Arie Brish is the author of the bestselling business book “Lay an Egg and Make Chicken Soup,” which can be summarized by one statement: Innovation = Idea x Execution. The book has been ranked among the top in multiple business categories since 2018, including several number one placements. It is a practical, industry-agnostic guide for commercializing new products, services, or businesses, covering new ventures, innovation in large companies, and refreshing existing small businesses. Arie spent 25 years in the corporate world including leadership roles at Motorola and currently works with a startup spanning three countries.
Host: Richard Lowe | Guest: Arie Brish
Conversation Transcript
Richard: Tell me about your book.
Arie: It goes back maybe 20 or 30 years in my career. I started as a design engineer, and like most engineers, I tended to think that the more feature-rich your product is, the better it will sell. That it will be so feature-rich it will sell itself and doesn’t need anything else. But as you progress and get exposed to real life, you learn that the product itself is a small component in the overall success equation. You need to execute on all the elements. Otherwise the whole domino collapses on you.
In recent years, I was also mentoring many entrepreneurs and realized this issue kept repeating. Almost everybody had brilliant ideas, but in most cases they don’t have enough experience to anticipate all the execution details and challenges they’re facing.
Richard: How did you solve that?
Arie: I started writing notes after every meeting I had with mentees. Some of the notes were important enough to blog on LinkedIn. A couple of years later, I found two things. One, this issue repeats itself with many innovators. They tend to think the great idea is 80% of what you need to succeed. Two, I had enough material to put together into a book. I started to glue all the notes into something that only months later I realized was becoming a book. Even my family didn’t know I was going to publish a book until two or three months before I pushed the publish button.
The Checklist Structure
Arie: The way the book is structured, I set it up as a checklist in the innovation process. People can download the checklist from my website. It has 20 or 30 different checkpoints that you need to go through and test yourself. In many cases, some may be irrelevant for your business, but at least you go through the list and find the top challenging ones you really need to address.
Each chapter is one of these check items. It starts with a definition or description of the topic, maybe two or three pages, and then two or three real-life examples of success stories or lessons learned from mistakes made by other people. One chapter is about finance, one about fundraising, one about logistics, one about intellectual property. Very quickly you get to 20 or 30 items.
I tried to make it industry agnostic by design, because you can always learn from different verticals. You may have an airline facing a customer service crisis and you’ve never dealt with that before. But you look sideways and find that a hotel or hospital had a similar crisis ten years ago. You can learn generic lessons across industries.
Why Large Companies Struggle to Innovate
Richard: I’ve worked for several companies, and innovation was always interesting because on one hand the companies wanted it, but on the other hand they kind of discouraged it. They didn’t involve the employees in the benefits of the innovation. You have a great idea and the company just takes it over. How do you fight that?
Arie: That’s an excellent point. The book addresses innovation challenges in both small business startups and large corporations. Large corporations are slower to innovate for two main reasons. One is the fear of cannibalism. The new product idea is very likely to cannibalize an older product, and there’s always the politics of management opposing it because it threatens their bread and butter. That’s something I learned working in corporate for 25 years.
The other obstacle is organizational. If the new idea is too innovative, sometimes the company doesn’t know where to place it. Say you’re a restaurant chain and somebody comes up with a new drink idea. Do you create a separate beverage division, or add it as a menu item? The organizational issues of how to tackle a new product idea can be a real barrier.
Richard: What I used to run into a lot was what I called the “just do your job” phenomenon. Come up with a great idea, go to your boss, and the boss says, “Why are you working on that?” That’s probably the lowest level of discouraging innovation. It has to be encouraged in the business.
Arie: One of my early reviewers noticed something I didn’t even do intentionally. Almost every chapter talks about human factors in whatever the chapter covers. What you just mentioned is definitely one of the issues in large companies.
Richard: “We’ve always done it this way.” “It’s not broken, why fix it?” All that standard garbage.
Arie: So one of the early chapters talks about why innovate. When you look at companies that were around forever, like Sears. If you don’t innovate, eventually you fall behind and collapse. The companies that survived are the ones that did well in innovation. Take IBM. Look at IBM today. It’s a totally different company because they managed innovation by allowing new business units to emerge every few years to tackle something totally new.
Remote Work as Innovation
Richard: One of the struggles I had at the company I used to work at was trying to get people to work remotely. We had programmers who didn’t need to be in the office much. I figured it would eliminate the commute and stress. But we could never make headway because they had this model in their head. Nope, they have to come in. They have a two-hour commute? That’s their problem. There was no realization that allowing remote work would increase productivity dramatically. They were worried about lack of supervision. But those are all solvable problems. Lots of trouble with innovation because people have fixed mindsets.
Arie: The supervision issue was something we dealt with 20 or 30 years ago when businesses started allowing remote work. When I worked at Motorola, I was one of the leaders allowing people to work from home. It started with young mothers who said, “I want to stay with my baby, but I can still work from home.” Management allowed that, so instead of staying home for a year, they came back to work almost immediately, just from home.
