A few weeks back, I spoke to Bruno Pešec for The Lean B2B Podcast. We talked about corporate innovators, innovation, strategies, The Lean Startup, and portfolio management.
You can watch the full interview below, or access it on iTunes, Google, or Spotify.
Étienne Garbugli: My guest today is Bruno Pešec. Bruno is an innovation expert, helping corporates make viable investments in innovation. Bruno is also the co-creator of Playing Lean, an award-winning board game that helps enterprises, universities, startup hubs, and accelerators learn the lean startup principle. He’s also the co-author of the newly-released book called Augmented Strategy.
Bruno, welcome to the podcast.
Bruno Pešec: Étienne, so happy to be here.
Étienne Garbugli: We’re both early adopters of The Lean Startup principles. Do you remember how you first heard about the lean startup and what initially attracted you to the lean startup?
Bruno Pešec: Absolutely, although I have a confession to make. I was definitely not an early adopter of the lean startup method. In fact, I would say that I got into it quite late and I’m going to share a little bit more why.
By trade and by training, I’m actually an industrial engineer. I used to study aeronautical engineering; guys that make planes. But during my studies, I heard about the Toyota production system and I was mind blown. I was like, “Wow, this is what I want to study.”
So I worked with Toyota. I was trained by them: corporate value creation, innovation, et cetera. And the Toyota production system — lean manufacturing, lean thinking — was always something that I was very interested in. I always considered myself a lean practitioner.
I did hear about lean startup, not in 2008 when it was actually happening in the USA, but later when the book came out. But my thinking back then in 2011 was; what is this? Another gimmick? Let them prove themselves. I kid you not, at that time, it was lean everything. There was lean wardrobe. That was the scene in the 2010s. So, to me, it was like, what is this? Who cares?
It was five years later, in 2016, that I actually revisited it. I thought, “Okay, lean startup is still here. Let’s take a look. What is this actually about?” And what I realized then, being more mature myself is, this is actually a viable alternative method for both business development and product development. And there weren’t that many lightweight methods that were combining both of these.
There were many methods for developing products based on insights, but they were all very cumbersome. If you talk to engineers, most of them will know about quality function deployment. It’s a total overkill. And then you had design for Six Sigma, another total overkill, all very process-heavy approaches.
Then there was The Lean Startup, which was, on the surface, fuck it, try it. I have an idea, let’s go and try it out. There wasn’t more to that. That is obviously a very superficial approach, but when you look at it from the outside, it seems like anyone can try this. You don’t need to have a Ph.D. You don’t need to be an engineer. You don’t need to have 20 years of education or an R&D background to try to come up with something new.
That was when I started paying more attention and took a deep dive into the method, started applying it myself, combining it with the knowledge I have, and figuring out, okay, is this good or not? That was all over the place.
Étienne Garbugli: No, it’s perfect. So did you end up buying the lean startup clothing?
Bruno Pešec: No, but I did get it.
Étienne Garbugli: Believe it or not, The Lean Startup was released 3,851 days ago today (March 30th, 2022). Of all the things that we associate with the lean startup movement, what do you feel has stayed true? What do you feel is not talked about enough today?
Bruno Pešec: First, my assessment of lean startup as a movement is that it’s dead. It’s been absorbed by others. If you look at Eric Ries and all the consultants that came later, they were all focused on startups. They realized there was no money there and they started pivoting to, “Hey, we want to serve corporates. We want to be consultants. We want to build venture studios. We want to build governance structures and things like that.”
That is the evolution we have seen. Lean startup as a set of principles has been kind of absorbed by the agile movement, which is much bigger and is considered kind of part of product development practices. Is that good or bad? We could probably have very long discussions, but that is my assessment.
There are no strong lean startup talk leaders, I would say, anymore. They either moved into the full innovation space, agile space, or entrepreneurial space. That is what I would say the situation is today.
That does not mean that lean startup is useless. I still think it’s a very good process, but in terms of a standalone community or standalone movement, I don’t think it exists anymore as it was. If you remember, 10 years ago, a lot of grassroots communities, a lot of movement.
I mean, I did bring the Norwegian lean startup circle, which was a lean startup circle from all over the globe and we had the Norwegian chapter as well. There are very few, if any, active lean startup circles anymore. And as I said, all the forerunners I would say are now gone. They picked different niches. They don’t promote themselves anymore as lean startup experts or anything of that kind.
