The Innovation Room: John Saunders on Creating a Culture of Innovation
Nov 23, 2020
Welcome back for another episode of the Innovation Room. This time we're privileged to have John Saunders with us.
John’s had a long and successful career on Wall Street, most recently as a Senior Vice President. Throughout his career, he’s seen the need for his businesses and teams to adapt to a rapidly changing world, so he’s worked hard as a leader to create a culture of innovation in an industry where it hasn’t always been business as usual.
In this interview, John shares his story and some of the many lessons he's picked up along the way. We cover topics such as what innovation really looks like, how leaders can create a culture of innovation, and how to build trust as a leader.
Thank you for having me, Jesse. I really appreciate it. I live in the D.C. area and I've got a wife and two boys. We've been in the area of five or six years and we spend a lot of time in the outdoors.
I've spent my entire life just being a very curious person. Why I wrote this book, quite frankly, is that I just love to learn. I look for learning all around me, in formal degrees, reading, designations, and I think curiosity has helped me publish this book, and it certainly helped my career.
It's hard to believe I spent over two decades working on Wall Street. I'll never forget arriving there as an assistant. I was sending faxes and making copies as a 22-year-old after going to college and thought: “Where could this ever end up? Did I really go to college to send faxes?”
20 something years later, I was running a $4 billion a year business as a Senior Vice President. Now I've had the chance to really follow my passion and move on to starting my own coaching and consulting business. So, it's been a great run, and I'm happy to be where I am.
In brief, it's really about delivering results through creating a culture of innovation – or what I like to call a culture of serial innovators or optimizers.
But more so, it's about building a mindset. This isn't something that just happens by chance. It's about building this mindset of trying to get people to think about how we can constantly improve things in line with the company goals and with what you’re trying to accomplish as a leader.
But what's been really fun about developing this mindset over a number of years is, I found it can really become contagious, and build upon itself, which has been a lot of fun to watch happen, and to see people elevate their game.
But the reason I wrote this book is because all these years I've spent in the workforce, I found so many people are afraid to embrace change for a variety of reasons, and they never really fulfil or deliver all their gifts to the world.
I think it's really driven by an emotional barrier because fear towards innovation and change can create hiccups. It's a risk. It doesn't work every time.
So, you have to have an environment where people can feel comfortable taking risk and knowing that it's not going to work every time. What I've tried to do is create an environment where people feel that freedom and aren’t afraid to fail, which I think is really important.
Ironically, the book itself was actually a series of optimizations, interestingly enough. Last summer, a friend said: “Hey, why don't you write a paper on leadership and just kind of put it out there, try to get it published somewhere?”
I then wrote this paper shared it with this friend. He said: “Gosh, I think you have a series here.” I then turned the paper into a four-part series, and then I shared that with another friend who helps people write for a living for a magazine here in town, and he helped me fine tune it over a number of weeks.
Then, late last year I had lunch with one of my professors from my business school and he said: “Well, I think you have the makings of a book here.” I’d never thought about writing a book, but he then introduced me to this author coach, and here I am a year later with a book about to be published.
So many times, we see the headlines and think: “Oh, this person came up with this big idea”, but we never see all the hard work done behind the scenes that really got them there. We just see the headlines and think this person was an overnight success. That couldn't be further from the truth.
History has proven this again and again. Innovation rarely changes the world on its first try. Going way back thousands of years, innovations were usually born out of necessity. We needed fire to stay warm and cook food, we needed vehicles to move ourselves and our goods around. And my favorite, we needed iPhone filters to make selfies post-worthy, which was a big, big necessity that came out of the last decade or so.
One of my favorite stories to talk about is to ask people who invented the lightbulb. I have yet to find a person that doesn't say Thomas Edison. Very few people know that he invented the lightbulb 77 years after Humphrey Davy, an English scientist, first came up with the electric lamp. John Deere, same story. Elon Musk, same story. A lot of people think Elon Musk started Tesla, but he joined a year after the fact.
What all of these gentlemen have in common is that they didn't invent what made them famous. What they did was to take the time and go through all the stages of making it awesome and accessible to a lot of people.
