Total Innovation Podcast

23: Pavlo Ryzhiy - The capital of failure

• The Infinity Loop • Season 2 • Episode 23

Share episode

Pavlo Ryzhiy is a strategic advisor, catalyst, and integrator who specializes in connecting insights from strategy, innovation, business modelling, and organizational design to create solutions that others often overlook. Originally from Ukraine now based in Hamburg, Germany. Pavlo works with organizations that have previously failed at innovation programs, helping them take a second approach that actually sticks. The central concept discussed is "capital of failure" - the idea that failure shouldn't be hidden or avoided in corporate settings, but rather treated as a valuable asset that can be measured and capitalized on a company's balance sheet. 

 In corporate innovation and intrapreneurship, Pavlo has developed scalable corporate startup ecosystems using unique gamified engagement models where employees invest in their colleagues' startups. He has designed and led corporate acceleration programs focused on sustainable innovation, achieving over fifty percent employee engagement in corporate innovation initiatives and generating significant returns on investment with millions in newly created profits. Through his work, he has facilitated the launch of more than thirty corporate sustainable startups.

 Pavlo is passionate about organizational transformation, sustainable development, self-organized teams, and harnessing both individual and organizational purpose. He focuses on developing employee agency, vertical leadership development, new business and product development, and innovation management. His methodological approach helps companies to drive comprehensive organizational change and innovation.

 His personal experience of leaving Ukraine due to war and rebuilding in Germany adds real-world examples of resilience and transformation that inform his methods for helping companies navigate innovation and change in an increasingly urgent global business environment.

Brought to you by The Infinite Loop – Where Ideas Evolve, Knowledge Flows, and Innovation Never Stops.

Explore how Wazoku helps organizations like those supported by Pavlo Ryzhiy turn past innovation failures into measurable success through sustainable innovation programs, employee engagement models, and strategic transformation.
Learn more about Wazoku’s approach to corporate innovation

Welcome back everyone to the Total Innovation Podcast, where we dive deep into the challenges of building real lasting innovation inside complex organizations and spotlight the people who are doing it for real. As always, I'm your host, Simon Hill. Today's episode is all about something we often talk about, but rarely embrace in the corporate world. Failure. Our guest today is building his career around the concept that failure isn't something to bury or avoid. He believes it's actually one of your company's greatest underused assets. That's the idea behind today's conversation entitled Capital of Failure. My guest is Pavlo Rizzi, an innovation strategist originally from Ukraine and now based in Hamburg in Germany. Pavlo started his journey in marketing at 3M, and after further roles in marketing, moved to be an in-house innovation lead at PMI. He now runs the Corporate Innovations Institutes, where he worked with organizations who've already tried to launch innovation programs and failed. His specialty is helping those companies take a second swing and this time to make it stick. And behind all of this is a personal journey of resilience. Pavlo and his family had to leave Ukraine due to the war and start over in Germany. An experience that brings an added layer of perspective to how he views transformation, failure and what it takes to rebuild. And with that, let's get into it. Welcome Pavlo to the Total Innovation Podcast. It's great to have you here. Hello, Simon. Thank you for having me. Hi everyone. My pleasure. So Pavlo, um, let's get started with this core idea, the concept that failure can be capital, not just a cost. What do you mean when you talk about capital of failure and why is it such a crucial mindset shift for corporate innovators? Yeah, great question Simon. Thank you. Actually, uh, I, uh. I came to this to, to the, to this concept, uh, through I would say pain of, uh, trying to build this is, uh, um, this concept, uh, because everybody are talking about this. Yeah. And when you start in corporate innovation program, and this is absolutely mandatory to have, uh, this, uh, safe, uh, secure feeling for employees. Uh, that they can fail, uh, fast, easily cheap, and so on. But entire philosophy in corporations, in majority of companies is like failure is something very bad. And I. I would be surprised if there will be many viewers of this podcast or overall people who do have, uh, uh, corporate experience who could say or confirm that, yeah. You know, in our company we are welcoming failures and mm-hmm. This is the, actually the. The, the repository of failures from our employees and you could learn from them and so on and so on. So this, uh, it's not happening, uh, frequently. Yeah. Sometimes company experimenting with such a format like, uh, of, uh, failure night or fuck up nights, and this is also popular entertainment format. Uh, but even in this format, a majority of people would love to say about like failure unite or combined with success, because usually. Failures being hide under the carpets in the companies and the, uh, the authors of these failures are usually forgotten and, uh, they, they fail, they laid off and so on and so forth. Yeah. So we are talking love to talk about successful success. Uh, and in this environment it's very hard to to, to persuade