Combining Excellence & Innovation to Build Enduringly Great Organizations with José Pires
We continue our series of interviews with leading global innovation experts on our The Innovation Room podcast. This time we’re interviewing José Pires on how to combine excellence and innovation to build enduringly great organizations.
José is without a doubt one of the most experienced innovation advisors in the world. He’s held innovation leadership positions in a number of leading global companies like Sony and Nestlé and has since used those learnings to create the Excellence & Innovation program, which has won numerous awards and been used to train more than 30,000 professionals across 100+ clients. The interview is also available on YouTube, and as an audio version.
Could you tell our listeners more about yourself and your background?
I was born in Rio de Janeiro, Brazil. That experience was really fundamental for excellence and innovation acceleration, which is a topic that we're going to be discussing here today, and it has a lot to do with contrasts and contradictions.
There is probably no greater place of contradictions in the world than Rio de Janeiro. You have the richest and the poorest right next to each other. You live with this contrast on a daily basis as you walk down the street.
I had parents who lived very modestly because they had little access to education. My dad had a ninth-grade education, and my mom was yanked off her school on the third grade to work on a farm full time. It’s not a sad story because we, myself and my three older sisters, had plenty of support and love from our parents.
But we definitely learned their work ethic. They never had vacations. They didn't have weekends, they worked 18-hour days. It was just work. That was foundational for what I'm going to talk about, and I think some of that discipline will carry through in our talk.
But in any case, I was blessed to have access to education, and I got my higher education in the United States. My background academically is in engineering physics, a combination of electrical, mechanical engineering and physics. Later on, I did graduate studies in investment banking and entrepreneurship, and it's the melting of these disciplines that I still carry with me and am passionate about.
As a Brazilian kid graduated from a US school, my first job was working as a designer for a Japanese company. So, I always tell people I was super excited but highly confused because of how incredibly different these places have been. This company was Sony, and at that time a few decades ago, it was the leading technology company specifically in the area of displays, which is where I was working.
My first boss, his name is Shigeo Hayashi, or Hayashi-san. In my first week there, he asked me to identify 100 innovations in that space. I thought that it was impossible as the new grad who didn't really have any practical experience. I thought I was going to get fired in the first week. It was a transformational experience for me and has really set me on the journey for excellence and innovation acceleration. And the reason for that is that Hayashi-san was a great mentor for me, and to this day, he still is.
One of the great concepts in that I learned from is that it’s the mind of the novice that identifies innovation. In the mind of the expert, there's only one way. It is in the mind of the novice, where there are many ways, that innovations are most likely to come from. However, and this is the catch, the mind of the novice is usually unable to scale innovation because the novice also has this inability to scale innovation. You need the mind of the expert to scale the innovation. So, this contrast and contradiction is one of the things that really was shaped by my early experience at Sony.
After I left Sony, I joined a startup company in California where I was blessed to be part of a team that that truly transformed the semiconductor industry. This was in the mid-nineties, when Moore's law in the semiconductor industry was having some challenges because we couldn't shrink semiconductor devices much further. We then came up with a breakthrough laser technology that disrupted semiconductor manufacturing and created a whole new approach to it.
After we scaled that company, I decided to go back to a big company again. I was the innovation leader for Nestlé, the food company and learned tremendous lessons from dealing with innovation and accelerating it in an environment where you have hundreds of business units and over 350,000 employees around the world. I learnt a lot of lessons about building culture, and how you have to meet people where they're at to bring them along the journey.
Then I spent the next nearly 14 years of my career in the global energy and infrastructure environment where I was the global leader for excellence and innovation acceleration in very large organizations that did large, global infrastructure energy projects in energy production using both renewables and hydrocarbons.
On that journey, we developed the discipline and the approaches to excellence and innovation for value creation in large organizations. We won a number of global awards for accelerating and transforming these businesses in a very significant way. And then, on that journey, we’ve worked with over 100 organizations across industries talking about the principles that I will open up to your audience today. These principles are some of the fundamental things that organizations do to be successful.
But I'll give you a warning right up-front: some of these things are hard to grasp. They sound really simple, but they're actually quite deep and complex.
Why Excellence AND Innovation?
JESSE: I can’t help but address the elephant in the room. People usually think that “excellence” and “innovation” are mutually exclusive, and you have to choose one or the other. How did the concept of marrying excellence and innovation emerge?
JOSE: Let's talk about that!
That's one of those fundamental principles that can be very confusing. Let me set the stage here. When I talk about the examples that I'm talking about here, I'm not talking about the average company, I’m talking about the truly great ones.
These organizations and leaders, by definition, are at the very tip of the high end of the distribution. It’s one thing to be great, and a completely different thing to be enduringly great. It's much harder. Very few organizations and leaders are able to sustain that level of performance.
So, with that setting, one of the great fundamentals that separate that group from the rest is this ability to master contradictions.
One of the great fundamentals that separate the enduringly great companies from the rest is the ability to master contradictions.
I'll give you the cheat sheet, if you will. If you want to be a great and enduring organization, or if you want to be a great and enduring leader, you have to master four things:
- You have to master ideas
- You have to master methods
- You have to master technologies
- You have to master people (in a good, leadership way)
Now, this sounds all good: “Oh, that's awesome. I understand that.” But, if I ask people, what do you think is most important of these, you get quite a bit of variety on the answers, and a lot of that has to do with their personal experiences.
