The Great Resignation of 2020-2022 is creating a paradox. CEOs often lament the lack of entrepreneurial talent in their organisations. They get frustrated that managers do not step forward with ideas that they can invest in to generate growth or take advantage of market disruptions.
However, in 2021 we saw managers resigning at record rates, many of whom headed straight into entrepreneurship attracted by what Wharton Professor Jacqueline Kirtley calls the ‘hero stories’ of great entrepreneurs like Jobs and Bezos. How can it be that in organisations without innovative leaders, so many are leaving to be entrepreneurs? The answer is that those entrepreneurs were there all along, we just did not create the conditions for them to emerge and create new ventures inside the company.
Calling all Corporate Explorers
I call managers who create new ventures inside existing organisations ‘Corporate Explorers’. They are like entrepreneurs in that they see a problem in the world that they think they can fix. But, unlike their startup cousins, their investors are not venture capitalists, they are senior managers.
Kurtisz, Carlin, and Peck, were not given the opportunity to set up a new business, they took it
These are people like Krisztian Kurtisz at UNIQA Insurance in Hungary. He saw the potential to create an entirely new insurance service based on the principles of the music service Spotify. His business, Cherrisk, has scaled across Hungary and has now launched in Germany. Or Kevin Carlin, founder of a data analytics business within semiconductor company Analog Devices. Or Jim Peck, the founder of LexisNexis Risk Solutions, now a multi-billion-dollar unit, larger than the original parent company.
I could keep going with more examples from IBM, Panasonic, Deloitte Consulting, Best Buy, AXA Insurance, and many, many more.
Human resource leaders are eager to identify and nurture such leaders. They fear that the Great Resignation will rob them of the very leaders that the business most needs to realise its growth ambitions. They are right to be concerned. Although you can teach the skills of innovation, there is something innate about the quality of being an explorer.
Kurtisz, Carlin, and Peck, were not given the opportunity to set up a new business, they took it. They framed the opportunity, built support for the investment, and led the creation of the new venture. They relied on supportive, even visionary leadership, to get this done, but the spark of innovation came from them.
The German Electronics giant, Bosch, forces their wannabe explorers to do at least 100 interviews with customers before they formulate a business plan
Companies with active Corporate Explorers like Kurtisz, Matsuoka, and Peck, are not very different from other corporations. They are highly successful, profitable businesses, with a fair share of cultural and leadership challenges. These are not wunder-companies like Netflix and Amazon, who seem to have innovation baked into their genes. There is no reason why most established firms cannot identify, nurture, and empower their own Corporate Explorers. Here is what you do.
Create opportunities for Corporate Explorers to emerge
The best way to do this is to spark curiosity about unsolved customer problems – things that people want to do but cannot. At Analog Devices, Kevin Carlin accepted an invitation to lead a team investigating the ‘industrial internet of things.’ Five years later, he was leading a new business, ADI Otosense, with two separate offerings in the market using AI to anticipate machine failures in manufacturing environments.
Drill them in the skills of ‘outside-in’ customer discovery so that their great ideas are challenged by a healthy dose of customer feedback. The German Electronics giant, Bosch, forces their wannabe explorers to do at least 100 interviews with customers before they formulate a business plan.
Teach them how to lead experiments so that they test and learn their way toward a robust business model for the idea. Krisztian Kurtisz’ funding for his insurance startup in Hungary was linked to hitting key milestones. As he learned more, so his executives were confident to release funds to support him.
Nobody is there to help them, and they are an unknown quantity to leadership
Give them space to succeed and fail by setting up a separate team. Kurtisz set up Cherrisk on a separate floor from the rest of the insurance business, so that it could operate differently. Staff from the existing company could join the new venture, but it was a one-way-door, they had to commit to be a part of startups’ success.
Have trust in the insiders to do the job. It is common to hire innovative leaders from outside the company. It makes sense. We do not know how to do it, so they must. Although some succeed, most fail, because they have no social capital in the organisation.
Nobody is there to help them, and they are an unknown quantity to leadership. When they hit problems, it is too easy to blame the outsider as a bad hire. In our research, the most successful Corporate Explorers are typically insiders, and the underperformers are outside hires.
Corporate Explorers are there to find in most organisations. We just need to create the opportunity for them to emerge before they decide it is time to find a venture capitalist to fund their new idea.
Andrew Binns is director of Change Logic, a Boston-based strategic innovation advisory firm. He is co-author of a new book, Corporate Explorer, published by Wiley in February 2022.
Interested in this topic? Read How HR leaders can ensure the best talent drives innovation.