Plenty of ideas

    In some companies, new ideas are in short supply — stifled by a corporate climate that cuts off intellectual oxygen, discourages change and demands conformity. At other companies, ideas abound and the challenge takes a different shape: creating the conceptual conveyor belt that moves ideas to action.

    Of course, everyone expects innovation from the dot.com companies of the world. But, is it possible to imbue a global giant with the kind of damn-the-conventions ethos that permeates Silicon Valley? Strategos tackled just this challenge in concert with Royal Dutch/Shell — the Anglo-Dutch oil giant.

    With $138 billion in revenues, 102,000 employees and nearly a century-old tradition, Shell is the epitome of a lumber ing industrial behemoth — the last place you’d expect to find entrepreneurial zeal. Within Shell’s Balkanized organization — which one employee compared to a maze of 100-foot-high brick walls — access to capital is tightly controlled, investment hurdles are daunting, and radical ideas move slowly, if at all. Shell’s globe-trotting managers are famously disciplined, diligent and methodical. Still, in cataloguing their character and capabilities, “wild-eyed dreamers” is not a term that comes to mind.

    The catalyst for change within Shell was Tim Warren, Director of Research and Technical Services in Shell’s largest division, Exploration and Production (E&P) Division.

    By late 1996, it had become apparent to Warren that E&P was suffering from an innovation deficit, and would be unlikely to meet its earnings targets without an infusion of radical new ideas to drive nonincremental growth. In recent years, his team had come under considerable pressure to align its R&D spending with the immediate needs of Shell’s national operating units. Long-term projects had been reined in, short-term priorities given more weight and open-ended innovation pushed far down the priority list.

    Convinced that a wealth of imagination was bottled up in Shell’s employees, Warren looked for ways to unleash the imagination that might help the company find its way into new, high-growth opportunities. As a start, he encouraged his people to devote up to 10% of their time to “nonlinear” ideas.

    The results were underwhelming. Warren ratcheted up his innovation revolution, giving a small panel of free thinking employees the authority to allocate $20 million to rule-breaking, game-changing ideas submitted by their Shell peers. Proposals would be accepted not just from anywhere within E&P but from across Shell — no need to squeeze radical new ideas through the keyhole of existing programs and priorities.

    The GameChanger process, as it came to be known, went live in November 1996. At first, however, the lure of venture capital failed to yield the avalanche of new ideas Warren had hoped for. Though bright and creative, Shell’s people were accustomed to working on well-defined technical problems, not thinking revolutionary thoughts. Warren, recognizing his innovation process needed a kick-start, turned to Strategos.

    Strategos’ solution was a three-day Ideation Lab, designed to take Shell participants through a process of discovery leading to insight into new avenues for future growth by harnessing disruptive changes in the external environment (both within and beyond Shell’s industry), overturning the “rules of the game,” and imagining new ways to leverage Shell’s “core competencies” against that changing environment.

    Seventy-two enthusiastic, would-be entrepreneurs showed up for the Ideation Lab — many of them individuals no one in Shell had suspected of harboring an entrepreneurial impulse.

    Like their counterparts at other companies, Shell employees had taken part in other exercises aimed at generating new ideas. According to participants, however, the process was “different this time:” The Strategos Ideation Lab generated a level of engagement and enthusiasm among participants — and a curiosity in non-participants — so significant that as the Lab went on, the doors to the conference room had to be locked to keep the overwhelming number of “gate crashers” out.

    Inside the Lab, groups of eight attendees sat at tables in front of networked laptop computers, as Strategos’ team encouraged them to put their new thinking skills to work. By Day Two, the group had unleashed a torrent of new ideas: 240 in all — some for entirely new businesses, others for new approaches within existing businesses — which they then sorted into a dozen different “domains.”

    These potential business concepts were then released into a kind of open market, in which Ideation Lab participants were free to respond to the “gravitational pull” that attracted them to one idea rather than another. The result: groups of three to four individuals clustered around the business concept that most appealed to them.

    The GameChanger panel approved six-totwelve-month funding to help these twelve concepts progress to the business-plan phase. A second Ideation Lab held a month later with a new group of would-be entrepreneurs produced a similar out pouring of ideas. According to one Shell participant: “…we accomplished more…in a week than we could ever accomplish back at our desks.”

    Several months later, however, Shell’s people — most of them scientists or engineers by training — realized a piece of the puzzle was missing. Conferring with the innovation teams, Shell’s GameChangers sensed that after a promising beginning, their innovation effort had become a “ship adrift.” Warren and his partners had worked hard to clear an innovation space within Shell, and they’d succeeded.