The concepts that I'm going to share with you are not concepts that I just envisioned, and thought were really cool, and wrote about in a book. Also, I’m not able to predict the future. As a matter of fact, there are two types of people who predict the future: those who don't know and those who don't know that they don't know.
So, let's look behind the scenes of the people who seem like they can predict the future. A lot of people think that they’re visionary, because they can see what's about to come. They are not visionary at all. If you think the visionary is having this ability to foresee what's going to happen, they don't have that ability. Nobody has that ability. How many people predicted the pandemic in 2020? Not many.
How do the visionary leaders then perform? How do they function? The way that they function is that they are highly empirical. They are experimenting constantly, formally and informally. They're observing what works and they're observing what doesn't work. If something doesn’t work, they let go, and then when they see something that works, they focus on it.
The fundamental difference is that's not enough for them see that something works. They try to understand why it works, and once they understand why it works, they try to scale that. So, they're not visionary. They're constantly experimenting. They see what works, they understand why it works, and then they scale that.
Seemingly visionary leaders are not in fact visionary. They are highly empirical, experiment constantly, try to understand why something works, and once they understand that, then try to scale that.
So, when you ask these leaders what's more important: ideas, methods, technologies or people, they will say all of the above – and none of the above.
Ideas are incredibly important. We need to create a new ecosystem where people can provide their ideas and we can listen to and scale their ideas. Ideas are important, but ideas are everywhere. What are uncommon are people willing to put their reputation behind ideas.
Ok, so what about methods? You need disciplined frameworks, otherwise you're just going to scatter. If you don't have a disciplined framework for innovation and innovation execution, you're going to scatter, and it's not going to work out. But then, at the same time, you're going to hear me say that while I am a certified Lean Six Sigma Master Black Belt, for most people, it sounds like a dangerous mental condition. It doesn't help them. So, methods matter, and they don't matter.
So, is it about the technologies? We live in a world of exponential technologies: AI, natural language processing, RPA, blockchain, and the list goes on and on. Wonderful technologies are incredibly important to accelerate our journey towards innovation for value creation. But, technology can also make stupid happen at the speed of light.
So, if it's not technology either, it must be about people, right? This is kind of a cop out answer: it's always about the people. People are our most important asset. Well, is that true? So how come they fired you but left that power plant as an asset? You're not more important than that asset after all, are you? So, we're not talking about what people want to hear. We're talking about the practicalities and the realities of innovation, excellence, and innovation acceleration. We of course value humans and people at a fundamental level, and great organizations always do that.
But if you're going to accelerate excellence and innovation, it’s not all about people. It is about finding the right people in your organization. It's about identifying the amplifiers of excellence and innovation.
The point of all of this is that it's about all of those things – and none of those things. It's the intelligent blending of those things in your organization and in your market that differentiate the great and enduring organizations from the rest.
So, it's important to understand that there are lots of contradictions there. The world of greatness specifically is filled with those contradictions. And that's what makes it so hard for people. People and organizations tend to be a lot more binary: it's either this or that, and they debate endlessly about these two options.
But the great and enduring leaders and organizations understand that the world of greatness is not an “either or” world. The world of greatness is an “and” world.
The great and enduring leaders and organizations understand that the world of greatness is not an “either or” world, it is an “and” world.
It is by the intelligent blending of these forces that pull in different directions that you get great performance – but it's very hard to do. There is no greater example than excellence and innovation, like you rightly pointed out, because the world of excellence is pulling in this direction, and the world of innovation in another one.
Excellence is all about understanding what the current system is. It is about setting performance standards and meeting and exceeding those performance standards. It's about squeezing efficiencies out of the system.
The world of innovation is about looking at the problem and the systems that you have from an entirely different perspective. It's not about squeezing efficiencies out of the system, it's about thinking about entirely different ways of accomplishing the same goals. It's about different models, different paradigms. Since these worlds are pulling in different directions, organizations and people debate about “Are we going to be excellent or are we going to be the most innovative?”
But here's what happens, and I ask you and your audience to check on your own personal and professional experiences.
If you look at great and enduring organizations, are they the most excellent organizations from an operational excellence perspective? Not in the long term. That can get them to greatness, but it will not keep them there. Why is that? Because if all they do is excellence, eventually they will become obsolete.
Then the answer must be that the most innovative organizations are the great and enduring organizations, right? Wrong. The most innovative organizations in the world are not the most dominant in their fields. Yes, I said that, and yes, it’s true.
The most innovative organizations in the world are not the most dominant in their fields.
You might have a different perception of it because the media highlights innovation and puts innovation on a pedestal. The most innovative organizations fail, they disappear, and you don't even remember them anymore. The ones that you pay attention to, that become well known for innovation, are actually not the most innovative. They are the ones who have been able to scale innovation better than anybody else.
The organizations that become well known for innovation are the ones who have been able to scale innovation better than anybody else.
If you're in the horse business, you’re in the world of excellence, it's all about squeezing efficiencies out of the horses, making them healthier, stronger. You no longer live in the world of innovation where you might design a car instead of squeezing efficiencies from the horses.
You might then feel tempted to jump into the world of innovation, but here's the problem. If you're just in that world, you fall in love of innovation. You fall in love with technology. If you do not have a consistent purpose that you're pursuing with the innovation that you're creating, you just dilute and scatter over time – and you die and disappear.
