The Digital Transformation Playbook: Rethink Your Business for the Digital Age

Involving Everyone
Intuit’s CEO Brad Smith has said that “Intuit has 8,000 employees, and we 
want them all thinking about how to improve the design of products and 
services, even if those offerings are intended for internal support only.”
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But how do you make that happen? Can innovation really be something 
that the entire organization can, or even should, be doing?
Some firms do find it useful to sequester innovation teams, isolating 
them at least partially from the politics and priorities of those maintain-
ing the current business. This may make sense if you are trying to pur-
sue innovation in an area outside your current business or ventures that 
may cannibalize or challenge parts of your existing business model. Earlier 
I mentioned Mondelez’s innovation “Garage,” where it tests out product 
ideas that may seem too far-fetched for some managers in the organization. 
Similarly, AT&T has set up a series of innovation labs it calls “Foundries,” 
each with 40–50 staff.
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Other firms seek to engage the entire organization, but they do so dur-
ing innovation “sprints” or “boot camps.” Typically, these are open to all 
employees, with an innovation challenge, a crowdsourced vetting process 
for picking the ideas to receive funding, team coaching on innovation meth-
ods, and a limited time frame within which final results are announced. 
Amy Radin has served as a chief innovation or chief marketing officer at 
top financial services firms such as Citi, AXA, and E*TRADE. While at 
E*TRADE, she led an initiative called Innovation Unleashed, for which a 
core objective was to use innovation to build morale and cultural cohe-
sion and tap into employees to create new growth opportunities. “Success 
really came down to empowering the employees,” Radin told me. “Making 
it easy to participate. Making sure bosses knew that their staff can do it on 
work time. Making it clear that it’s sanctioned by the leadership team.” She 
focused the incentives on recognition rather than compensation. “If your 
idea wins, we will invest ten or twenty thousand dollars to prototype it, and 
you will get to participate in the workshops building it.” The response far 
exceeded expectations: 120 teams registered to participate in the innovation 
competition, out of 3,000 employees in the entire company.
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The last, and likely hardest, approach is to try to train everyone in 
the organization to adopt experimental methods year-round in their daily 
work. This is the approach that Intuit takes, having now trained hundreds 
of “catalysts” who, in turn, work with teams throughout the company to 

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help them experiment effectively. The same experimentation method that 
was used to develop the Fasal product for India is being used internally 
to improve processes in departments like legal, HR, and order manage-
ment. By instilling innovation methods broadly, businesses can benefit 
from a wider range of perspectives, including those of their newer junior 
staff. Retailer Tesco trains the junior analysts at its UK headquarters to con-
ceive and conduct experiments on small samples of customers. This gives 
them free rein to try unconventional ideas that executives who have been 
at Tesco longer would not even think of.
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Planning to Fail and Celebrating It
The hardest challenge for many organizations as they learn to embrace 
innovation by experimentation is accepting, planning for, and even cel-
ebrating failure.
Let me be clear. In some quarters, the embrace of failure has gone so 
far as to mistake it as a noble goal in and of itself. But failure—learning that 
an idea for an innovation does not work—is not actually the goal. Learning 
through failures is the process that takes us to the goal of great innovation.
But singing the praises of failure, done right, is probably needed at 
most companies. After all, it is human nature to avoid failing and being 
perceived as having failed. Most large organizations tend to reinforce this 
strenuously with rewards systems. But an organizational culture that shuns 
failure poses three severe risks to any innovation efforts:
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 Incremental innovation efforts: The first big risk is risk aversion. When 
those involved in failed projects are punished or stigmatized, employ-
ees tasked with innovation will shy away from any unknowns, includ-
ing big growth opportunities for the firm. When Bank of America set 
up a group of branches in the Atlanta area to serve as test sites for the 
use of technology to reinvent the banking experience, it established a 
30 percent failure rate as a goal in hopes that teams would try genuinely 
new and risky ideas. But in practice, the innovation teams felt intense 
pressure to show successes and opted for testing what they acknowl-
edged were the safest of the ideas they generated. The actual failure rate 
in the first year was only 10 percent.
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 Loss of learning: When failures are punished, there is no incentive 
to bring failures to light. Even innovation teams that find successful 

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solutions are unlikely to reveal the early blunders and blind alleys they 
stumbled through along the way. If teams aren’t comfortable sharing 
their mistakes, then the learning at the heart of experimentation will 
never be captured by the organization. Peers will be doomed to repeat 
the same mistakes.
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 Throwing good money after bad: When failures are punished, any team 
with a budget will find a way to justify their underperforming initia-
tive as “just needing a little more time,” adjusting their future projec-
tions and endlessly postponing any decision to shut it down. Scott 
Anthony, David Duncan, and Pontus Siren call these “zombie projects” 
and describe them as initiatives that “fail to fulfill their promise and 
yet keep shuffling along, sucking up resources without any real hope 
of having a meaningful impact on the company’s strategy or revenue 
prospects.”
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To avoid these three hazards, businesses need to plan to fail and cel-
ebrate smart failure. Planning to fail simply means developing a process 
for evaluating every innovation initiative on a predefined schedule, against 
predetermined criteria, and with incentives to encourage employees to 
declare their own project fit for termination. Failure planning should be 
structured so that shutting down one project is directly tied to freeing up 
resources (indeed, reallocating the same people) to work on new oppor-
tunities for innovation. When Finnish game maker Supercell shut down 
a year-long IT development project that had gone off course, it celebrated 
the team members’ hard work with champagne and shifted them to another 
project. That project turned out to be the wildly successful mobile game