Étienne Garbugli: Do you feel like all the principles have been swallowed up by agile or have been adopted or there are some of them that have faded away? If that is the case, if you’re starting from the assumption that all of it was absorbed by agile, you could make the case that this was pretty successful; that everything that was put forward actually worked out, right?
Bruno Pešec: Of course, you can make the case. I want to be clear; I was not making the case that it was a failure. When I say it got absorbed, it doesn’t mean it got absorbed successfully. I mean, agile is very popular, but I would say there are very few good practitioners, both at the individual and company level. The same goes for lean startup.
If you multiply mediocre with mediocre, you’ll get very bad. You don’t get another mediocre. In my experience, when I walk into companies and even startups that claim that they’re using lean startup or agile, I will very rarely see that everything has been fully adopted. What usually happens is that superficial things get adopted; things get confused.
People think that being iterative means being clueless. It doesn’t. Agile did not say planning is bad. Agile says sticking to the plan when everything is going wrong is bad. That’s what agile is. Not try something and then figure out if it works.
The same for lean startup. It isn’t iterating until you finally hit that golden thing. It is understanding where you are today, all the information you have, figuring out what you need to learn, and iterate/test before you start scaling.
We had a discussion earlier today about product/market fit, that it is what it is about. If you cannot figure that out, why are you doing this? I don’t know.
Étienne Garbugli: Well, it’s interesting because in 2022 or 2021, we’re seeing a bit of a resurgence of innovation accounting, which has been interesting to me because that seems to be one of the aspects that got a little bit pushed to the side by a lot of companies. Any thoughts on why that is? Why is that making a comeback if we’re saying that a lot of the lean startup principles have been swallowed up by a bigger thing?
Bruno Pešec: A few reasons. When we go back to the five original principles, and to those that are listening or watching that aren’t familiar, it’s that basically, entrepreneurs are everywhere, entrepreneurship is management, innovation, accounting, validated learning, and build-measure-learn loop. Those were the five core principles.
What I like to say is that the first two — entrepreneurs are everywhere and entrepreneurship is management — are the fluffy ones. Entrepreneurs are everywhere is more about allowing employees, regardless of their role, to propose ideas. Entrepreneurship is management is an important one but isn’t necessarily limited just to lean startups.
To me, the biggest contribution of that was understanding that there are some skills, practices, and capabilities we can develop. Therefore, entrepreneurship and innovation aren’t just pure luck. Good. Useful. People understood it.
Validated learning: people still suck at it. It is very difficult, but experimentation skills have gotten much better. Also, a lot due to popularization from Google, quantitative testing, et cetera. That’s not everything that has to do with experimentation, but it did get more popular innovation.
Innovation accounting principle was always the least understood one and the least explored one. Originally, what Eric Ries said about it is different sets of metrics that are more appropriate for early-stage ventures. I would say that that was set aside because the whole movement was less mature. And because the thought leaders or let’s say the more skilled practitioners either went into the innovation or entrepreneurial space, they did continue developing some of the things that were more arcane.
Innovation accounting: I’ve been working a lot with Dan Toma. He wrote the book Innovation Accounting, and I wrote a chapter and contributed more than a chapter. Innovation accounting is a thing that’s most beneficial to large organizations, not necessarily to startups. Because, in innovation, you cannot guarantee outcomes. You cannot guarantee time. You cannot guarantee deliverables. You cannot guarantee a lot of stuff.
The only thing that you control is cost. How many hours do you spend on this?
How do you set up the operations? How do you innovate? How do you do the innovation process? Do you use your Lean B2B approach? Do you use some other approaches? That, you can control. And that’s why innovation accounting becomes important.
Another thing is, in organizations, we’re looking at hundreds or more ideas. So innovation accounting becomes not measuring one, that’s trivial, measuring hundreds. And how do you aggregate that up to the board level where there are people who maybe never have seen those ideas or met those teams so that they don’t make retarded decisions, but they make good, informed decisions?
That is why I would say that there is more on innovation accounting today, but it’s not overwhelmingly more. It’s just a little bit more.
Étienne Garbugli: To that sense, is this still the innovation accounting that Eric Ries considered in 2011, or is this something completely new that is using the word innovation accounting?
Bruno Pešec: Well, I wouldn’t say it’s completely new. I think it’s still in the spirit and it’s taking that idea and developing it. In a way, there was no pivot, if you go to another term that Eric Ries popularized. Pivot is a change in strategy without a change of vision. I would say that the vision remains the same, but the strategy as well.
