Why do people believe you can build an innovation team by hiring a few smart people and giving them a creative space? In my experience, teams built on this false premise die within eighteen months.
How do organizations get it so wrong? Innovation consultants have told them, or innovation books have taught them, that this is how you build an innovation team. Those experts have rarely built and led innovation teams that delivered.
So why is this episode any different?
I built and ran HP's Innovation Program Office (IPO), and the teams I led there were named to Fast Company's Most Innovative list three years running. For the last fourteen years, I've run CableLabs, the research and innovation lab for the global broadband industry, where our teams build technology that half a billion people use every day.
This episode is about what it takes to build innovation teams, based on my experience doing it at scale—multiple times.
By the end, you'll have the six steps I use, in the order they have to happen, what goes wrong when a team skips one, and a way to score your team today.
I'll start with a decision I almost got wrong.
In 2007, I was about to approve a 20 percent time policy at HP. Under what is called "20 percent time", employees spend about one day a week, a fifth of their working hours, on projects of their own choosing. Google had made it famous; everyone was talking about it, and it looked like the answer.
Chuck House stopped me. Chuck had spent decades at HP working for Dave Packard, who founded the company with Bill Hewlett. "Before you do anything," he said, "you need to talk to Art."
Art Fong was HP employee number nine. When I sat down with him, he told me something I didn't know. HP had already tried 20 percent time. In the 1950s. The company had watched Art work on his own ideas on Friday afternoons, so it gave everyone Friday afternoons. Most people sat around not knowing what to do with the time, and HP dropped it.
"The ones who were going to innovate, like me, were already doing it," Art told me. "The mandate didn't change behavior."
That was the lesson. You can't order people to innovate. The people who will innovate are already trying, and your job is to find them and clear the way.
I never approved the policy. Google killed its "20% time" policy in 2013.
What Art told me next shaped every innovation team I built after that, and we'll keep coming back to Art and his story.
Let's get into it.
The Innovation Team Fallacy
The innovation team fallacy is the belief that if you hire smart people and give them a creative space, innovation will follow. It's easy to believe, because every successful innovation team you've read about had smart people and a place to work. That's the part you can see from the outside. What you can't see is what had to be in place before the work began.
There's a second version of it, and it's the mistake I almost made with 20 percent time: copying what worked at another company and expecting it to work at yours. I'll come back to that later, with the story of a company that learned it the hard way.
Teams also fail when you build the pieces in the wrong order. Get the order wrong, and it doesn't matter how talented the people are.
Here are the six steps, in the order they have to happen:
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Build the culture before you hire anyone
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Recruit for specific roles, not just talent
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Adapt the process, don't adopt someone else's
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Fund it like innovation, not like operations
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Measure what keeps leadership bought in
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Lead it day to day
Step 1: Build the Culture Before You Hire Anyone
Culture is how people behave when nobody is telling them what to do, especially when something goes wrong. New hires don't learn it from what you say, or from the employee handbook. They learn it from what they see.
Art Fong didn't describe HP's culture with a policy. He taught me through stories.
One weekend, Bill Hewlett found a manager had locked the tool room with a padlock. Bill came back with bolt cutters, cut the lock off, and left a signed note on the door: "Never lock this again." He wanted his engineers to get to parts and equipment whenever an idea hit them. The note told every engineer at HP that the founders would remove anything that stood between them and their next idea.
When Art tried to buy a house in Palo Alto, and discrimination stood in the way, Bill and Dave bought it from the seller themselves and sold it to him. No memo or values poster builds that kind of trust. It's built by what leaders do.
Three things have to be in place before you hire your first person.
Permission to fail without penalty. Innovation means working on ideas that are too early, too unusual, or too risky for the company's normal processes. Most of them won't work, and nobody brings you ideas like that if failure costs them. People watch what happens to the first person whose project gets stopped. If that person's next performance review takes a hit, your team stops proposing anything that might fail.
Trust built through integrity. Trust gets built when a leader does the costly thing they didn't have to do. It gets destroyed when a leader says one thing and does another.
Leadership that protects the team from the rest of the organization. Every company has its own version of that padlock: approval chains, purchasing rules, a legal review that takes six weeks, a budget that only opens once a year. Most of them exist to protect the core business, and they do that job well. An innovation team can't work inside them.