So, what is the solution? The solution from practice, not theory, is that the great and enduring organizations master the contradictions of excellence and innovation. They understand that it's not about one or the other. It's about blending excellence and innovation, where excellence is all about creating efficiencies out of what you currently have, and you create a ton of value by doing that.
And at the same time, you're looking at these clear performance standards that you have established and say that there's got to be a better way – and take a different perspective on that and come up with several possibilities for breakthrough innovations. Now it's not enough because those won’t do much for you unless you're able to scale them.
And how do you think that great and enduring organizations scale innovation? They scale innovation by applying the principles of excellence and discipline to innovation. You can consistently scale innovation by applying excellence to innovation. So, excellence and innovation often despise each other, but in the great and enduring organizations, you see them playing side by side with each other.
The great and enduring organizations scale innovation by applying the principles of excellence and discipline to innovation.
They are absolutely necessary for achieving enduring greatness, not to just about being the most innovative or being the most excellent for a short period of time, but to be enduringly great. To master the contradictions of excellence and innovation is one of the biggest contradictions out there.
I have to point out to your audience that this is not what I believed in when I started this journey. If I look back nearly three decades, in the beginning of my journey, I was a technologist at heart, and I felt that innovation is it. Everything else is a bit of fluff, and this excellence thing is a bunch of outdated motives and discipline. I don't need discipline. A monkey can follow a set of rules, I don't need that. I need to innovate. That sounds very appealing. And there is a nostalgic part of me that still wishes that that was true. But it's not true.
The great and enduring organizations not only come up with innovations, they are also masters of scaling innovation with excellence. There is no perfect recipe on how they blend, but in reality, it's more heavily weighted towards excellence than it is towards innovation. It's perhaps a 70-30 ratio on that. That's hard to do and understand, especially for entrepreneurs, especially for technology driven companies. It takes them decades to learn those lessons. Some of them never do.
What are the key elements and methods of the Excellence and Innovation program?
These are complex issues to be mastered. There is no silver bullet, single solution. These are interconnected components that you need to blend to the culture of your organization to make it happen. So, just the question of how you can put all of that together can be a many months long discussion, but I will summarize and give you a specific example.
One of the organizations that I did advisory for and helped their leadership team come up with their strategy for innovation excellence and innovation acceleration, but also had to lead from within, was Andeavor, an energy company here in the United States.
In 2010, right after the ’08 financial crisis, this company wasn’t doing very well financially. It was a public company with a market capitalization of $2 billion at that time, which may sound big for people who are trying to build their business, but as an established energy company, that level of $2 billion is a bit like noise in that industry. That $2 billion market valuation was less than the book value of the company, and that's pretty sad when your book value is actually greater than your market value. The market is basically looking at you and saying that you're just on the path towards bankruptcy. So, there wasn't anything special about this company, and that's why I like to talk about this because it's such a great story.
Way before my time there, they had a very visionary CEO that came and joined the company. His name is Greg Goff. He joined this company in 2010 from another energy company, and his approach was very much culture driven, which is a little bit odd in an energy company. You’d think that he was going to be very focused on technology. Anyway, he came in and had this mindset of building an organization where entrepreneurship and excellence were just a key part of it, which is not very common in the very traditional established energy businesses. They are experts in the field and do very technical things like logistics, refining and distribution of oil and gas products.
So, he started to bring in experts from multiple industries, taking different perspectives, and creating this very cool blend of entrepreneurship excellence within the organization by building a culture around those values. I joined the company a number of years later and made excellence and innovation perhaps more explicit. But here's the point: when we apply these principles of excellence and innovation acceleration, the company continued its transformation.
The basic principle, at a very high level, is that you create a meritocracy of ideas with very clear execution mechanisms. So, this meritocracy of ideas is accessible to all, meaning that anybody in the organization regardless of their status, rank, or title in the organization has an opportunity to communicate about what can we do to improve and innovate the way that we do work and business. That's the meritocracy of ideas.
Now, this meritocracy of ideas has a very disciplined approach for identifying, prioritizing and choosing what we're going to be working on. Ideas can come from everywhere, but we're looking for people who are willing to put their reputation behind the ideas! So, it’s a meritocracy of ideas accessible to all within the organization, with very clear, transparent execution mechanisms. This is very important. Innovation is trivial compared to innovation execution, which is the implementation of new ideas that create value.
Innovation is trivial compared to innovation execution, which is the implementation of new ideas that create value.
You need to have very transparent execution mechanisms, which is not common in organizations, and then very disciplined execution mechanisms that you follow through consistently. This company had been doing that already, and with excellence and innovation acceleration that I brought in, we just took it to a higher level of discipline in execution and engaged the entire organization in this journey.
In a period of about 18 months, we trained over 14,000 professionals in the organization on the basic principles of excellence and innovation acceleration. We made it very clear to them what the execution mechanisms were for their ideas and for their innovations, and then provided support on the ideas that were prioritized into the innovation execution funnel.
Over that 18-month period, they identified and executed to completion, executed to completion is the key part there, over 2000 excellence and innovation projects that delivered over a billion dollars in additional earnings for the organization. These were financially audited items, soft savings or nice to have cool stuff. This is real value creation.
