Creating a Culture of Innovation: Insights from Nick Jain

[00:00:03] Welcome to the Business Chop Podcast, where our guests speak on meeting the challenges of entrepreneurship, as well as offer tips and advice on business, marketing, technology, and more. Whether you are a newbie or seasoned professional, this episode is for you. I am your host, Audrey Wiggins.

[00:00:24] Let's chop it up.

[00:00:28] Hello, Chop Squad and friends. It's great to be with you and welcome to our new listeners. I hope that you will subscribe and become a member of the Chop Squad.

[00:00:39] My guest today is Nick Jain. He's the CEO of Ideascale, the world's largest innovation SaaS, software as a service company.

[00:00:49] So Nick has lived an inspiring rags to riches story. He started his life being raised by a single grandmother in a small city in India and graduated at the top of his class from Harvard Business School.

[00:01:03] Along the way, Nick has worked at some of the top investing firms in the world, such as Bain Capital and Greenlight, and has led dramatic business transformations in three entirely different industries, trucking, men's shoes, and now B2B software.

[00:01:21] Nick is an expert at marketing, team management, and creating a win-win-win, we're going to ask him about that later, outcomes for his three stakeholders, customers, employees,

[00:01:33] and shareholders. We'll learn more on the other side of this message, so please stay tuned.

[00:01:41] What will your business look like on January 1st, 2025? Join us for 60 Days to Success. It's the Elevating You Entrepreneur Business Summit, November 2nd, 2024.

[00:01:52] Visit Bits.ly slash Elevating You Fourth Quarter 2024. That's Bits.ly slash Elevating You the Letter U, the number 4TH Quarter 2024.

[00:02:06] Nick, welcome to The Business Shop.

[00:02:09] Thank you so much for having me, Audrey. I'm very excited to be here today.

[00:02:12] Thank you. Yep, absolutely. Looking forward to hearing more from you and learning about what you do.

[00:02:17] So Nick Jane is, again, CEO of IdeaScale.

[00:02:22] IdeaScale helps large, complex organizations like Pfizer, the Postal Service, Doctors Without Borders, innovate faster, better, more systematically.

[00:02:33] As an evangelist for Gen AI, Nick championed the use of large language models at IdeaScale well before the AI hype cycle began.

[00:02:44] Outside his work, Nick enjoys poker, running, listening to battle rap, oh my goodness, traveling.

[00:02:51] He's also an avid reader, currently tackling, I'm sure this is right too, Nick, tackling Moby Dick and Milton's In Paradise Lost.

[00:03:02] Nick, welcome again to The Business Shop.

[00:03:04] And before we get started on our questions, do you mind giving us those couple of fun things that you had shared with me in your application?

[00:03:13] Yeah, there's two or three kind of fun things about me.

[00:03:16] Number one, I'm one of the few CEOs who's led companies in a bunch of different industries.

[00:03:21] Most people just rise up through one industry and get really good at it.

[00:03:25] Number two, I'm about to be a first-time father, which I'm pretty excited about.

[00:03:30] So that's happening in about five weeks from now.

[00:03:33] My office is slowly becoming a nursery.

[00:03:37] You can actually see a children's number book in the background.

[00:03:42] And yeah, number three, I'm a very avid poker player.

[00:03:46] And if I wanted, I could make it a job, but I'd rather run a company.

[00:03:50] So I play poker for fun, but it's my side hustle.

[00:03:54] Okay, I love that.

[00:03:55] Yeah, we always have to have some kind of side hustle, right?

[00:03:57] Or just something that, you know, detract, you know, deter us from, we need some distraction every now and then, I probably should say.

[00:04:03] You've done a lot of things.

[00:04:05] And one of the key words to stand out for me as an individual is innovation.

[00:04:10] It's always like that.

[00:04:12] So why do large organizations struggle with innovation?

[00:04:16] And how can a smaller players, you know, really think about that and make that part of our business plan?

[00:04:22] Sure.

[00:04:23] So I think that's a really good question, firstly.

[00:04:27] So I think large organizations struggle to innovate because of three core reasons.

[00:04:33] Number one, they've lost the hunger, right?

