#255 The Game Changers: Corporate Rebels and Innovation with Jim Verquist

0:00:01 - Mehmet
Hello and welcome back to a new episode of the CTO Show with Mehmet. Today I'm very pleased joining me from Boston in the US, jim Verquist. Jim, the way I love to do it is to keep it to my guests to introduce themselves, but just I want to mention that, jim, you know he is a rebel, so, jim, I will leave the introduction to you. 

0:00:23 - Jim
That sounds good. Thank you. Yeah, my name is Jim Verquist. I did three Silicon Valley startups and then I went and got an MBA and went to big companies and you know, the culture shock of going from a 10-person startup to a large company was far worse than the culture shock I ever experienced when I moved from America to Japan for three and a half years. Like that was nothing right and I've always rejected the idea that it has to be that way. And so I led a turnaround at Millennium and a fast-strategy transformation at Best Doctors, and now I'm launching an innovation firm called Engine 2 Innovation for businesses that need a second growth engine. 

0:01:02 - Mehmet
Great, great and again, thank you for being here today. As a first thing and you just mentioned, you know about, you know living the shock. So, what was the experience? You know, shifting from, you know, being in the Silicon Valley startup space and pivoting to leading transformation in established companies. So, because usually we see the other way around, right. So what was the main driver for you to take this path? 

0:01:30 - Jim
Well, I think that your startups are exciting. I mean, it is a blast to work at a startup. You know, a startup is a big bucket of challenging, instinctive problems and when you work at a startup, you have a lot of freedom. Just reach into that bucket and pick a problem that you are, you know that you want to solve and you just go solve it. And that's why, when you're working at a startup, you know if you're working at a 10-person startup, you've got 10 people who are using the big brains to do what they think is right. You don't ask permission, you don't get. You know there's not all this politics and this is my role and that's your role. And stay out of you, stay in your lane. That's not how startups work, especially the good startups and so. But the thing is, is that we know how to do startups Like you know, we have a model that works. We have a whole venture capital industry that works. 

Big companies do not, and that's why I think that there are, there's so much talent in big companies, and sometimes this is surprising because there's a lot of attitudes in big companies where we just have the wrong people. You know, like our people are, are are deadwood and and there's nothing we can do about it. And you know, maybe we need to bring in the the cool kids and, you know, buy some ping pong tables and beanbags and give them a really cool space and we're going to be an innovative company and this is at the innovators right inside your company already. You just haven't tapped into this, and we know this because, as you said, a lot of people go the opposite direction. Right, they work in a big company. 

They get, they get bored and frustrated and so they go join a startup at the big company, they're, they're stifled and they look like they're not very creative or innovative. They go to start up and they do amazing things. So it's it's not the people, it's it's kind of the we've got something wrong. That is kind of killing the entrepreneurial spirit. And that's really what I focused on. You know, going into big companies. And if we simply create some space for people to use their big brains to do the things that they want to do, like it's not. Like you know, change is hard, all that kind of all that kind of nonsense. People want to do things they want to do, they want to tackle challenges, make a difference, and so you can really tap into that, and that's what I'm focused on. 

0:03:39 - Mehmet
Great, and is this what you call as a model, the corporate rebel model? 

0:03:46 - Jim
Yeah, so the corporate rebel model was. There was a whole process on how, on how, how I got there, but really the corporate rebel model is simply a name for a pattern that shows up all the time in big bureaucratic companies and organizations, and what it means is that corporate rebels are simply employees who bump into a problem or bump into an opportunity and they say, oh my God, this, this is crazy, like what. You know why? Why is it this way? Or why aren't we doing something? And the thing is is that sometimes you can go to your manager and get permission to work on your idea. Most of the time, you can't right. 

The business is focused on reliable, efficient execution of the proven business model, which is what they need to be focused on. The corporate rebels, as a pattern, are simply employees who say you know what? I'm so energized and so confident that this could be something big. I don't know if it's going to succeed. I may not even know what I'm doing really, like I may be the last person on earth who should be doing this, but somebody's got to do it, and so I. I'm going to do all of my regular work and but on top of that, I'm also going to work on this unofficial skunkworks project and do that as well. And so the corporate rebels are. 

Really they're always some of the best employees you have in the company, because if you're a corporate rebel and you're working on a kind of an unofficial skunkworks project, you don't slack off, you don't do shoddy work, like the whole goal is to kind of fly under the radar and not attract attention to yourself. You're not trying to get yourself fired, you're trying to get something, your idea, far enough along that other people can start to see what you see, because it's really hard to sell ideas. But when you've got a project that has traction, momentum, you've got something to show for it, then everybody says, okay, now I now, now I get it right. And that's how. That's how the corporate rebels work. And this is a pattern that I'm guessing that this was around at the time of the ferrules, like it's just a, it's just a part of human nature that this is what people do. When you have no power, no permission, no funding, no anything, but you want to do something, you just go off and do it. 