Innovation accounting, at least how we present it in the innovation accounting book, still has the same things, but the details of how to actually accomplish what we were saying from the very beginning innovation accounting is. The intersection between accounting skills, innovation skills, and entrepreneurial skills doesn’t happen so often.
So somebody needs to sit down, study all the accounting things, what makes accounting work, what makes innovation work in the large companies and small companies, and then figure out something that works and then test it in the organizations. So it’s a big commitment. That’s why I also think that there haven’t been 200 books on innovation accounting.
Étienne Garbugli: Very interesting. There is a little bit of an interesting intersection with the next question then. You mentioned that the lean startup principles, there has been an evolution, not necessarily all positive for everything, but you are the creator of Playing Lean, Playing Lean 2 even. What led you to create Playing Lean? Why a game?
Bruno Pešec: A few things. My friend, Simon, used to run an IT agile consultancy. It was IT services and agile consultancy. And what they were often doing is they would use board games and visual tools when training executives.
For example, in Kanban, there is getKanban game. It’s a very easy game to use. You play it for a day and people understand because they experienced it and they understand the importance of flow, planning, etc. He had the same idea for lean startup. He didn’t just want to buy books for executives. This was 2015, I met Simon in 2016 and we started working together.
What I’m very proud of with Playing Lean is that we developed the game for teaching lean startup using lean startup principles and the approach. So we were creating a lot of prototypes, testing with players, testing with users, making sure that the learning is there, and making sure that the experience is there. Then we decided to crowd-fund it and it was a big failure.
We had so many tests. We were using the method itself. We were confused: if people were getting what they were supposed to get, what they were telling, why is this not succeeding? And then we looked at people who were actually buying and we understood our fundamental confusion or our fundamental assumption, where we went wrong without being aware of it.
We assumed that the customer of the game would be the player. What turned out is that the customer, the buyer, is actually a facilitator, a person like you and me, the educator, the consultant, and not the player. The player wants to come, learn lean startup, and then go back to their world to improve their business using lean startup methods.
When we realized that, we started investigating: okay, what is important to buyers like you and me? First, it has to look professional. It has to look good on the bookshelf. It has to be something that when I come to the boardroom, people don’t laugh me out. It cannot have clipboard art.
The second thing was: who are those guys in Norway? If this is the tool for teaching the method, then some of the thought leaders must endorse it. So we said, “Okay, let’s go to Ash Maurya, let’s go to Alexander Osterwalder. Let’s go to them and let’s get their seal of approval.” All these things that, in essence, didn’t have anything to do with the content itself. The educational content was there, but the packaging wasn’t.
We learned that Playing Lean 2 bomb success is now used all over the world, institutions, big companies, education institutions, accelerators, et cetera. But that’s not the answer to your question. If I’m saying this, why did we decide to make a lean start board game?
Because despite all this, remember what I said in the beginning, I still see use and experienced lean startup as a viable, lightweight approach to developing businesses and products as an integrated process.
Usually, when you look at how companies and even startups — because that’s where they’re taught, either at uni, or high school, or what they see — perceive product development as separate from business development, as separate from sales development.
Yes, Steve Blank introduced us to customer development. Yes, it’s exactly the same problem Steve Blank tried to solve with customer development. But the thing is very few people will pick up the book. And even if they do, very few people will finish that book. That is why Eric Ries did a great job with lean startup. He made it accessible.
That’s why we decided to continue on that route. It’s still a good approach, better than nothing and better than the traditional approach. Why a board game? Because it creates a safe space.
You know that lean startup is all about failing and learning from that failure. It’s much easier to fail in the game and get a little bit ashamed and may be mocked by other players. But your brain actually remembers that experience and when you go back to your office, you will connect a real situation to a gamified situation and you will make a better decision. That’s the science behind it.
Étienne Garbugli: What’s the impact that you’ve seen from enterprises, universities, or people that have been adopting the game?
Bruno Pešec: Most recently at British Telecom, a very large organization and very traditional, the most powerful role of Playing Lean or any good game in the business setting is that it opens the doors to change. You do not use games or simulations to become an expert. That’s only possible in the real world.
But to open the doors to change, to get the naysayers to become more open to trying something different, that’s how Playing Lean is supposed and is used in the corporate setting.
