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The Chief Innovation Officer, Redefined

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How to hire a CINO that can build lasting innovation capabilities.

The way businesses need to organize and behave has fundamentally shifted. Across industries, companies, and organizational functions, we have heard many of the world’s most innovative companies echo the same challenge: businesses must urgently embrace a more nimble and entrepreneurial approach in order to stay competitive. We call this challenge of how big companies can leverage scale while staying innovative “big entrepreneurship.” The Rising Billion is one of five pieces in our report, Big Entrepreneurship, aimed at deconstructing some of the complex challenges around big entrepreneurship and provide actionable insights for business leaders.

This report was created by Fahrenheit 212, a global innovation strategy and design firm. We define innovation strategies and develop new products, services, and experiences that create sustainable, profitable growth for our clients. We challenge the belief that innovation is inherently unreliable and have spent the last decade designing the method, building the model, and assembling the minds to make innovation a predictable driver of growth for our clients' businesses.

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The Chief Innovation Officer, Redefined

  1. 1. How to hire a CINO that can build lasting innovation capabilities The Chief Innovation Officer, Redefined
  2. 2. Big Entrepreneurship The way businesses need to organize and behave has fundamentally shifted. Across industries, companies, and organizational functions, we have heard many of the world’s most innovative companies echo the same challenge: businesses must urgently embrace a more nimble and entrepreneurial approach in order to stay competitive. We call this challenge of how big companies can leverage scale while staying innovative “big entrepreneurship.” This report aims to deconstruct some of the complex challenges around big entrepreneurship and provide actionable insights for business leaders. Fahrenheit 212 Fahrenheit 212 is a global innovation strategy and design firm. We define innovation strategies and develop new products, services, and experiences that create sustainable, profitable growth for our clients. We challenge the belief that innovation is inherently unreliable and have spent the last decade designing the method, building the model, and assembling the minds to make innovation a predictable driver of growth for our clients’ businesses. www.fahrenheit-212.com | marketing@fahrenheit-212.com @fahrenheit212 | #bigentrepreneurship 5Big Entrepreneurship
  3. 3. It’sapositionbornoutofarealorganizationalneed, anditisintendedasthebestwayforacompanyto institutionalizeinnovation.Butasitstandstoday,the ChiefInnovationOfficer(CINO)roleisthebestway foragoodexecutivetogetfiredwithin24months. 2Big Entrepreneurship The Chief Innovation Officer, Redefined
  4. 4. The urgency to innovate better, faster, and more consistently has led many companies to look for a leader to help drive innovation. With one in five executives touting innovation as their top priority, they are in need of a captain to help guide the organization through turbulent times: a rapid rise in ways to source innovation, technological advances, potential disruptive new entrants, and complex internal politics. The result has been the development of a Chief Innovation Officer (CINO) role. In fact, 43% of large organizations already have a formally accountable innovation executive in place. However, as with nascent roles before them (such as the CTO role in the dot-com era), this role suffers from a lack of proper definition. The creation of the CINO position may signal the company is ready to institutionalize change and growth, however poor role definition risks wasting time, resources, and ultimately the career path of a high-potential executive. Wall Street Journal 43% of executives who responded to the survey said their companies have an innovation executive, compared with 33% last year. Yet 58% of those companies said they did not have an innovation strategy. In other words, for many companies the title of chief innovation officer is mostly for show. It’s like a new toy. Company boards feel that they ought to have one. They just aren’t sure what to do with it.” “ 3Big Entrepreneurship The Chief Innovation Officer, Redefined
  5. 5. Experience in commercial innovation teaches that a CINO role succeeds or fails based not on the hire, but on the structure and strategic intention that surrounds it. Before accepting resumes, know that a CINO job description should outline a capability; it is not simply a wish-list for company growth. As such, start by avoiding the critical mistakes that commonly sink CINOs. Driving Forces 4Big Entrepreneurship The Chief Innovation Officer, Redefined
  6. 6. 5Big Entrepreneurship The Chief Innovation Officer, Redefined The CINO needs a dedicated budget Driving Forces A company’s in-place operating budget can be the enemy of innovation. The operating budget, well… operates. It presupposes function-specific solutions (marketing, merchandising, etc.) before a problem or growth challenge is properly identified. So when a new consumer behavior arises, such as Millennials becoming socially conscious shoppers, the organization is unable to react with agility. Budgets have been set, and problem-solving projects “take” from each fiefdom’s precious resources. Without a dedicated budget, your CINO will spend a majority of his or her time “selling” projects internally and fighting for scraps of funding. Put another way: you wouldn’t buy a car without fueling it. Don’t hire a CINO without a dedicated innovation budget to empower them to act.