0:06:07 - Mehmet
So how that differs, Jim, from the term entrepreneurship. 

0:06:16 - Jim
Yeah, entrepreneurs are. It's a, it's a word that tends to be owned and delegated to, kind of, the chosen innovators, and so normally, you know, a company says, okay, here's our employees, and they, they do, you know, the business as usual stuff. And then we have to, we have to be innovative, and so we need to hire entrepreneurs and we need to select the few people in our company who are bold, creative, talented people that are going to do this for us. And so I would say that corporate rebels and entrepreneurs. You know, every corporate rebel is an entrepreneur in a lot of ways. 

The difference is that nobody knows that a corporate rebel is an entrepreneur. Yet because you know they, they just look like somebody that is either quietly doing something that nobody knows, or when the manager finds out. In a lot of cases and many cases, especially when they come when it comes to creating the big breakthroughs, these employees are, they get harassed, they get bad performance of you, they are threatened to be fired simply because they have an idea that their managers don't like, and so it's almost like you have to earn the term, the term entrepreneur. So you know, maybe you could view entrepreneurship as an umbrella term that is larger than corporate. Real corporate rebels is the smaller subset of people who simply innovate even though they don't have permission, they don't have funding, they don't have any any authority inside the company to do it, but they do it anyway. 

0:07:53 - Mehmet
Yeah, yeah, it's a great explanation. Now, you mentioned something at the beginning about like how into startups, you know, the smaller teams, the more agility they have, and so on. Now, when companies grow, you know and this is something I've seen it again and again, again I call like they become a little bit like dinosaurs, right. So in order, you know, like a dinosaur, to turn, you know, like right or left, it needs a lot of time and the reason is there will be a lot of bureaucracies behind the need, approvals from everyone. So, within the model you're talking about, jim, what could be a way to let this dinosaur in just, of course, like a fictional way, become more agile and, you know, allow this group of people to take decision faster? Does it need, you know, some endorsement from, from, you know, the upper management, the board, or maybe? Or is it like an internal movement that starts from down and then it goes all the way up? How does it work actually? 

0:08:58 - Jim
It's a great question and it's something that took a while to figure out exactly how to how to make it happen. Because what happens is that if you go inside a company and people are doing their job there's a lot of autonomy in companies today where you know, let's say, that you're in charge of filing documents right, and you think of a better way to file documents that tends to be a fairly low risk, well understood, if you want to continue to improve that project, you're not normally going to get into a lot of trouble or have a lot of problems doing that, and a lot of people do that, which is great. You know we need all of that kind of stuff. But the corporate rebels they tackle problems that are way outside of what they're supposed to be doing. They may be trying to solve a problem that maybe somebody else is working on something, and they think that that approach is is like a slow motion train wreck and they're saying you know, like I'm worried about this and I don't know what to do. I've talked to people, maybe, or whatever, and nobody's listening, nobody sees what I see, and so that, or they just find something that is so bizarre. You know, like when, when Gary Stark weather created the laser printer. You know, his boss thought that putting a laser inside an office machine made about as much sense as putting a nuclear bomb inside a you know an office machine. Like why would you do that? This is, lasers are dangerous. Everybody knows they're dangerous. Like, why would you even think that this is a good idea? So so that's kind of that corporate rebels are are different in that way. Where they're in, the promise is that they're not. There's not very many people who are willing to risk their careers to go and do this. So my estimation and I've talked to a lot of corporate rebels is that there's probably one in a thousand employees that are actually wired or geared to do this. 

Now, what's funny is that when we were in kindergarten, everybody did this right. When you think about your little kindergarten yourself, when you wanted to go do something, you didn't ask permission, you just went out and did it right and you fell down 80% of the time you didn't care. You got right back up and kept going. But by sixth grade, nobody does this anymore. We all ask permission, we stand in line, we follow the orders, and so I'm a corporate rebel and somehow I missed the lesson in third grade or whatever happened, where I didn't realize that you're not supposed to do this. 

It took a long time, but what ends up happening is that if you want to make this an innovation model, you can't rely on the people who are willing to do this, risk their careers. The one in a thousand, that's not enough. And so the corporate rebel model is really how do you go into a company and get 10% to 20% of your employees doing this? You're never going to get everybody to be an innovator, right, and you don't need everybody to be an innovator If you're a successful company with a proven business model. But what's special about this is that, because corporate rebels work right within the bureaucracy, right within the management model, you don't have to change anything about how the company operates. However, you can't let this just be a bottom-up movement, because managers will kill it, not because they're bad people, just because they don't understand it and it looks like chaos to them and disruption because they don't understand it. 