“What all of these gentlemen have in common is that they didn't invent what made them famous. What they did was to take the time and go through all the stages of making it awesome and accessible to a lot of people. “
After Edison invented the lightbulb, he was in this interview and somebody asked him: “How does it feel to fail 10,000 times?” His response was great. He said: “I didn't fail 10,000 times; the light bulb was an invention that had 10,000 steps to it”.
It's fascinating to me that the three guys that are so well-known with these particular products and not one of them invented them originally. They went through these steps, step after step after step to make the products viable and useful to thousands and thousands of people, and then went on to create tremendous success with them.
JESSE: Yeah, definitely. As you mentioned, it's not something that just happens over a few years, but it's decades and a lot of hard work that really goes into all of those stories specifically, but also into innovation in general.
JOHN: No doubt about it. One of the things I learned through researching this book, that I didn't know about Thomas Edison, was that he was actually the father of the research and development lab as we know it today. One of his greatest innovations to the world was actually creating a lab for innovation. He had scientists and fabricators working side by side. As they came up with new ideas, they could go right to work on building it. And that is essentially the model that modern R&D follows today.
But when I think about Edison, his real superpower, if you will, was to see failure as learning, and to continue to push onward. Getting back to your earlier question, when we try something and it doesn't work, we think: “Oh, man, I've got to walk away from this because it's just never going to work.” Talk about resilience, taking thousands of attempts to make the lightbulb.
A very interesting story about Elon Musk, that you might have actually shared with me at some point, is that Tesla is not only increasing the rate of improving their products, they're increasing the rate of change, or rate of innovation that they've delivered, which is just extraordinary. So, they're actually iterating at a faster pace, which is really fascinating to me.
For me, it was just working my way up the ranks. I went to a state school in Wisconsin. So, when I moved to New York City, I felt like maybe I didn't have the pedigree to compete with these people on Wall Street that came from much better schools.
So, my strategy was to work harder than all of these folks. How do I show up earlier and stay later? And as time went on and my career developed, I realized working harder wasn't going to get it done. So, I had to find ways to be more impactful and more effective in my operations.
In operating effectively and efficiently, you can't just choose one. You have to find a balance between the two. So, I've spent a career asking myself: “Is that efficient? Is that effective?”
It’s the balancing point between the two that can really be impactful.
"In operating effectively and efficiently, you can't just choose one. You have to find a balance between the two."
As I was going through the dozens of interviews I did for the book, I interviewed a senior executive at Microsoft and he actually described innovation as optimization. In fact, I kind of debated him about that at the time. And after I thought about it, I realized: “Oh my gosh, optimization has been my mindset forever.” I just never thought about that word for some strange reason.
It's always been about how do I make my business plan incrementally better. I looked at it every quarter and twisted and tweaked it a bit to make it more impactful and grow my business. And so, it's just this mindset that I developed because I felt like I had to find a better way to compete and continue to grow in my career.
I think it's about the mindset and I absolutely believe it can be developed. That’s one of the reasons for the subtitle of the book being Lifting the Curve. I inherited my team, and I’m going to be making up numbers here, but maybe they all ranked, let’s say, 40 to 80 on the bell curve, if you will. Going through this process over a number of years, I would argue that at the end of it, maybe we ranked 50-60 to 90-95 at the end.
So, it wasn't just about helping the people at the wrong end of the curve innovate or get more impactful on how they operate, but you can help everybody improve. That’s often missed. I've seen managers over the years think: “Oh, my best people don't need any help. They can figure it out on their own.” I would argue that they want to be challenged.
It’s of course harder to do it, as it’s difficult to find ways for them to improve, because they're already working at such a high level. But I found that they do want to be challenged. If you can find a way to challenge them and then showcase that for your team, that can be very powerful.
If someone’s struggling with innovation, to me a big part of addressing this was finding a way to do it in a very non-threatening way. And I use that phrase very intentionally because that was the feedback my team gave me: “You challenge me in a non-threatening way to get better.”
As everyone on the bell curve found new ways to get things done, I would share it with the team: “Hey, everybody, this person found a better way to get this done. How could we all benefit from this now – and not take the three or six or 12 months it took that person to get there. Let's all leapfrog to where they already are.”
