Suneel Gupta: The New Face of Innovation

(“Corporate Board Member” Magazine, New York Stock Exchange’s Quarterly Publication) – ONE-ON-ONE

By Deborah Scally

Embracing change means more than just coming up with new ideas. It requires a mindset shift that relies less on process and more on agility.

Suneel Gupta has been in the center of some of the fastest-growing and innovative companies of recent history and believes strongly in the need for a shift in perspective that allows companies to react to and embrace the feedback of end users as a means toward success. We sat down with Gupta recently to talk more about these ideas and how they relate to strategic discussions in the boardroom.

When we look at the trajectories of innovation from a historical standpoint, there are definite periods of boom and bust. Where do you see the impetus for innovation currently in the US?

I see two worlds, really. I grew up in Detroit, Michigan, and my parents both worked for Ford Motor Co. for 35 years. I remember as a kid going to the auto show with them when they both had been working on projects that were being debuted at the auto show. For them, that [show] was the biggest moment—because the press was there, and it was really the first moment, in a lot of ways, that they were actually getting feedback from the market. And if you think about that, that’s just amazing because [at that time] it took years from the point that something was a concept to the point that you got real market feedback. Today, there is a segment of corporate America that is living in that long lead-time dimension, where they hide the idea for a long period of time and then unveil it at the very end with a curtain opening.

And then there’s another world, and it’s the world I’m much more familiar with, which involves the ability to take something from concept directly to the market; where putting it into users’ hands takes hours, if not minutes. At Rise, my team and I can come up with a concept in the morning just over coffee, as we’re sitting there in the office, and literally by lunchtime have something that’s actually touching users and understanding how they’re behaving, so we understand that feedback. If you think about it, this creates an absolutely magical opportunity for all of us to use those tools, but it takes a shift in mindset. I think most of corporate America has access to the tools that we have access to as a startup, but the choice to use those tools and to get things out there quickly has more to do with mindset. That’s where I see the difference.

Also, there’s the grassroots element that exists in the user market today, which makes funding ideas and bringing things to market possible in a way that didn’t exist before.

Yes, and plus, ideas are coming from everywhere. You’re seeing that with so many different examples now. You look at companies like Quirky, for example, where people can actually take an idea and create a physical good out of it. You look at companies like Kickstarter where you have people who used to be those annoying folks who said, “Well, wouldn’t it be cool if…,” right? And now, they’re inventors! I mean, it is possible now for anybody to create something. So it’s a really liberating time for us to be working on what we work on.

The thing that is always interesting to me is companies that have the power and the influence to take things to the next level, to really get them to a massive scale, and they are almost missing phase one—getting a lot of ideas built quickly, doing it as inexpensively as possible, and not necessarily aiming for perfection with version one but doing so because they can get market feedback quickly. I think we’re going to be in a different [environment] when we all begin embracing operating in a lean, agile way.

How important is it to introduce disruption to a company, to break through the mold? How can that mindset work to a company’s advantage?

Most of the work out there that has been seminal when it comes to disruption has really focused on the process instead of the mindset. So if you look at, for example, Clayton Christensen’s book, which is probably still to date one of the most widely read books on disruption, a lot of it assumes that the company has gotten to the point where they actually know what they want to do. Once that’s the case, then a lot of the tactics he proposes in the book are super helpful. You know, getting people in their own room or separating them from the rest of the organization, all those ideas are really helpful.

The part that is still missing is getting the company to the point where management and the board realize they actually want to invest in something. I think that’s where the lead time comes in. You find there’s a lot of bureaucracy, especially in big companies. I’ve worked in big companies where it can take a long time for a company to say, “Look, this is something that we actually want to go do.” And part of the reason for that is because the process of getting from concept to a green light is,
I think, much more about talking about the idea, presenting the idea, debating the idea, and discussing the idea with all particular stakeholders within the company.

The way that I see it operating in a different part of the world is that you’re actually getting the idea out there as quickly as possible and coming back to the company with real data. For example, look at how Google launched its Google news service a few years ago. There was a huge debate within the company when Google news launched about whether they should include filters on the page and, if so, whether those filters should be by geography or by time. Were people going to be more interested in finding out what’s going on in another part of the world, or were they going to be more interested in figuring out what’s happened in the past 24 hours or just the past week? And it was this huge debate within the company. You had product managers who were on opposite sides of the coin. And then finally, an engineer said how about we just do this? What if we launch it without any filters at all? Let’s just get it out there, and let’s put a feedback button on the site and let people tap that button and tell us what they want. And what they found is that within a week, because it’s Google and they had lots of volume very, very quickly, 90% of the requests that came back wanted it to be filtered by time. So they had their answer.

So think about all of the debate that typically that goes on, and all of the long lead time that we spend in organizations to get to a point of green light when, in reality, a lot of it just is about getting it out there and seeing what the market says about it.

And isn’t that because most companies are so worried about risk?

Yes, and I understand that. I’ve been part of big organizations before. You have a brand to protect. You have a certain level of quality you want to protect. But my point is this: If an organization wants to make speed and acceleration a real priority, the mindset is really the blocker, not the process.

Take a company like Microsoft, for example. Microsoft used to introduce a lot of products that had been beta stamped, right? It was very clear to people who were actually testing it that this was something that probably had some holes, and it wasn’t going to be a complete product. There are very few of those out there now for Microsoft. Microsoft has gotten to the point where whatever they put out has gone through massive internal testing, cleared their own bar before it touches users. So in a lot of ways, I think they’ve separated the end user from the whole process of building the product.

My proposal is that as long as something is delivered to a user within the right context, which is based on [the idea that] we’re including you in this process, it’s not going to be perfect and it’s not going to be what you’ve come to expect from us, but it’s something we want to give to you early because we really want to get your feedback. If your customers have that context, I think you’ll find the mindset much more forgiving when it comes to products that are in the development phase, because they get it.