And so the corporate rebel model is really you need three things to make it work. First, you need the CEO or the business unit leader, whoever's on top. You know what? We have got a lot of talent in this company. We've got a lot more ideas than we can personally fund and sponsor as projects, and we don't want to hold people back. So if you have big ideas and something that you think could be big for the company, don't ask me permission because I'm probably going to have to say no. I don't want to have to say no, right, like, just go do it, and if it turns into something interesting, then we can talk. You need then that lets the managers know that you do not have permission to kill projects, and so managers can ignore projects or they can sponsor projects that they like, but they can't kill projects, and that turns out to be incredibly important. It's why Google's 20% time failed and similar schemes always fail is because managers always reserve the right to kill projects they don't like, and it turns out that's exactly how you kill the breakthroughs that would bubble up naturally inside of your company. 

And then the third thing you need is you need a catalyst, somebody who is outside of the management system that can offer dedicated support to the employees, because it turns out, most people actually need somebody to kind of almost like give them permission, you know, and management team for all kinds of you know, for other reasons we talked about, you're going, if you say yes, you're going to have to give them time. You're going to probably have to give them a little bit of funding. If the project doesn't work out, you're probably going to have to accept some responsibility for that as a manager. You don't want any of that stuff, so, but you need somebody that the employees can go to and say, look, I've got some crazy idea. I don't know if it's going to work, and the catalyst is not there to pick the good ideas because nobody can predict the future. That's really one of the key insights. 

When you look at the break, you know big companies do create breakthroughs from time to time. They don't. You know they don't come from picking the winners. They come from unexpected people, unexpected places, and so the catalyst is not there to try to pick the winners or say hey, I don't know that's a, or try to connect anybody, or all they're there is to say, look, I don't know if this is going to work, like, I can't predict the future any better than you can. 

But if anybody can do it, I believe you can, and so find the smallest, simplest little thing that you can do to get started and go do it. And you know, once people are in motion, newton's Law of Inertia kind of starts to take over and they, you know they keep going. But getting them past what's called a refusal to call is a really tricky thing. So you do need it to be an official Skunkworks program for corporate rebels where the CEO says let's do this. You have a catalyst that provides dedicated support to employees and the managers. Their rules are you can't kill projects, you can ignore them, or you can sponsor projects you like, and that's it. That's all you need. 

0:15:37 - Mehmet
Yeah, yeah, now you mentioned you know about Google and the 20% thing you know, and you just you know, you said something which not something I just figured out, but again it reminded me about, you know, the famous, you know the graveyard of Google products. 

0:15:56 - Jim
You know, that yeah. 

0:15:57 - Mehmet
So why do you think? You know that model didn't go well and so we needed another one like the one that you were talking about, which is the company, the mobile? 

0:16:10 - Jim
It's a great question. So Google's 20% time was a complete failure in terms of creating new growth engines. Right, it was great for marketing. It really helped Google present themselves as a very innovative company, but it did not produce even one single hundred million dollar business from from the Google store percent time. And so you know, a lot of people say that, like Google ad words was a Google 20% time project. That's not true. That was actually a corporate rebel project, and so so Google's 20% time didn't work. And the real, the key reasons are first, managers had the right to kill projects they didn't like, just like Gary Stark, wether's manager, who thought you know, putting a laser in an office machine was a ridiculous idea. And it's like I'm all for you being innovative and creative, but don't do stupid, idiotic things, right, like that, just. And so that's kind of that's how managers think is that they have the. You know, part of their job is to is to not waste companies resources, and the thing is is, with corporate rebel projects, there are no resources dedicated to these projects. 

You know they're doing everything they're supposed to do. They're not given 20% time. They figure out their own time, and that's one of the things that is important to understand with these projects is that any employee who has deadlines and schedules in their work has what we call white space right. There's always some uncertainty in your job, just like there's uncertainty in how much you know you need to budget for something or how long it's going to take you to get downtown when you need to. You know go there and you're not exactly sure how the traffic's going to be. You always have to build in a little bit of white space, and so it turns out. Every job has, you know, about 20 percent. The rule of thumb is 20 percent of anyone's job is white space. Now they're not going to have free time. You know this extra time that they can free up to work on something more exciting. That doesn't happen every day, or even every week, but if you really want to free up time for an unofficial Sconkwork project, you can do that. So so you know these, these projects get no time, they get no funding. They don't get any management support. They cost they literally cost the company nothing, and so Google's 20 percent time, didn't need to award 20 percent time because employees can figure that out. And that's what corporate rebels have been doing, like I said, since the time of the pharaohs. Right, they figured, they figure out how to free up time. Work efficiently, do your job well, but don't waste time and screw around and look busy when you're not busy. Right, just get your job done and then work on this more exciting project alongside that. 

And so the other thing is just that Google was all about transparency and you know they wanted to have data and metrics and you know we're gonna. You need to show progress and support right from the beginning. And it turns out that in the fuzzy front end of innovation, it's not appropriate to do metrics and kind of transparency like that. And you can think about it from your own life when you have kind of an idea that is so crazy you don't even know how to like explain it to people, right, you're probably not even gonna tell your own wife or husband about that idea, right? You're just gonna kind of you kind of want to quietly have some space, just to kind of quietly explore and work on it, and then, as you start to have some success, then you might be a little bit less guarded about it. It takes time to figure out how these things are going to work. It takes time to even be able to explain it, to figure out the terminology you might use, and so you need some quiet space, some private space where everything isn't posted on, you know, like whiteboards, and driven by metrics. 