You don’t become a lean startup expert after a day of playing the game. What you do is you go from seeing a slide to actually understanding, “Oh, if I tried to learn about the customers, then it’s easier to win in the game.” And yes, in reality, of course, if I know what my customer wants, then I can develop exactly that and I can charge them more. Therefore, I will have more of the market share.
With the game, you go from Étienne or Bruno telling them, “This is what you should do and why you should do it,” to actually them feeling, experiencing, and concluding, “That’s what I should do in order to get that result.” And flipping that around is so powerful. It’s like what a lot of very good teachers do. That is the effect that we’re always going for and that is underlying and built into it.
A similar use case is for accelerators who are even faster learners because they care about their own business. It’s not like they’re taking a salary.
Étienne Garbugli: You were mentioning that you were an industrial designer before.
Bruno Pešec: Industrial engineer not designer.
Étienne Garbugli: What initially attracted you to corporate innovation and what has kept you in corporate innovation?
Bruno Pešec: I’m an accidental innovator. That’s what I like to say. For a long time, I didn’t even consider myself to be a creative person. I always considered myself to be someone that you give me a problem and I’m going to solve it. I’m going to look at the solutions that exist out there. I’m going to recombine them and figure out the gaps and then come up with something new. That was always my self-perception.
That’s changed over the years, obviously, as I’ve matured as an individual. But where it started was when I finished my education, my first jobs were in defense. One of the big projects I worked on was a customer asking for the impact.
I was a young engineer in a team of young engineers, and we took that very personally. So we did everything we could to come up with the impossible. And we did, and the customer did not believe us and did not want to buy it.
To me, that was the beginning of the journey. I was like, “This doesn’t make sense.” I used everything I know from my education to be creative and innovative. I was, in fact, inventive, not innovative. We did invent what the customer wanted, but the value to them was not obvious. Therefore, no innovation actually transpired.
That was, for me, the trigger to start looking into what is innovation and what makes innovation work? And I realized it’s not just about technical stuff. It’s a lot about human stuff. That is how I went slowly into the space and realized that I really enjoy different challenges.
To me, innovation provides that. It’s uncertain, it’s unknown, it’s dirty. You need to be learning fast. You’re working with many people; so many moving parts. Things are almost exploding everywhere around you. What worked today might not work tomorrow. It’s a crazy world, but I love that role. I have the freedom to choose what I work on and who I work with.
I don’t have a better answer than I feel pleasure from it. Right now, it’s pleasant. Maybe 30 years from now, I won’t be in the space anymore, but for the last 10 years, I’ve been really enjoying it.
Étienne Garbugli: 30 years from now, you’ll probably be retired.
Bruno Pešec: Who knows?
Étienne Garbugli: Having worked with a lot of corporates and been in the field in different roles and capacities, what have you observed? What types of innovations do you see getting funded, and what tends not to be getting funded?
Bruno Pešec: In corporate, what I’ve observed again and again, what gets or doesn’t get funded has very little, if anything, to do with the idea itself. It has all to do with the innovator or the idea owner.
What I mean by that is that those that are able to navigate the organization, that have the social or other types of skills that can get in front of the CEO or someone with power, their ideas get funded. Those that just think, “Well, my idea is good, and if it’s good, someone is going to fund it,” usually don’t get anything.
That is my unfortunate observation, mostly across Europe and North America. Is that good or bad? I don’t say that’s necessarily bad by itself. Of course, innovation is about promulgating ideas, sharing them in networks, bouncing, and connecting the dots. Of course, that’s important.
It doesn’t mean that the person that cannot do that has a bad idea, but the thing is what we often say, if something is to be sold, people need to see it, hear about it, smell it, use it, taste it. So it does make sense that the same process happens within the organizations. That’s been my experience so far.
Étienne Garbugli: Doesn’t that enter the fact that it reverts to a bit of a HiPPO type of situation where the people with the most influence or most clout will tend to get their projects adopted, which kind of defeats the purpose of having something that flushes out which ones are the best innovation or the best opportunities?
Bruno Pešec: Exactly. That’s exactly why larger companies specifically can benefit from introducing innovation portfolios, having an innovation strategy that’s not hidden but clear and transparent and communicated, by introducing innovation accounting systems. All of these are tools for surfacing these types of situations.
If you go back to the Toyota production system and the whole flow, pull instead of push, how Taiichi Ohno and the Toyota family like to illustrate that is, imagine you have a river and you start reducing the water level and you start seeing the rocks. Then you remove the rocks and then you increase the water level again, and the flow is better.