I would make sure that as they shared their story, they would talk about the challenges along the way so people could see that again, this didn't just happen overnight. They spent months trying it this way, tweaked it, and so on. So, I believe if you set up this mindset for the team, this culture where everyone is thinking about trying new things, and feel safe taking these risks, it can be very powerful.
“If you set up this mindset for the team, this culture where everyone is thinking about trying new things, and feel safe taking these risks, it can be very powerful.”
Another interesting example related to this topic from my interviews was Patti Brennan. She’s an extraordinary individual, one of the top financial advisors in the United States. She's won just about every possible award you could imagine in her line of work. She's been in business for about 30 years. Her team, year after year, sets records for growth. And just when you think they can't do it again, they do it. There’s 25 people on her team, which for those who don't know the financial advisory business very well, that's an enormous number of people to be on one team.
One of the things she does is create this mindset that’s all about enabling and empowering. What she does is empower every single person. One of the key ways that I found in interviewing her was that every single person has a voice in the business planning process, from the lowest ranking person on the team to her most senior leader.
Every person has an equal voice in the business plan, and they could raise their hand and say: “Hey, Patti, I think what we're doing here isn't helping our clients as best as it could. We should maybe reevaluate this, and here's how I think we might do it.”
If someone comes up with a good idea, she is not afraid to rip up last year's business plan and implement the new idea. One of the ways she makes this work is that they all have a voice to set a goal for bringing in new clients. If they hit that goal, every single person gets the same bonus, which is almost unheard of, particularly in the industry.
This really levels the playing field and builds camaraderie into the team, which I think is just extraordinary.
How does she do it? It really gets to one of the core principles of what I write about in the book, which is vulnerability.
It's very difficult for a founder, or a CEO, to stand up and say: “I built this business. Now I'm going to empower these people to come and make decisions for me.” That is not an easy thing for everybody to do, and that takes an enormous amount of vulnerability. But she demonstrates this over and over again.
Think about that message she is sending to her team: “We're all in this together. You all have a voice here. We can make this better, but we're going to do this together because there’s synergies in working together, as opposed to just me pushing everything down from the top.” She’s just an extraordinary example of teamwork and vulnerability.
I'll share one of my favorite examples with you. One of the big elements of the book is creating a feedback loop on how you operate, and it just really doesn't happen without communication and building trust.
When you first go to your team to try create that feedback loop, they aren't always used to that. Asking them: “Hey, what's it like working with me? How can we improve our relationship?” is an incredibly powerful exercise.Back in 2011 or 2012, I wasn't a manager yet. I was a salesperson and my business had taken off in the first number of years, but then it had kind of plateaued. I remember sitting at our awards ceremony one year, and when they were calling the award I remember thinking anxiously “Oh, is it me this year?” But, as soon as they said the person's name, I realized I wasn't even in the running, and I was deluding myself in thinking that I was, which was a painful lesson.
Afterwards, I went right up to the gentleman that had won the top award the company gave out and I congratulated him and asked if there's something he did differently this year that drove the results. He said: “Yeah, I surveyed my top clients on what it's like working with me”.
That just blew my mind. Nobody in the industry was thinking this way, at least not that I was coming across.
So, I asked him to share the survey, tweaked it marginally and set out to do this myself. It was probably the single greatest thing I did in terms of helping my career evolve.
As I went to set up all these meetings with clients and said: “Hey, I'd love to get your feedback on what it's like working with me. I'm so impressed with how you operate your business and I'd love to get your feedback on how I could improve what I do.”
I'll never forget sitting down with this one gentleman top client of mine. I'd worked with him for years, and I'll never forget this moment. I asked him what the best part about working with my company was, and I was thinking that this is where he tells me how great our partnership is.
He never mentioned my name. Not once. I'll never forget that moment. I'm still feeling the sting of it right now 10 years after the fact. As I drove out of his office that afternoon, I remember thinking: “Man, this is what brand management is all about, here I’ve done all these things to help him and his team grow their business, operate more effectively, and he never even considered it in answering that question, which I thought was fascinating.
So, taking that little analogy right there, I took that exact same approach as a leader. So instead of asking clients now at this point, what it’s like working with me, I applied that same lesson to my team, and it's an incredibly impactful exercise.