What to do:
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List the padlocks, then remove them. Take one idea and walk it through your organization on paper, from the first conversation to the first test with a customer. Write down every approval, every form, where the money comes from, and how many days each one takes. Then go back through and cut the ones your team doesn't need.
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Write what happens to a person whose project gets stopped. Do it before the first project, not after, and be specific about the performance review and the next assignment. Then keep your word the first time it's tested, because that's the one everybody remembers.
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Name the protector, and make sure everyone knows who it is. Pick the person with enough authority to tell the rest of the organization that a rule doesn't apply to this team. If nobody in your organization can play that role, you're not ready to build the team.
Go deeper: HP Won Innovation Awards. Then Killed What Made It True.
Step 2: Recruit for Specific Roles, Not Just Talent
Keep the team small. I've argued for years that the right size for an innovation team is six to eight people. Bigger than that, and people lose focus and stop feeling connected to the work.
Small means every seat matters. If you hire the eight smartest people you can find, you'll often end up with eight people who think alike. I look for four roles, and in my postmortems of teams that failed to innovate, they were missing at least one.
The visionary. This is the person who sees an idea before there's any evidence for it. They're rare, and often hard to work with, because they're living in a future the rest of the company can't see yet.
The leader, who usually isn't the visionary. This is the most common mistake I see. Somebody has a great idea, so they get put in charge. The leader's job is different: get the resources, protect the team, and stop a project when the evidence says it's time. The person who had the idea is the worst person to make that call to kill it.
The evangelist. The evangelist takes the team's work to the rest of the organization and explains it in the language of the people who will have to build it, sell it, or support it. Without one, a team builds good things that nobody adopts.
The radicals. These are the people a normal hiring process screens out. They're creative, they push back, and they can drive the people around them crazy. Remember what Art said: the ones who were going to innovate were already doing it. Your radicals are often inside your company right now, working on something nobody asked them to do.
At HP, my group became known as the place you could send your radicals. One of them was very creative, and he drove people crazy, especially the other executives. Every week, a senior executive called me to ask if I had fired him yet. I refused, and I spent a fair amount of time running interference so he could keep working. When he left HP, he started a company with some contacts. When it was acquired, he was worth several times what any executive at HP was worth.
The person the organization wants gone is often the one with the idea nobody else can see yet. If you want radicals on your team, you have to be willing to take those calls.
What to do:
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Write the four roles on one page and put a name beside each. Use the names of real people, not job titles. Any blank is your first hire, and it tells you what to recruit for.
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Keep the visionary and the leader as two different people. If one person holds both roles today, decide which one they're better at and fill the other. The test is simple: can this person stop a project they fell in love with?
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Choose the evangelist from the part of the business that will have to adopt the work. Their credibility with that group matters more than their innovation experience, because those people already trust them. Give the evangelist standing time with that group, not just a presentation at the end.
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Go find your radicals, and decide in advance how you'll protect them. Ask managers who they would transfer out, and look for the people already working on something nobody asked for. Then agree with your own boss on what you'll say when the complaints start.
Skip this step, and you get a team that produces what the core business would have produced anyway, or one that builds good work nobody adopts.
Go deeper: What Is the Optimal Innovation Team Size?
Step 3: Adapt the Process, Don't Adopt Someone Else's
Once you have the culture and the people, you need a process: how ideas come in, how they get tested, and how you decide which ones get more money and which ones get stopped.
At HP, we funded innovation in stages. An idea had to earn its next round of money at a checkpoint we called a stage gate, where the team answered a set of questions before anything moved forward. We ran four gates: market validation, customer validation, a limited launch, and then a full launch. We called the journey through all four gates the innovation funnel.
Here is what that looked like in practice. From a pool of about three thousand idea submissions a year, we funded roughly twenty into market validation. Around twelve made it through to customer validation. Five or six were in a limited launch. Three or four became new products.
Now, remember the second version of the fallacy from the start of this episode, copying what worked at another company? A process like this one is exactly what people try to copy. Here is what happened when a grocery chain did it.
An executive at Kroger, the grocery chain, heard my podcast and emailed me to say his team wanted to use HP's innovation playbook as written. We had released it under a Creative Commons license, so anyone could use it for free. I said yes, they could use it, but I was clear: "It won't work as is."
They ran it anyway. They built an innovation lab next to a Kroger test store in Northern Kentucky and used HP's playbook without changing it. It cost them eighteen months, mostly building credibility with the store teams, who had to adopt anything the lab built for their stores. Their answer was always some version of "Our customer likes it this way."