[00:04:36] When you're already a billion-dollar organization or you've got your government agency with a $10 billion budget or you've been around 40 years,

[00:04:42] you don't have that hunger the same way you do when you're kind of young and scrappy and poor and, you know, barely making payroll.

[00:04:48] So hunger, you know, what's that old joke?

[00:04:53] Necessity is the mother of innovation, right?

[00:04:55] Yes.

[00:04:56] If you're not scrappy, you don't innovate.

[00:04:57] So that's number one.

[00:04:58] Large organizations often, not always, have lost the hunger or pressure to get better every day.

[00:05:05] Number two is, just candidly, the larger you get, the more difficult it is to innovate because the more bureaucracy there is,

[00:05:12] the more process there is.

[00:05:14] And process stops creativity.

[00:05:16] When have you ever heard of a genius artist painting by the numbers?

[00:05:19] You haven't, right?

[00:05:23] And number three is, large organizations often think they can just buy innovation where they, you know,

[00:05:30] hey, I can just go buy another company that's come up with a cool product or a cool way of doing things.

[00:05:34] Turns out, actually, if you read the research on it, acquisitions are actually terrible for shareholders and companies.

[00:05:42] There have been decades of research from McKinsey, from Harvard Business School, from professors put out that buying innovation is a bad idea.

[00:05:49] You actually need to do it yourself.

[00:05:51] The good news is, these things are flexible.

[00:05:54] Can I stop you there for, Nick, can I stop you for a quick second?

[00:05:57] Yeah.

[00:05:57] So what reasons did they give for that?

[00:06:00] Let's imagine that you have a company that's invented a new type of coffee mug, okay?

[00:06:06] You know that the company's worth $100.

[00:06:08] If I, as a bigger company, want to go buy your company, you're not going to sell it for $100.

[00:06:13] You're going to demand more than $100 because you know it's worth $100.

[00:06:17] You're going to demand $120.

[00:06:18] That means I'm going to pay you $120 for something that's worth $100, which means by day one, I've lost $20.

[00:06:25] So that's how corporate M&A typically works.

[00:06:28] And there's a ton of research on this that the sellers almost always win because the buyers overpay to acquire another company or a new product.

[00:06:37] Okay.

[00:06:37] So is that based on the future or the perceived value or perceived future value?

[00:06:43] Is that why?

[00:06:45] Well, two things.

[00:06:46] Number one, buyers get overzealous and overoptimistic.

[00:06:49] And number two is because the sellers have more information.

[00:06:52] Like you have more information about your coffee cup company or about your child than I ever will, right?

[00:06:57] So if I'm buying your coffee cup company that you've run for the last 10 years, no matter how much research and diligence I do, you will know more about it.

[00:07:05] And so I'm at an informational disadvantage, right?

[00:07:08] And if I'm at an informational disadvantage, you're going to out-negotiate me.

[00:07:12] And that's, again, very, very common in corporate M&A.

[00:07:15] In fact, there's decades of research that almost all M&A is negative value for the acquirer.

[00:07:21] Wow.

[00:07:23] Wow.

[00:07:23] Okay.

[00:07:23] Thanks for making that little detour there for us.

[00:07:26] So we were talking about the struggle of innovation for our larger organizations.

[00:07:31] I know you want to finish your trend of thought on that and how do we need to – well, not we because that's not me.

[00:07:39] It's going to change our mind shift, you know, shift our mindset to be able to get that culture again.

[00:07:48] Sure.

[00:07:49] So I like using the three-legged stool analogy, okay?

[00:07:53] There's three – and there's three legs to the stool of innovation that you need for your organization to actually become structurally more innovative.

[00:08:01] Number one, you need the right people.

[00:08:03] Number two, you need the right culture and incentives.

[00:08:05] And number three, you need the right process and technology, okay?

[00:08:11] You need people who actually are hungry and want to do creative things rather than want to keep doing the same thing they did yesterday or last year.

[00:08:17] So you want people who are changemakers.

[00:08:20] Number two, you need a culture and incentive system that encourages this.

[00:08:24] Lots of large organizations are actually fine just being who they are, right?

[00:08:29] They've lost the hunger.

[00:08:30] They're, in fact, disincentivizing employees.