people, to experiment, to, to, to tackle unknown. And, uh, when there is a certain risk behind innovations, it's always about certain risks. And, uh, that's why I was also, uh, struggling and experience this pain that I could not, uh, effectively or if, uh, um, massively engage people to, to, to corporate innovation activities. Uh, due to this, due to this barrier and. Experimental, let's say way trials and fails way as well. Uh, I, I end up with the, with this idea that. Hey, why failure is good. So what, what, what experiment driven approach saving us from It's saving us from failure on scale. Yeah. So when we making small, uh, uh, quick and cheap failure, it save us, save our time, save our money, resources, and so on, from, uh, losses on a big scale. With this concept, we started, let's say, experimenting. And this concept was really a appreciate and accepted by management, uh, of, of, of, of the company where we, where we, where we started from this concept. Yeah. And, uh. It, it, it was accepted, let's say. And then when, uh, someone or corporate innovator started with certain idea, uh, and then after, uh, diving into prototyping, experimenting phase with this idea of certain opportunity or saving opportunity or growth opportunity, and then after failed and proved that this idea doesn't work, we, uh, convert this. Let's say results into the thinking like, Hey, if we imagining that this idea would initially be be, be liked by management and they would invest in this idea massively on scale, how much money we would lose if we would, would do so, and this losses, which does not happening, converted into the capital of fail. So this is. One of the, let's say lines in this capital, in one of the accounts. Yeah. Uh, in this, in this capital. And then after with next, uh, uh, all the next fail failures also being capitalized, let's say, so accumulated and end of the certain period, someone could say, Hey, we thanks to our, um, uh, let's say. Prototyping and testing approach. Thanks to our, uh, corporate innovation program or entrepreneurship program or program of, uh, developing of the corporate, um, entrepreneurship, uh, corporate culture or, or corporate entrepreneurship program, uh, whatever you call it, thanks to this program will not only achieved certain. Positive results, uh, with, with opportunities unlocked and so on. And talking about successful success. Yeah. But also. It save us from the failure for billions or millions and take a millions, depends on the scale and the period and the size of the company. Um, uh, uh, losses. And usually, uh, uh, this capital of failure is, uh, is is something much, much bigger. Then the real opportunities, which was successful. Just because statistically for innovations, you usually have to deal with like, say more failures when than the successes. Yeah. So this is the, this is the concept. Uh, and this is the practical application of the example of practical application of this concept. And thanks to that. We could appreciate and celebrate the failures. Not meaning that, hey, you failed and you, you, you be working only for, for, for the purpose of failure. But no, uh, if you fail is also good because we capitalize in this knowledge, we capitalize in this, um, somehow. Money. Yeah. And risks and knowledge about these risks and failures. Uh, and if you success. Successfully. Oh, fantastic. We capitalize on this as well with, uh, with, with father development of this, of, of this idea and scaling it and, and, and, and, and earning money or, um, or cutting costs. Yeah. Thanks. And it's a good, it's a good scene setter. And I think the idea of this is some kind of, you know, quasi balance sheet item from a capital perspective is a good one. There'll be people that are listening that are, you know, familiar in some capacity with concept of. Failing fast and failing forward. And I think failure capital as a build on that is quite, is quite a nice idea. Um, in entrepreneurship land, the, you know, these, these sort of therapeutic nights of fuckup nights or whatever, uh, are quite common. I haven't seen them as much in corporate land. Maybe they, maybe they do exist as well, but as you said, there's a little bit of, of theater, there's a lot of therapy in some of those, but there's also a, you know, a real capital that isn't perhaps as easily measurable. Um, but still carries a huge amount of value. Right? And we'll get into that a little bit in our, in our discussion later about some of the enablements around this. We need this because a lot of your work starts after something didn't work right? And I think it's a space that many companies don't talk enough about that a moment where our huge enthusiasm for this great innovation project suddenly turns into silence as we slowly sweep. Failure under the carpet and try and move on to the next, uh, the next thing, whatever, whether we call it a failure or not, right? It's like we've all experienced that it was the big thing and then it was nothing. Um, all, all of a sudden. And we, we all kind of wonder, what do you think some of the most common reasons are that things fail for the first time and maybe you think it's okay that they do as well? Um, and how do you help companies to turn that into an advantage? Um, yeah, actually the, the, uh, the tool or the capital failure tool as a tool, as a balance sheet like you, uh, uh, correctly suggested. It's exactly the, one of the practical tools how to. Uh, deal with the failures, like with something, uh, articulatable and available and, uh, uh, uh, I would, here maybe I will not give, uh, will not, uh, recreate the wheel or the bicycle saying that, uh, enablement of the fast, cheap. Uh, controllable, manageable experiments is the