Kroger got it wrong by copying the process. HP's process was built for a technology company. A grocery store is built to run the same way every day, and anything new disrupts that. So I went to Kentucky and helped them tailor it. That work is what the evangelist role exists for. Once they did, the team shipped Advantage Checkout, a scanning tunnel for groceries that was recognized at the National Retail Federation's annual show in 2011.
I've said it many times: adapt, don't adopt. That runs against what a lot of innovation consultants sell: a framework you can install. I had to follow my own advice when I moved from HP to CableLabs. What worked at HP wouldn't work at CableLabs without changing the language, processes, funding level, and who the customers for the innovations were.
What to do:
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Write how your organization already makes decisions. Who approves spending, how long an approval takes, and the words people use for customers and products. Your process has to run inside that reality, or it gets rejected.
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Keep the purpose of each piece and change the form. A stage gate decides whether an idea gets more money and resources or stops. Write your own gate questions, in your own vocabulary, and make them about where the market is going rather than what is happening today.
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Translate it, then prove it in one place. Rewrite the process in the words the group that has to adopt it already uses. At Kroger, that meant the language of the merchants and category managers, who decide what goes on the shelves. Then try it with one team, on one idea, for ninety days, and let that team show the results to everyone else instead of presenting the framework.
Go deeper: Kroger Copied HP's Innovation Playbook Perfectly. It Failed Anyway.
Step 4: Fund It Like Innovation, Not Like Operations
Operations get budgeted once a year because operations are predictable. Ideas don't arrive on a budget schedule. Someone has an idea in March that needs a small amount of money to test, and the answer they get is to put it in next year's plan. By the time the money arrives, the opportunity has passed, or the person who had the idea has moved on.
At HP's Innovation Program Office, and again at CableLabs, I set up what I call the Idea Fund. It's a pool of money that isn't committed to any project. When a good idea comes up, we give it money from the pool, say $50,000 for seven months. Once committed, the project has that money for the full seven months, no matter where we are in the fiscal year or what happens in the next budget cycle. And because the pool stayed at the same level year after year, no one had to wait for next year's budget.
It takes a leader who can protect that pool, and that means having the CFO on your side. A pool of uncommitted money is an easy target when the numbers get tight.
What to do:
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Set the pool once, and keep it at the same level year to year. Agree the number with your CFO up front, and agree that it stays in place, so it isn't swept up the first time the numbers get tight.
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Commit money to a project for a set amount of time, not for a fiscal year. Write the amount and the end date together, and hold to both, so the team knows exactly what it has and can get to work.
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Put a deadline on every commitment. If a project can't answer the questions for its next gate in the time it was given, find out why before you decide anything. Sometimes the team learns something that changes the question.
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Decide whether to stop or pause. If the answer at the gate is no, stop the project and put the money back into the pool for the next idea. If the problem is market timing rather than the idea, pause it, so you don't keep investing before it has a real chance to launch.
Skip this step and every good idea waits for the next budget cycle, which is how innovation teams die of patience.
Go deeper: Are You Playing The Innovation Long Game? An HP Story.
Step 5: Measure What Keeps Leadership Bought In
A team that can't show its leaders what the innovation funding is buying gets cut at the first bad quarter. A team measured on the wrong thing stops taking risks, even if nobody tells it to. You need a small set of numbers that do both jobs: show what the money is buying, without killing the risk-taking.
Start with what not to measure: the number of ideas. The Innovation Program Office received over three thousand ideas and pitches a year, about sixty a week, and that sounded like success. But no team, however smart or well funded, can properly evaluate three thousand ideas a year. After reviewing a few thousand, I found myself skimming proposals that deserved hours and would catch myself looking for reasons to say no. We had built what we thought was the most sophisticated innovation evaluation process in corporate America, and it was filtering out the breakthroughs it was designed to find.
The number of ideas, or the size of your funnel, doesn't matter. What matters is ranking them well enough that the best ones get the proper attention. The goal isn't to evaluate everything. The goal is to evaluate the right things properly.
Then get the best ones into the funnel, so the ones that survive the gates have an impact. Leadership is not interested in the funnel. They want to see the impact from the innovations.
That is what you need to measure to keep leadership bought into innovation.