Some things take a long time to get together, to come together. It's not because it's you know, people are inept. It's because these problems are complicated and the breakthroughs are the ones that are the most complicated and complex of all. Right, like nobody's done this before, we're pioneering entirely new ground, and that's the focus. That I'm interested is how to go in and make it a repeatable way to actually create breakthroughs in a company, and you're not gonna do it by letting managers pick the projects and doing metrics and transparency. So, google, I think they were well meaning, but they did exactly the things you would do to kill all the great ideas, the ideas that could have the potential to become something big, and only keep those things that actually would get a lot of support inside the company but actually and would look good on the metrics scale but would actually never turn into anything big for the company. 

0:20:59 - Mehmet
Yeah, like makes sense a lot to me. 

You know, and you know, when you see, sometimes why not only Google, like usually in the tech space specifically, we see a product with great traction and I'm sure maybe a rebel he came out with or she came out with the idea, and then all of a sudden you see, okay, you know what, it's not only Google that does this, by the way. 

So I've seen a lot of companies, okay, you know what, like we decided to retire this project and I think, if they have just waited to your point about time maybe a couple of months sometimes, or okay, 12, 18, I don't know but it's not your main business, so you're not losing money actually keeping this project alive, yeah, but the same story we hear it in companies, especially when they go out from the startup and they start to be under the mercy of investors, and you know the why we are wasting your resources here. So we started to see this Now, while preparing to for the episode, I've seen, like you mentioned that teams. You know usually they don't innovate, right. So you, why don't innovation teams work? Like? Why do you think this way? 

0:22:15 - Jim
Yeah, the innovation teams are. They're good people, they do a lot of good work, they do a lot of cool projects, right. But when you look at where you know what actually happens inside of a big company, it turns out they do not create the $100 million businesses or the billion dollar businesses. Those come from corporate rebels and so, and you know why don't they work Well, innovation teams are good at certain things. If you want to do kind of the next, the next step in your existing business, all you know with you're working within your paradigm, and you want to, you know push performance 20% or cut cost 20%, or you know add, add certain capabilities that fit firmly within what you are good at already, then you pick the top, you know you pick the best and the brightest and you put them on that project and they will normally deliver. This is what companies do, right. They're also good if you just if there's emerging technology that you just kind of want to understand better, so that the you know they can inform the executives and have some in-house kind of understanding of this, instead of going to consultants who are going to tell every company, all your competitors, the same exact thing. You kind of want to just explore that technology. Innovation teams are great for that. If you have a big customer that has a big check that says, look, if you can hit exactly these specifications you know here's a $100 million contract or $1 billion contract then innovation teams are good at that, because that's just again, it's kind of a stretch relative to the existing paradigms. What is different, though, is when you're actually trying to create a new growth engine, which really means you're trying to create a breakthrough. You're trying to do something that nobody in the company, nobody in the industry, has done before, something that's going to surprise people. You can either go buy a company that's already growing, and that's great, because then you know, next quarter you can show growth Like wow, look, how much we've grown. The problem is is that you know acquisitions destroy more value than it creates 65% of the time, and you know tech-based companies especially, they want to be viewed as innovative, so they really want to build, to do this stuff internally, and that's what we're saying is that use innovation teams for the right purposes, but if, when you want to go out and create the next big thing, you're not going to get there from the innovation teams, it's going to come from the rule of you know. Number one rule of innovation breakthroughs is you know. Most breakthroughs come from people and places the experts least expect. This means you're not going to be able to predict the winners, so we need to. 

And you mentioned kind of the startup ecosystem and how it's you know. How is it different? How is it related? Well, venture capitalists use this exact same model. Venture capitalists don't go out and pick certain people or certain ideas and say you know, this is the one that's going to be a billion-dollar business. They sit back and wait until a startup gets far enough along. They've already have some traction, some momentum, some customer, some revenue. That's when you go and pitch a VC and so they plug into this vibrant entrepreneurial ecosystem. 

You know where you have thousands and thousands of people just doing all kinds of crazy things and they don't. You know, when you're an entrepreneur and you want to go launch a startup, you don't go knock on the VC's door and say you know, hey, what do you think of this idea? Or you know, can I have a little funding or can I have permission, you know, to work on this? You don't do any of that stuff. You start trying all kinds of crazy things and most of the time you know you're bootstrap funded, you're eating ramen noodles and you're doing everything on the cheap. And it turns out that innovation in the early days actually really loves scarcity. Like, if you give people a bunch of time and money to work on an innovation, they're going to do stupid, obvious things, whereas if you give somebody nothing I mean like literally nothing they will be very creative and very innovative in in and actually being able to really figure out the fuzzy front end of innovation in a very cheap and inexpensive and fast way. 

