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London, EC2Y 8DD
United Kingdom

+44 20 3318 5728

London-based creative training, consulting & strategic design company providing onsite & public courses on the Creative Problem Solving Process, team-building, leadership, entrepreneurial mindset, business storytelling, applied improvisation and innovation facilitation. We run ideation sessions, we mentor, we coach, we deliver. In all we do, we're here to make you more agile & more successful in the face of change. 

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Fixing the Game: Why innovation leaders need to think long-term

Kate Hammer

Shareholders, have patience. Be advocates for innovation, it’s in your long-term best interest. Keep the faith: you’ll need it.

Here at KILN, we’ve been reading Steve Denning’s Forbes piece, titled “The Dumbest Idea in the World: Maximizing Shareholder Value”. We like the provocation in the title. We also like the underlying research – by University of Toronto’s celebrated professor Roger L. Martin. Martin’s latest, Fixing the Game tackles head-on what’s wrong in big business.

Playing to "The Street" 

Basically, Martin makes plain that when you’re a CEO playing to “The Street” you spend more time juggling expectations and making short-term profits. This suppresses innovation.  Because anything that carries capital costs, or only bears fruits over years not a couple quarters won’t play well to the audience on Wall Street. Which ultimately means disaster for the company And the shareholder. (Never mind the relationship between stock price and executive compensation, it only adds more heft to this argument.) The systemic links Martin makes are neatly unpacked in Steve’s piece. Clearly, accounting principles not just remuneration packages have to change for the leadership of public corporations to be organized around long-term value creation.

Innovation's rhythms

Our build on Martin and Denning’s relates specifically to innovation. We at KILN take it for granted that innovation is purposeful – that companies take risks and pioneer ambitious, category-changing offers because the new offers add value to people, groups, communities, countries: bring joy, cut costs, somehow enhance people’s lives. That’s what we’re here to catalyze. (As if to prove by the exception, we’ve seen how the so-called innovative breakthroughs in parsing risk only enriched the banking elite, with damaging consequences to the broader economy.) It follows that worthwhile innovation is always about something greater than short-term gains.

First, it’s clear that what happens at the top filters down to nearly everyone in the organization. When ideas are truly “breakthrough” they are by definition disruptive. If a BRAVE NEW IDEA requires major capital, if it has a long development time, a radically different business model, cannibalizes other products, or necessitates new factories or tooling, short-term thinking about what really matters almost always means it gets rejected out of hand. And that’s the start of a truly vicious feedback loop. Employees learn what top management wants to hear and they deliver, selecting ideas that are safe and short term. This mode of thinking becomes Business as Usual. Nothing wrong with safe and short term ideas, but if that’s all you’re doing you’re going to have problems. And when you do finally start asking your people for fresh ideas and new approaches, they often don’t know where to begin. It’s hard to recover creative thinking once it’s been “bred” out of an organisation’s system.

Second, we’re seeing real courage on the part of companies. There are firms where innovation is part of the muscle fibre of the organization, and others that are darned determine to up their standing in the innovation game. But most often these firms are privately held. In our experience, private companies are often: less bureaucratic, more decisive, more willing to change business-as-usual practices to make space for something truly productive like KILN’s IdeaKeg. Here at KILN we’ve had the interesting experience of having ambitious private corporations (compared to the Fortune 500) buy our services with very simple sales cycles. In some instances they trial our IdeaKeg subscription service without even seeing us in person. This actually makes sense — IdeaKeg is a straightforward offering and the price point is such that it’s not such a big risk to simply try.

Changing the game

Martin’s book and Denning’s summary make the point squarely: we have to change the playing field so that CEOs and their leadership teams don’t gain by playing to the stock market, fixing quarterly results to smooth the real ups and downs product cycles drive. There are some who create real value for customers already; P&G, Apple, and Johnson & Johnson to name but a few. But the market also makes “logical” the outrageous behaviors of corporate miscreants like BP and Enron.

Systemic change is hard to drive, but if ever there was a time for a rethink, it’s now. Fixing the Game is a great addition to today’s debates about why business exists. Big sprawling debates aside, there is still something you can each do. If you’re working inside a public corporation, ask yourself:  If we acted as if this firm were ours (for better or worse), in what ways might we change our innovation approach….?