Interview

Emilie Sydney-Smith: How To Escape The Corporate Innovation Theater And Make $400m Out Of Building The Future

How To Escape The Corporate Innovation Theater
© Emilie Sydney-Smith

Emilie Sydney-Smith is the CEO of ExO Works, helping large companies like Visa, HP,  and Procter & Gamble to prepare for the future and actually profit from 10X disruptive innovation initiatives. She’s a keynote speaker, panelist and workshop facilitator at many international events, sharing practical case studies and talking about how technologies like flying taxis, genetic engineering, 3D printing, quantum computing, machine learning, and VR are applied by her clients.

Earlier in her career, she was part of the executive team that drove an Australian startup to a $300 million valuation over the course of 2 years. Emilie also has a decade of experience in private equity, evaluating the growth potential of around 100 business opportunities every year during that period. She says that this gave her a deep understanding of the patterns that make a business likely to thrive or fail.

As Emilie was in Sofia during the last week of January, we used the opportunity to ask her a few questions.

Trending Topics: Why do corporate clients usually come to you and ExO? Are there any common challenges they face?

Emilie Sydney-Smith: About half of our clients realize that their company could fail if they don’t change, because a really big disruption will be hitting them. These companies know that competitors will soon offer superior substitutes for their products, often for free. The other ones are seeing all fast-growing companies in the world and they’re jealous – they want to get on the same growth path. Their share price has been fairly stagnant over the past five years and there is often a new CEO or executive who wants to make a mark and do it very fast.

So, where should a big company start its transformation journey? What’s the process like? 

Most companies struggle to innovate. Lots of innovation teams today are either being disbanded or acting like zombies. What they really lack is a systematic approach to help people within the organization feel comfortable with change. But this change needs to be tangible and result in initiatives that are actually implemented. 

We don’t think of ExO as a consultancy that tells companies what to do about their future. People within the company should be making this decision and it’s our job to coach them and help them understand how to truly innovate. We also think it’s very important to have a time box so that a year later you can’t have: “Oops, nothing really happened.”

So, we have a 10-week process, a sprint. We form four teams of four to six people from the client company and we coach them through, but at the end, each team has come up with two initiatives. The company gets a portfolio of eight ideas while they’ve trained their staff to think like innovators. Then, if a crisis happens, these people can come together and quickly bring a new product or service to market. And about 50% of the initiatives we help create end up being implemented in the first place. 

Can you elaborate a bit on how you make people feel comfortable with change? How can a large corporate cultivate a culture of disruption and shift its mindset, from being slow and creating incremental improvements to delivering 10x radical innovation?

Many businesses practically tell their people: “We don’t trust you. You have a very specific role, don’t do anything else and definitely don’t have big ideas, because that’s the role of the CEO or the strategy department”. I think that’s just sad as it’s disenfranchising and a waste of the talent in that organization.

To the people who participate in our sprints, we say: “You are here to create ideas that might positively affect millions of lives, to create the future of the company.” And people come alive, they’re inspired by that. So, that’s the start. Then, the coaching is really important but also the access to a global network of people who have done large-impact innovation before.

The other thing most companies fail to see is that they accidentally create ‘Innovation Theater’ because they have all these great ideas but nothing comes of it, because of the corporate immune system. The corporate immune system is there to stop people from doing crazy things and ruining the company, and yet now it’s also stopping innovation. So, you also need to give people a way to align all the politics within the company. Having 10-week sprints where decision-makers give the teams feedback every week actually helps with that alignment, so initiatives are far more likely to be implemented.

Is there any measurable outcome at the end? What should companies expect as ROI?

Well, we worked with Mexico’s largest insurance company. In the three years since we worked with them, they doubled revenue and tripled profits. Their CEO says it’s our work that did that. Other large companies like Procter and Gamble have generated over $400 million out of the work we have done together.

What should you keep in mind if you want to make money out of disruptive innovation?

I see too many companies that create innovation teams that say: “Don’t expect any revenue from us for the next 5 years because we need to develop these new technologies.” I think that’s awful, because there are so many things that we can do that can bring early revenue and then in stages get to the point where it takes off exponentially. People at the highest level of the company should be aware that quick innovation wins do exist, while one day these ideas will turn into the future of the company.

