Both rooms are right
Over the last few months I have had more or less the same conversation five or six times. Different sectors, different sized businesses, innovation leads who have never met one another. The words change. The shape does not.
It goes like this. We have been told to innovate. We have a team, a budget of sorts and a mandate written on a slide. We go away and do the work properly. We come back with something that would genuinely move a needle. And then it stops. Not with a no, which would at least be clean, but with a slow deceleration. More validation, please. Have we thought about the regulator. What does this do to the ratio this year. Let us pick it up at the next planning cycle.
The innovation lead leaves that meeting certain the executive team lacks courage. Two floors up, the executive team is equally certain the innovation team lacks commercial realism.
I have sat in both chairs. I started as a young technician in the Lloyd’s Underwriting Room, built the first dedicated outsourced claims business in this country, was part of the founding family of an early insurtech, and I still spend time mentoring start-ups who are trying to get a foot in the door of exactly the sort of company I used to help run. I have been the one pitching, and I have been the one who had to say not yet.
And having been on both sides of it, I think both of them are right.
This is not a shortage of bravery or a shortage of rigour. It is two rooms using the same words to mean different things, with nobody having ever written down how they are supposed to work together. Courage is very hard to install in another person. Rules of engagement you can write on a Tuesday afternoon. So what follows is a little bit of argument and mostly a manual.
Two rooms
Every business of any size is running two operations at once, and I have come to picture them as the engine room and the design studio.
The engine room makes the promise happen. Reliably, at cost, today. It prizes predictability and it is trained to strip out waste, and the people in it are usually very good at their jobs. The design studio is trying to work out what the business should be doing next, which means the thing it produces is not profit, it is information that did not exist before. It needs speed and it needs permission to be wrong cheaply.
Here is the problem. These are not just different tasks, they are different ideas of what good looks like, and from inside either one the other looks like bad practice. To a well run engine room, an unproven idea with no guaranteed return is simply waste, and it will be removed with great efficiency. To the design studio, being asked for a three year business case before the first experiment is a polite no.
Nobody is misbehaving. Each is applying the rules of its own room to the work of the other. And because that is never said out loud, the same argument gets had every quarter, about a different project, with the same result.
Why the no is not cowardice
I would start here, because the innovation side almost never does.
The pressure your executives describe is not invented. When researchers at Duke put it to a large group of finance chiefs, around three quarters admitted they would knowingly give up real value in order to keep the reported numbers smooth, and more than half said they would delay a genuinely good project rather than miss a quarter. Not creative accounting. Real decisions, about real projects, taken by people who knew exactly what they were giving up.
From the workshop floor that looks like cowardice. From the twelfth floor it looks like keeping the covenant, the rating and the job. Your proposal is not competing against doing nothing. It is competing against the analyst call.
So do not go in arguing that short-termism is foolish. Go in arguing that it is expensive, because it is. The businesses that genuinely run for the long term grow revenue and earnings faster, invest more in developing new things and create more jobs than the ones that do not. That is a sentence a board can act on. Be braver is not, and it lands as an insult dressed up as advice.
What actually breaks
In my experience the relationship almost never fails in the meeting where the decision is taken. It fails earlier, and quietly, when people stop telling each other the truth.
Nokia is the story I keep coming back to, and it is not the one most people think. The engineers were not short of talent and the strategy was not blind. What went wrong was that the top of the house had a reputation for being formidable, so the layer below learned to manage what went upwards. As one of them told the researchers who went in afterwards, everybody knew things were going wrong, and the thought was, why tell top management about this. Leadership, working from a flattering picture, pushed harder for speed, which made honesty even more expensive. Round it went.
Now hold that against the opposite failure. LEGO in the early 2000s did everything the innovation books tell you to do. Theme parks, video games, jewellery, education centres, film tie-ins. Inventive, energetic and almost entirely ungoverned, and by 2003 it had lost around 300 million dollars with worse forecast and barely any cash left. What turned it round under Jørgen Vig Knudstorp was not less creativity. It was a simple test that every idea, from anybody, had to pass about what the company was actually for. The creativity survived. The free for all did not.
