Corporate Innovation/Interview/ Forget thinking “outside the box”. This is why the box is useful Todd Rovak, chief executive of Fahrenheit 212 (part of Capgemini Invent) tells it straight: most corporate innovation labs are failing and pretending there are "no bad ideas" is naive. By Kimberly Eynon 21 January 2020 \Corporate Innovation Purrsonalised health: The startups and VCs betting on pet genetics By Adam Green 15 September 2022 Corporate Innovation/Interview/ Forget thinking “outside the box”. This is why the box is useful Todd Rovak, chief executive of Fahrenheit 212 (part of Capgemini Invent) tells it straight: most corporate innovation labs are failing and pretending there are "no bad ideas" is naive. By Kimberly Eynon 21 January 2020 Todd Rovak, chief executive of Fahrenheit 212 (part of Capgemini Invent), is not one for pontificating about the meaning of “innovation” or thinking “outside the box”. The box is a good thing, sometimes, he says, because the constraints of an industry are real and a good innovation process doesn’t pretend they don’t exist. He’s straight-talking in his assessment of the corporate innovation market: most corporate innovation labs don’t work and 75% will have disappeared in three years time. How do you define ‘innovation’ and how do you best describe your job? Over the years I’ve found that innovation has about 25 definitions that all basically get at the same thing. My favourite is that innovation sits at the intersection of what is creative and what is useful. This captures the two-sided nature of innovation nicely, the nuanced blend of creative and practical/technical. However, the truth is that most definitions are perfectly fine; any time over 10 minutes spent debating the definition can be better spent solving a customer problem. “Innovation sits at the intersection of what is creative and what is useful.” I lead two groups — Fahrenheit 212, innovation consultants, and the global Innovation & Strategy practice at Capgemini Invent, our parent company. I describe what we do as defining what should exist, either right now or in the future. Not what could (wide-view dreaming), what might (hypothesising) or what likely will (forecasting) but what should — a strategic articulation of a new product, service or business model that the market actually needs, whatever the timeline or enabling technology. It’s a sharpness of creation and I would argue that this same skill applies to entrepreneurship and venture capital, albeit in different forms. What do you think will be the biggest threat for Fahrenheit 212 in the next five to 10 years? Good innovation practitioners have to do two things that exist in conflict: 1) bring predictability to innovation through some kind of process (so the process isn’t random and has some understandable return on investment). 2) constantly evolve the inputs to this process (so you’re connecting to and leveraging what’s new in the world). The threat to Fahrenheit 212 is that either one of these pillars falls. The process is incredibly strong at this point — so my worry is always the latter. The rapid pace of technological improvement means that the use-cases for products and services are changing just as rapidly — if our people don’t know how to leverage these technologies we are not really painting with the full pallet. Sometimes this means training a consumer packaged goods expert on blockchain; other times it means bringing in new people to add this dimension. Capgemini Invent brings a lot of the technology side, so I think we are good for the next five years. The next 10 will be judged by those who have the broad skillset and access to resources to build entirely new companies. How do you think innovation and design firms will differentiate themselves in the next five to 10 years? Here’s my personal theory: for the last 2000 years or so, the success of companies has been driven by access to (and leverage of) capital. If you can get financing or a loan, you’re set for growth, and this is why for every railroad there is a JP Morgan. It gave banks and finance a massively outsized role in what gets built. This has been true for a long time. “The past centuries of business success were driven by leverage of capital, the next century will be driven by leverage of technology.” A few years ago, a few things changed. Access to capital became easier — not just because of low interest rates but because of new mechanisms like peer-to-peer lending. In parallel, the need for capital is reduced; if you want to start a digital business today, you can hack something together to test in a few days or weeks and never make that trip to the bank. Therefore, while the last centuries of business success were driven by leverage of capital, the next century will be driven by leverage of technology. Those companies that understand this will connect in whatever way possible to those who can understand, create, and scale new technology-driven products and services. The ones that don’t won’t be useful and won’t exist for much longer. Innovation and design companies aren’t necessarily the same thing and grouping them too closely can be a bit dangerous. Design is an incredibly valuable skill, but ‘design thinking’ often misses a lot of the business realities and leaves them as problems for others to solve. This institutionalises the typically high failure rate in innovation. We believe the business problem and customer problem should be solved concurrently, not sequentially. There are some killer design firms and incredible innovation firms out there — but I wouldn’t use the terms interchangeably. How do you challenge yourself and your team to ‘think outside the box’? Honestly, “the box” doesn’t come up too much. Those who work and thrive in innovation naturally push boundaries and don’t need a lot of encouragement to do so. It’s a creative business and I consider this table stakes. Small ancillary point: the box is useful. Those who believe that dropping all constraints is the way to make new things don’t typically get too many things into the market. The technical or regulatory constraints of an industry are real; there are workarounds, but a great solution often leverages these constraints in unique ways; a good process doesn’t pretend constraints don’t exist. “In truth, there are a ton of bad ideas. I’ve authored quite a few myself.” It’s fun to say “there are no bad ideas!” and this brainstorm mentality is the DNA of a lot of painful workshops, but in truth, there are a ton of bad ideas. I’ve authored quite a few myself. Innovation practitioners are trained to think creatively, broadly, experiment and then know the difference between bad and good when there are careers and millions of dollars on the line. What is currently not working in corporate innovation? Most corporate labs, 75% of which won’t exist in three years. A room with cool furniture does not create reliable growth for companies. Even rapid prototyping — a good thing — isn’t innovation. It’s a part of the process. Companies often confuse elements of innovation with innovation itself. You made something that looks beautiful in 3.5 weeks — amazing! Wait — why? How does it make money again? Would we even want to scale it if it worked? “A room with cool furniture does not create reliable growth for companies.” What advice would you give to a new head of innovation — what do they need to get right from day one? Chief innovation officer is a very tricky role. Here’s the litmus test: if they have a meaningful budget, corporate innovation has a meaningful role in the company. If they spend 75% of their time looking for business units to fund their projects, it’s over. What book has been most helpful to you in thinking about corporate innovation? “Business books are no fun and most should be pamphlets.” Business books are no fun and most should be pamphlets. Instead, read Enders Game by Orson Scott Card. I think it’s meant for nine-year olds. It’s the world’s best science fiction book from the 1980s and also a pretty terrible movie from five years ago. Takeaway #1: You can make amazing teams out of completely diverse and unrelated skill-sets, including with people who don’t fit in elsewhere. It’s how they work together to create something bigger than themselves. Takeaway #2: Don’t try to make a low-budget movie out of Enders Game. Related Articles What working with companies like Apple and Ikea has taught IDEO about innovation By Kimberly Eynon Click here to read more Half of all corporate innovation providers will fail in five years By Kimberly Eynon Click here to read more New head of Airbus BizLab: “We need to take better bets” By Maija Palmer Click here to read more Most Read 1 \Healthtech Is Daniel Ek’s new body scanner worth the hype? Sifted tried it out 2 \Venture Capital VC diversity needs to change — and white men need to take responsibility 3 \Venture Capital New €3.75bn European Investment Fund pot to back late-stage VCs 4 \Sustainability Counteract closes £15m fund for carbon removal solutions 5 \Mobility Was the $5bn that VCs plugged into escooters worth it?