way how companies, uh, can, can, can deal with this, uh, with the, with the risks and with the failure, uh, comfortably. And, uh, and to enable that. Of course, uh, companies should have, should have, uh, a certain. Uh, capabilities and tools and, uh, there are many of them. Uh, and one of one very important tool is of course, uh, ability to co experiment with external experts because usually when it's about innovation with, when it's about doing something new, it's always about unknown. And, and you don't know what will be the result. Because if you would know then it's not about innovation, it's about just deployment project. Yeah. And if you don't know, it means that there is a certain probability of success and certain probability of not, of, of, of failure. Yeah. That is why you should be ready. The company should be ready. The corporate innovator or entrepreneur should be ready for that. The internal sponsor of this entrepreneur, his team. So everybody should understand this idea that, hey, we are dealing with something we've never done before. It means that we can fail and this, and it's okay. And this is like, this is a mass component of, of trying something new. Our task is to organize the process in a way so we can do it as fast as possible, as cheap as possible, and without real risks for our ongoing business. And this is actually the, one of the tasks of the, of the guys like, like I. This is what I'm doing with the companies. This is what, where my expertise is actually available, how to organize this process, uh, in a way. So these components of these criteria, which, which I, which which I just listed, will, uh, will, uh, will work actually. And, uh, uh, yeah. So these, these are, uh, the, the, the main things. And when you cap it, when you're dealing with this balance sheet. And, uh, then after you can. Um, end of the certain period. Um, can talk about the efficiency and, uh, productivity of, of, of this activity. Because you can talk about the, yes. We, we spent the so much time and, and, and finance for the experiments and, uh, some of them failed and we have capital of failure. And on the other hand, we, thanks to these experiments proved that, uh, certain opportunity. Is available or accessible. It means that. Uh, we can earn money, we can have, uh, new profits thanks to cutting costs or, uh, new growth opportunities with this very solution which we just tested, and maybe one of the 10 solutions will work. But, uh, with this calculations, let's say, so with this balance sheet, you can easily prove that overall system is efficient. Be because, uh, cheap 10 or yeah, 10 cheap experiments will definitely, will be covered by. 10th or 11th, successful opportunity, uh, which was tested and proved successfully. So this is how it works and, uh, about this cheap and, uh, uh, fast experimenting here. I would love to underline that the role of the open innovation format, the role, how you can collaborate with innovation ecosystem is crucial because many things inside of the corporate, in the corporate world just does not work. In a cheap way, let's say so, and I think this. Um, this is something we can, we can, we, we can discuss further because it's about innovation, procurement, it's about, uh, uh, yeah, the, the, the, the thinking how you purchase the innovation as a service as well. Uh, and yeah. Yeah, exactly. Now we'll, we'll get there and just, just to set the scene.'cause I think, you know, I find this topic in engaging and interesting, but, but I think it can also feel. Really complex, right? Is it, is it complicated or is it actually really quite, quite simple in, in many ways? Like how does someone, how should someone sort of conceptualize this as a, as a living, breathing thing? You know, we all know what a balance sheet is, but maybe it's a bit harder to understand the concept of a failure balance sheet or something. Um, yeah. So, uh, uh, the. The question was about engagement because, uh, there are three like different subjects that I can start answering this question. I think only the question to start with is how, like, what does this look like? Like how simple is it? How complicated is it from a, from an organizational perspective to, to start to create this kind of balance sheet of failure, right. Then yeah. Then we'll get into engagement as a follow up. Yeah. It's, it's actually, it's super easy because anyhow, you budget in your. Uh, corporate innovation activities, your budgeting, your communication activities with the employees, your budgeting, your experiments, your budgeting, your prototypes. And, uh, this is something which all companies are familiar. And this is, uh, uh, yeah, this is the, uh, uh, yeah, that's what I wanted to pull on, right? That this isn't complicated in many ways. And we'll get into KPIs. Um, a little bit, a little bit later. I'm gonna tilt us slightly before we get there. Um, I'm teasing some of the things that are coming later in the discussion into the idea of, uh, in order to do this, we need to get the company culturally engaged and we want to rebuild confidence through engagements and, and, and, you know, gamification approaches is, is one of those. So. If, if something fails, right then confidence, as I said earlier, tends to disappear. People try and sweep these things under the carpet, even if there's a notional culture of failing forward and learning from failure, like incentives and. Personal career protection, everything else drives a very different behavior in almost all organizations. Um, but you've created an engagement method that helps bring people back into the fold in a playful and potentially even empowering way. So can you tell us a little bit about that approach and how it engages