You can't ask all these questions at once, but maybe over the course of a couple of quarters:
The first time you ask these questions, you will quickly see how comfortable people feel with your relationship, or with their career or their spot in the company, because if they feel comfortable, they'll give you more honest answers. If they don't, they'll say something like: “It's nice to work with you, and I really enjoy it”.
I found that exercise I learned as a salesperson and applied as a leader as incredibly impactful to build trust and engage the team. I'll pause there.
JESSE: I've seen a lot of people, myself included, be in that position where they are asking for feedback, but then they don't really get anything meaningful out of it, which might lead you to believe that there's not much to do to improve at the moment, which of course usually isn't true. But what you're saying is that it all comes down to the building that trust first?
JOHN: I would add two more wrinkles to that. It's not a one-time event, much like innovation. It's a series of events. To get there with these folks, to get them to trust you and to believe you will actually do something with the information they give you.
Few things are more frustrating than having a manager come to you and say: “Hey, help me out with this project.” You do all this work or give them a thoughtful answer – and then nothing happens. That's a quick way to getting people to not give you feedback.
One simple example that really was a turning point for me, was doing just that. I went to somebody and said: “Hey, you know, we're a remote team. How can we better communicate as a team and without delay?” This gentleman had been with the firm a long time and quickly replied: We have too many conference calls. He didn't actually say it quite that nicely, but I'm paraphrasing for everyone.
I hadn’t really thought of that, it was just in our culture. We've always had these conference calls, so when I became a manager, I just kept it going on.
I then just knocked out something like 15-20% of our conference calls. I sent out a note to the team: “Everybody, Brian had an interesting idea. I want a pilot this year, let’s see how it goes. I'm just going to get rid of a bunch of these calls based on his feedback and see what happens.”
And then, all of a sudden, they saw all these invites disappear from their calendars. So:
That simple moment was one of the biggest door openers for my team, because at that moment they said, Holy cow, this guy's paying attention. He's not just asking his questions to make us feel good about ourselves and provide lip service. He's actually going to do something about it if we come with a good idea. And boy, that really opened the floodgates for the team.
But here's the sort of the punch line to the story. At the end of the year rolls around, and on the last call of the year I said: “Hey, everyone, we had these fewer calls. What did you think? Should we bring them back?” And the phrase ‘the silence was deafening’ is my best way to describe what happened. That's how we continued on for the next number of years, and our business improved. It had a very positive impact on the team and its operations.
I think a big part of the answer is going further back and looking at how change has impacted people over time. How have we been conditioned to think about change?
From my own life experience, and of those of my family and friends, change isn’t always good for you right now: your job being cut, pay cut, loss of power… So, change often not only comes with risk, but it comes with very negative consequences. And many of us have been conditioned to think that way.
There are these huge emotional barriers, and I think the Big Four are:
I found some really interesting research on shame as I was researching for the book that said that we fear shame so much that we will do anything we can to avoid it, including not trying something new.
We are not trying to be creative or innovative because we're afraid that if we try and it doesn't work, then we have to go to our spouse, our partner, our friend, our co-workers and say, I tried and it didn't work. I've now suddenly tarnished this perfect image that I thought you had of me. This is a huge problem. We need change to happen to evolve as a company, and as a business. We can't stand still, as standing still is really going backwards.
As leaders, we often don't have the tools, the training, or the time to create this environment that gets us past these emotional hurdles. I would argue we need to make the time, and that a part of our job is to make people feel engaged and empowered in what they do.
If you can get it even close to right, you're going to not only find employees more engaged in the journey, but they're also going to be more passionate about their work.
We spend most of your waking hours at work, so people really want to have a great environment and be engaged and feel like they're making progress, and I think that's just really important.
But, back to this concept of trust: if people trust you, chances are good that someone on your team sees the flaws, the holes in your business plan, and client concerns. And if they don't feel open to share that feedback with you, you're going to find it out the hard way later on: “We just lost all of these clients because we had this problem. Why didn't anybody tell me?” Well, that’s because they're afraid. They feel like if they come forward with that information, you're going to be upset with them.
A few years ago, I had a gentleman leave my team and he had one of the smaller sales regions in the company, so I had to make a decision. Should I replace him, or should I maybe merge the territory away and give part of it to the people adjacent to him?