And so what we're saying is that the VC's, they sit, they plug in this vibrant economic entrepreneurial ecosystem that they have nothing to do with actually creating or nurturing or supporting. They sit back Once the winners start to merge. Then you can get a visa and a point with the VC. They and Then they will. You know only five out of a hundred startups that that get far enough along to even pitch a VC actually get VC funding. So the odds are really bad in terms of getting VC funding. And then it turns out that VCs only make money on 20% of their investments. 80% of the time they lose right and so and that's after they already have some amendments and traction and in most of the most of time, they make a modest returns on their investments every once while they invest in a Google or Facebook. It makes the whole game worth playing. 

What we're saying is that you need to do that inside this, your company. If you, you know, if you, if you can create an Innovative ecosystem inside your company, that you don't have to provide any funding, no time, you don't have to pick winners, then you can wait, sit back and wait until you see projects that start to look interesting to you, and then you can support those projects with official funding and and and support and and. Then that's when the metrics and everything else kicks in, just like at a startup, and that puts you a lot of pressure on you. But you've, you can't do that in the very earliest stages. You've got to wait until they're actually starting to to get momentum attraction on something, and then it's appropriate to start to say, okay, now let's hit milestones and and kind of show progress. 

We're trying to do this at the earliest stages in big companies. It's forcing us to pick the winners is putting a lot of unnecessary pressure on Startups, you know, on the internal startups, because they've got to. They've got to hit these. You know metrics and milestones when they're just trying to figure things out, and so it's a fundamentally broken model, and the corporate rebel model lets you work the way that the VCs do. We have a model that works. Let's use it. 

0:28:29 - Mehmet
Yeah, is there any success stories that you have seen that gem like any, or you know examples you can give us? 

0:28:37 - Jim
Yeah, so, like I said, big companies do occasionally create billion-dollar breakthroughs. Right, and the, the laser printer, gary Stark, where other created the laser printer, he was a corporate rebel, like I said, you know they got fired to do that LED lighting, like we're we have. We're in the middle of a revolution where our entire lighting infrastructure has Transitioned, and just seemingly a matter of years. Right, that was all based on a breakthrough in how to create bright blue LED, which is required to create pure white lighting. And there was a corporate rebel called shoo-gee Nakamuta and he did it the exact same way. Right, he didn't get permission, didn't get funding. He, you know, got harassed and almost fired and persevered and created a billion-dollar breakthrough for For his company, gary Classon at at black blackberry, he created bbm same story, same way. 

So, you know, gordon teal dick drew. There's just so many stories of people that have created billion-dollar breakthroughs in this way, and and that's why and these are the, these are the one in thousand people who are willing to risk their careers. Imagine if we took the you have to risk your career to do this off the table for employees. You had 10 to 20% Of your employees doing this, you would have a lot more growth engines created inside big companies. 

0:30:05 - Mehmet
Yeah, these are very good examples actually, and you know it's funny enough that usually we hear that a lot of these projects, you know that now we use them on daily basis. Once upon a time they were rejected and people were, as you mentioned, loved that and Said, oh are you crazy? And then, and so on, but actually they turned out to be the best thing they have ever come up with now. 

0:30:33 - Jim
That's right. I mean, you know, the breakthroughs actually take people by surprise. They come from the crazy idea that everybody hates Until it works and then everybody's oh wow, of course that works right. It's funny that Steve Jobs is. Everyone knows. Steve Jobs created the iPhone. The problem is is that he didn't create the iPhone right? Of course not. Steve Jobs was actually Really good at getting the best out of the people inside the company that he was. I mean, he was, he was a terrible person, a terrible interpersonal skills, but he actually he didn't say that's a stupid idea, I never want to see you working on that again. He said that's a stupid idea and come back to me when, when you've got something better right. 

So the people who created the original Foundation for the iPhone you know the the kind of touch-based, jester based Input methodology. They were, you know, a few corporate rebels who started working on something in as an unofficial skunkworks project and the first time they approached Steve Jobs they really thought look, we're, you know, we've got some success. They spent a long time and this is really working. We can show results. They went to Steve Jobs. He's like this is the stupidest thing I've ever seen my life. Like. You know, stop wasting my time, what are you doing? And so this is how the, the corporate rebels, most of the innovation stories start, at the point where everybody understands the potential, and then you kind of tell the story and it just looks like started from success and grew into success. 

But when you really peel back the onion to the very earliest stages, they are these long, lonely, kind of terrifying journeys by corporate rebels, by people who think differently, that say you know what my gut is telling me? Something is here. I don't have any data, I don't have any proof yet, but something is here and all I need to do is get a far enough along that other people can do it. And so when Steve Jobs said that's a terrible idea, they didn't say, okay, scrap it and never work on it again. 