  7. 7. 6Big Entrepreneurship The Chief Innovation Officer, Redefined Cultural change is not a realistic ask Driving Forces Are you expecting the CINO to change your culture? Don’t. The fact is that the CINO cannot, and should not, change the culture of an organization. No amount of open ideation competitions, workshops, or awkward trust falls on earth can meaningfully shift a company culture. While CINOs can help create more innovation activity, creating a “culture of innovation” is not actually within the power or remit of the CINO. Culture is driven by the CEO and his or her team and is determined by what is rewarded, valued, and how resources are spent across an organization. It is incredibly tempting to write “create a culture of innovation” as part of the CINO’s job description. Cross it off, just as you would anything else he or she can’t control or really influence.
  8. 8. 7Big Entrepreneurship The Chief Innovation Officer, Redefined Support must come from the inside Driving Forces Innovation does not happen in a vacuum, and without the attention and buy-in of key internal stakeholders, re-entry of an idea into the organization can’t succeed. In addition to C-suite champions, every CINO will require some dedicated percentage of time from someone in every major business unit. Each in-unit representative will help the innovation team navigate the business, facilitate information flow, and contribute to initiatives. These representatives are formally accountable to the CINO and the CINO to them. Having clear metrics and lines of reporting help enable this collaboration, be that between digital, marketing, R&D, sales or a combination of teams.
  9. 9. “Harvard Business Review 8Big Entrepreneurship The Chief Innovation Officer, Redefined Increasingly, companies are embracing collaboration as part of their strategy to grow, by cross-selling products to existing customers and innovating through the recombination of existing technologies. across sales offices, business units, sales, product development, and marketing.” But this won’t work unless employees work effectively across silos —
  10. 10. 9Big Entrepreneurship The Chief Innovation Officer, Redefined The ideas are the easy part Driving Forces The CINO is not an ideas collector. In fact, sourcing ideas is hardly ever the problem. The challenges lie in tasks such as defining what a “good” idea looks like, choosing which ones to bring to life, how to make them ownable and defensible, and prototyping and implementing. If you are hiring a CINO to run innovation competitions and collect ideas, perhaps a better investment is in good collaboration software. Quirky, one of the best crowdsourcing platforms, has begun shutting down despite having raised $150MM in venture capital and a small army of top-tier innovation and design talent. Ultimately, idea sourcing, and even the great directional data it can produce, is just one input to the CINO’s role, as is research, market analytics, business planning, and R&D.
  11. 11. 10Big Entrepreneurship The Chief Innovation Officer, Redefined A better job description for the Chief Innovation Officer We need a better job description for the Chief Innovation Officer. Before starting to re-write it, let’s understand what we should truly be asking of a CINO.
  12. 12. 11Big Entrepreneurship The Chief Innovation Officer, Redefined Bring the outside in The CINO is the eyes and ears of the organization, looking beyond the company’s own data. A CINO should seek to generate cross-category insight, pulling inspiration for growth from beyond the organization and its core industry. The seeds of solutions to healthcare problems can be inspired by what’s happening in financial services; the best new consumer experience for physical retail could emerge from new behaviors around digital couponing. In bringing on a CINO, you are not simply hiring a “big thinker”—you are hiring a detective, a curious problem-solver looking for signals and patterns to pursue, with the ultimate goal of readying the organization to address them. In parallel, this outside-in orientation requires evaluating and bringing in third-party problem solving capabilities when needed. The CINO must recognize and quickly be able to deploy skills such as research, innovation strategy and product and experience development, and design and prototyping to accelerate innovation initiatives. 01 Define innovation portfolio metrics Cross-functional, creative problem solving 03 02 Develop innovators, not just innovation 04
  13. 13. 12Big Entrepreneurship The Chief Innovation Officer, Redefined Think of the CINO not as the source of the “new,” but as the builder and operator of an organization’s problem-solving engine. A “problem” in this case can include a growth challenge (e.g. step-changing the mobile experience or increasing average spend per visit), just as it can represent an institutional weakness (e.g. improve customer service or separate from a competitor). This requires pursuit of the C-Suite’s top-down strategic priorities while also becoming the strategic think-tank for the specific challenges of company divisions. Cross-functional, creative problem solving 02 Bring the outside in01 Citi Ventures, in this model, has the mission of accelerating innovation at scale “by merging Citi’s strategic initiatives with the best of the entrepreneurial ecosystem.” The arm helps partner with the different businesses at Citi to test, pilot, and commercialize new solutions while also investing in and solving for major challenges relevant to the broader business. The result has been the successful introduction of several innovative pilots and proofs-of-concepts, ranging from big data to security, across various business units at Citi. Develop innovators, not just innovation 04 Define innovation portfolio metrics 03 * In full disclosure, Citi is a client of Fahrenheit 212