employees who may be many don't see themselves naturally as innovators? This is absolutely true. Uh, uh, people who are signing contract as an employee, they're usually not looking for risks. They're looking for safety and protection and support, uh, from the company. And, uh, they would love to look, uh, confident into the future. And that's why they're not choosing the, the, the, the career of, of entrepreneur, but. On the other hand, companies are in need for entrepreneurs because they are entrepreneur enterprises, they're entrepreneur on the market, and they're competing with the competitors. And the, it's very hard actually to imagine, uh, that company can be competitive enough, uh, when the competition as a concept, the entrepreneurship concept is not being observed, uh uh, and, and, and practiced by. By employees, but that's actually usually what is happening in the majority of companies. And maybe that's why, uh, pretty often we see in startups are winning corporations in competition, um, uh, uh, game. Yeah. Let's say So. Uh, and uh, that's absolutely correct. When we start in the, uh, usually the, the, the corporate innovation development program, um, we do, uh, having. Relatively easy and fast. Some, uh, cohort of, of, of early adopters of this concept, of this idea. They are ready to, to dive into the story. They were ready to, to play the role of the entrepreneur. They do have ideas and so on. Uh, and, uh. But the main, the first barrier, uh, you're facing with the second cohort, let's say, was the, with the first 10%, everything is more or less okay with them. We, we do have a, another challenge. Another challenge is them, is to turn them from episo, from ad hoc entrepreneurs to the repetitive to serial entrepreneurs. To, to, to, to, to push them, to persuade them, to help them to initiate second, third, fourth cons, uh, project and experiment. Yeah. But what to do with this 90% of people who are sitting saying, Hey, hey, hey, I'm not entrepreneur. I'm not risky. I'm here. You know, to have a safe work and a job and so on. And, uh, to engage them. It was a, a real, uh, challenge. And, uh, uh, we ended up with the, with the idea saying, Hey. You. So there is a role for you. If, even if you don't feel yourself from the very beginning, like entrepreneur or innovator or, and so on, there is a role for you. You can be an expert in a corporate startup. You should not. Take all responsibility for the, let's say, risks and so on in this, in this journey, despite the fact that there is no, actually, there is no risks for your career and so on, because you're experimenting on a, on a, on a small scale and it's everything is approved and managed and, and, and controlled, let's say, and so on. But still, it's, it's like, like you said, it's really psychological side of the story. But even, even if you're not ready to start this, uh, engagement, like, like I, a expert, like someone who is helping incorporate startups to help other colleague who initiated certain, um, prototyping and testing initiative, then uh, you can also have a role to play. You can invest money. Into the corporate startups, but not your own money. It's kind of a virtual money. That's why we call it a gamification. Yeah. Because it's about, uh, in, uh, like venture investor in game for all employees into corporate startups. And, uh, and it's really create, uh, uh, this gamified approach. The, the, the willingness to. Engagement to observe what is going on with innovations in our company, who is doing what or what, what, which projects were initiated and so on. Or interesting because I can invest some virtual money like this, real money of the company, but it's, it's virtual money. It's kind of a coins options if you want to say, uh, from for employees, for real employees, but. Later, if your investment succeed, you can get real dividends. Normally, it's not something huge, it's can be up to par a couple of thousand a year if you are super active investor and if you are talking about the relatively big corporation and big opportunities, uh, for the corporate startups, but it's gamified story, so you say, oh yeah, look. I've invested. I was curious. I was engaged to this movement and I earned something. Now I believe that it's possible, my fear decreasing and next step for me saying, Hey, but I can also create value. I can be part of this corporate startups, even if I'm not ready to initiate my own. I would love to join someones because. It's interesting, it's possible. It's not something, uh, scary and I can earn more because when I will be a part of the startup, definitely my, uh, part in the potential, uh, benefits can be bigger. And the third step is, okay. Now I tried myself as a corporate, as a, as a startup co-owner or, uh, co-founder or expert. And as a thought step. I now prepared physical, uh, mentally, uh, from the. Skills point of view to create or to initiate my own corporate startup. And the fourth step is yes, now I'm equipped with the knowledge and experience so on, so I can support others to, uh, create corporate startups to, uh, do their entrepreneurship activities and so on. So this is exact, so we creating an engine. Which generates constantly and, uh, uh, in and in with the chain reaction effect, the movement, entrepreneurship movement in company. So this is the role of this gamification approach to unfreeze these non entrepreneurial employees who is majority in the company. To step by step, engage into this moment and transform not from the one workshop, not from the one like, uh, meeting. It's not possible to change mind of the people during just one meeting. He was not, or she was not an inter uh, entrepreneur. And in a five minutes discussion or persuasion or, or persuasive