Middle Managers

By Ben M. Bensaou

To adapt in a competitive, changing world, every business needs to operate an innovating engine, which requires contributions by employees at every level of the organisation. Often overlooked is the importance of mid-level managers, who must drive the process of integrating innovation by coaching and connecting frontline innovators. The story of how Allianz became an innovation leader in the insurance business illustrates how this works.

In today’s fast-changing, ultra-competitive business environment, most companies understand the urgency of innovation. We live in a world where unpredictable trends, from global pandemics to climate change, are continually throwing up new problems for companies to address. It’s also a world in which technological innovation is steadily empowering new business models that generate unexpected competitive challenges. No wonder C-suite executives in practically every industry are making innovation a top priority for their companies and constantly searching for the “next big idea” that will help their businesses survive and thrive.
In this innovation-craving world, a relative handful of companies seem to have cracked the secret of innovation. Some, in fact, have faced a problem most businesses would be thrilled to experience: having too many innovative ideas to select from!

Allianz bldgThat’s the problem that challenged leaders at Allianz, the German financial giant.1

My involvement with Allianz began several years ago, when I was invited to meet with Jan Carendi, an Argentinian-born executive who was then a member of the board of Allianz. Carendi was part of the corporate team working to develop a systematic approach to generating and implementing innovative ideas throughout Allianz. This was a fascinating challenge. After all, the world of insurance in which Allianz primarily competes is not generally regarded as a hotbed of innovation. But I discovered that Carendi had been thinking deeply about what companies must do in order to innovate continually.

At a certain point in our conversation, Carendi offered an observation that I remember to this day, and which I often quote when people ask me to describe what’s necessary to stimulate innovating. “To innovate,” Carendi said, “people need to feel able, capable, and motivated.” I think that simple sentence suggests very well three of the most important elements that an organisation’s leaders must provide if they expect their people to participate in innovating: they must give them permission to innovate (that is, letting them feel “able”); they must give them the skills, support, and tools they need to innovate (helping them to be “capable”); and they must nurture in them the desire to innovate (making them feel “motivated”).
These three essential ingredients form the basis for a company-wide innovating system that I describe in my book Built to Innovate.

company office

The Innovating Engine and Its Three Key Processes

I refer to this system as the innovating engine. Every organisation needs to have such an innovating engine, which must engage the energies of all its employees at the same time as they are carrying out the daily tasks that create value for customers and profits for the business – the work of what I call the execution engine. The execution engine is essential to making your business successful today. But the innovating engine is essential to creating your success in the future.

Following my conversation with Jan Carendi, I was invited to speak with a group of 30 leading executives at Allianz as they worked on building an innovating engine for Allianz. Eventually, I ended up training more than 100 additional Allianz executives over a series of programmes. As I taught the Allianz leaders, a company’s innovating engine is driven by three key processes of innovating: creation, integration, and reframing. Everyone within the company must be engaged in these three processes, in addition to their familiar execution engine roles.

Creation is the process by which the organisation continuously generates new ideas – the raw materials of innovating. When an organisation has built an innovating engine, it innovates in everything it does – in technology, products, services, and also in management processes and in internal functions. And that means the process of creation is constantly happening in every department and division of the organisation.

Integration is the process by which the dispersed innovating capabilities and resources within the firm are brought together into a corporate-wide innovating capability. It connects people, linking innovators throughout the company into a social network and an organised process fully dedicated to innovating.

Finally, reframing is about shifting your mental gears sufficiently to recognise the potential value in an innovation. It’s also about altering your assumptions about your business so as to make the innovation part of a new status quo – a better way of working that creates more value for you and for your customers.

People at every level within the organisation all have distinctive contributions to make to each of these three innovating processes. In describing their roles as part of the innovating engine, I refer to the three main levels of the organisation as Frontline Innovators, Mid-level Coaches, and Senior Leaders.

Of these three groups, mid-level managers are the ones most often overlooked when it comes to innovation.

Senior leaders are usually recognised as the chief cheerleaders, inspirers, and guiders of innovation. When we think about innovation, our minds often go first to CEOs like Jeff Bezos of Amazon, Reed Hastings of Netflix, and Elon Musk of Tesla – so much so that business people sometimes think, mistakenly, that innovation is all about having a brilliant chief executive to drive the process. In my research, I’ve found that there are many highly innovative companies that do not have a “genius” CEO as the main fount of innovation. But I’ve also learned that senior leaders must play a key role in driving the reframing process, encouraging people throughout the organisation to rethink basic assumptions and become open to fresh thinking.