  14. 14. 13Big Entrepreneurship The Chief Innovation Officer, Redefined Institutional learning is a purposeful and valuable byproduct of innovation initiatives. An often-overlooked component of the role, CINOs must define, manage, and socialize this learning for the broader organization. By considering innovation initiatives as experiments, best practice also requires that the CINO clearly outline what metrics will inform subsequent decisions. When launching a new in-store experience for a big-box retail chain, how will the company measure success? Is it ROI, an NPS score, or is it confidence that the CINO has found a consumer insight against which the company can invest? The difference is critical, not just for project success but the CINO’s own track record and credibility within the organization. Many failed and fired CINOs have suffered not from lack of ability, but from lack of properly defined measures of success. Since the CINO owns the innovation portfolio, they also control the metrics for what must to be met in order to release funding for the next phase of a project. Their responsibility is to test and learn across several experiments to optimize how and where funding and resources are deployed in order to make better, smarter bets in the long-term. Define innovation portfolio metrics Develop innovators, not just innovation Cross-functional, creative problem solving 03 04 02 Bring the outside in01
  15. 15. 14Big Entrepreneurship The Chief Innovation Officer, Redefined Innovation is a discipline. Innovators can be found, hired, and their skill sets can be cultivated and developed. The CINO is responsible for the presence (or lack) of this skill set within the business units and standalone innovation groups. This role is not about discovering the next wild thinker, but instead focusing on nurturing and enabling innovation capability development. The CINO should assemble a diverse team that blends analytical, deductive reasoning with creative thought and inductive leaps. The only way the CINO’s team improves is by taking on multiple projects—with each initiative growing the topline as well as the company capability itself. Find a CINO that can recognize and recruit for entrepreneurial passion within the organization. If building and nurturing an innovation skillset isn’t part of the CINO’s job description, it simply won’t develop beyond the one executive. Define innovation portfolio metrics Develop innovators, not just innovation Cross-functional, creative problem solving 03 04 02 Bring the outside in01
  16. 16. Are there teams and representatives across the organization that report to the CINO? Do we cultivate and train innovation talent on a regular basis? Is there a defined budget for innovation outside of the operating budget? Do we have the strategy in place to decide which ideas to bring to life? Do we know what innovation skillsets we need to develop or bring into our organization? Have we defined the metrics for success for the investments across our innovation portfolio? 01 0302 04 0605 Key considerations for big companies 15Big Entrepreneurship The Chief Innovation Officer, Redefined
  17. 17. Todd is Managing Partner and Chief Executive Officer at Fahrenheit 212, and the architect behind the unique theory, capabilities, and talent that drive the company’s innovation process. He oversees the company’s ability to predictably unlock growth on behalf of both Fortune 500 companies and institutional investors, and is responsible for the commercial impact of the company’s work. Todd is deeply dedicated to the development and training of Fahrenheit 212’s team of innovators, driving a philosophy that innovation is a discipline that can be analyzed, taught, and refined. He developed the company’s teaching methodology to transform innovation into a predictable, scalable capability. His passion as much as profession, Todd enjoys creating the industry’s playbook as much as running its plays. Big Entrepreneurship The Paradox of Scale Incubating Innovation Winning the Next Generation of Innovators The Rising Billion The Chief Innovation Officer, Redefined 01 02 03 04 05 105Big Entrepreneurship The Chief Innovation Officer, Redefined About the author Todd Rovak Managing Partner, Chief Executive Officer trovak@fahrenheit-212.com
  18. 18. Fahrenheit 212 defines innovation strategies and develops new products, services, and experiences that create sustainable, profitable growth for our clients. We challenge the belief that innovation is inherently unreliable and have spent the last decade designing the method, building the model, and assembling the minds to make innovation a predictable driver of growth for our clients’ businesses. www.fahrenheit-212.com marketing@fahrenheit-212.com @fahrenheit212 #bigentrepreneurship New York 665 Broadway, New York, NY 10012 +1 (646) 654 1212 London 31 Great Sutton St, London EC1V 0NA +44 0 20 3567 0820 Copyright © 2015 Fahrenheit 212.
  19. 19. Innovation Enterprise, “The Rise of the Chief Innovation Offier,” (2015) http://info.theinnovationenterprise.com:rs:inn ovationenterprise:images:Rise-innovation-officer.pdf CXO Today, “Do You Have An Innovation Officer? Time To Check” (2014) http://www.cxotoday.com/story/does-your- firm-has-innovation-officer-time-to-check/ IT World, “Changing of the guard: CIOs, CTOs in flux,” (2000) http://www.itworld.com/article/2783720/careers/ changing-of-the-guard--cios--ctos-in-flux.html The Wall Street Journal, “Chief Innovation Officers: The Growth of the Other CIO” (2012) http://blogs.wsj.com/ cio/2012/04/03/chief-innovation-officers-the-growth-of-the-other-cio/ Harvard Business Review, “Who should be your Chief Innovation Officer?” (2010) https://hbr.org/2010/10/who- should-be-your-chief-colla Wink Product Photos, https://www.wink.com/products/ References

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