The other motivation was satellite experts who lived far away. The company had a dilemma: let them go, or let them work remotely. In many cases they let them work remotely, and it proved to work well.
Diversity of Thinking Drives Innovation
Richard: Another problem we ran into was degrees. MBAs and things like that. I never felt a degree was very important when hiring, except for highly specialized technical things like a PhD in math for an AI person. For regular jobs, trade school would be fine. But the bosses always wanted that bachelor’s degree. I found that people with degrees tend to be in a fixed mindset from school. By mixing in people with degrees and people without, I managed to get a much bigger and more robust set of skills and ideas than by having everybody in the same mold.
Arie: Excellent point. You touched on something even bigger. Today they call it diversity. Back in the 1980s, diversity started as a social initiative to give everybody a fair chance. But 20 or 30 years later, the research shows that diverse teams do 50% to 70% better than homogeneous teams. Diversity started as a racial and gender thing in this country, but when you come to diversity of thinking on a team, mixing different education backgrounds is one angle. Different countries, ethnicity, gender, age.
When I became a marketing manager after years in engineering, I hired the most experienced marketing people I could find, some 20 years older than me. On the other hand, I found it very productive to have young interns alongside the experienced team because young interns don’t have a box that limits their thinking. They come up with crazy ideas, and some of those crazy ideas turn out to be good. You have a mix of very experienced and very fresh eyes looking at the same problem.
I’m working now with a startup company in three different countries, people in multiple locations in Europe and the US. It’s a small team of about 10 people. The youngest is 22, the oldest is in the late 60s. We work very well together.
Richard: I’ve always hired diverse teams. It didn’t even occur to me not to. This person has the skills and education and background? Fine. Who cares about all these other things. I’ve also found that diverse teams are very good for innovation. An example: I think it was Amazon that put out an AI tool for their HR group to make hiring recommendations based on 10 years of history. It turned out it hired mostly men, so it was very biased. Amazon pulled it immediately. But if they’d had a couple of women on the team, I bet that wouldn’t have happened. There are countless examples of this in AI. If you had the right diverse staff, you would catch those biases before they hit the public.
Arie: People tend to gravitate to people like themselves. That’s a natural human thing. So you need to step out of your comfort zone when you hire. If I have two people at exactly the same skill level, everything being equal, but one is from a different country or has a different background, I will take that one any day because they will bring a different way of thinking to the team.
Richard: I enjoy working with all the different groups regardless of background. I’m fascinated by other cultures and ways people think. When we’re brainstorming for innovation, having those other cultures and backgrounds is invaluable. Those different points of view bring different ways to innovate, different thoughts, different processes. If everybody’s the same, you’re not going to get diversity of thought.
Arie: We had a case at Motorola. Two executives never agreed on anything. One was French and the other was Brazilian. A few years later the French guy was promoted. He called up the Brazilian guy and said, “I want you to come work for me.” The guy asked, “How come? We never agree on anything.” He said, “That’s exactly why I want you. We debate issues. I’m not looking for yes-people. I’m looking for people who will tell me when I’m wrong.” And they worked well together as a team.
Richard: I don’t want people who are obstructionist or argumentative all the time, but I definitely want differences of opinion. I want somebody willing to stand up and say, “This is my opinion and it’s different than yours. Let’s talk about it.”
Arie: When I started at Motorola, the team was about 80 to 90% white male. Three years later, we had people from all over the world. I had a big map in the office with little flags showing what country the different engineers came from. We ended up about 50/50 on gender. When I went to engineering school, we were about 50 people, one girl. You can’t have a 50/50 gender balance with those numbers. But today at engineering and business school graduations, female graduates are about 60% versus 40% male.
The Human Element in Innovation
Arie: As I said, almost every chapter has some human aspect to it. There’s a whole chapter about HR, how to manage people in an innovative organization, how to encourage innovation. When you launch a new product, how do you manage salespeople? There are different challenges and reward systems you need to think about for selling new products versus existing products. Almost every discipline has a human element that businesses or ventures don’t pay attention to.
Richard: And then there’s stretch goals, pushing people out of their box. How do you address in the book people who are unwilling to get out of their box and innovate?
Arie: Two things. One is training. You need to train and coach people to think out of the box. The other has to do with reward systems. You reward people for getting out of their comfort zone. A bonus for submitting new ideas, even if the idea isn’t accepted. If it’s accepted, even better financially.
Salespeople are motivated by commissions. If the entire pay plan is commission-based, they’ll naturally gravitate to selling mature products because they spend less time on them. They just go to their customers once a month and take the purchase order. Five minutes. But promoting a new product takes hours of educating customers, and customers naturally buy small volumes initially. So commission-based salespeople don’t get rewarded for selling new products.