Two opposite diseases. Same underlying cause. In both cases the two rooms were not speaking the same language about risk, and nobody had written anything down.
The manual
Here is what I would actually do, roughly in this order. None of it needs a culture change programme and all of it can be started inside a month.
The eight steps as a single journey, from outset to outcome.
1. Agree the portfolio before you argue about the project.
Most of these rows are project rows that should have been portfolio conversations. The executive is not really rejecting your idea. They are reacting to the fact that nobody has ever said how much of this sort of thing the business intends to do at all.
So settle that first. Put every live initiative on a wall and sort it into three piles: improving what we already do, extending into next door, and genuinely new. Then get the executive committee to say, out loud and on paper, roughly what share of money and attention each pile should get. A rough rule of thumb from work in the Harvard Business Review puts the better performers at about seventy, twenty and ten across those three, with the returns arriving in roughly the reverse order. Whether you land there or somewhere far more conservative matters much less than that a number exists and someone’s name is against it.
Ninety minutes, executive committee, innovation lead and the finance director in the room together. One question: is this the portfolio we chose, or the portfolio we drifted into. I have never seen that session be comfortable and I have never seen it be wasted.
2. Write down how much you are allowed to lose.
An appetite that only ever lives in conversation is not an appetite, it is a mood. Turn it into three written numbers. How much can be spent before anybody has to ask. Who signs off the next tranche. And what evidence means we stop.
Adobe took the extreme version of this and made it famous. It hands people a red box with a prepaid card in it loaded with a thousand dollars, no expense claim, no manager’s approval. The money is neither here nor there for a company that size. The point is that the business has said in public how big a bet one person may place on their own judgement. Below the line, get on with it. Above it, come and talk.
Write your own version and pitch it wherever your nerve allows. A few thousand pounds and six weeks at the first stage. Fifty thousand and a quarter at the second. Real capital and the executive committee at the third. And agree what would make you stop at the same moment you agree the funding, while everyone is still calm and nobody’s reputation is tied to the answer.
3. Get rid of the deck.
If only one thing here survives, make it this. The slide deck is the single biggest cause of the misunderstanding, because it lets an idea look finished while remaining unexamined, and it quietly rewards whoever presents with the most confidence.
Amazon gave them up altogether. Jeff Bezos wrote in his 2017 letter to shareholders that they do no slide presentations at all, writing six page narratives instead and reading them in silence at the start of the meeting. For anything new this hardens into a discipline they call working backwards, where before a penny is spent the team writes the press release announcing the finished thing to the customer, with a set of awkward questions and honest answers behind it.
It sounds like a gimmick. It is the best translation device I know, because prose cannot hide behind a bullet point. And the questions section is where the lawyer, the actuary and the head of operations get to put their objections in writing early, rather than saving them for the room.
Insist that yours answers six things in plain English. What is the customer’s problem, in their words. What has to be true for this to work. What is the smallest test that would tell us whether it is true. What does it cost us if we are wrong. What does it do to our standing with the regulator and the public. And who, by name, is accountable.
4. Hold the funeral before the wedding.
The premortem takes about fifteen minutes and changes the temperature of everything that follows. You gather everyone, tell them it is eighteen months from now and the thing has failed badly, and ask each person to write down privately why. Gary Klein’s original piece makes the case that imagining something has already happened makes people markedly better at spotting the reasons for it.
What it really does, though, is political. It gives the cautious people a proper place to be cautious, early, rather than forcing them to become obstacles later. So invite risk, invite compliance, invite the most sceptical line manager you can find. You are not trying to convert them. You are making them joint authors of the risk list, which is an entirely different relationship from being on the receiving end of it.
5. Ask for the red lines first.
The reputational caution, the capital discipline, the care about what shareholders will make of it. In a regulated business those are not obstacles, they are the reason anyone hands you money for a promise in the first place. An innovation team that treats them as friction will always sound naive to the people paid to protect them.
So run a red lines session before you do any ideating. One hour. The sponsor and the risk and compliance leads name, explicitly, what this business will never do, what exposures it will not carry and what headline it could not survive. Everything not on that list is then agreed to be open.
I have watched teams walk out of that hour visibly lighter. A short, honest list of prohibitions is far easier to work with than an open field patrolled by a veto you cannot see.