I did a lot of analysis on it and realized that I could actually get rid of this region. This would reduce the headcount on my team, which as a manager is hard to do. Many times, we're sort of conditioned to think that if we have more people reporting to us, we’re more important, and therefore our jobs are more secure, and so on. Still, I decided that it didn’t make sense to keep this role and was going to get rid of it.
But before I announced that decision, there was one gentleman on my team, Dave, a very tenured person that I went to have a chat with about the change. At this point, I wasn't completely convinced of doing it, but I was pretty close. I said: “Dave, you've worked in this area for years. You've covered much of this region that this other guy that left covered. I'm thinking about not replacing him. I'd love to get your take on what this region should look like if we don't have another person working in it.”He was blown away. He'd been with the firm for 20 something years and had never been asked for this kind of feedback on a meaningful change. He asked to have a few days to think about it.
Three or four days later, we met a Starbucks and sat down. He came back to me with all this very thoughtful work. He even had specific suggestions like adding more resources for his team and things like this. Lo and behold, his analysis overlapped 75-80% with mine. But now that he did the work and brought me the ideas, this change effort was largely his.
If your manager comes to you and says, Hey, Jesse, I'm going to turn your life upside down, take it or leave it. What's your reaction? You probably call up your favorite work colleagues and talk how your boss is a jerk.
But, not only did he come up with a lot of the same work I had done, but he also came up with a couple of new wrinkles, which we were able to add, which was great in terms of getting him more resources. And, because these decisions were his, he was really able to own it and take greater ownership of the change. He spent the next two years running really hard and fast, and found himself promoted.
This one really required me to be vulnerable and saying: “Hey, let me empower you to help me make this decision. I think you could make it as well if not better than me.” And it really had a massively positive impact on our circumstances.
Interesting. That makes me think of some data. When the S&P 500 came out in 1964, on average you spent 30 something years on the list. Innosight, an innovation consultancy, came out recently and said that by 2027, they think the average tenure on the S&P 500 will be 12 years.
So, I tell you that backdrop to say that I think these two things are tied together. I think as a leader, you have to drive change. You have to get people to evolve and to make your business grow and continue to grow. In doing that, you have to create this culture of innovation, this optimizer mindset, to get people to think this way.
There's also a number of other benefits to doing that in addition to just growing your business. Inevitably, sooner or later, you are going have to come to your team with a big ask and say: “Gosh, this time we can't make an incremental change. I need you to take a bigger leap.”
"As a leader, you have to drive change. You have to get people to evolve, and to make your business grow and continue to grow. In doing that, you have to create this culture of innovation, this optimizer mindset."
So, If you get people to constantly think about allocating time to this change and constant improvement, mindset, it allows them to already be there. So, instead of just taking a small leap, this time it’s going to be a bit bigger.
Throughout time, when challenges arise, you'll be better prepared for them. Maybe there is something that comes out of left field in the industry, the economy, or competitors that forces you to make more of a radical shift. Having this innovative mindset can really help you be better prepared for that. Does that get what you're asking?
JESSE: Yeah, so your view is that innovation just has to be a part of basically every team and everyone's way of operating these days, and you can't really get away without at least incremental innovation. But then that also prepares you for the bigger, more disruptive shifts in that basically every industry is facing these days.
JOHN: Thank you. I'll tell you, it was fascinating to see, as I alluded to earlier, seeing people at each end of the bell curve on my team embracing this mindset. You’re probably not going to see the least innovative person on your team, if you've identified them yet, come forward with the very best ideas. But what this process can allow you to do is unleash even that person and get them to push forward and help the team grow.
If you go to the other end of the bell curve and can find a meaningful way to challenge your top people, they're going to come forward with extraordinary ideas that really help move everybody along. Everyone has the ability to do it. So, creating this mindset can be incredibly powerful for leadership, and for driving innovation. I think these two things are very much linked.
Start small. Begin with a simple feedback loop.
But, before you do it, before you start asking your team for feedback, I would encourage you to take an idea from Tomas Chamorro-Premuzic, who wrote a book a while ago that had a very interesting exercise. To get a sense of how your team thinks about not just you but leadership in general, go to Google and type in “my manager is” and see what pops up.
