We’ve heard the stories. Nokia. General Motors. Kodak. At their peak, they all held very prominent market shares in their respective markets. They were pioneers, global leaders in their industries.
Until they weren’t, of course. They grew nervous about transformative innovation, worried it would risk their position. They ignored the competition, the rapid changes their industries were going through. Even Nokia, which undertook groundbreaking changes to keep up with the times — first as a pulp mill in 1865, then a rubber manufacturer, telecommunication company, and finally, in the latter part of the 20th century, a mobile phone producer — eventually started playing it safe.
A few weeks ago, during WebSummit, I gave a keynote speech about why companies need to keep innovating, and how to create the space to do it. Because here’s the thing, you can’t predict where your company will end up going when you first bounce the idea off with a few friends, or start drawing up a business plan. When you first start your company, there is a world of possibilities. In our case, those possibilities were all the things we could achieve by solving the translation problem. Text messages and emails, subtitles, high-end marketing materials, websites, academic, medical and legal texts, even tattoos — we’ve gotten a few peculiar requests over the years.
But a lot of initial effort goes into finding a sweet spot, that one initial foothold that allows you to get established, create the engines that you need to grow, and enables you to scale your business. For us, that was Customer Service, specifically, multilingual Tickets, Chat, FAQs — a trio that comprises millions of daily interactions between companies and their customers. And while our ultimate goal hasn’t changed, and we’re still very much working towards becoming the world’s translation layer, for now, it still feels like we’re just scratching the surface of Customer Service, building not just a product suite, but also further building the platform that will enable our customers to interact with these products.
Find your sweet spot
Whatever it is, every CEO needs to find their engine of growth. And let’s say everything goes according to plan, and you’ve scaled your company, drawing attention from potential hires and customers, investors and media. Something is clearly working. Your team and investors are not only encouraging, but also demanding that relentless focus on what’s worked so far.
But when a strategy proves successful, leaders can be reluctant to take unnecessary risks, to take much needed resources into unproven, untested areas. And it’s perfectly understandable. Companies naturally want to allocate their resources on tangible customers’ needs, on increasing profits, on features or integrations that can quickly return their investment. But by doing so, they fail to see what’s beyond that promise valley — a steady climb towards maturity, followed by plateau, an inability to adapt to the market, and eventually, much like all those brands eventually discovered, a decline.
Constantly reinventing your company, even competing with yourself, is a fundamental mindset in the tech industry. They call this problem the innovator’s dilemma, after a seminal book chronicling why market leaders fail to seize the next wave of innovation in their respective industries, even as the landscape and customer expectations shift around them.
“The reason [for why great companies failed] is that good management itself was the root cause. Managers played the game the way it’s supposed to be played. The very decision-making and resource allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening to customers; tracking competitors actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit. These are the reasons why great firms stumbled or failed when confronted with disruptive technology change.
Innovator’s Dilemma, Clayton Christensen
So how do you keep innovating in a company when there’s so much pressure to just focus on your core business model?
Invest in an engine of change
Ever since we’ve started Unbabel, we felt that there were a lot of unanswered questions in what we were trying to solve. Solving translation was the original reason Artificial Intelligence was invented, but we’re still but we’re still a ways off from putting the problem completely to rest, as current methods in machine learning can’t fully capture the semantic structure of language.
But solving language as a problem is very close to solving intelligence in general, and so we had this innate drive to continue to research fundamental problems.
Now I think that’s where I, as Unbabel’s co-founder and CEO, can make a difference. Once you’ve found your engine of growth, and agree you’re all rowing towards the same goal, it’s very hard for someone inside an organization to drive change against the current, to drive new initiatives that are disconnected from the general strategy of the company. But founders and C-level officers more broadly have that ability.
I believe we have a responsibility to innovate. It’s up to the CEO to invest in that continuous engine of change.
That’s what we did here at Unbabel. We created what we call the Labs team, a cross-disciplinary team that is radically different from every other team at Unbabel, led by our VP of Product Innovation Paulo Dimas. They’re responsible for coming up with new and exciting applications for Unbabel’s vision and technology, which could be anything from improving on an existing application, to coming up with something the consumer has never even dreamt of. We don’t hold them accountable for delivering results on a quarterly basis, and we don’t expect them to.
They have much more autonomy to pursue what we called moonshots, different ideas that ranged from things that they expected would see a return in the next two months to things that could be maybe pointing us in direction for the next two, or even ten years.
And sure, there are times when this fails spectacularly, but it can also go wonderfully right. A couple years ago, our core product was translation for customer service emails, or tickets, as they’re commonly known. We were building our integrations with platforms such as Zendesk and Salesforce, allowing companies to speak to their customers in all these different languages, translating emails within five minutes, at native levels of quality.
Then Paulo Dimas came along, and he told me he wanted to go after multilingual live chat. And at the time most people would have told you that was an insurmountable problem, because chat is synchronous ± it’s pretty much real time. No customer or support agent is going to be OK waiting five minutes for a chat reply. At the time, even I felt we weren’t going to be able to do it — it seemed like a lost cause. But I told him to prove me wrong, and now, chat represents 30% of our total revenue. And this happened in just two years.
Give them license to fail
So after creating a sandbox where the Labs team can experiment with, you should find the right people and give them autonomy to pursue ideas. Finding someone who you trust who stands up to the CEO, the founders or board members and says:
Hey, I believe in this. This is going to work. Give me some time to prove you wrong.
And make no mistake, it’s virtually guaranteed that sometimes, it’s not going to work. Not all moonshots will succeed, nor do they have to. These teams should have a license to fail. Paulo Dimas often tells me that “50% of the ideas should fail. If they don’t fail, we’re not taking enough risks.” And it’s important because if you’re worried about all these ideas failing, you’re going to end up cutting bait too early, not giving enough time to really achieve the potential of the ideas that this team is developing.
Because of the delicate balance between the risk of failure and the perks of success, it’s not always easy to introduce what Labs is working to the rest of Unbabel — to the engineering teams, product marketing, sales. A lot of times, there’s a healthy tension inside the company where every other team is thinking about the resources that could be otherwise allocated to go faster in that direction we have long decided to go towards.
Which is why it’s important for the CEO to communicate very clearly why we need an engine of innovation, why these teams are important and their influence on the company in the long run. In hindsight, chat was an obvious growth opportunity, but there’s a reason why hindsight is 20/20. Success will not always be immediately visible to people inside the company, even to the CEO. It’s our job to explain the vision to our employees and have them committed to the mission, even when the outcome isn’t clear.
It’s dangerously easy to get trapped in what you know, but innovation doesn’t just happen. It’s a constant struggle to embrace risks, to go beyond the beaten path of tried and true metrics and strategies, to stand up against cautious board members and co-workers and rally the whole company behind an uncertain road. But it’s our job to it.
If you’re going to innovate, if you’re going to continue finding other products that are going to help find new avenues of growth, you need to create the space for innovation. Besides that, you only need three other things. To find the right people, give them autonomy to experiment, and keep trying to build the impossible.