All these tools do the same for innovation in a company. You start draining the river to start surfacing all those people that are maybe HiPPOs or that are getting their ideas funded, not on the strength of the idea alone but on the strength of their character and ability to navigate the organization.
As I say, that by itself is not bad unless they’re proposing shitty ideas. Then it’s bad. So systems like that make it visible to everybody. Okay, what is the idea? Who is the proposer? What is the idea about? What’s the potential upside? Then you’re able to make much more informed decisions that take into account both the quality of the idea as well as the innovator, entrepreneur, or whomever.
You and I know the team is more important than the idea. But if the idea is zero, it doesn’t matter how good the team is. It’s still a zero.
Étienne Garbugli: If a corporate innovator is not in control or is not able to fund his own innovation, what do you feel are the biggest challenges that they’re facing?
Bruno Pešec: I’ve worked with many innovators in that role. Luckily for them, when I engage with my clients, I am hired by executives. So, when I’m there, they have already set funds. So it’s much easier for them to get their funding.
Let’s say we are not working together. You’re just someone listening, watching, and you have this brilliant idea. My suggestion is, first, make sure that you do have an idea. What I mean by that is grab a piece of paper, write down, what the hell it is about? Who is it for? How are they going to be better off?
Make sure to put it out of your head because you might be in a situation where you’re trying to sell your idea, but people aren’t getting you because you haven’t clarified what your idea is actually about. The next thing is before you even try to sell it to your boss, once you have put it down, try to find out; what’s your company’s strategy? What’s the business strategy? What’s your boss’s boss measured on? What’s your boss’s boss supposed to deliver?
Is your idea aligned with that? Will it help them with that? Will it make their life easier? Will it help them get their bonus, not just your idea funded? When you have all these check marks, now you have your case to go to your boss or to your boss’s boss and to start the conversation, “Hey, I have this idea. This is how it’s going to help our customers do XYZ better. This is how it’s going to make our life easier. This is how it’s going to make you look good in front of your boss.”
You might feel cringy hearing this, but let’s be honest. It is about you also making your boss look good if you’re an innovator and you want to get your idea funded. We have to accept the social reality of our organization. That doesn’t mean you are selling yourself out. It just means being smart. That is the best starting point.
The third one is there’s usually a question or a statement, “There is no money for it.” Your idea is brilliant; no money for it. That’s a fallacy because money in organizations is all about priorities. There is money, but your idea isn’t the priority. The easiest way around that is something that you, Étienne, are also talking about, ROI.
Of course, if your idea is really something new, it’s impossible to show ROI. But what you can do is focus on the opportunity cost. How much does it cost not to go for your idea? For example, if the company keeps doing what they are, are they going to maintain the same level of revenue, quality of service, cost of service efficiency, or is it going to go down?
In every natural system, decay is a natural thing. So you always must make investments to keep the same level of performance. So your idea should beat that decay and add on top of it. If you can do that, at least make an estimate, then you have beating decay and adding on top of it, boom, you have your case.
You’re most likely going to be wrong because at this level you cannot say we’re going to make $100 million, but you won’t be wrong by a magnitude of 100 or 1,000. If you are, you’re probably going to get fired at the end of the project but you can’t win them all. You can’t sell your project and then don’t have skin in the game.
Étienne Garbugli: In that case, how do you develop those skills of figuring out how to bring that? I’m understanding that there’s a big part of that that’s change management, stakeholder management. How would you recommend someone picks that up or learns that part of the equation that seems to be so critical to getting innovative ideas out of the door?
Bruno Pešec: When I work with business leaders, what I always tell them is that big bangs are not a good approach. Big bang change management isn’t a good approach unless there’s a big trauma happening like we had with COVID or like we were having with the war. Those are big things that can drive very big changes.
A lot of people are joking, “What has driven your digital transformation?” “COVID.” That’s not normal. You shouldn’t try to create a burning platform or things like that. It’s not a good motivator.
A much better approach and the one that I always use is to imagine a business unit, not necessarily the whole organization, but a business unit. That is quite a large subset of the organization. Then imagine taking a vertical slice of it. So, few people from the top management, few people from the leadership, few people from the middle management, few teams from the frontline. Select them and start doing things differently with them.