    Innovation had a mandate but not a method. Warren and his panel recognized that “permission to innovate” is necessary, but not sufficient. What they needed was a process, validation in the form of funding to continue to refine promising ideas to and through the business plan phase — but also a forcing function to make that happen.

    The scene was set for a Strategos Action Lab — an intensive five-day experience, designed to dramatically accelerate the translation of “gamechanging” ideas into compelling and actionable venture plans for the creation and launch of new businesses — plans that would pass muster, in fact, with venture capitalists in Silicon Valley. Clearly this level of aspiration called for an unorthodox approach.

    From the outset, Strategos Director Steve McGrath, architect of the Action Lab concept, chose to signal the break from “business as usual” by moving the action off-site, well away from Shell’s Hague headquarters, to a 14th century castle in Maastricht, Belgium. The metaphor was not lost on participants. As one put it, “It was a wake-up call…we were challenged to break with the present, to find new ways of seeing — new ways to convert our visions into reality.”

    But, appearances can be deceptive. Behind the castle’s 14th century exterior lay a rich array of technology and expertise, assembled in order to stimulate and enable breakthrough thinking. High-speed networked computing, access to online research databases, videoconferencing, video production and editing technology, plus graphic artists, a film crew, and a host of subject-matter experts from venture capitalists and entrepreneurs to alliance experts and marketing gurus were brought together under one roof.

    The aim, according to McGrath, was to create an “innovation hothouse” — a full-immersion, resource-rich environment in which to incubate new ventures.

    Shell teams were taught how to scope out the boundaries of their “opportunity spaces,” identify potential partnerships, enumerate real sources of competitive advantage and identify broad financial implications.

    Next, they were coached in developing 100-day action plans: low cost, low risk ways of testing their ideas in the market place. But they didn’t stop there. Recognizing the need to make their ventures emotionally, as well as intellectually, compelling, the teams were coached to bring their ideas to life using the techniques of story-telling and visualization.

    Graphic artists worked with the teams to visualize product prototypes, a video film crew helped them to create short-length “infomercials” with which to communicate the essence of their ventures, and venture plans themselves were conceived a “strategic stories” that captured the passion as well as the logic of the idea.

    At the conclusion of the week, each team presented its story to a “venture board” consisting of the GameChanger panel, a sampling of senior Shell executives, and representatives from Shell Technology Ventures Inc., a unit charged with funding late-stage technology commercialization. GameChanger empowered the venture board to “sponsor” winning concepts and fund the next round of business development.

    In the end, four teams received six-month funding to put them on a migration path toward full-fledged business plans.

    For Shell, the Action Lab has helped to institutionalize the innovation process. The GameChanger panel meets weekly to discuss new submissions —320 have come in so far, many via Shell’s intranet — and its members serve as coaches and advocates for prospective innovators.

    Any employee with a promising idea is invited to give a ten-minute pitch to the panel, followed by a 15-minute Q&A session. If members agree that the idea has potential, the employee returns for a second round of discussions with a broader group of company experts whose knowledge or support may be important to the success of the proposed venture.

    As a failsafe, before rejecting an idea, the panel looks carefully at what Shell would stand to lose if the opportunity turned out to be all its sponsors claim. Ideas that get a green light often receive funding— on average, $100,000, but sometimes as much as $600,000 — within eight or ten days.

    Ideas that don’t pass muster enter a database accessible to anyone within Shell, a kind of innovation stock pot that helps entrepreneurial employees shape their own ideas, or bring new insight to existing ones.

    Several months later, each project goes through a proof-of-concept review, in which the team must demonstrate that its plan is indeed workable in order to win further funding. This review typically marks the point at which the GameChanger panel helps successful ventures find a permanent home inside Shell.

    To date, about a quarter of GameChanger’s ventures have found homes in a Shell operating unit or in one of the company’s various growth initiatives, while others have been carried forward as R&D projects the remainder have been wound down and written off as inteesting but unproductive experiments.

    One year after the Lab took place, the exercise is producing measurable results: of Shell’s five largest growth initiatives for 1999, four had their genesis in the GameChanger process — including one exploring an entirely new business focused on renewable geothermal energy sources. Focusing forward, fully 30% of Shell’s exploration and production R&D budget is now devoted to ventures that are “graduates” of the Strategos Action Lab.

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