discussion. He or she immediately turned to entrepreneur and, uh, ready to experiment. No, it's not happening. So we giving people time and vehicle to have this journey from, uh, non non entrepreneurial, uh, employee who afraid of everything to one who engaged others and support others. I think so what we've now in this call created a, uh, failure balance sheet, and now we're creating a, uh, sort of equity style cap table, or an innovation dividend concept as well. And I, it's a, the idea of an innovation dividend, um, is something that I've played around with and, you know, we've done a bit of work with in, uh, in WKU land as well. Because you know, there's an element and if we, if we apply this into startup world. You have concepts of founder equity and sweat equity and, and, and obviously sort of investments capital that drives actual equity, et cetera, et cetera. Um, and lots of employees will come in and have, you know, small amounts of equity for their contributions to help to grow the thing often because. They, they will come in early. Maybe they could have made more money elsewhere doing other things and taken on more, less risk elsewhere than doing the things. And there have definitely. Uh, synergies. Oh, sorry. Um, uh, lessons that can be carried over from that world, into this, into this concept building, right? Um, and that not everyone has to play a role of builder and entrepreneur, and even doer, actually, like you could just be the person that believes enough in this to put a bit of weight behind it, um, as, as, as you go. Let's talk a little bit about, um. The procurement side of this and the systemic barriers that can get in the way. And as you were talking earlier, I wrote down this, this idea that. Often gets lost, I think, in some of the early innovation hype, which is, does anyone actually want this fucking thing? Right? Is someone gonna pay for it? Um, or willingness to pay maybe is the, or procure or use in some way, shape, or form that's gotta be there. It can be a brilliant idea, but if there's no actual problem, solution fit and therefore feeding into product market fit with a willingness to pay. It was just a vanity project probably. Right. Um, from a, from a business perspective, certainly if it's a. If it's a revenue driver or, or a growth driver for the business. So whilst culture is one piece, and that's what we were just talking about with the sort of, you know, investment style, gamification approach. Systems are another potential quiet killer of innovation, uh, inside an organization. And one of the parts of the business that perhaps is a, uh, a lived bottleneck from my experience, um, or a lived enabler is, is is the procurement function, right? And it's often. Never reimagined, never, you know, frequently ignored, often blamed. So what is the idea that you have behind, you mentioned a little bit earlier in the conversation, this kind of experimentation as a service, and how do you see it helping companies to potentially turn their, you know, procurement bottleneck into a procurement superpower? Um, yeah. So, uh. Procurement, uh, people are not living in the, in the totally in their own bubble. They are also managers. They're also part of the company, the executives and so on. And they're not acting alone. They're acting in together with, with people from finance, uh, uh, with, with controlling, uh, and, and, and, and, and, and risk management and all this, uh, interconnected. And, uh, for this per, uh, in this, in this situation, I can talk about maybe, maybe I would love to add a little bit to the previous question and immediately jump to answering your, this very question that, um, the, uh, capital of failure or this idea and the failure management, let's say. So it's also helping, uh, managers, because this is a huge barrier in companies to, to, to, to extend the innovation management movement and the entrepreneurship movement is. Because, uh, uh, line executives or some, uh, people do who do have initiative, they are ready, ready to start the experimenting and, uh, and prototyping and testing and innovating. Uh, this is one piece, another thing that we should give something, some tool, some concept into the hands of their managers and managers of their managers. So they would, uh. Can deal with the successes and with the failures. And this is where capital of failure play, play the role. So company can celebrate the failures because it's value for the company. That's why, uh, in this situations, there is no need to hide the, the, the, the failure while you in this experimenting process. Yeah. Uh, innovation process. Uh. Like working. Yeah. So this is the practical tool also to unfreeze the innovation saturation within organization through layers. And coming back to the question of the, uh, about the procurement, it's actually was also very, very practical pain, which I faced in, in, in my practice. Uh, when, uh, I, for example, it was one of the maybe short story where it started from. We had an idea about certain tools, certain solutions, which should supposed to help company to save certain money. And it was relatively innovative. So it's not totally, it was not totally innovative because the solution like that was on the market, but it was super, super expensive. So the business case was not there. Definitely. And the idea, the initiative was like say, Hey, we, it seems like we do have opportunity to make, to create this, the same solution, but 10 times cheaper so the business case can work. And procurement in the company said, Hey. Of course. Yeah. Let's make a, let's make a tender and find the right, uh, partner who can, um, you know, create a prototype for us and for the procurement and the big corporations, there