6. For the first year, report what you have learned.
Asking a genuinely new venture for a revenue forecast is how good ideas learn to lie. The number is fiction, everybody in the room knows it is fiction, and when it misses, the whole category loses credibility for a decade.
For the exploratory end of the portfolio, swap it for a handful of things a board can still hold you to. How many assumptions did we test this quarter. What does an experiment cost us now compared with six months ago. How long from idea to first conversation with a real customer. And how many initiatives did we stop on the evidence rather than let quietly wither, which is the best single sign of whether your governance is real. Keep proper financial reporting for the core, where it belongs. This is not about letting innovation off the hook. It is about holding it to account for what it is actually producing at that stage, which is less uncertainty.
DBS Bank is the one I would point an executive team towards. What carried that transformation was not a bolder mission statement, it was plumbing: a shared technology doctrine its people could recite, customer journeys as the unit of work, and a meeting discipline so unglamorous it simply gave everybody back half a million hours. Income rose by half over the period and the bank ended up holding the world’s best bank and best digital bank titles at the same time.
7. One name and one date in the diary.
Committees do not sponsor things, people do. Put one named executive behind each initiative. Then hold a quarterly portfolio review with the power to move money between the three piles without waiting for the annual budget, because an annual cycle is simply too slow to keep your options open. And get the portfolio in front of the board at least once a year as a portfolio, next to the risk report rather than in the ten minutes left at the end.
None of that is exotic. Work by FCLTGlobal and McKinsey on what long-term companies actually do differently comes back to much the same unglamorous habits: chief executives who stay personally close to their strategic initiatives, boards that spend roughly twice as much time on strategy as their peers, and a willingness to argue properly before deciding.
8. Borrow someone else’s room.
Sometimes the two sides need somewhere that belongs to neither of them. This is where a good accelerator earns its keep, as long as it is built for adoption rather than for photographs.
The Lloyd’s Lab is the one I know best, having had the pleasure of mentoring there. Around ten teams a cohort, ten weeks, and every team matched with eight to twelve mentors from the market itself. The results speak for themselves, with the great majority of alumni still trading, most of them still working with the Lloyd’s market, over a thousand jobs created and 200 million dollars of premium written. The design lesson is the mentoring. The market is not an audience at a demo day, it is inside the work from week one.
Zurich runs a version of the same idea at group scale, with its Innovation Championship naming ten winners in 2025, two of them out of pilots run during the year. Again, the competition is not the interesting part. The tracking of pilots into live markets is.
The page they both sign
Pull all of it onto one side of A4, agreed by the sponsor and the innovation lead and looked at every quarter. Six sentences:
This is the customer problem we are chasing, in the customer’s words. This is how we are splitting our money across improving, extending and inventing. This is what we can spend before we come back, and who says yes. This is what we will never do, whatever the return. This is what we will measure for the first twelve months, and it is not revenue. This is when we look at it again, and what would make us stop.
That is the common narrative. Not a vision, not a set of values on a wall. Six sentences that mean the same thing in both rooms. Everything above it is just the work of getting them written down honestly.
A last thought
Steve Blank gave us innovation theatre for the hackathons and the labs and the reorganisations that create a lot of activity and no change. I would add that there is a theatre on the other side too, and it gets named far less often: the innovation function that mistakes motion for progress and hears every fair question as obstruction.
The businesses that get out of this do not resolve the tension between the two rooms. They stop treating it as a fault and start treating it as the job. A company that can run steadily and explore honestly at the same time tends to come out of a shock in better shape than it went in, because it has been practising under load all along.
If you take one thing from this, let it be the least dramatic thing in it. The distance between the workshop floor and the twelfth floor is hardly ever a distance of courage. It is a distance of documentation. And that, unlike courage, you can close this quarter.
Mark ‘Hux’ Huxley is the founder of Huxley Advisory, with nearly 50 years’ service to the insurance industry. He mentors and advises businesses across brand, proposition, purpose, leadership and operations. He was the 2023/24 Master at the Worshipful Company of Entrepreneurs and the current Chair of the Financial Services Group of Livery Companies.
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