You need different incentive plans. Going back to my corporate life, we had separate plans for new products. Not commission-based, but milestone-based. Bring a customer to a training class about the new product, you get a bonus. Get the customer to buy the first sample, another bonus. Financial incentives tied to milestones, not commissions.
Funneling Ideas and the Learning Curve
Richard: You can’t just take every wild idea and turn it into something. You have to consider return on investment.
Arie: The book covers almost everything, though it doesn’t go very deep on any one subject. Every chapter in the book could have a whole book written about it. I go overview on every topic you need to think about.
For funneling ideas, you start with 10 or 20 new ideas and the whole team starts stress-testing them. Is the market big enough? Will customers accept it? Is it too expensive to build? You go from 20 good ideas down to 10 or five, and eventually the top three or one, whatever your capacity is. Then you execute.
The discussion is: what’s the return? How many customers will buy it and how much will they pay? On the other side, how much will it cost to build and design? In many cases the originator doesn’t know all the hidden costs. So you analyze all costs and do the market research for the revenue side.
There’s also the learning curve. Every time you start with a new product or service, it costs more than it will six months or two years in. Say it’s a $10 product but the first few thousand cost $200 each to build. That loss needs to be accounted for as investment. You know you’ll get costs down to $5 and sell for $10 or $15 at good profit, but it takes a few thousand units to get there. People sometimes ignore the higher cost of early production. Even if you anticipate higher costs, it’s normally higher than what you anticipated.
Industry Culture and Ecosystem
Richard: And then you’ve got other barriers. Resource availability, scalability, customers don’t want to change.
Arie: In some industries, customers are happy to adopt new ideas. In high tech, when you come up with a new gadget, people will test it the next day. In other industries like medical or energy, the cost of failure is so enormous that customers are very risk-averse. Just getting them to check a sample could be a very long sales cycle. In high tech it’s days. In energy and medical it could be years.
Richard: Scalability is important, and also the difficulty of the idea. How difficult is it to implement? How many resources will it take? Do you even have the resources?
Arie: Different industries have different cultures. In high tech, if you come with something very innovative and out of the box, people love it. In utilities, it scares people. You connect a new gadget to the electrical grid of a big city and something goes wrong, the whole city shuts down. That’s why it takes a long time to launch a new product in utilities.
Richard: And there’s the matter of fitting into existing standards.
Arie: We had a real project in the air conditioning business. It took us two years, and it wasn’t even a new standard. It was an interpretation of the existing standard. We had to convince a standards committee that our interpretation was acceptable and in compliance. That delayed commercialization. You have to look at the entire ecosystem. I have a chapter about that. There could be many elements: city government, regulatory bodies, customers, suppliers, sales channels, customer support. In some industries there are 10 to 15 ecosystem stakeholders you need to satisfy before you can start selling.
Innovation Applies to Individuals Too
Richard: Innovation is super important for businesses and individuals. In this day of the pandemic, people becoming unemployed need to innovate their own lives. Not just sit there collecting unemployment. They should be out trying to figure out what to do and how to change. Innovation doesn’t just apply to businesses. It applies to individuals.
Arie: Absolutely. I heard a presentation by a psychologist whose theory was every three to five years, you need to make a major change in your life. Move to a new house, change your job, buy a new car. Something that keeps you fresh and energized.
Richard: Otherwise you’re stuck. Especially now, if there are no nine-to-five jobs available, you need to do something else.
Arie: Many businesses bounced back immediately during the pandemic, or adapted and pivoted. We have a vodka distillery here in Austin, Texas that weeks into the pandemic changed their production line to make hand sanitizers. Another client did engine lubricants and changed to hand sanitizers. Ford changed production lines to make PPE for medical personnel. Go back to World War Two, changing from automobiles to build airplanes and tanks.
Richard: You also need to consider more than your current market. You could have other markets available to you.
Arie: There are two angles. One, take what you know how to build or your technology and see if other market segments or verticals can use it in different ways. Changing from vodka to hand sanitizers is the same technology, totally different application. The other direction is look at your existing customers and see what additional services or products you can offer. Capitalize on the good relationship and see what else you can do for them. That usually brings up ideas for new products.
Innovation Doesn’t Have to Be Technology
Arie: Innovation is important no matter what industry you’re in. People tend to think about innovation as a technology thing. It doesn’t have to be. My favorite example: Domino’s Pizza went public about the same time as Google. Google is considered Wall Street’s darling, but Domino’s stock did two times better than Google. They went IPO within a few weeks of each other. Domino’s innovation was in customer service. They were the first you could order pizza through the internet. But they didn’t invent the internet. They didn’t invent any new type of pizza. The innovation was the customer service element. Innovation definitely doesn’t have to be technology.
Richard: Of course not. It could be just about anything.
Learn more about Arie Brish at cxo360.net.
Find Richard Lowe at TheWritingKing.com.