Times Have Changed. 'Innovation' Hasn't
Times Have Changed. 'Innovation' Hasn't.
The most embarrassing date I ever went on was in college with a girl called Sarah. We went for coffee after class once. “Want to go for dinner tomorrow?” I asked casually. “Sure” she said. I showed up with a dozen roses, wearing a hand-me-down suit jacket. She was wearing sneakers and jeans. She thought we were just friends. I remember sitting in the restaurant with a bunch of flowers resting on my lap, eating a burger, convinced that everyone else was whispering about how stupid I looked. Sarah and I never had a second date.
When a tech cycle goes from expansion to contraction lots of business leaders have analogous bad dates. People misread the expectations of the room they’re in. They misread the signals that times have changed. They show up with yesterday’s strategy to a very different today.
Not long ago #bitcoin was worth $64,000, the CEO of Twitter was Jack Dorsey, #theranos was still a going concern, WeWork was worth $48 billion, and a record 46.6 million Americans were quitting their jobs during the #greatresignation.
Outside of the tech industry companies looked on with envy at Silicon Valley. They built labs, incubators, and accelerators to capture some of the magic. They spent millions on field trips to places like Singularity University, founded by Elon Musk’s mentor Peter H. Diamandis, where they learned the 'secrets' of exponential growth. Titles like “The Innovator’s DNA,” “The Lean Startup,” “The Startup Within,”and McKinsey’s “How Companies Can Encourage Employee Innovation” filled the shelves of airport bookshops.
Today bitcoin is worth $22,983, Elon Musk owns Twitter, Elizabeth Holmes is serving an 11 year federal prison sentence, WeWork is worth $1.16 billion, and 229,000 tech workers have lost their jobs.
The pendulum has definitively swung from tech expansion to contraction; from Sand Hill Road to #wallstreet. #Startups, #VCs, and tech companies are absorbing the impact of this contraction. But this contraction has huge implications outside of the tech industry. Anyone who is responsible for building new businesses, or growing mature businesses, should stop for a second and recalibrate to the new normal.
So, for this article, I spoke with Sherryl Tarnaske, Siddhartha Bala, CECILIA AMBROS, Rod Sayegh, and Nyla Beth Gawel, enterprise #executives who have navigated the swing from tech expansion to contraction many times.
Here’s their playbook on how to navigate a tech contraction outside of the tech industry.
“Don’t sell innovation to someone who only wants change.”
Cecilia Ambros, Executive Director, Digital Design, JP Morgan, (ex-Amazon)
When the pendulum swings from tech expansion to contraction you need to understand the difference between change and innovation, says Cecilia Ambros, Executive Director of Digital Design at JP Morgan Chase. Cecilia’s career includes stints in Silicon Valley and Wall Street. “Change is essential because your company needs to grow sales, reduce risk, and cut costs.” But innovation seems like speculation and waste. “Don’t try to push innovation on someone who only wants change.” she says. She recommends not using the term ‘innovation’ at all.
“It’s Risk-Off”
Siddartha Bala, CIO - Data & Platforms Business, BNY Mellon
The money you use to do your job is someone else’s money, says Sid Bala a lifelong tech executive on Wall Street. It is a loan that a bank made to your company, or an investment that someone believed would deliver better risk-adjusted returns in your hands than with another company. During a tech contraction someone in your company is in constant meetings with these people, reassuring them about what you’re doing with their money. If you listened in on their phone calls it would sound like, “No, we’re not squandering your money on science experiments. Yes, profits are stable. Yes, risk is under control.”
On Wall Street, this market environment is called “risk-off” which means investors prefer stable, predictable, familiar, (boring?) investments. (“Risk-On,” in contrast, is what drove Bitcoin to a high of $64,000) Risk-off means every investment you make must have a clear near-term impact on sales, risk, and efficiency. This may sound like a creativity straitjacket, but it doesn't have to be. During the tech boom many brilliant, creative technologists were locked in a lab, incubator, or accelerator which had lots of autonomy but no mandate to scale any of their innovations into financially relevant businesses. Now is their chance to climb out of their quarantine and start making a material difference. Capitalist constraints can be a counterintuitive gift for creativity.
“Become problem-obsessed”
Sherryl Tarnaske, Director, UX, Sandvine
When a tech boom shifts to a contraction, companies need to shift from tech exploration to problem validation, says Sherryl Tarnaske, Director of UX at Sandvine. This means greater emphasis on problem validation and user testing. This means product teams need to be more aligned with sales rather than led by engineering. When the tech boom ends you can seriously damage your company if you're a solution looking for a problem.
“Be a smarter explorer”
Nyla Beth Gawel, former head of strategy, SAIC
Many tech markets still require lots of exploration. In aerospace and defense for example, space is literally a new frontier, where it makes economic sense to invest in exploring and creating the market, says Nyla Beth Gawel, an executive strategist who’s worked at SAIC, Verizon, and Booz Allen Hamilton. In AI, especially generative AI, the focus has shifted from experimentation to deployment. It's healthy to lean toward near-term monetization, but don't prematurely exit a market that's still young and undeveloped just because it's not making money yet.
Stop Using These 9 Phrases
“Innovation”
“Disruptive”
“Moon Shot”
“Pre-revenue”
“Lab”
“We’re ahead of the curve”
“Explore v. exploit”
“Autonomous Innovation Unit”
“Crypto”
Say these things more often
“Profit”
“Improved efficiency”
“De-risk”
“Generative AI”
“Competitive advantage”
“Value-add”
“Sales growth”
Sherryl, Sid, Cecilia, Nyla Beth, and Rod are members of the executive network Punks & Pinstripes, the 100 most badass #rebel executives in the world. We help each other avoid awkward business dates.
Agree? Disagree? Let us know!