Let them implement a little bit of an innovation strategy. Let them use the lean startup method when developing their ideas. Train those few middle managers on evaluating ideas, coaching the employees, and helping them out.
What you’re creating is you’re helping those frontrunners to move the organization. At the same time, everybody else who’s not part of that small change can see that. They can see that new things are developing. People are not getting punished; they’re getting rewarded. It’s helping them in their daily life. They’re happier. They’re more satisfied. They want to try it as well.
And then you start getting that effect where people start volunteering, “Hey, when you have other teams that will become innovative, that are going to use lean startup, that are going use Lean B2B, that are going to use these approaches, I want to be part of that.” That’s the best way.
So you always want to create this effect for change, where people are pulling it instead of you coming and being a police officer, “Everybody now goes to training in France, Canada, or whatever is the best university in your part of the world. Everybody gets innovation training. We fly in Bruno and Étienne to give you workshops and a pep talk.” That stuff doesn’t work no matter how good you are.
Étienne Garbugli: We could make a lot of money.
Bruno Pešec: It only works if you keep us to coach your employees. That is the thing that works.
There are many academic and scientific reasons for that. But the most important one is you’re creating results in the short term while creating social acceptability in the organization. It’s not “those freaks or those superstars”, or “he’s Steve Jobs, let him be.” You want people to get those skills and accept them as a normal part of their business instead of outliers.
Étienne Garbugli: So you’re creating experiments with team composition or team structure within the organization with people, where you try a new approach and you let it kind of do the selling for you afterwards?
Bruno Pešec: Exactly. That’s a perfect summary.
Étienne Garbugli: If we take a little bit of a step back, if you’re looking at corporate innovation, what do you feel is getting more attention than it should? What do you feel are the shiny objects of corporate innovation?
Bruno Pešec: Shiny objects of corporate innovation is something I call doing innovation. What I mean by doing innovation is taking an idea and turning it into a value proposition or a million or a billion-dollar business.
Why do I say that’s a shiny object? Because we have a lot of answers to that. They might not all be perfect, but we do outcome-driven innovation, lean startup, design thinking, all the design methodologies, all the ways to work and develop ideas, venture studios, M&As, partnerships, startup partnerships, et cetera.
It’s important to keep refining that, but to me, this isn’t what breaks corporate innovation. The problem or challenge isn’t to develop one idea. The problem or the challenge, something that I believe is overlooked in the field of corporate innovation, is how do you manage innovation?
How do you repeat that process for 100 or 1,000 ideas while making sure that they’re aligned across the organization, that these ideas are relevant to your future, that the people are getting the support they need to get, that you’re measuring that through innovation accounting system or similar, and that you are making an informed decision on that?
That is what I believe is overlooked or not given any attention. I sometimes say that innovating, in a sense, developing ideas is almost trivial. That’s not easy. I don’t mean it’s easy, but a lot of approaches are very similar. Figure out what the customer wants, figure out the cheapest or simplest way to deliver that, and then do that. Then scale and then keep repeating that.
That’s at the core of a lot of modern innovation methods. Flavors are different. Exactly how you do that, of course, differs. But my position is we have figured it out, to a large extent, if you want to be successful with corporate innovation, you need to figure out how to also manage that on a scale.
If you look at a lot of top leaders from lean startup that went into the innovation space, a lot of them are now trying to figure it out. The Startup Way is kind of trying to offer that. If you look at Ash Maurya and some of his newer offerings, he’s also trying to offer funnel portfolio and things like that.
Corporate Startup from Tendayi Viki, Dan Toma, and Esther Gons was actually the first that was very comprehensive in looking at innovation strategy and innovation management, this kind of integrated innovation ecosystem together with innovation practice. How does that land with you? Does any of that make sense to you?
Étienne Garbugli: Not really, but yeah, it makes sense. What I’m getting is that the tools are not the problem; the processes are more challenging at this stage of the game.
Bruno Pešec: Yes and no. What I would say is that there are two games in corporate innovation. There’s the game of developing ideas and there’s the game of managing ideas.
What I’m saying, for managing ideas at the large scale, managing innovation teams, we have a lack of tools. We have a lack of processes. We have a lack of best practices. All of that is missing.
If a body has two legs and one is all pumped up like Arnold Schwarzenegger and the other one is atrophied, it’s like, “Please, don’t step on me.” And that’s been changing. We started pumping the other leg now for the last five or six years.