What to measure:
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Percent of revenue from new products. Pick a time window, say products that didn't exist three years ago, and keep it the same. This answers the question, "What are we getting for this money?"
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How many innovations ship each year. At HP, our target was two new global products a year. The Innovation Program Office averaged three to four.
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Profit on what shipped. Bill Hewlett and Dave Packard considered a product successful only when its profit over time was six times what it cost to develop.
Any one of these on its own will push the team in the wrong direction. Measure only new-product revenue, and last year's product in a new color starts counting as new. Measure only how many products ship, and the team will ship small, safe ones. Together, they keep each other honest.
Skip this step and the first bad quarter ends the team, because nobody outside it can say what the money bought.
Go deeper: 6 Innovation Metrics and KPIs Every Organization Should Use
Step 6: Lead It Day to Day
Everything so far can be set up as a process once. This step never ends.
Art Fong told me one more story. One evening, while Art was working on a new piece of equipment, Dave Packard came in, sat down next to him, and looked at his notebook. "I'll tell you what," Packard said. "I'll write it down while you take the readings." The company's co-founder worked as Art's lab assistant until nearly midnight.
Packard was running a company. He could have asked for a report the next morning. Instead, he sat down and did the work alongside Art. A great example of an innovation leader who led.
Three behaviors hold an innovation team together.
Show up in the work. Not only in the meetings about it. The team needs to see that you understand what they're doing and care how it turns out.
Hold a vision that reaches past this quarter. Innovation takes longer than anyone expects. What your team is working on now will show up as a product long after this quarter has been judged. The team needs to hear where the work is going, from you, more often than feels necessary.
Take the pressure so the team doesn't have to. Every quarter, someone in an executive meeting will ask what the company is getting for this money. The leader answers that question, using the numbers we just covered, and keeps it from landing on the team every week. Those weekly calls asking whether I'd fired my radical were part of the job.
The team trusts you because you protect them, and that trust keeps them innovating when a project gets hard.
What to do:
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Spend time every week on the work itself. Sit in on a test, join a customer call, or read the raw results before someone summarizes them for you. Put it on the calendar and protect it the way you'd protect a board meeting.
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Write the three-to-five-year destination in one sentence, and repeat it. Say it in team meetings, in reviews, and in your own updates until everyone on the team can say it back to you without looking.
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Take the executive questions yourself. Bring the numbers from the last step into the leadership review, and be willing to defend the innovation teams, especially when the organization is facing a tough quarter.
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Protect your people in public. When someone complains about a member of your team, answer it yourself, in the room where it came up. The person being complained about should never have to defend themselves to the rest of the organization.
Skip this step, and the other five come undone. The padlocks come back, the radicals leave, and the idea fund gets raided.
Go deeper: 9 Leadership Behaviors for Innovation Leaders
The Payoff, Told Straight
When this worked at HP, the teams I led made Fast Company's Most Innovative list three years running, and the recognition credited the Innovation Program Office, the products it created, and the culture we were rebuilding. Stanford and Harvard both wrote teaching cases on how the team worked.
I retired from HP in December 2011. A few years later, HP shut down the Innovation Program Office. As of last fall, when I last wrote about it, HP hadn't been back on that Fast Company list in thirteen years.
That's the part of this playbook I'd underline. Leading the team day to day depends on one person. The culture is what has to survive when that leader leaves, so spread it widely enough that others defend and protect it.
At CableLabs, I used the same playbook, adapted to a unique organization. In the twenty-four years between CableLabs' founding in 1988 and my arrival in 2012, CableLabs had been granted approximately 70 patents in total. In the fourteen years since, we've added more than a thousand.
While I'm the CEO, innovation is a team sport.
Everyone in the organization owns CableLabs' innovation culture, not one person. To avoid repeating what happened at HP, we established a small council of employees, not executives, who champion the culture and corporate values.
The Innovation Team Scorecard
Building a high-impact innovation team starts with an honest assessment of the team you have. Not the one described in a board update. The one your people work in.
The first step is to honestly score yourself on the six steps. Then have someone on the team score it separately, and compare. The gap between your score and theirs is usually the most useful thing on the page.
Fix the earliest weak step first, because later steps rest on earlier ones, and adding people to a weak foundation only makes it fail faster.
You can run this on a sheet of paper today. I've built a scorecard as a free download you can fill in. For each of the six steps, the scorecard describes each step and what a 1 and a 5 look like.