They went back and kept working on it as an unofficial Conqueror project, and that's why these projects are special is because nobody can kill these projects, like they cannot be killed, and that's a very important thing. They were able to then keep working on it and finally they got a far enough along and Steve Jobs was like, oh my god, this is going to change everything, and it did, but you can't do it. If you kill things in the early stages, it's a very fragile time for innovation and for the people who try to do this stuff. It's very easy to kill and what we're trying to do is say, look, let's not kill it and let's make it easier for people to start, just have enough space, just to simply not be fired because they have an idea that other people in the company don't like. If we take that off the table, we're going to have a lot more of this. 

0:33:22 - Mehmet
Yeah, and to this point, if someone is very curious to know the story behind, so you can read the book by Tony Faddel, who was actually the guy behind the iPad and the iPhone, and he had to deal with the bipolar disorder of Steve Jobs, and then he talks a lot about it and I remember when I read the book a couple of months back. It's a little bit funny because if these guys, they didn't have the persistence and perseverance that you just mentioned, Jim, they could have just said you know what, screw it, we're actually resigning from the company. The good thing also. On the other hand and this is why, if you remember, I asked you at the beginning of the episode about who should sponsor this, regardless of the we can argue about the personality of Steve Jobs, but also he was a rebel himself. 

And this is why, yeah, and this is why, of course, like he had this personality, the bipolar disorder that everyone you know, and if you read also his autobiography of Steve Jobs, you'd see this a lot happening but he was a rebel. The team was a rebel also as well that he used to work with and actually, you know like, in the long run, actually all the breakthrough product that came out from Apple was a clash between like two rebels together. If you want, and to your point, like this is something we see a lot Now, something you talk about, and I know that your company is, like, has the same name. So what is the engine to innovation? You know, like, why, why you call it an engine. Is it an engine to grow? Is it an engine to take the company to a, let's say, unicorn state? Is it like to take the company to a new market? What is it exactly? What is this engine? 

0:35:11 - Jim
Yeah, engine to engine to growth engine to innovation, or just called engine twos really comes from the people at Bain who kind of there's an article that, the Hubbard Business Review article that says you know when your business needs a second growth engine, and they really lay out the framework well. And so an engine to is when your core business is kind of it's reaching the top of the S curve right, and everybody knows that the S curve is not going to last forever. This core business is eventually going to run out of steam and somehow we have to hop onto a new S curve. And so an engine to would be like Blackberry Messenger service, bbm was. It was a perfect example of a of a engine to, because it extended life of the Blackberry. Once iPhone was released, blackberry still was still selling like hotcakes because of BBM. 

And so an engine to is simply a a new what becomes kind of your core business or your stronger core business. That is some paradigm. It's based on some paradigm breaking breakthrough that that happens. So you know, the IBM 360 was an engine to. You know they had these really successful computers but they they created an entirely new architecture, new approach, the IBM 360. And that was an engine to. So that way their core business only could get them this far and was eventually going to slow down and fail. Now you've got a brand new thing and you're on a brand new S curve and so you're on, you're riding the growth curve up again. So that's what an engine to is is that every core business matures. And you know, if you want to sustain growth, you've got to go out and create new growth engines. And if you have a billion dollar business, you're going to need to create billion dollar growth engines, and so that's what the engine twos are. 

0:37:10 - Mehmet
Great. And I know you have another term, which is Horizon three innovation. So what is? 

0:37:15 - Jim
that yeah. So Horizon three comes from the McKinsey framework called, you know, the three horizons of growth, and what they're really saying is that you don't create. You don't create new growth engines like next week. Again, if you need to show growth, next week you go out and buy a company, because that's the only way you're going to succeed. And so there's three McKinsey there's, there's a book that kind of lays out the three horizons of growth. 

The first is inside your core business. You're inside the current S curve. You there's all kinds of ways to extend and strengthen your S curve, right, you can do geographic extensions, expansion, you can do line item extensions. You can do add new features and new capabilities, you can push the performance up. So those are all innovation within your existing core business, and that's what that's what companies are good at, right. That's really what where they excel. 

The next the horizon to growth are the businesses that are just starting to kind of grow. So let's say that you bought a company, a startup, and it's just starting to grow, but it's kind of on the early scaling phase and those are different processes and capabilities. You need to actually successfully really scale that in a way that's going to reach its potential. Then the next one, the horizon three, are the ones that are just basically ideas or early kind of experimental projects. And that's what I'm saying is that the corporate rebel model is where you're going to generate your engine threes inside of your company or your horizon three opportunities right inside of your company. You don't have to buy a startup anymore to get this. You do it through these unofficial skunkworks projects. 

So horizon three growth, in the book, in McKinsey's book, they lay out a whole. You know they kind of walk through how you're supposed to do this, but of course they're basically making bets on people and ideas and problems and that approach doesn't work. So I'm saying, is that the idea, the concepts of horizon three are great McKinsey's answer of how you do it, where you just basically predict the, you know, you pick the winners and hope for the best. That's the model that has proven not to work. The corporate rebel model is a much better way to do that. 