Étienne Garbugli: Maybe this connects with the next question. How do you see corporate innovation evolving moving forward? What trends are you tracking personally?
Bruno Pešec: One of the big trends, especially in the interface of explore, exploit, discover, deliver, et cetera, there’s more and more around structurally organizing companies to become more innovative. I’m a bit contrarian on that. You cannot organize yourself into excellence. Why should you then be able to organize yourself to innovativeness? It doesn’t make a lot of sense to me.
What is good is that it’s educating people that you cannot hire a team, put them on the outside, and say, “Be innovative.” When I work with corporates, I always say, “Innovation should be with or in the units that have profit and loss responsibility.”
Don’t create a service unit for innovation because people are going to expect them to innovate, i.e. make ideas that will bring money, while their mandate is going to be, “Don’t innovate, go into business units and help them innovate.” You’re setting them up for failure from the very beginning.
Again, this is purely a corporate innovation challenge that doesn’t exist in a startup or other entities like that. That’s what’s happening.
Another trend beyond that is there are now a lot of approaches trying to use venture studios, either building their own startups or venture studios as a specific type of M&A. Not the traditional M&A, but a specific venture studio that goes out, validates an idea, and then acquires a similar business in order to grow the market. There are more and more of these kinds of things.
Are they going to hang around? Well, let’s have a chat in five to six years and see if they stay. But those are some of the biggest trends in corporate innovation specifically that I’ve been seeing.
The third one is that, like in any space, there are practitioners from different backgrounds coming, and then they start adding to that. So you have service designers, you have people from the agile world, you have people from strategy. I mean, strategy has always been connected to innovation, but they have been at high levels. Now they’re trying to figure out the execution.
What has been missing and the niche that I’m continuously feeling and educating myself to continue feeling is exactly the one that combines strategy and execution in the innovation space.
Because I would say that a lot of lean startup practitioners, design thinkers, and customer developers are good at executing and implementing. They were not and remain not that good at strategizing and not just creating strategy, but operationalizing it at that middle level. That is the atrophied leg that I was talking about.
Étienne Garbugli: How much of this do you feel stems from the fact that a lot of the more traditional roles are probably either changing in nature or are being reworked or they need to adapt to a new reality, and maybe the landscape is not up to par with where it probably needs to be?
You’re talking about strategy being in charge of strategy. That’s not the same thing as being in charge of strategy in 1989. Yet a lot of people are maybe still in their roles or they’re learning it from books that were written based on the previous generation.
How much of this do you feel is the changing nature of role or function within organizations?
Bruno Pešec: That is happening as well. What I have to say after many years of experience is that, man, I wish that people were following strategy advice 20, 30, 40, 60 years old.
It’s not that bad. I have some very real strategy books up here. Strategy is one of those things that we have mastered centuries ago. But for whatever reason, we are really bad at transferring that knowledge.
What I’ve observed in a lot of organizations is that it’s one of those things where a little knowledge is very dangerous. Somehow, only the superficial remains. Only the bad part of practice remains. I cannot tell you how many organizations I’ve walked in that do have strategy departments, and then I ask them, “Show me your strategy,” and it’s not a strategy at all.
And it stresses my head. Those people aren’t stupid. They’re very educated and have very good skill sets. How do you end up with something like this? Because of a little bit of practice. Because they only keep some things and don’t actually take a deep dive into it.
And I understand that not everybody in the world can afford or wants to take deep dives, and that’s perfectly fine. But I also have expectations that if you’re a chief strategy officer, I definitely expect you to know very well at least a select number of strategic tools, approaches, and methods.
If someone comes and tells me, “Bruno, I’m a lean startup coach.” “Good. Show me. Design an experiment right here, right now in front of me.” Of course, not a scientific experiment, but design a lean startup experiment in front of me. If you can’t do that, how are you a lean startup expert, for example? The same goes for strategy or anything. Be able to show it.
I must admit that I use a lot of my approach from martial arts. I’ve been training in martial arts for more than 26 years now. I’m an instructor myself and it’s very simple in martial arts. You cannot just talk about it; you need to be able to show it. I cannot tell you, “Étienne, this is how you throw.” I must grab someone and throw them in front of you. Then I must grab you and throw you so you feel it, not just see it.
I must be able to explain it to you verbally, walk you through it step-by-step, show it on someone else so you can see and understand the movement, and then show it on you so you can feel the movement. To me, the same thing is with innovation coaching, strategy coaching, or whatever.