is a certain rules that you can deal, you should deal, and you can deal only with proved suppliers, with someone who is many years on the market, very approved. We have experience working with them, compliant, blah, blah, blah, blah, blah. And, uh, uh, we said, okay. Uh, it'll not work with these companies just simply because they're not thinking in a way of like, garage style prototypes, creation in terms of the cost and speed. But let's try and let's play this game. Uh, there was, uh, uh, a tender. There were three or four, um, you know, proposals, uh, for the prototype. All of them were. Beyond much higher. The proposals for, if I, if I'm not mistaken, the cheapest one for 30,000 euros or dollars for the time. And was this cycle of, of, of pro production, of this prototype? Was this the, the, this the fastest one, if I'm not mistaken, three months, otherwise like nine months, six months, and so on. And then after we said, okay, can you let us, uh, to. Show you the proposal from the makers like garage. Uh, guys who do have like, like individual entrepreneurs, not even enterprises. And the offer, there was like two weeks, or sorry, three weeks, two of them just waiting for spare parts from, from a Lee Express and, uh, one week for assembling and the cost 2000. And uh, uh, and then, uh. We found a way how to make this first, uh, purchasing, but how to systematize this approach. We, uh, found it bit later because we, for the procurement and for finance people, we explain this idea like saying, Hey, we are not buying the prototype. We are not buying this certain device, which might not work. Because it's, it's crazy. Company cannot buy something, which with the probability that it will not work because Yeah, it's risky. Immediately we are saying that we are performing the experiment and we are buying information about risks of future investments on the scale. We are saying we are not buying prototype, we are not investing in something which can fail. We are buying information, which is giving us, uh, evaluation of risks. Yeah, we are, we are, we are buying information about the future risks of investments on the scale. And with this concept, immediately everything changed for the procurement and for the financial people. Finance, uh, managers starts loving us because they said, Hey, you are giving me experimentally prude, and what is really important. How information, so experiment with all the steps, with everything is documented and you can measure everything. So it's auditable and this auditable result is acceptable by financial institutions. It means that banks, for example, giving us cheaper money for the future investment when we would love to scale this innovative solution just because we can prove them that we know. The percentage of the risk there. So we're saying with that 80% success is measured. That's why cost of capital should be lower, because usually you're dealing with a different percentage of risks. And this is, that was really game changer for the procurement and for the financial and controlling and the risk management partners from other departments. And starting from that. Uh, we, we, uh, we, we, we, we, we made a, a, a absolutely, uh, we had absolutely new life and absolutely total green light for this coex experimenting in a fast and cheap way with, uh, let's say non corporate friendly suppliers. Uh, and, uh, because we just simply transformed the, the, the, the point of view on, on, on, on this, on this concept and idea. Yeah, we are not buying. Uh, prototype, which might not work. We buying information and if it fail as well, we just bought information, which tells us that investing in this product on the scale will lead us to risks. That's why this information is very available and very important for us. It save us from. Failure from risks, from losses. That's why this is, once again, we are coming back to the question of the capital of failure or how it works as well on the, for the managerial decision making. Yeah, I mean I think the, um, you know, they're quite hard arguments to win, aren't they? Especially if you're not talking the language often as innovators do. We're very close to getting that language right, but it's not quite tied into some of those critical. Business functions and their ways of working and the language that they use and the reporting styles that they will use to measure in the right way. I think also you can know you can drive innovation that will drive cost savings or drive efficiency, but if someone doesn't feel that, you know, you don't see your costs opportunities, you don't see your costs going down or you don't see. Anything else changing then, you know, how are you, how are you supposed to, supposed to measure that? And maybe about, just move us into that idea. You spoke a little bit about it earlier of, you know, how might companies rethink their KPIs around this concept of a, you know, of a capitalized failure balance sheet and around other things, like what kind of metrics actually do support progress, do you think then? Oh, one of the, oh. Well, greatest metrics, uh, I, I am always recommending to implement, and I think this is enabling one of the enabling metrics. This is a not only capital of failure, so accumulated, uh, accumulated potential losses we would experience if we would on scale launch. All of these ideas we never launched, but tested. Uh, but also there is a KPIs for the positive. Uh. Uh, uh, let's say outcomes, which is size of the opportunity, I think, and I practically proved that, that it's very important to measure, um, the value potentially can be created on all, at all stages. Not only measuring or accumulating the, the, the, the real profits company experienced already