[00:08:32] They don't pay employees more or give them pats on backs.

[00:08:34] They don't do anything that reward employees for experimenting, for innovating, okay?

[00:08:39] That's why a lot of top employees go leave and start their own company or go to startups because they want to be the billionaire.

[00:08:45] They want their name on the company or they want to make a difference in the world.

[00:08:48] It's not even necessarily about money.

[00:08:50] It's about they want to be the change leaders, and if your organization is not doing that, your top performers are going to leave and go elsewhere.

[00:08:56] And thirdly is process and technology, which is – look, if you have great people and you have great culture, why would you not give them great tools in order to let them accomplish even more?

[00:09:06] It's like having a world-class athlete who wants to go to the Olympics but not giving him or her access to a gym and training shoes and a coach.

[00:09:15] Right.

[00:09:16] And obviously, our company, Ideascale, really focuses on that third leg of the stool.

[00:09:20] We help a little bit on the stool one and two, but there's other organizations that are a little bit better – or quite a bit better than us on those two legs.

[00:09:27] But we're best in class about the third piece where we give you – once you've got the right people in place, once you've got the culture in place, we give you the tool that helps you supercharge your innovation.

[00:09:36] Is that what you mean by building and sustaining a culture of innovation?

[00:09:39] It's very easy for anybody to come up with a brilliant idea once in a while or for organizations to come up with a brilliant idea once in a while, right?

[00:09:46] Just creativity can randomly happen either – however, for large – if you're a billion-dollar company or a $10 billion government organization, you don't just need to get better once a year or once every five years.

[00:09:58] You need to be innovating every day because your competitors, your foreign actors certainly are, right?

[00:10:04] Whether you're a government agency competing in foreign countries, whether you're a private sector company competing against other organizations, that could be a small hardware store.

[00:10:12] That could be Home Depot.

[00:10:13] Both of them, fundamentally, they're in a competitive marketplace.

[00:10:16] And so the goal is not to innovate once in a while but to have a process where you are innovating and getting better every single day.

[00:10:25] And that's the difficult nut that a lot of companies struggle to crack.

[00:10:29] But, again, the good news is it's a solvable problem.

[00:10:32] It's well understood how to solve it.

[00:10:33] The right culture and incentives and the right technology and tools.

[00:10:37] Okay.

[00:10:38] Yeah.

[00:10:38] Thank you.

[00:10:39] So you mentioned in your formation about a meritocracy.

[00:10:43] What is that?

[00:10:45] Sure.

[00:10:45] A meritocracy in general is this idea that the best person wins, right?

[00:10:50] It came from like, hey, should we let the smartest people into college?

[00:10:53] Should we let the most altruistic people or responsible people be presidents, right, rather than just whoever wants who's the most greedy, right?

[00:11:02] Now, there's been a kind of a cultural revolution in management philosophy over the last 20 or 30 years where 20 or 30 years ago, there was this notion that, look, the CEO and his or her friends at the top are the smartest people.

[00:11:14] People in their organization.

[00:11:15] Therefore, only their ideas matter.

[00:11:17] Now, it turns out research has shown that people who are very junior in the organization or sit in a satellite office or speak broken English or look very different than you, right, may not be part of the predominant majority culture, ethnically, race-wise, sexuality, whatever.

[00:11:31] They also have great ideas.

[00:11:33] And sometimes their ideas are better than the CEO who may be the smartest person in the room.

[00:11:37] So this idea meritocracy is the notion that, look, you can have your CEOs and executives be really smart people, but they need to be listening to and getting the best ideas from their full ecosystem, which is their junior employees, people in different offices, their customers, their shareholders.

[00:11:53] And so an idea meritocracy is a organizational culture and philosophy where the best ideas are heard and implemented regardless of where they come from.

[00:12:04] So they could come from someone who sits in your branch office in China, is your janitor.

[00:12:09] But if he or she has a great idea, it needs to be done more so.

[00:12:13] It needs to be done before the CEO's idea, if the CEO's idea sucks, which actually happens a lot in practice.

[00:12:19] Yes, you're absolutely right.

[00:12:20] Because, wow, I thought that was very important.

[00:12:24] Because I can remember, this is not necessarily about innovation, but, you know, as a young person, my mother was a teacher.