Over an 18-month period, they identified and executed to completion more than 2000 excellence and innovation projects that delivered over a billion dollars in additional earnings for the organization
Now this company that was a $2 billion company in 2010 had a market value of nearly $36 billion in 2018. Think about that: in a period of eight years, they increased their market valuation eight-fold in an industry that is very traditional and has nothing new or sexy about it. There are many high-tech growth stocks that don't deliver these kinds of results, and this is an established company.
In summary, it's about creating an idea meritocracy accessible to all within the organization, but that doesn't mean anything until we have clear, transparent innovation execution mechanisms that translate the principles of innovation into action. You will have to be very disciplined about those execution mechanisms when it comes to innovation.
If you’re like: “Oh, we're gonna have a hackathon, we're gonna have cool code that's gonna be created”, the problem is that this kind of implementation is not scalable, and I don't see how the path to value creation is for this. So why are you doing that other than that it looks really cool?
So, it's actually a very hard process. This may seem contradictory because you think, don't you want to make it easy for people? No, you want to make it incredible hard for people. We’re going to talk about the traits of real innovators, and you don't get those real innovators by just saying: “Here's a ping pong table and free beer, now we’re going to be great innovators”. That looks good on media, but it's not how real innovation happens.
You make it hard because the real innovators, they will learn to overcome those challenges you provide. It's weird, because you make it really hard, and you also provide a lot of support at the same time. But you do not fool people into believing that creating and implementing innovation is fun. It's not fun.
You do not fool people into believing that creating and implementing innovation is fun. It's not fun.
Are you kidding me? It’s one of the hardest things you’re ever going to do. If it's fun, there's something wrong with you, you like suffering. You are basically implementing things that will require other people to change their behaviors, and you think that's fun? They're going to hate you and everybody who looks like you.
I’ve never heard someone who finished an excellence and innovation project that delivers millions of dollars in value creation say that it was fun. They look at me and they may say it was rewarding. It was fulfilling, but I wouldn't characterize it as fun. And I think that's an honest answer. We need to have those honest answers, debates and discussions with people, because there's too much fantasy and romanticism being glorified when it comes to really innovative organizations. The real innovators don't have time to be talking about what they do and don’t. They're not very interested in marketing their innovations. So those stories need to be told.
How to turn ideas into real value creation?
JESSE: One of the things we hear people in many companies struggle with is that they seemingly have all the ideas and know what to do, but just can’t get the approvals and the resources to make them happen due to a variety of reasons. Do you have any advice for folks struggling with this on how they can turn those ideas into real action and value creation?
JOSE: This is a great question. This is a very challenging issue because it depends on where you are. In general, starting small and then scaling is the way to go. If you’re an entrepreneur or a leader and you call the shots, then it’s just a matter of implementing what we just discussed in that previous example. But, if you’re in a big organization, and it’s difficult to get started, start in your own department.
However, what do you do if you’re in a big organization and you think that nobody listens to you, what do you do? Let’s have an honest discussion about this: there are a couple of options. One, you can start building this thing for your company and demonstrate it to them. Or, second, just get another job. Get out of there, go do something else that you think will create value. That’s super hard, by the way. If you’re going to stay where you are, there’s some benefits there. You have a safety net. You don’t have to be selling things to remain alive financially, someone will give you a pay-check.
But, if you don’t want to become an entrepreneur, and want to stay there, you can become an intrapreneur and start changing the company from within, depending on your own scope of control and influence.
But what if no one still listens to your ideas? Well, listen, if nobody's listens to your ideas, you're not communicating your ideas very well. You're not showing to those people the value creation potential of your ideas. Or again, you could have a leader on top of you who is just a bad person, right? And that happens as well. You have to decide. You either get out from under that person, or you have to have self-awareness and decide whether or not your idea is really a good idea or whether you're just falling in love with some idea because of technology, or because another company did it.
If nobody's listens to your ideas, you're not communicating your ideas very well, you're not showing the value creation potential of your ideas.
You have to become a value creation leader. You need to be an innovation leader. By definition, great innovation leaders are value creation leaders. You cannot divorce innovation from value creation.
But, what if it takes time for the idea to mature? That's fine, but you do need to show the path to value creation. You cannot just tell that this is a cool feature. What is the value creation that you’ll have out of this on an annual basis if we work on this for the next few months? Again, you need to have a very clear path to value creation.
It's your responsibility to build that innovation, and accountability for the innovation starts with you. You have to decide if you're going to embark on this journey, or if you just want to go back to doing your job.
It's your responsibility to build that innovation. You have to decide if you're going to embark on this journey, or if you just want to go back to doing your job.
What if you’re in an organization that don't have a meritocracy of ideas with clear execution mechanisms, which, by the way, are the overwhelming majority of all organizations. Well, you're going to have to start building this thing from where you sit, and you have to try to influence people to start building this.
How do you then influence people? You influence people by creating value for the organization. I never heard someone who says: “You know, I have a million-dollar idea that I can implement in the next four weeks, but nobody listens to me.” It's usually a myth, because when you look at your idea, it might sound good, but there isn’t a clear path for that value creation and implementation, or how you’re going to make it happen.
The moment that you start pointing fingers to someone else, it's over. It's over. You cannot do that. It has to be you. You have to do it. It requires a high level of personal accountability and ownership. And, if you're not going to own it, it's not going to happen. It's incredibly hard. It's incredibly hard if the systems are not set up for you. And, by the way, even when the systems are set up, it's still very hard.
