THOUGHT LEADERSHIP

Leading radical innovation and transforming organizations from within.

In the fiercely competitive, swift-moving age of digital transformation and technology disruption, intrapreneurship isn’t optional for large companies. For those that want to survive, it’s a requirement.

“The market is moving too fast for companies to rely on traditional modes of launching innovation,” says David Gram, executive advisor and co-founder of Diplomatic Rebels. “Intrapreneurship is about innovating in explorative ways within your company and developing a culture of agile experimentation and learning. It’s really about companies daring to fail.”

The bigger a company gets, so does its fear of failing, notes Gram. This fear can easily stymiea company’s ability to react quickly to market changes, seize new business opportunities, and adopt emerging technologies. The trick for large corporations is to break free from tired operational habits and ways of working, clearing the way for an environment that supports nimble, adaptive capabilities, processes, and talent.

Enter the Diplomatic Rebel

Gram honed his intrapreneurial and innovation leadership skills for the past 15 years at major corporations like Siemens and, more recently, LEGO where he served as senior innovation director for the toymaker’s Future Lab and head of venturing (EMEA) of LEGO Ventures, the business group that invests in external startups.

After LEGO, he co-founded the firm Diplomatic Rebels to help individuals and company leaders develop the capabilities to be intrapreneurial. His training focuses on helping individuals balance the startup spirit of a rebel and the skills of a diplomat within their organization.

“Diplomatic rebels know how to challenge the status quo with disruptive and provocative ideas without losing the support and respect of their colleagues and management,” says Gram.

He helps companies navigate the corporate bureaucracy and inertia within their organizations to create the proper environment for intrapreneurial innovation to thrive and identify ambidextrous leaders who can manage existing business models and guide new, radical ones simultaneously.

Three Levels of Corporate Innovation

Gram describes three levels of innovation that occurs within organizations:

• Level 1: Incremental innovation
• Level 2: Radical innovation
• Level 3: Innovation through a separate business entity

Level one consists of incremental innovation and continuous improvement within a company’s core business. Most large companies excel at this level, says Gram, because they leverage the core expertise they have built up over many years. “This does not require alot of intrapreneurship, as the needed competencies and knowledge already exist in the organization,” he says.

In the next level, companies go beyond incremental innovation and continuous improvement to apply the capabilities for more radical innovation. Here, innovation is developed not only within a company’s existing business but in areas that are radical to the company’s core competencies, such as digitization and new technology adoption. Intrapreneurs and ambidextrous leaders can have a significant impact on this level.

In an intrapreneurial culture, companies provide a sufficient runway and tools that enable individuals to explore new territories in a fast, agile manner without putting the core business or brand at risk.

“Intrapreneurs need an environment where they can thrive, pursue their ideas, and solve the problems they face. They create true value within their organization when the culture and infrastructure support their ability to have an impact,” Gram says.

In the third level of innovation, a company invests in entirely new ventures outside its core business. This approach is suited to companies in a market or industry being heavily challenged or disrupted, where core business has become irrelevant, or that are seeking to grow through diversification. Innovation usually happens with the launch of or investment in an external startup or legal entity that operates separately from a company’s core business.

Balancing multiple entities with different business models is a new frontier for corporate management that requires ambidextrous leaders who can champion the freedom and agility to experiment within their organization while also leveraging the resources of the core business. New innovation initiatives require processes that run faster, offer greater flexibility, and provide different key performance indicators and governance. All this has to be managed effectively alongside the company’s current business.

The paradox of being an ambidextrous leader, says Gram, is in balancing the need for your company to be agile and fast in getting products and services to market with the realization that your innovation ventures will probably have a long time horizon. In this way, ambidextrous leaders are like venture capitalists. They have to invest in multiple bets over time, knowing that it could take five to ten years for one of them to mature and hit its growth stride.

Radical Innovation in Practice

In the early 2000s, LEGO needed to redevelop the mission of its business. The company initiated an internal culture change, notes Gram, eventually to support innovation through intrapreneurship. One of the fruits of this internal shift was LEGO’s Future Lab (initially called New Business Group before re-naming it Future Lab), which was tasked with “inventing the future of play.” Future Lab was given the freedom to explore and experiment while running its innovation projects much like small startups within LEGO.

Unlike LEGO’s core business where product launches are big and global, Future Lab was a platform for exploration, collaboration, and learning on a smaller scale. Empowered with the space and tools to change the way LEGO had always done things, the Future Lab team looked at trends that were changing kids’ behavior. And the team proposed something radical: They wanted to look at design innovation outside the company.