Overcoming the Corporate Immune System

The large majority of new products and growth initiatives fail - countless more never make it off the ground.

A major, underestimated, factor contributing to the short-lived success of growth initiatives is the tendency of companies to undermine their own efforts.

Internal systems can often behave like immune responses, instinctively targeting foreign objects whenever anything new is introduced.

Here is how the scenario commonly plays out:

You've conducted thorough market research. You have a clear picture of the problems and opportunities facing the business.

You've crafted the approach to your next groundbreaking product or initiative, poised to launch the business into a new market…a new stratosphere.

You've meticulously mapped out resource support for this new venture and cultivated alignment/participation in concert with your peer functions that will be critical for support along the way.

You've pitched to the board or executive leadership.

Everyone is waiving their jazz hands in full support. It is a go!

But then, a week or so later, you are back at your desk and reality sets in.

Time keeps a tickin’. Tick tick, tick tick, tick tick.

Resources begin to fall short of expectations. This becomes clear when those who were early champions are delegating to their front line teams who have far less context and influence. The promised support starts to thin and stretch out (we need to push our program regroup meeting another month!?).

It feels as though everyone who participated in building out and aligning on a joint approach to the opportunity are mentally hung-over.

Teams are distracted with other urgent business-as-usual tasks, their focus scattered.

Your initiative, along with those responsible to aid it (but not taking accountability), faces slow and steady dilution. You felt the half-assed execution coming from a mile away and months or quarters later things are far from the full commitment pledged. Everyone is promising it’ll be okay.

Even more frustratingly, key players who vowed their support continue to engage. Yet their actions are of those who have both feet out the door. They are even questioning why the thing we weakly launched with is weakly performing.

Teams on the ground are left with the tax of operating a poor solution to a real company, customer, and partner problem.

You are bewildered, disheartened, and yet somehow not surprised.

It can be soul-sucking stuff. But what’s going on here? I think about this a lot.

Most new or novel initiatives encounter some type of internal resistance - subtle or overt. Left unfettered, initiatives will find themselves systematically dismantled by the organization's entrenched processes and cultural norms. Effectively, these growth initiatives are forced into direct competition with the gravitational pull of well-established businesses or units.

Defense mechanisms naturally exists in organizations of every size, especially when there hasn't been a concerted effort to cultivate a culture of growth and innovation beyond a well-established "core competency."

It takes focused and intentional effort for organizations to create environments that embrace innovation and change.

If you are in charge of championing a growth program it starts with you - it is the wrong move to accept disfunction and continue to hope for change. Your team, and the business, are counting on you to help them overcome this.

Where do you start?

First, if you are the sponsor of a growth initiative (i.e. you are a C at a small-mid size or own the P&L of a division at a large organization, a product vertical/horizontal owner, or similar) one of the primary things you have to do is continually get distance from the growth initiative and assess how the playing field is operating.

A simple tool to be able to do this, which is natural for many organizations, is to organize work and initiatives in the queue across 3 distinct horizons.

• Horizon 1 (H1): This represents the work that serves your current, established business – the core operations and revenue streams that define your business today. You might be a startup and do one thing really well, or you are a 100 year old business that has multiple mature business lines. H1 items bolster the existing, established, areas sustaining active business health.

• Horizon 2 (H2): These are logical progressions from your existing business competency but stretch you into new areas of opportunity. H2 involves combining current competencies with innovations or developments in new technology, channels, products, or production methods / processes that leverage your asymmetric advantages. This can often mean there are new combinations of existing functional activities that need to coordinate or there are new activities that need to be incorporated across the existing areas.

• Horizon 3 (H3): This horizon encompasses ideas for future business ventures. While these concepts align with a long-term vision, and are likely common in the industry or vertical you exist in, they often lack an immediate, logical extension from the current business model, all factors considered. There is likely larger dependencies or developments needed which come over a logical course of action (usually H1/H2 enable and position the business for H3 items).

At first scan, which horizon do you think the Corporate Immune System attacks most?

It’s natural to think that the businesses future rests on the ability to get your future ideas in H3 out the door sooner, therefore this must be where the issues lies.

In actuality, it is HORIZON 2.

H2 is the transitional phase where current strengths and operations meet future aspirations. And why does H2 get squeezed and growth breaks down?

Here are the top reasons why H2 should be every growth leaders primary focus:

• Financial reporting and investor communication primarily focus on current year results. This aligns organizational incentives with the immediate success of H1 products and initiatives, not the areas that have impacts outside of the current reporting period.

• Accountability for delivery beyond core business doesn't exist. Advancing outside of H1 in large organizations often requires calling in favors and the creation of pet projects with the wrong people on them.

• Leadership will disproportionately directed their attention towards H1 but sporadically focus on H3 due to its association with innovative and exciting ideas.

• H2 is in no mans land, caught between the immediate results of H1 and the visionary appeal (RE: Sexiness) of H3.

• When H2 items go unserved for too long, different parts of the company try to ‘compensate’ for the gap. It is clear there is a need, recognized by random parts of the organization, yet not obvious where it should go or how it should happen. People in the wrong parts of the company begin creating pet initiatives under their remit that have direct strategic disadvantages if left to fester. In many cases these activities are welcomed by functional leaders as being resourceful and pioneering within their teams. Yet ultimately, it’s just a land-grab. It’s not uncommon for the idea to be raised of absorbing entire existing misaligned functions because of the collection of pet projects one leaders team has accumulated. Ever seen a franken-function?