thanks to certain innovative solutions which was implemented at scale, but also, uh, starting from. Size of the opportunity, this name of one of the KPIs. So we initially sizing the problem or the opportunity, uh, before experiment, and this is certain from two number. Then after we make an experiment and we narrowing this number down so we now know. Uh, that it's the, the, the, the, this is this from what to what? It's, it's where it's ended and where it started, where it's minimal opportunity and maximum opportunity and capitalization of the size of the opportunity accumulation of, of from different kind of initiatives employees can initiate in the company. This is one of the very important KPIs because it's also plays a very practical role because here and now here, I would love to back to the question of engagement and to the. Of the organization and to the corporate, uh, uh, innovations or, and entrepreneurship, because the huge barrier is to engage managers of all levels and typical situation. Then the CEO or some C-level executive is sponsoring the, uh, employee. So entrepreneurship movement or trial, let's say in the company. But it does not mean that all his C-level executive colleagues or especially lineman or middle management engaged to this game, how to use these KPIs to engage them in a very practical way. I can illustrate one of the examples. For example, uh, what you, you, so how it can be used? Yeah, so on the regular, for example, monthly meeting of the board. CO do have a certain, uh, uh, certain dashboard in front of him prepared by the function, which is supporting the corporate innovation, uh, movement deployment in the company. It's called the corporate innovation function, or, or it can be even, uh, external provider of this kind of services. And in this, uh, dashboard, he or she can see the following that saying that, Hey. In, in this by, by each department, uh, how many potential value or cost savings were discovered, not proved yet with experiment, but discovered initially by employees. It means that, uh, uh, when I dunno, sales function coming to me and saying, Hey, we having this great opportunity. Uh, we don't know the probability of success and so on. We don't know where to take the money from. Can you give us more money and invest into this opportunistic thing? On this scale, I am, as a general manager, could say, Hey, my dls uh, leader, look, our employees already for the last three months accumulated 10 million of euros or dollars opportunities of saving for the sales function. And it does not mean that this all 10 millions will be like real, but uh. Have you seen those ideas, this, these proposals about this potential 10 millions, how many experiments you supported, uh, to make, happen, to prove, uh, this or that idea and so on? So it's created dialogue and money, talking dialogue with people, not like, Hey, do you like this idea or not? We are talking about the size and yes, initially it's this sizing is very, very. Weird. But after the first experiment, it's becoming very tangible. And after the maybe second, third experiment, it becoming super tangible. And then after the next and, and, and, and next steps. Next step. KPI is accumulated, uh, opportunities which we, which are experimentally proved. It means that it's experimentally proved if you apply or deploy this idea or solution, it will, it is with. With very high probability, we'll bring you these profits, which was experimentally, uh, tested. And this is a like second or third KPI in this case? Yeah. So before investing in something, uh, um, untangible, uh, un not tested, um, not experimentally approved company can have a priority to invest into something which was experimentally approved with lower risks. And this is. KPIs being used for the project sourcing or project or investment into the project decision making. So we prior, so company prioritizing, so do have a tool to prioritize investment based on the criteria of success, of course, criteria of the strategic. Um, uh, necessity or urgency, how fast you can, uh, receive your payback, what expected payback should be or, and what risks we are talking about in this case. Yeah, and what costs, of course. So, uh, this kind of KPIs allows company to rethink the decision making process and investment process based on the experiment, uh, through experimentally proof data. Great. And look, I, I think you and I could probably talk all day on these things, but I'm conscious of, uh, of, of time on this. I'm gonna pull us towards the final part of our discussion today. But I'd actually, outside of this, love to pick that topic up with you and maybe we can visualize some of that, um, some of that dashboard and some of that reporting back and, and share it with folk as well. So let's give that some thought, this, this conversation, this topic. Isn't just theory for you, you know, your own journey. Leaving Ukraine, rebuilding your life in Germany mirrors a lot of the themes we've talked about today. Failure, uncertainty, transformation on a personal professional level, how has that personal experience influenced your approach to helping companies navigate innovation and change? Uh, yeah. This is a very good question and, uh, uh, not simple, but not easy because. When you're talking about the personal experience related to the certain disasters, it's, it's always, um, um, sensitive. Yeah. Uh, but uh, on the other hand, I could say that, uh, I'm personally experiencing this kind of a professional reborn, um, experience. And, uh, it gives, it, it gives me, um, the, the real life examples, the uh, um. Um, certain certainty and certain, uh, um, confidence in persuading, uh, companies and leaders to, uh, treat some risky things, trial