How can you teach if you’ve never done it? That’s why I love your book, for example, because Lean B2B, the second edition especially, comes after years of you practicing it and speaking to others who have practiced it and asking them what has worked in your practice, what hasn’t worked in your practice. And then basically putting that in a book. That, to me, makes sense.
Étienne Garbugli: It also connects with what you mentioned about your game. It’s the same thing. You’re trying to find the right balance to be able to get people to the conclusions that they need to reach through practice or actually playing in this case.
As the last question, where does your new book, Augmented Strategy, fit in all this? What led you to writing a book?
Bruno Pešec: I don’t want to say it’s completely unrelated. It’s somewhat unrelated, but, of course, it’s related because I’ve written it. So it doesn’t exist in a vacuum.
It actually came from a conversation I had with Dr. Dominik Dellermann. And what we were discussing is I basically said, “Dominik, what doesn’t make sense to me is we have more data than ever.” Like, eBay, in one year, creates more data than all of mankind up until that year. And we’re just looking at eBay, now imagine adding Amazon, Facebook. It’s insane.
We have big data. We have statistical tools out of this world. It’s so easy. Now, anyone without training can just put data in and get fancy pictures and make sense. Why are our decisions not getting better? That was the starting question.
What we came to is that people are overwhelmed. There is actually too much data and people are approaching it the wrong way. They gather all the data and then they try to figure out: what can we do with this data? Hey, how about we hire someone whose job is to monetize that data? How about we hire someone else to help us make sense of the data?
And that’s folly because there’s so much data today, as I just said, it’s like looking for a needle in a haystack. You might find something eventually, I mean, you surely will, but is that going to be useful? Who knows? Why take that?
So what we said is that what we want to present is a different way to approach this and that’s what we called augmented strategy. We said, first, intuition should not be ignored. Intuition is your individual life experience. So intuition needs to be combined with the data that you have.
You should not start with data and intuition, you should always start from the decision, ideally, a high-stake decision. What do we need to decide? Enter a new market, create a new product, hire a new team, set up a new organization; that’s a high-stakes decision. Then work your way backwards. What type of data do we need? What type of insight do we need to make the best possible decision?
That is what we were going into in the book. One thing that I said to myself is, “I want a book that can be read in one day.” I told Dominik, “Can you write a book together with me that’s less than 100 pages?” And he was like, “Oh, I can try.”
He’s a practitioner as well but does write a lot of academic papers. And academic papers are a little bit verbose, sometimes overly verbose and impenetrable. So I told him, “Dominik, I don’t want any of that. I want both you and me to write in plain English. I want it to be understandable for everyone: how do you do this?” That is how the whole book is structured.
The reason we called it Augmented Strategy is because we see that the data and all the technology happening out there from artificial intelligence, machine learning, and whatever else is going to be next is not about replacing our brains. It’s about augmenting our brains and allowing us to make better decisions compared to if we did not have access to all of that. That is kind of how it ties in.
With you, obviously, we are two experts in the field, so we can discuss it like that. But I always try not to use terminology. Like I avoid using lean startup, Kaizen, Toyota terminology, and lean terminology. I always try to say it in plain language. It’s about iterations. It’s about experimentation. It’s about this. It’s not about MVPs and business model hypotheses. It’s about testing assumptions and figuring out how to deliver value sooner.
The same approach is in this book. We don’t talk about big data. We don’t talk about stratification, probabilities, et cetera. It’s all about, “Hey, you have a high stake decision? How do you make the best decision you can by accessing the needed data? How do you do that in a practical way?”
Étienne Garbugli: Awesome. Thanks for taking the time to join me on the podcast. Where can people go to learn more about the book, your work, the game, everything?
Bruno Pešec: The easiest is www.pesec.no. Anyone listening and watching, Étienne has my contact as well. You can always reach out. He can connect you.
I make available almost everything on my website. A lot of things I mentioned; you will find the book, you will find a lot of free resources, eBooks, white papers, et cetera. Everything is there. I don’t hide my contact information, no contact forms. You can find my email, home address, and phone number. Just reach out.
Always happy to help and have a chat. But don’t show up at my address. I will probably not even answer. I’ll just look at the pee hole and be like, “Who is this?”
Étienne Garbugli: You got to remember you’re a martial art expert as well. Thank you very much.
Bruno Pešec: Thank you, Étienne.
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