The moment that you start pointing fingers to someone else, it's over. It has to be you. You have to do it.
So, if you don't have the systems in place, you need to start building them. Let me give you an example. I made the crazy decision to fight this battle early in my career because I did not want to be the person who spent one year on process engineering and then one year in manufacturing, engineering and one year in design in this job rotation thing. I never wanted that because I fell in love with innovation acceleration early in my career. I sat there and I thought: “How do I build a career around this?”
I can’t tell you all the struggles that I've had in organizations because people say something like “that title doesn't work because we don't have that title” or “we don't have that function”. I had to create functions. I had to create titles. But I had this passion for innovation acceleration, and I understood at a visceral level that if I created value for the people in that organization, they would allow me to get away with a lot more things.
You have to become a sort of improvement and innovation venture capitalist within your own company. I'm not trying to say it's easy. So, it starts with self-awareness. Is this something that you even want to do? Is this worth it?
You have to think about that because it will be hard, and the traits that these real innovators have are not easy traits to have.
What are the key traits of successful innovators?
JESSE: As a big part of your work is identifying and training successful innovators within organizations, what are these traits that innovators should aim to develop, and to look for in others?
JOSE: This is a lesson that I learned in my first few weeks at Sony with Hayashi-san. So, if you remember, I had to come up with 100 innovations in my first week at work. I mean, how do I do this? I'm totally inept to do that. I do have an academic background, but these are like the best scientists and engineers in the world who designed these incredible systems and products. I mean, who am I to come in there and say, here’s 100 different ways you could innovate and do better.
I barely slept that week. I was to deliver a 100-item report by the end of the week, and it really was kind of crappy. I had probably 20 good ideas on it.
Well, guess what? Hayashi-san was not very enamored with my ideas. He basically asked very specific implementation-oriented questions about every one of my ideas. You might say, oh come on, is that fair? Maybe he should be given room to grow and nurture the ideas.
Maybe, but that's not his job. His job was to identify which one of my ideas were any good so that he could actually move them forward. So, he was not easy on me. He was very hard on me. As a matter of fact, when he got through the four hours of reviewing my ideas, he looks at me and says: “José-san, how come you are so stupid?”
To this day, I remember that. I was like “Holy cow, the man just called me stupid!” He just trashed my entire identity. You could say that it was partially due to his English being very rough, but he then followed it up by looking at me and saying: “Your problem: think too much like engineer, must learn to listen. To process.”
I was like: “Holy cow. Is this some sort of Asian wisdom that I cannot grasp? What is this guy talking about? I really dislike him.” I spent my whole weekend just thinking about ways I could exact revenge on the man the next week, if I would even have a job the next week. It was my first real professional experience, and it was a disaster.
On week two, he comes in from the other side of the lab, smiling at me, speaking Japanese: “Ohayou gozaimasu! How are you José-san?” I'm like fake smiling back to him because I figured out that I had to be strong and show him what I can do in the second week.
So, he looks at me and says “José-san, this week I have a new assignment for you.” Oh, boy, when he said that I felt a weight being lifted off from my shoulders. I was like, Oh, thank God. Maybe I'll get some training, some rotational engineering program.
He looks at me and says: “This week, you identify 200 innovations.” I looked at the man. I still remember this. I lowered my head, and I thought about punching him. I really did. And I said, I can't do that. Then he just left me there alone and I had to decide what to do. And you know what I did? I went on and identified 200 innovations in week two.So, the traits need to become a real innovator, I learned from him. Like anything in my career and in life, when I learned some concept, I then tested the concept to see if it's true or not. And you know what? He was right. He's one of the greatest mentors of innovation I've ever had, and to this day he leads displays for Sony in Tokyo.
Maybe he wasn’t so eloquent with the words, but what he taught me is that when it comes to real innovators, it doesn't matter what your gender, race, or ethnicity is, or how many certificates you have hanging on the “I love myself” wall. None of that stuff matters when it comes to real innovators. There are four traits that separate them from the rest and the only way to find out those traits is the test of innovation execution, and that's what he was doing to me. He never explained that to me, he just did it because maybe if he had explained it to me, he felt that I would be too prepared for it, and he didn't want that. He wanted to get me raw and he wanted me to go through the innovation execution process without knowing exactly what he was testing me on.
So, what are these traits? Well, first of all, there's a mindset issue that's very important. He knew that I would only have the novice mindset in that work environment for a short period of time. Because what happens when you go into any company, they indoctrinate you on the way that they do things. So, the novice mindset, it starts to fade away and disappear very quickly, and you start becoming an expert about what the organization does. That's how organizations function. But the dilemma is that in the mind of an expert, there's only one way.
Once you get to that expert mindset, you become stuck. It's the mind of the novice, where there are many ways. So, he knew that I would have the mindset of the novice only for a short period of time, and he wanted that. But, remember, you ultimately need both. You need the mindset of the expert and the mindset of the novice.
In the first week he was trying to get the novice mindset from me. What he was doing was to create a test of innovation execution for me so that he could really understand if I had the traits to really excel and lead innovation.
Those traits I mentioned, they have less to do with what people normally look at in terms of resume, background, and even track record, even if it is a potential indicator. The ultimate factors that differentiate innovators from those who are wannabes, are human personal behavioral traits.