new things, um, and proceed with, uh, invest time and efforts and their, their, their attention to the subject of the corporate, uh, uh, innovations because. Uh, this case, uh, everything which is happening now in the, in the global world should, this is exactly the capital of failure, which, uh, developed markets, developed countries should use as a learning, as a, as a fail or accumulated by others. Yeah, so. Can you, I I, I can refer to the great disasters and the big mistakes of others, which happened as a real life examples, which are valid today, uh, in the conversations about why you should, thinking about new ways of working in new approaches, in new decision making model in your company, uh, inter to thinking and acting towards. Practices, not like in a, in a, in a form of innovation theaters, which some companies have been done for, for decades or for the last 15 years actively. And the majority of them failed. Just simply, it was really innovation theater, not, not, not total like entrepreneurial transformation for the company saying, Hey, look what is happening? And especially when we're talking about the Germany, uh, uh. This is a great country with huge potential, but look at what is happening with the employee engagement, uh, index. So it's decreasing from year to year and now. So in 2023, according to Gallup, employee engagement, average index in Germany was only 13 or 14 sorry percent. It's super low. It's extremely low in this situ and in this situation when Germany should deal and compete now with the, these dragons from Asia, especially in automotive industry, and not only, uh, and all these tariffs war, which, which is happening right now with u with us, or initiated by us. So in this global world, the speed of entrepreneurs. Is needed on all level organization in starting from line employees, blue collar workers, white collar workers, C-level executive, middle management executives, VPs, CEOs. Everybody should think and act in entrepreneurial way. Because it's extremely needed. And maybe last, but definitely not least in this case. Um, I'm, I'm using example of the defense industry innovations in Ukraine because this is a brilliant example. When people who are really like in a direct line. The firefighting in acting in a case fire activity, or not only case fire actually in actual battlefield experimenting with new technologies, uh, with automotive drones. So the robotic drones there, or the, the computer vision drones, night vision drones and, and, and so on and so forth. So all these examples, uh, and, and, and creating solutions which are really, really. And breaking from the cost perspective, because before, who could think about the, the battle withdrawn, which cost, uh, five or three, even a hundred dollars. No way. It's not possible. Uh, military drone cost. Oh, you should, that should start it from hundred thousands. Yeah. But in this case, couple of hundred dollars, not hundred thousands. Yeah. So these real life examples of the fast experimenting necessity to, uh, act in urgency and the actually global economical urgency, all these camp components, uh, and my personal experience living through that. Uh. Um, really helping to, to, to, to put, push this agenda forward, to explain the, the momentum where companies and leaders should start acting tomorrow. Oh, sorry. Should start acting yesterday and, uh, and, uh, and not, not only today, and start, and can start experiencing results tomorrow. Because this is not about the things I'm talking about. Practical is not something about. Uh, results, which are far, far, far in the future. It's about tangible results and payback period from investment in the corporate innovation within couple of, first even within next two, three months. Yeah. And uh, exactly, exactly. Pablo, thank you. Thank you for a very authentic, um, answer to that question as well. I know that last question's very personally resonant and there's a lot I think you can draw from that around resilience, around perspective, but also, you know. Very real disruption can come, you know, very quickly and, and change everything personally and from a corporate as well, right? And there's a lot, there's a lot of shared learning in all of that. Genuinely, we've covered a lot today from failure balance sheets to procurement hacks, gamified engagements with balance, with investment equity, balance sheets, KPIs that actually work, et cetera, et cetera. The constant theme though is that failure is not the end. It's a raw material, it's an asset. Um, and thank you for that. I hope people have enjoyed this conversation. If they have, where can I, where can they find out more about you and your work as the best place to find you? Yeah. LinkedIn profile. This is the way, uh, you can easily find me and, uh, uh, yeah, I, I'm a regularly on a regular base publishing, uh, articles about this and many other subjects by the way. And you can easily reach me all through LinkedIn. It's the best and easiest way. Pablo, thank you very much. Again, what you've shared today is not just theory, it's a roadmap for companies who are ready to build smarter, stronger, and more resilient innovation from the ground up and to think differently in this topic about failure, but as you said about many other things as well. And that's it for today's episode of Total Innovation. If you've enjoyed it, please be sure to subscribe, share with others, and as always, leave us a review and give us your feedback. And remember, sometimes the most valuable resource in your innovation journey is the failure. You've already survived. Thank you, Pavlo and everyone. Until next time. Goodbye. Thank you, Simon. Cheer.

People on this episode

Head Shot

Simon Hill

Host