. I, I feel that like the companies that do enable that, that’s often like the quiet success. You see those stories because you know what happens there

Rich Ziade: Mm-hmm. Mm-hmm.

Paul Ford: uh, Sally was really frustrated. She went and started this thing. We bought it and the thing is then Sally knows how to work inside the company.

Rich Ziade: Yes. Yes.

Paul Ford: that, that, that five year loop, right. And then Sally got really rich, but she’s okay. She wants it to land well. So it all works

Rich Ziade: Exactly. Exactly. And look, not everybody has the, the stomach for that. Like it’s hard and brutal. There are, we say it on this podcast all the time, there are no shortcuts. [00:24:00] So it’s, it’s a, it’s a credible suggestion. It’s a credible piece of advice if you’ve got the, you know, the sort of will to do it right and, and kind of really go through the experience.

Paul Ford: Okay, what’s my other option?

Rich Ziade: Um, if you’re in a, the bigger this is, I, I could, I could graph this, right? The bigger the org, the less likely it is you’re going to see what you’ve created and what you’re innovating on. Become real, right? Because the, the, the, the, the gravitational pull is too strong. Go. If, if, you know, I’m not gonna tell you how to navigate whatever company you’re in politically so that your innovation succeeds.

This is a much more dire. Picture of the reality, cuz we’ve just been in, we’ve been in too many orgs and we know there is

Paul Ford: but, but also everyone can relax because like Google can’t innovate anymore.

Rich Ziade: Nobody can, once they get

Paul Ford: Nobody can

Rich Ziade: So here, here’s what you can do. Go find a 200 [00:25:00] person company that’s doing really well that actually still has some nimbleness to it, where the impact radius of what you do is relative to the surface area of the place. The smaller, the surface area, the more of an impact you can make if you think you’re gonna

Paul Ford: 200 is a good size. 90 to 150 is a terrible size cuz that’s just when people are learning politics, uh, inside of that org. Like it should be just a, a little bit

Rich Ziade: to 500. 200

Paul Ford: Yeah. Now we’re talking about it’s a real company. Yeah. Your skills transfer a little bit and so on the, it’s either like people think they want a startup and then they think they want a little bigger than a startup.

You want like a 500 person company

Rich Ziade: Yeah, don’t, yeah, exactly. And last piece of advice, don’t be discouraged. Don’t feel like, oh my God, just think of MasterCard. MasterCard’s a behemoth and they haven’t done a single thing except redesign the front of their credit cards. God bless ’em.

Paul Ford: oh man. I [00:26:00] don’t even want to Google MasterCard Innovation

Rich Ziade: Yeah. There goes the MasterCard partnership with, with our startup all.

Paul Ford: No, we should, we should, uh, we should talk to our sales guys. Make sure they’re okay.

Rich Ziade: Yeah. Um, okay. Um, good

Paul Ford: right. Well, I’m

Rich Ziade: Very hard problem. I, it’s advice, but it’s also kind of a dose of reality too,

Paul Ford: Well, maybe what I’ll do is I’ll go start my new sweater technology company, get a little investment from my Giant Co, and then they’ll buy me five years later for for 2000 bales of wool.

Rich Ziade: Success. Uh, you’re listening to the ziti, the Zian Ford podcast@zitiford.com and at Ziti Ford on Twitter. Um, hit us up. hello@zitiford.com. We love to get feedback mailbag,

Paul Ford: Meal bag.

Rich Ziade: and uh, we love answering questions. Have a lovely week, Paul.

Paul Ford: Bye. Yes, you have a good week too. Of course. I’ll see [00:27:00] you in a minute.

Rich Ziade: Bye

Paul Ford: everybody.

Rich Ziade: Bye. [00:28:00]

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