The number one is purpose alignment. There is something in the personal purpose of that individual that aligns with the professional purpose of that individual and the organization. So, there's a level of purpose alignment. I'm not working for an organization if I don't believe what it stands for, what it does, and how it serves the world. You're not going to have much great innovation out of that. So, you need to have a personal and professional purpose alignment number one, and there are different levels of strength there, but you must have some.
But that's not enough. None of those things are enough by themselves. Then it's needs to be followed up by passion, discipline, and resilience. So, purpose, passion, discipline and resilience are what separates the great innovators from the rest the world. Great innovators are great value creation leaders and great collaborative leaders, so they have all of these.
Purpose, passion, discipline and resilience are what separates the great innovators from the rest the world.
Jesse, let me go a little bit deeper for your audience here. There are great innovators already in our audience, so I want you to check this list against your own principles. And if it doesn't make sense, that's totally fine. You just you just haven't seen the full picture yet. Keep building, and I believe it will make sense to you. Purpose we already discussed, so let's talk about passion, discipline, resilience.
When I talk about passion here, I'm not talking about this romanticized view of passion. As a matter of fact, this passion that I'm talking about is a lot less like serendipitous love, and a lot more like an arranged marriage. When I'm talking about passion here, this passion doesn't come about like “Oh, I'm trying to find my passion so I’ll try skydiving to see if I can find it.”
No, try working on problems that really challenge you. Try working on a lot of different problems that challenge you and work your face off in trying to solve these problems, even if you actually dislike this stuff when you're starting to work on it. As you start working on it and develop skills and start overcoming these challenges over a period of time, you start enjoying it. You start enjoying the grunt of it. It's weird. I'm not telling you these people are like normal people because they're not. They're special people in sometimes not so special ways, all right, but that's how they can usually find their passion. They work their face off for something. They overcome challenges over time, and they develop a passion for it over time.
Honestly, a lot of these people are cranky because they’ve been so immersed in this process of overcoming these challenges, and the passion that they’ve got is not this flowery kind of passion. It's a very deep sense from within that's the passion that I'm talking about. I’d summarize it as an arranged marriage more than serendipitous love or romantic love.
The next one that passion alone is not enough either. You know, passion is the fuel. If passion is not followed up by high levels of discipline, that passion is just going to scatter. So, discipline. However, it's very important that we remember this discipline is not just following a regimented set of rules. The ultimate level of discipline is consistency with purpose. Remember that. That's what real discipline is. You have purpose alignment. You have the passion. You have the discipline which is like this fanatical discipline and consistency with your purpose.
Then you have to have resilience. Why? Because nobody's going to give it to you. Nobody's going to make that path and journey easy for you. You're going to have lots of challenges that you need to overcome. And if you're not resilient, you're not going to overcome them. You're going to just bounce and go work on something else because this is kind of hard.
But it’s not about being stubborn. It's not like you have to create a blood trail and just destroy things on the way towards your purpose. No. You're, going to have challenges. What the great innovation leaders do is that when they have the resistance and they want to overcome that resistance, they actually engage the resistance. They collaborate with the resistance to overcome the challenges together because they know that that's the better path than just destroying people. It's the right thing to do so they are driven by integrity and respect, high values.
The great innovation leaders collaborate with the resistance to overcome the challenges together because they know that that's the better path than just destroying people.
They do have highly developed collaborative leadership skills, but it's about the resilience to overcome challenges. And if they’re unable to overcome the challenges, what they do is that they pivot, and that's why resilience is so important. You pivot because you try to overcome the challenges collaboratively and you're unable to, despite your best efforts. If you have resilience, you have to be willing to endure the pain that it takes to take the longer road for something for that purpose.
Think of it as a blend of purpose, passion, discipline and resilience. Some of these things are wired in your DNA, and some of these things you develop over time in your career, and your professional and personal experiences. But this is the key point, how these systems are all interconnected. I hope that the audience builds an appreciation for this being complex because it’s all interconnected.
The next question is then is “How do you find these people?” They are collaborative leaders; they are value creation leaders. They are the amplifiers of excellence and innovation for value creation in your organization. And they're like gold. You need to find them because they will then amplify everybody else.
So how do you find them? Go back to the system. They are only revealed by the test of innovation execution. So, your job is to create a meritocracy of ideas with clear execution mechanisms accessible to all the people that will be attracted to it. The ones who actually get it done are the ones who are able to do innovation execution.
Guess what? Once they get through the funnel of execution and they emerge on the other side by implementing strategy, execution and value creation, those individuals have a blend of purpose, passion, discipline and resilience that makes them successful.
So, you have to set up this meritocracy of ideas with clear execution mechanisms as a way of finding people with purpose, passion, discipline, and resilience. And that's the only way.
You have to set up this meritocracy of ideas with clear execution mechanisms as a way of finding people with purpose, passion, discipline, and resilience. And that's the only way.
There might be some psychological tests that could maybe give you a 40% accurate answer, as an educated guess, but that's not enough. We need to get much higher than that. And the 100% solution is a test of execution. So, I could maybe use some kind of a questionnaire to narrow down the list of the most likely people to have these traits. But, ultimately, I don't even bother. I just open the system up to anybody and let the test of the process itself wither them out. And that's why you make it hard.