How much of this is changing based on demographics?

I think the thing that’s common across all customers is that they want their feedback to be heard and used. So if a company is just putting a product out there with the intention of doing what it is they want to do anyway, then they can isolate customers pretty easily. In other words, the feedback doesn’t fit their road map, and therefore it’s “Thank you, but no thank you.” So that is more of a matter of process than it is a matter of mindset.

But if the mindset is, “Look, we’re putting something out there because we really want to make this the best product possible, and in order to do that we absolutely need your feedback and we’re willing to take that data and channel it back into the product,” if that really is the mindset, then that is a very empowering sort of thing. The cool thing about that is having the customers codeveloping this product with us by giving us their feedback. Maybe we’ll give them some incentive to do that to make it worth their time, but imagine how empowering it can be for a customer to know that their voice was heard when the product is released.

Of course as that mindset evolves, boards and management have to be cognizant about the risk profile of their company— overseeing the risk/reward analysis and just how much risk they are willing to take on—which really plays into which companies are more likely to be more open to that kind of mindset.

I wonder how much of it is about communicating openly with the board, with both sides of the table in this case coming together to say, “Look, do we want to be more risky; do we want to take more risk?” Or is it more of an implied understanding that we as a management team aren’t going to take risks because we feel like the board wouldn’t approve it? And is there a hidden side of the board that’s kind of wondering why the management team isn’t taking more risk? Is there a conversation here that needs to be had?

Those are all good points — and those conversations certainly should take place on an ongoing basis.

I also wanted to hear some of your thoughts about accelerating innovation and managing that type of change, especially after a great idea takes off, and all of a sudden you’ve got a different dynamic happening in your company, right? You may have been small and quiet, working behind the scenes where all the idea folks were excited about what’s happening; then suddenly, you have an amazing trajectory you’re trying to stay on. I know you’ve been involved in a situation like that, so what can you share about managing change at that pace?

Yes, I joined Groupon and Mozilla, the creator of Firefox, and in both of those companies I joined around the time they had less than 100 folks in the business. In the case of Groupon, we ended up growing it to about 15,000 people on staff within a course of two and a half years.

That’s phenomenal.

Yeah. Just a breakneck pace. And I would say that most of my learning related to your question came from there. I think there are two effects that happen during those times. One is that you’re going to get pulled as hard as possible to scale the business, just to keep up with the growth. In our case, that meant hiring people. It meant making sure that stuff doesn’t break. In my case, working on the product side of things, making sure that our server stayed up, didn’t go down, that we had a reliable product to give to people. And what’s interesting is that those things will pull you away from the second effect, which is that you also want to stay ahead of the game. So in the case of Groupon, we knew that what we had uncovered was a brand new idea, but not necessarily a defensible idea; it was an idea that could be cloned many times over, and in fact, it was.

So what we needed to figure out, as we were trying to keep up with that pace, (Forbes called us the fastest-growing company of all time) but we also knew that the path to getting there wasn’t necessarily all that complicated, meaning that another company could come in and potentially do the same thing. So in these cases, there are tugs in both directions.

I give Andrew Mason, our founder and CEO at the time, a lot of credit for making sure we didn’t zoom too far in to only optimizing what we had but making sure we addressed where the market was headed. That’s very challenging. And I can only imagine how challenging it could be once you get past that point, where the entire company is focused on optimizing to break out of that mold and start doing disruptive things. That, I think, takes an enormous mindset shift. The only way I’ve really seen that done is when there’s a leadership change or a leadership reset, where someone will come in and basically say, “Look, this is going to make people really, really uncomfortable, but we’re going to do it anyway.”

With all of this forward-thinking optimism, I am sure you have some concerns as well. What’s the No. 1 risk for corporate America in general? What do you worry about in terms of the future?

I worry about people more than anything else. I think if you look at innovation 20, 30 years ago, we were talking mainly about proprietary technologies. We were talking about things that were under cover, and that’s what made a company innovative.

Today, it’s mainly about the people. You know, when your best people walk out the door, your innovation can walk out the door as well, along with the ability to protect that [innovation] through proprietary mechanisms. I’m a lawyer by training, I know what the faults are in that system as well. And if you want to continue moving fast, you don’t necessarily have time to be litigious. So your only option, I think, is to be a place where the best people want to work. And my belief about what it means to be the best is that not only are you good at what you do, but you’re also the kind of person that makes the people around you better. I think that’s a new way of thinking about recruiting. I’ve adopted it after watching some of the people I respect most do it. It’s really interesting to me to watch people, particularly in Silicon Valley, build teams. And they’re building them not based on a collection of individuals, but they really are looking at the team dynamic.

Finally, tell us a bit about Rise and how you’ve applied some of these dynamics into your current venture.

Well, one of the things we have found is that when we talk to employers, in particular those who are trying to solve a problem in the health care space, they have these vast organizations, and they’re trying to figure out how to treat everyone as an individual. Everyone has very customized health concerns, whether it’s that they’re simply overweight or they’re dealing with different types of hereditary diseases—everybody has sort of a unique fingerprint that impacts their health. So employers are struggling with finding a solution that will address and personalize a product to every single person in the organization and do that in a way that’s actually cost effective.

And how have you brought innovation into that arena?

At Rise, we believe in is this idea of “personalization at scale,” meaning we treat every single human being that’s in our platform as a human being. We address exactly what it is they need. We address exactly what’s going to bring them to health, and we personalize and customize a solution that’s going to fit them, and we do it at a price point that’s the same as Weight Watchers or a gym membership. So what’s been interesting for us is to find employers who are getting really excited about Rise, and I’m more excited to see where that goes in 2015.