• Ideas from H3 are frequently pushed into H2 without a solid business model or integration strategy, driven by the allure of innovation rather than strategic importance. Product teams in particular can be quick to jump to H3 for all the glory.

• Internal teams such as product development, sales, BD, and operations often pressure for the inclusion of H3 initiatives to enhance the appeal of existing offerings to internal stakeholders or to customers for the same reason.

• Despite the initial enthusiasm for innovative H3 ideas, the core business focus remains on H1, leading those exciting new non-adjacent initiatives to becoming shelf-ware or contributing to unnecessary complexity without substantial business impact. You were not ready for those things and now you have operational problems (but perhaps that isn’t your problem…perhaps you shouldn’t be in the position you are in!)

• H2 product is funded yet the operational requirements and service accountabilities that are critical to the initiative working are overlooked or blatantly not supported.

If anything resembling these organizational behaviors commonly happen, it may be prudent to think about “growth” at a different altitude; at the organizational level, with top brass.

These are not bottoms-up issues that reside within the initiative and the key constituents in your organization need help recognizing the issues in a constructive and objective way. It is your responsibility to navigate appropriately, conscious of the organization’s unique norms, to cultivate opportunities to address the challenges faced.

Should the leaders around you have the maturity to address systemic problems, and the conviction to build organizational strength that will serve the business over the long-range, here are some best practices I’ve observed when organizations get it right:

• Insulate Horizon 2 from Horizon 1:

  • This will be the #1 hardest thing for organizations to overcome. Success in Horizon 2 can't be measured by the same standards used for the established business in Horizon 1...even though they are being "added to" the overall suite of business capabilities.

    
    

    • You must create specific processes and set relevant performance targets that align with the unique characteristics of Horizon 2 initiatives to ensure their growth and success.

    
    

  • Further, the people associated with performing tasks related to building and then sustaining the new initiative should be measured differently.

    
    

    • An example is breaking out emerging territories from core markets. They are their own segment, with separate leadership, should be focused on performing (and being measured by) the activities that lead to closing transformational deals appropriate for the stage they are in.

      
      

      • Territories remain this way up until the point they start behaving like your mature segments, then are rolled in to core capacity at 'maturity' and not sooner.

      
      

• Put the right people in place, don’t just supply added resources:

  • Simply allocating budget and a share of people capacity to H2 initiatives isn't sufficient. If team members have ‘dual roles’ or are 'managing across business lines’ you are going to have issues.

    
    

    • It is likely you need to go back up to the point above and think about how you are measuring success

    
    

  • Success requires dedicated entrepreneurial team members who possess not only the skills to deliver but, critically, the fortitude to endure in open waters. If this thing is as important as it was agreed in the board room or the C-steering forum, this should not be a problem.

    
    

    • A dedicated, procured, cross-functional team needs to be capable of steering through the uncertainties of new markets, methods and modalities, transforming the opportunity that exists into tangible deliveries and outcomes.

    
    

  • Create an accountability directive in executive forums. The expectations need to be placed on the highest level leaders who oversee the resources needed to clear the runway and make H2 initiatives happen - protected from the expectations of the existing day-to-day business and supported with a tight watch on breakages.

    
    

    • It is not enough to simply say someone is accountable. The systems you utilize and the behaviors you perform must consistently reinforce accountability for delivery.

    
    

• Elevate and Make Horizon 2 Initiatives Highly Visible:

  • Once you get the right infrastructure in place from the previous two items, leaders must bring H2 opportunities into focus for the rest of the organization. Leaders often prefer to nurture their budding initiatives in the shadows, keeping them 'secret' until they're deemed ‘ready for the spotlight.’ This is a distinction with no objective benchmark besides the leader's instincts (see: comfort).

    
    

    • Often, when new initiatives get developed quietly, it is known only to those directly involved. This approach, while seemingly less risky and comfortably familiar, is fundamentally flawed. It neglects the dynamic growth segments of the business in favor of the well-established parts.

      
      

    • Secretive behavior can stem from an irrational fear of upsetting existing employee norms, a founder having to help employees envision the original business narrative differently, or that the people that helped achieve the growth to-date will somehow want to stop progressing forward. Ultimately it is a communication, trust and leadership maturity problem.

    
    

  • Ironically, the 'new stuff' – the initiatives in Horizon 2 that are critical for maintaining relevance and justifying leadership roles – demand high visibility to succeed. These initiatives must be prominently featured in boardroom discussions and consistently highlighted in company-wide communications.

    
    

    • Active and consistent engagement from top management, including the CEO and the board, is not just beneficial but essential. The visibility and endorsement of Horizon 2 projects are vital for their sustainability and for reaching excellence. Without this high-level spotlight, it's all too easy for the rest of the organization to make decisions that inadvertently undermine these burgeoning initiatives.

      
      

    • Absent this level of communications, the teams involved face an uphill battle to bring the rest of the organization up to speed. This leads to a repetitive cycle where teams find themselves continually having to re-introduce and re-justify the value of what's being developed to various peers and groups across the organization, all of whom are essential for the initiative's full realization and success.

    
    

This certainly isn’t an exhaustive list of solutions and I remain curious about how else organizations can get out of their own way in these situations. Ultimately, when these issues are solved, organizations are healthier, better for employees, and can give themselves a chance to live up to the potential they have in serving their customers while creating immense shareholder value.