By the way, if you have a very disciplined approach to prioritizing those ideas for value creation, then those leaders will deliver. You see them being successful on the other side. They have purpose, passion, discipline, resilience. Now you’ve found them. They become the amplifiers for excellence and innovation for value creation in your organization.
On Creating a True Culture of Innovation
JESSE: Company culture often comes up as a big barrier for innovation in our talks with leaders. What are your thoughts on the impact of culture for innovation, and what do you think should be done to create one where innovation thrives?
JOSE: Well, what you do with those people we just talked about is very important. You have to put them on a pedestal, and you showcase them and their teams to the entire organization. Why are you doing that? Well, the reason you're doing that is because now those people are role models for successful excellence, innovation and value creation.
Now people will look at them and they say: “Oh, wow, that's Jim up there, the guy did like a $4 million innovation project for our company. But Jim’s as dumb as a door. How did he do that?“
Then you can be like: “You know what Susan, you may think that Jim is dumb as a door, but he's a great collaborative leader and creates value for the organization and for himself. So, here's the deal Susan, you don't have to be perfect to do this. You just have to have collaborative leadership skills, innovation execution skills, and have the purpose, the passion, the discipline, and resilience to actually get it done.”
This is very important because now you're democratizing innovation within your company. It's not the smartest software engineer who designs fancy code that is the team leader. That person is likely to be a contributor in the team that's led by someone else who is a great collaborative leader who got everybody to move towards that common purpose together. So, when you're democratizing innovation, you're making it accessible to all within the organization.
By the way, guess what those teams and their leaders, what do they appreciate in terms of recognition? Of course, they have to get paid well, but what they really appreciate is the recognition that comes with it. They really appreciate the independence and self-direction that they have, the autonomy that they have to do this work. And they'll get so pumped up by other people now connecting with them and saying, “Hey, we have this other idea”, and they become masters of collaborative leadership and innovation execution. That's why they are the amplifiers.
Talking about cultural transformation, culture is just the behaviors people are exemplifying in your organization. So, by doing what we just talked about, you have created a system to foster a culture of excellence and innovation in your organization, which is, by the way, the ultimate trick, the ultimate competitive advantage for any organization regardless of the business model you have. When you have a culture of excellence and innovation acceleration, you're going to tackle any problems that come your way with these innovators.
When you have a culture of excellence and innovation acceleration, you're going to tackle any problems that come your way with these innovators.
These are not just innovators that come up with a new idea. These are innovators for value creation. So, these are special people, and once you have that you now have a competitive advantage that's very hard for others to emulate. And that's real cultural transformation in a nutshell.
I have a lot of people who come to me asking for support on cultural transformation, and honestly, at heart I'm an engineer. When you start thinking about cultural transformation, core values and all that, for a lot of engineers, especially young in your career, it sounds like fluffy stuff. Let me tell you, if you want to create a great enduring organization, that is the most important stuff you have to do over time. But they are also right. There’s too much fluffy non-sense about cultural transformation, business transformation and digital transformation.
You need to become a value creation leader through innovation, and then exemplify those behaviors, and that is how you transform your culture over time: through those behaviors. So, this is a model for cultural transformation. But I never come into organizations talking about cultural transformation because most of them would just fire me and everybody who looks like me if I talk about that.
But I’ll tell you, the ultimate cheat is to create the system to identify the right people and amplifiers that will then exemplify the behaviors, that will in turn set the culture for a collaborative and competitive organization in the long run.
The ultimate cheat is to create the system to identify the right people and amplifiers that will then exemplify the behaviors, that will in turn set the culture for a collaborative and competitive organization in the long run.
And, as you can tell, I'm very passionate about this because it's one of those a-ha moments that happened for me in my career. I was lucky to have that early in my career, and then have been testing and developing these disciplined approaches over the last two decades. But I feel like if organizations understood the untapped potential that they have in their people to create value, I mean, we can create so much value for society and for people. Creating more meaningful work environments, and talk about culture in a very disciplined, meaningful way, and not just this soft, high level stuff that people can't really grasp. These are incredibly important concepts, regardless of your organization.
These principles are universal, regardless of the size of your organization. You scale them for the realities that you have. I work with entrepreneurs who are like two entrepreneurs in the company and companies who have tens of thousands of employees. So, the principles are universal, but you have to adapt them to the realities that you have. To do that, you need to understand these concepts.
Some of you might think that these are just common sense. Wonderful. If they’re common sense to you, wonderful, go do it! But I'll tell you, that isn’t the case in the organizations I work with. They have pieces here and there. They do not know how to put these pieces together in an interconnected system to build culture as a competitive advantage, to identify amplifiers, to have execution mechanisms for innovation where innovation lead to real value creation. They don't usually have the full understanding, they have pockets of brilliance.
As innovation is inherently risky, how would you advise companies to approach risk management and fear of failure?
We could talk about this for hours. I mean, our introductory course on excellence and collaborative leadership and innovation execution is five days long for a reason!
So, as we’re running short on time, I'm just going to hit the key points. So, fear of failure: step number one, create value. You need the 3Rs. You need to build a reputation, but to build a reputation, you do that with relationships and results. So, the 3Rs are relationships, results, and reputation.
To combat fear of failure, you need the 3Rs: relationships, results, and reputation.
Build your reputation by building relationships, and by showing results. So common sense again. But build those. Wherever you are, fear of failure is normal. Now, let's talk about our brain, it’s not wired for change. Our brains are wired for reliability and safety. So, of course you're going to be afraid of failure. Fear of failure is the number one force on people in organizations, or even as entrepreneurs.