[00:12:31] And she, you know, she always, she respected everybody at every level of the organization.

[00:12:37] Her principal, her fellow, you know, teachers, the janitor, as well as the office secretary.

[00:12:44] And because it takes off all of those entities to actually make that wheel turn.

[00:12:51] And so everyone contributes something.

[00:12:54] And so, but to be a good contributor, you have to understand how the organization works or why it's there or its purpose.

[00:13:02] I think that that's very important of being able to, you know, to let down your or don't have an ego.

[00:13:09] Check it out the door when you come in and to be able to listen and respect everyone at every level in your organization.

[00:13:16] I want to go back and you may have touched on a little bit.

[00:13:18] We talked about the triple win, the win, win, win.

[00:13:21] Can you expand upon that?

[00:13:23] Sure.

[00:13:23] So private sector organizations and capitalism exist for the fundamental purpose of creating value.

[00:13:30] We can get into the math of it, return on investment, economic value, net economic surplus.

[00:13:34] There's all these fancy buzzwords we can get into economic theory.

[00:13:37] But basically the idea is in a company, this could be a pharmaceutical company, a trucking company, a mining company.

[00:13:44] They take a bunch of inputs, right?

[00:13:46] And then they organize it, reshape it, put it together in a different way that it's worth more at the output.

[00:13:51] So the idea is an organization takes one plus one and somehow makes it equal to three.

[00:13:56] And therefore, you've created a dollar value.

[00:13:58] Okay.

[00:13:59] So that's step one.

[00:14:00] But once you create, that's like baking the pie.

[00:14:02] You've created a pie and then you need to divide that pie between the people who helped contribute to make it.

[00:14:08] Okay.

[00:14:08] And those three for any capitalist organization, there's three core stakeholders.

[00:14:13] Number one, the customers.

[00:14:14] You need to give them a great product.

[00:14:15] And that product needs to be better every month, every year.

[00:14:18] You can't just be selling them same thing 20 years ago.

[00:14:21] So number one, the customers.

[00:14:23] Number two, the employees.

[00:14:24] They helped make it, right?

[00:14:25] They did the hard work to go make whatever you're making, right?

[00:14:28] Whether that be digging holes in the ground for mining and pulling metals out of the ground, whether that be making an iPhone, whatever.

[00:14:33] You need to pay the employees, make sure they're able to support themselves, their families, et cetera.

[00:14:38] And number three, your shareholders, right?

[00:14:40] They're the ones who put their money into the business and put it at risk to create value.

[00:14:47] So I'm a fundamental believer that capitalism, A, must create value, must bake the pie.

[00:14:53] And then also good executives, good CEOs, their primary responsibility is to figure out how to divide that pie so everyone wins, right?

[00:15:01] So as CEO of IdeaScale, my core goal is, look, I need to create value.

[00:15:05] I need to be profitable.

[00:15:06] I need to make a bunch of money.

[00:15:07] And then when I make a bunch of money, that allows me to give my employees raises, give them job security.

[00:15:14] So we, you know, we still give them job security and give them raises and give them career progression.

[00:15:19] It allows me to take some of my profits and put it back into the product to make an even better product for my customers next year.

[00:15:26] And then also return some money to my shareholders who obviously have taken a lot of risk in setting up the business in the first place.

[00:15:32] Why is it important then for business executives to understand finance?

[00:15:36] Because I know that's a great part of what you're talking about.

[00:15:39] Yeah.

[00:15:40] Well, it's like, that's a tough question because it would be crazy to me if your executives and leadership don't understand finance.

[00:15:49] Because how do you know if your business is making money?

[00:15:51] It's not.

[00:15:52] Finance, by the way, is very different than accounting.

[00:15:54] It's the notion of can you quantify value creation, which is a little bit different from a technical perspective than accounting.

[00:16:00] Look, if your executives don't know finance, then how do they know if what they're doing is creating value?

[00:16:06] Right.

[00:16:06] How do they know that one plus one is equaling three rather than as opposed to one plus one is equaling, you know, one, which is a bad outcome.

[00:16:15] So I would describe it almost as an essential skill.

[00:16:18] Right.