It’s been really interesting to look at companies that have failed to think about their future. Marriott is a great example. Compare it to Airbnb, which managed to scale so quickly by looking at the leveraged assets of people having spare rooms. They didn’t need to go and build new hotels. At the same time, Marriott failed to look at what their existing talents and resources were and to think about new business lines. If they were smart enough to say “Let’s create TripAdvisor, Booking.com, Airbnb,” their market cap would be four times of what is now.  But they were too focused on their existing businesses and missed great new opportunities.

So what can big companies do to make sure they spot these new opportunities and the cultural shifts in society? 

For the most part, companies are not spotting these shifts, they’re just getting blindsided by new technology. We talked to a very large shipping company recently and asked: “How is 3D printing going to affect your market?” and the answer was “It’s not.” How crazy is that? The localization of manufacturing around the world means that the shipping of finished goods around the world can evaporate incredibly fast. And 3D printing has improved dramatically in the past five years. It used to be like most early technology – ugly and not working all that well. But today 3D printing works pretty well and is very close to being something we see in every neighbourhood, creating lots of the goods we use.

What’s the emerging technology that will change our lives the most within the next 3-5 years?

I think that automated vehicles will change our lives the most. They will mainly be shared vehicles as we’ve seen with Uber. Today a third of downtowns in big cities are car parks. We wouldn’t need car parks anymore. All of that real estate can be changed to something else. People will be able to commute much longer distances because now they can eat, they can sleep, work, or do something other than holding a steering wheel.

We are working with three different companies on flying taxis. Many people think they are a long way away. No, in 2023, they are expected to start taking passengers in Dallas, Los Angeles, Dubai and soon after that in many other cities around the world. We are working with architects that are creating the skyports for those flying cars. They expect to build 40 skyports per major city, each capable of a 1000 take-offs and landings per hour. Uber is expecting that the price of these sky rides will be the same as the price of a ride on the ground – not straight away but pretty quickly. These will be quiet flying cars. Helicopters today are very noisy and very dangerous – once you go from one single rotor to many electric rotors, you won’t be able to hear them with all the background noise in the city.

So, we are about to see a very big change in traffic and how people move around cities.

What’s your take on corporate innovation portfolio management? Do you believe in the 70/20/10 rule (core/adjacent/ moonshots)? Is there a recipe for how many resources a company should allocate to innovation?

It depends on where the company is. If you see a disruption coming at you, you should be putting a lot more than the 10% into the moonshots. And most of your investments will be in the adjacent industries. In general, I think that the 70/20/10 rule makes a lot of sense. The thing is… you see companies are cheating. I talked to an innovation manager recently and he said: “Okay, we are doing the 70 and 20, and next year we will do the 10.” And next year, they will probably say that they will do the 10 in 2022. This way, they’ll never get to that moonshot. Moonshots are hard and take time to develop. You need to be doing them now. But you also need to be doing them because they create excitement across the organization. When people work on projects for the future of the company, that becomes more than that 10%. That becomes the reason for being for a company.

I like to think of it the other way around.  Every fast-growing company in the world has a massive transformative purpose. Companies often forget why they exist. So, when you create the vision for that future you want to live in and how your company will make it a reality, that takes over many of the aspects of the company, and the 70/20/10 rule is no longer of any interest.

Can you give us an example of a great massive transformative purpose?

Oh, my favorite one is Google’s. “Organize the world’s information”. It’s audacious and yet truly explains what they do in just a few words.

GitHub is listed as number 1 in ExO’s list of top 100 Exponential Organizations. What makes this company so special?

GitHub really understood how to scale and that they didn’t need a lot of things. GitHub was sold to Microsoft for $7.5 billion and yet they have almost no staff, almost no intellectual property, and almost no assets. We have never seen a company like this created before that has that kind of valuation. They really used the exponential attributes, the attributes shared by the world’s fastest-growing companies, to do things in a very easy way. They get customers and suppliers around the world to happily do the hard work because of the fabulously useful platform. But also to make a lot of money out of doing that. These platform businesses that allow people to make transactions and benefit themselves on the platform have been the ideas that took off in the world in the last 10 years.

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