So, you need to understand the mechanisms of fear at a personal level. At a personal level, the difference between fear and excitement is largely what your brain labels it as. You need to understand that from neuroscience, number one. You then need to start reframing what you're afraid of as excitement. Now, this is a process, it takes time, and you also have to be smart about it. You have to manage risks as you do this.
I'll give you a very quick example. If you're going to ask us all to go bungee jumping out of a bridge, it is natural for most of us to be afraid of it. Now, it would be really stupid to just wrap a rope around your ankle that you’ve never used before and just jump out of the bridge with no assessment of the risks. You're probably going to die, and that's stupid.
What some people might say is that you just need to allow people to fail all the time. No, that is stupid. That is incompetent failure. People are going to die doing that. Don't do that. You have to create an environment where failure is acceptable. But you have to create an environment where people also manage risk, and they have competent failures. They think about what they're going to do, and it's not a failure. It’s just an experiment. If I do an experiment, but I manage the risk, I call that a competent failure.
Please do not just fail at random. It is really stupid what people are saying about “fail fast and often to succeed sooner”. Fail competently instead. You have a responsibility to manage basic risks and understand what is going to happen on that experiment, and what you're going to learn from that experiment.
It is really stupid what people are saying about “fail fast and often to succeed sooner”. Fail competently instead.
So, when you get excited about what you're doing and you’re managing the risks, now you can relabel the fear as excitement in your brain, and this is a process that you have to start with at an individual level.
At a social level, which is where most of us operate as well, there is another level of fear, which is the social fear. We're afraid of what others are going to think of us. The antidote to fear at a social level is trust. So, you need to develop trusting relationships to have people around you that can be supportive and trusting.
So, at an individual level, you have to reframe fear of failure in your mind, not as an absolute but as something that you overcome by constantly exposing yourself to those failures, to those experiments, if you will. And then at a social level, you need to surround yourself with people that you can develop a level of trust for, which is the antidote to fear. There are many different ways to do that we unfortunately don’t have the time to get into.
And then, you have to have courage as well. Courage requires vulnerability. Courage requires understanding that you know that that you are vulnerable and that certain things can happen to you. And there is no special formula there. We’re all built slightly different in how we can increase our courage and our tolerance for failure.
Well, I would like to say that it's been an honor to be here with you all, and I know there are many great innovators for value creation in the audience with purpose, passion, discipline and resilience. You know who you are when I talk about these concepts that I've just talked about. If you would’ve already stopped listening, you’d probably not be one. But if you're still here with us, you probably have a lot of these components in you.
It's definitely an incredibly worthwhile journey to take. I've been fortunate to “retire”, a few years back, but I'll never retire from excellence and innovation acceleration. Because for me, this is my craft, and this is how I give value to the world. And I'll do this until the day that I'm that I'm gone or mentally or physically incapacitated and I can't just do it anymore. And let me tell you, this is incredible fulfilling.
Most people know Abraham Maslow for the hierarchy of needs, but there are a couple of lessons that I want to share with you from Maslow. One of them people know well, but the second one people don't know very well, and it's incredibly profound, and I have found that to be true from my practice.
The first one is the hierarchy of needs. You know, you have to take care of your basic needs first. Make sure that you can eat, drink and have your basic needs covered. You know, this talk about innovation and doing this higher level purpose thing, that's wonderful if you cover your basic needs. But, if you're struggling to eat and to survive, please go take care of that first. You cannot be at a higher level of purpose and self-actualization if you don't cover your basic needs. And I see that sometimes people try to skip that, and they start getting into a really bad place because they don't have the basic needs covered. The ugly side of entrepreneurship is that the suicide rate in this specific segment is much higher than any other segment. So, do not let yourself be affected by that because you're pursuing higher purpose without covering your basic needs. Make sure you cover your basic needs first.
Number two, once you have your basic needs covered to a certain extent, now you start thinking about how to get to the higher levels. I'll quote this from Abraham Maslow's research directly. When Maslow was asked, “What is this ultimate level of fulfilment in life? How am I going to find my passion? How I'm going to get there? How do I get to my purpose?” The way that he summarized his entire research is in this one sentence, and I'll quote: “Discover what you're meant to do and commit to the order of pursuing it with excellence.”
“Discover what you're meant to do and commit to the order of pursuing it with excellence.”
– Abraham Maslow
These are not my words. These are the words from Maslow, with research on thousands of people who found this level of self-actualization and fulfilment. Pay attention to these words carefully. “Discover what you're meant to do”. It is about your passion and purpose in life. What is your purpose? How do you serve the world? Discover what you’re meant to do is the purpose, and then the next follow up is just as important and not very intuitive.
“Commit to the order of pursuing it with excellence.” That is, ladies and gentlemen, the passion, discipline and resilience to have a disciplined pursuit of this thing with excellence. That's how you scale innovation. Discover what you're meant to do and commit to the order of pursuing it with excellence.
It's been a pleasure being here with you! If you want to follow what we do on thought leadership on excellence and innovation acceleration, you can find me on LinkedIn as Jose Pires, or on excellenceandinnovation.com Have a great rest of your week.
JESSE: Thanks José, it’s been an honor to have you on the show!
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