[00:16:18] Would you ever hire a person, a, an informational worker who can't do arithmetic or multiplication?

[00:16:23] That's such a critical basic skill.

[00:16:25] Like, how can you do anything else if you can't do elementary school math?

[00:16:30] The same would be true for a business executive.

[00:16:32] I would never hire a business executive who doesn't understand how their business works.

[00:16:37] Right.

[00:16:38] And at a very quantitative and analytical level, that's a core competence that any senior executive needs to have for any meaningful scale organization.

[00:16:46] Absolutely.

[00:16:47] Now, can smaller companies use idea scale?

[00:16:49] Yeah.

[00:16:50] Our software is completely free, by the way, for organizations less than 100 people or for teams of less than 100 people within larger organizations.

[00:16:57] So just go to ideascale.com.

[00:16:58] Click get started free.

[00:16:59] Takes less than 30 seconds to be up and running.

[00:17:02] No downloads required.

[00:17:03] And so, you know, small organizations or individual entrepreneurs have access to software that, you know, some of the biggest organizations in the world use.

[00:17:11] Totally.

[00:17:12] Okay.

[00:17:13] That's great.

[00:17:14] Yeah.

[00:17:14] So, Chop Squad, you know, you want to pull that down because we do need to, and this is a good time of year to start, you know, to take another look to reflect on what we're doing and what we should be doing.

[00:17:24] And these software tools are definitely things that we need to plug into this technology in general to be able to, you know, to scale or understand where we are so we can get somewhere else, where else that we want to go.

[00:17:36] So, so as we get closer in, what advice would you give other tech executives?

[00:17:41] I would give three pieces of advice.

[00:17:43] Number one, be very focused on the quality of your product.

[00:17:48] Good tech companies live and breathe and die by the quality of the product that they are delivering to their customers.

[00:17:55] That's number one.

[00:17:57] Number two, make money, right?

[00:17:59] Like a lot of tech companies are really poorly run and don't, and their executives don't know how to make money.

[00:18:03] They, tech companies need to make money and be better run on average.

[00:18:07] And then third is if you're not good at something, that's okay.

[00:18:12] Hire someone who is.

[00:18:13] So there's many things that I'm really good at.

[00:18:16] There's things that I'm bad at, and I hire people or supplement my skill set with other people who are extraordinary at that, acknowledging that, hey, this is a weakness of mine.

[00:18:24] I'm never going to be world-class at it, so let's go hire someone and augment my team with someone who is world-class at it.

[00:18:30] That is great advice.

[00:18:32] So Chop Squad and listeners, definitely plug into what Nick Jane just shared with us.

[00:18:37] Go to his website, learn more, and definitely check out his software so you can begin to grow and scale your business.

[00:18:44] Here's the quick story behind IdeaScale.

[00:18:47] So we've been around 15 years.

[00:18:48] I only joined about two years ago as an external hire.

[00:18:51] But IdeaScale is a very cool origin story.

[00:18:53] It was founded by two guys, Rob and Viv, in 2009 because of something President Obama did.

[00:18:59] President Obama came out and said, hey, government needs to be more innovative.

[00:19:02] We're still running government like it was running 100 years ago in some cases.

[00:19:05] And so when President Obama said government needs to be innovative, Rob and Viv came up with this idea that, hey, if government is going to be more innovative, they need tools and technology to do this really well.

[00:19:15] So one of our first customers was actually the White House.

[00:19:18] So it was actually the White House.

[00:19:20] And President Obama's White House chief of staff actually specifically called out IdeaScale.

[00:19:24] So our origin story really originates from like the number three guy in the entire White House.

[00:19:30] President Obama's chief of staff.

[00:19:32] That was one of, I think, if not our first, one of our first customers.

[00:19:35] And that's really what started our journey to being where we are today.

[00:19:39] That's awesome.

[00:19:40] Well, thanks, Nick.

[00:19:41] And thanks again for coming by today and lending your expertise to the CHOP Squad and to myself and, you know, helping us to be better tomorrow.

[00:19:51] And so we're definitely going to be following you and downloading your software and talking that up.

[00:19:57] So thank you.

[00:19:59] I really appreciate the opportunity to be on today.

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