0:39:42 - Mehmet
And I think, jim, this is very valuable. Again, you see me like going back to startups because, on the hope, you know, and this is something I wish I see one day is that all startups becomes big corporate, right, they need, they need, they need to have this framework, let's call it and to be prepared from now and I know, like we repeat this, we talked you know about it, me and you about how companies they fail later because they were not able to innovate I like to ring the bell, even in the early days, that this is something you need to put in mind from now, although now maybe you are a small startup, maybe you are 5, 10, 20 people, but you're gonna reach a phase. Don't think the world ended when you are now in the top. 

0:40:37 - Jim
That's right. 

0:40:41 - Mehmet
This is related to another thing that I like a lot to talk about, which is the blue ocean, red ocean concept. Once you reach the peak, all the others are approaching you and you're gonna be in a crowded place and you need to take yourself to another peak. You can start from another place to go all the way up the way in the S curve. This is very important and the reason I'm repeating this again and again. Don't be tricked by winning fast and saying, hey, now I'm done, I don't need to innovate anymore. I know it's a very traditional quote. Maybe it's a marathon, it's not a sprint, but it is really a marathon and it's a never-ending marathon. So they need to do it. You mentioned some books, jim. Like you mentioned the McKinsey one, any other books where we can learn more about all this? Is there any books you recommend? 

0:41:43 - Jim
Yeah, I think the best book to understand how breakthroughs really happen and why they're so unusual is Thomas Kuhn's the History of Scientific Revolutions. Now it's funny because that book doesn't. You know, the innovation does not show up in that book. The word innovation doesn't show up in the book once. Right, he's really talking about scientific breakthroughs, but he's the person who coined the term paradigm. And if you want to understand innovation, you want to understand breakthroughs. You've got to understand how powerful paradigms are. 

Paradigms are amazing because they let us, they focus our attention. That you know, once you're on an S curve, you're living inside of a paradigm where we understand how we succeed, we understand what we compete on, and now it's about strengthening that and that's all kinds of activity to extend and strengthen that existing paradigm. And that's mostly what we do inside big companies. That's mostly what scientists do working within a paradigm. But what happens is that there, eventually, the paradigm starts to break down. So you know, in the scientific world, you know, newton's laws of physics started to break down. They weren't explaining things, they were all these anomalies, right, and so everybody knew the paradigm was broken. But you could still use a paradigm to do a lot of good things, but everybody knew it was broken and some things were fundamentally wrong. That's where you need a breakthrough, somebody that's coming way outside of the paradigm to actually say this is different and so and explains. You know why it's so hard, why it normally comes from people and places that experts would expect. I mean, like you know, einstein. Nobody was going to pick Einstein to revolutionize a lot of physics. This guy couldn't even get a job in his own industry, right Like he had to become a patent clerk because nobody would hire him. That's why you can't, you don't go out and pick the best and brightest. If you want to, if you want a great breakthroughs, the best and brightest are almost always not going to, not going to succeed. For you it's going to come from kind of the weirdos and the knuckleheads you know like watch Apple's old commercial about. You know the people that actually changed the world. They're not the people that you would ever pick in the early days, and so so I think that's probably one of the best books on innovation, because if you don't understand paradigms, you're not going to understand anything about innovation and you're going to lull yourself into the myth that the innovation models try to tell you that you can just use a lean startup process and you will go out and create the next billion dollar breakthrough, except the problem is, no, it hasn't worked. It doesn't work. You have blue ocean strategy. The concepts in there are great, but in terms of actual model to go out and create breakthroughs it has not worked. 

Disruptive innovation, and so, because of all these sexy innovation models, the Thomas Coons book, I would say, explains why those aren't work, don't work and why they will never work. And then I also really like Thomas Johnson's I'm sorry, michael Johnson's book called Word Good Ideas Come From, and really it's the ideas you know, the breakthrough ideas really are from really unexpected places. And he kind of talks about the, you know, adjacent, possible and liquid networks and and that's another thing, like the whole net liquid networks thing is fascinating because in our, in a world, if you live in a city, on a per capita basis, people living in cities are more innovative. Like you know, there's a ton of research that shows us. There's more connections, there's more and, and more connections just means there's more opportunities to ideas to bounce off each other and actually do something right. There's more opportunities for collaboration. When you go to small town you don't have nearly as much innovation on a per capita basis just because there's there's fewer people and fewer, fewer connections. Well, you would. Those same laws should work in big companies. You know, it's like we have so many people, so many connections and we don't see this happening. Where we do see it happening, in nature, this means that something is stopping at, something is stifling it, and, and that's kind of interesting. So Johnson's book, where good ideas come from, is this the second one. And and then you know the funny, the funny thing, I think you know one of the things, one of the quips I like to make, is that you can learn more about innovation by watching the Wizard of Oz, then you can by reading 95% of the books on innovation out there. 