"Start small. Begin with a simple feedback loop."
Spoiler alert, not one of them are going to be positive. So, before you begin this feedback loop, just go through that exercise to get a little bit more perspective on where your team maybe coming from.
So, when you think about preparing for asking feedback, and I list a number of questions for this in the book like: How could I be more helpful, how could our teamwork be better, and a bunch of others.
But the most important thing with this exercise is to be prepared for answers you don't want to hear. Because it might turn out that maybe you're not as perfect as you thought. This is where vulnerability plays such a key part.
If your focus is ultimately on trying to help your clients and grow the business, it makes the whole process a lot easier, because if you just take it personally, then it's just me against this person.
But if you think about it more from the perspective of, “if we can have a better relationship, we can deliver better for our clients.” That’s where this thing really gets powerful. When you hear these feedback insights that you don't feel comfortable with and don't think are true about yourself, reflect on them. This is how you grow. I believe great leaders do this all the time, and it gets easier over time for sure.
"It might turn out that maybe you're not as perfect as you thought."
When you go through these questions, be thoughtful. Don't force a square peg in a round hole. If you're uncomfortable with it, start with an anonymous survey so people can really feel free to speak their minds to get people to feel like you are listening and do care. Take that information and report back to the team what you’ll do, just like I did with the conference call schedule. I mean, how simple was it for me to do that? And that was such a big change.
One of the folks I interviewed, David Gardner, who is the co-founder of The Motley Fool, which is a financial advice company here in the D.C. Area., is the master of this. When they started over 25 years ago, it was just him and his brother writing a newsletter and thinking it was fun to put on the Internet and give people advice.
It was really interesting to hear him share a lot of the same ideas, and how he operates. He has a constant feedback loop with his team. He does formal surveys twice a year, and he also gets the team together, face to face in an all-hands meeting and asks everybody what's going on. He keeps it very light and low-key like that and takes their feedback. He doesn't just write it on a piece of paper but takes that insight and really tries to use it to make the business better.He also built their mission around this. It took him about half his career to shape it, and it is: “We want to make the world Richer, Smarter, Happier.” I think there's something very important in those words, and that is they all end in “er”. He didn't say we're going to make the world rich, smart and happy. Those have endpoints: “I'm rich. I can, stop. I'm happy I could stop.”
So, he's built this optimizer mindset into his team by saying: “If you want to work on something, if you want to innovate, ask yourself that question: Is it going to make the world Richer, Smarter, Happier.” It makes decisions a lot easier. He’s just a great example of being vulnerable, being a good problem solver, focusing on your customers, and engaging your team and empowering them to be involved in the process.
If there's one thing, I would argue that without trust, none of this is happening without a doubt.
And the bar, I believe, is lower than you think. People want to have a good relationship with their manager, and I believe it's incumbent upon the leader to put out the olive branch and begin this process because most employees aren't going to take it upon themselves to come to you and say: “Hey, let's have a conversation about us not working together as well as we could“.
How many employees are going to have that conversation? Its's you as the leader that has to begin that conversation and empower your team to do it. People want to see progress in how they operate, and if they could be a part of it, that's when they're really going to be passionate with their work and be more engaged in it.
And when that happens, that's when they start to deliver more results because they start to think about how do we make this place better all the time? And then it becomes this beautiful waterfall effect where everyone gets involved and positive things begin to happen.
When you get people started to come up with these new ideas for themselves, they're not going to stop. They have the ability to not just surprise you with their creativity and innovation, but they're going to surprise themselves, and their peers. And it's going to make them happier, and more passionate about their work but also their lives.
Quite frankly, I think it's really possible for this cycle, this feedback loop, this innovation cycle to take on a life of its own. And I would argue that it really could become much more as time goes on and your team members will start pulling each other along. After this thing really gets up and running, you as a manager really just set the guardrails so that the team doesn’t go into the ditch, if you will, and making sure that the innovation or the optimization is focused on goals meaningful to the business.
I believe this can be a self-fulfilling thing that continues and takes on a life of its own and delivers results, and ultimately, allows everyone to have a little fun along the way.
The book will be on Amazon, Barnes & Noble, and wherever you buy books online in early December.
JESSE: Thanks for being on the show John!