Because you know, dorothy is the classic person who sets out to accomplish something that she has no business doing right, and she's not the heroic type, she's the unexpected hero right in the beginning of the movie. You know she's so kind of helpless and pathetic that when she falls in the pigsty, like she can't even get herself out, like her uncle has to come and and pick her out Nobody was going to pick Dorothy to be, you know, to go off and save the world right, but once, once her dog is is is threatened. You know, at first she doesn't, it's like she tries to get everybody else to solve the problem. For it's like, you know, please, anti, save my dog. You know, save total, uncle, save total. And nobody, nobody would do it. 

And so eventually it, she, she, reaches the point where it's like nobody's going to do it, I'm going to have to do it myself. This is exactly how corporate levels work, this exactly how the innovation things work. And it's something that hits you and it says I can't wait around for other people to do it, I've got to do it myself. And then what's funny is, as she's on this journey and she's going along, she's starting to get a little bit more confident. She's starting to look like she's the person who knows what she's doing and suddenly other people are joining in the team. So this whole idea that innovations the team sport is true, but it doesn't start with a great team who you know, just because they're so brilliant and they bounce ideas of each other. They know it starts as a lonely journey and you attract people along the way because you're going somewhere. So watch Wizard of Oz if you want to learn about innovation. 

0:47:58 - Mehmet
That's great, great, great great one, jim, like, as we come to an end, how you can help you know companies and where they can find more about you. 

0:48:09 - Jim
Thank you. My website is engine to innovation, to as a number, I'm sorry, so the URL is engine to dot us. So engine to with a number, dot us. And then I'm easy to find on LinkedIn or anywhere else, because I think I'm the only person on the planet with the name Jim Berquist. So look me up and you can get to the website and the information that I put out through through LinkedIn or other channels. 

0:48:40 - Mehmet
Sure, I will make sure also to put the link you just mentioned in the show notes so they can visit the website. And, you know, highly advised to reach out to Jim if you are stuck and you're thinking, oh, like we're reaching a dead end. Right, because I think you know you don't need to live the frustration. We, we, you know there's always solutions, as always, I believe. And, jim, like, actually, the world you're doing is fantastic to enlighten, you know, corporates how they can find the rebels within let's call it this way and keep keep innovating and keep you know growing and keep you know being the company, the iconic company that everyone wants to be right. So I think this is very crucial. Is there anything that you think we should have talked about? Is there any final thoughts you want to leave us with today, jim, before we close? 

0:49:35 - Jim
Yeah, the biggest. 

I think the one thing I would say is that the companies are operating with a flawed assumption that we really have to be smart about when it comes to innovation. 

We have to be smart right, because we can't possibly pursue every idea that people inside the company may want to work on. And that is true if you think that you have to fund projects and put people give them time and money and things like that. What the Koper Rebel model shows is that that assumption is no longer true. You can literally work on, you can let people work on any idea, any project that they want to work on, and you don't have to give them anything. And so we move away from kind of a situation of scarcity and having to be smart and clever which is exactly what's getting us into trouble into an abundance where we actually, if you have an idea and you think it can be big for the company, you're not going to get anything, but go prove us wrong. We don't buy it and we're pretty smart people, so you're going to have to do some work to prove it to us, but you are free to do that, and I think it changes everything. 

0:50:49 - Mehmet
Yeah, very good insight. And just if you allow me very shortly, in one or two sentences, this works whatever the size of your company. I was lucky enough around 15 years back to work with someone although, like we were like very small organization, but I was very lucky to have a leader who always encouraged us to go try new things and see how you can make things better, and we were really motivated. It's not only about getting, maybe always from financial perspective, but also you can. 

You can feel you are, as you mentioned at the beginning, like you know, we leave the world better, in a better shape, as we found it, and this is very, very important, you know, to keep driving for innovation. I know that people they don't love change, but it's a fact that we're going to change all the time. So better that you act now rather than you know regretting this later on. Jim, really I enjoyed the conversation with you today. You know a lot of insights you added to us, so we know now what is the Rebell model, is how to implement it, what are the I would say, the persona that should be available to make it a success. We talked about also the different models, whether it's, you know, the engine to innovation, the horizon three innovation and all this. 

So it's a really very, very, very, very informative episode. I would say, at least from me, I learned a lot from you today. So thank you for sharing the knowledge with us today and, as usual, this is how I end my episodes. If you are a first time listener or you know watching this, thank you for tuning in. I hope you enjoyed. So don't forget to subscribe and, you know, keep watching the podcast or listening to it and for the you know loyal audience that always they send me their notes and emails. Thank you very much also for reaching out to me and please, please, please, let me know the feedback and if you're interested to be also on the show, don't hesitate to reach out to me. 

If you have an idea, maybe you want to do some innovation on something, so let's discuss it and let's make it reach to as much people as possible. And thank you again for tuning in. We will see you in the next episode. Thank you, bye-bye, bye-bye. 

Transcribed by https://podium.page