A company’s innovating engine is driven by three key processes of innovating: creation, integration, and reframing. Everyone within the company must be engaged in these three processes, in addition to their familiar execution engine roles.

Frontline employees are also widely recognised as founts of innovation. After all, they interact with customers and their issues on a daily basis, which gives them unique insights into the real needs of those customers. In many companies, frontline employees are encouraged and incentivised to submit suggestions for innovation. It’s a useful practice that can help to start the flow of innovating ideas that any innovation engine needs. In fact, most of the innovative companies I’ve studied support frontline employees in their crucial role in the creation process for innovative ideas.

But the equally important role of middle managers in innovation is often neglected. In fact, because middle managers are typically intensely focused on the work of the execution engine, they are sometimes viewed as obstacles to innovation, which they may see as an unwelcome distraction from achieving their day-to-day objectives.

This is a serious mistake. If your company is to become a consistently innovative organisation, all three levels must be committed to, and involved in, innovating. In particular, mid-level managers must serve as coaches who drive the integration process.

That’s exactly what happened at Allianz – creating both the problem of “too many” innovating ideas, as well as a solution that helped make the company an industry leader at innovation.

Systematising Innovation – How Middle Managers at Allianz Made It Happen

Having absorbed the basic concepts about innovating, the mid-level managers at Allianz conducted training sessions in which they shared these principles with the frontline workers who reported to them. They also created an internal information system designed to let any employee from an Allianz division generate and share innovating ideas. The ideas were then funnelled to a corporate-level committee whose job it was to select projects to be acted upon.

It was a well-crafted system, but initially it had one flaw. Within three months, it became overloaded with ideas from hundreds of Allianz workers. Swamped with ideas, the committee was unable to respond in a timely fashion, and when workers found that their suggestions went unanswered for weeks or even months, the rate of submissions plummeted. The reason was clear. The company’s employees had been sitting on innovative ideas for years. As soon as these ideas were solicited by the organisation, they began to flow, in numbers that overwhelmed the system designed to handle them.

Fortunately, the leaders of Allianz recognised that this problem was really an opportunity. They developed a system to channel and organise the flow of ideas – one that activated the overlooked resource of middle managers to serve as integrators of innovation.

In each division of the company, a middle manager was selected to serve as a local innovation coordinator. This mid-level coach was given the mandate to provide preliminary feedback on every concept within fifteen days of its submission. This system quickly solved the “problem” of too many innovative ideas. When frontline employees found they were getting quick responses to their innovative ideas, they resumed submitting such ideas on a steady basis.

Allianz’s corporate-wide system for innovation, built heavily on the contributions of mid-level coaches in Allianz divisions around the world, has generated thousands of ideas and created tens of millions of dollars in value for its customers and its shareholders.

Some of Allianz’s country divisions have found additional ways to enhance the work of middle managers in running the integration process. For example, at Allianz UK, two sets of mid-level coaches were created to lead innovation at the local level. One group was labelled “lead champions”. Their job was to advocate for innovative ideas during management meetings, making sure that senior decision makers were kept informed about good ideas that were bubbling up from the front lines. Another group was called “innovation champions”. They worked on coaching and mentoring frontline workers as well as organising innovation panels and challenges at the local level.2 (These two groups of mid-level coaches were providing the first two ingredients in the Carendi recipe for innovation, helping Allianz employees to be “able” to innovate and to be “capable” of innovating.)

The innovation champions found ways to encourage even more innovating ideas. For example, they organised and led company-wide “idea challenges”, in which groups of frontline employees were invited to propose concrete answers to broadly worded questions like, “How can we improve the customer experience?” The resulting ideas were winnowed by review panels that included both the innovation champions and selected subject-matter experts, who identified specific concepts that could become the basis of practical initiatives.

The innovation champions also served as connectors, finding ways to link individuals who had good ideas with colleagues throughout the company who had the knowledge, experience, and resources to help develop and implement those ideas. As one manager put it, “We communicate to our staff this message: when you come up with an idea, rather than thinking you should execute it or that you can deliver the whole idea completion by yourself, you should form teams and collaborate with other people to get things done.”3 From their in-between level in the company hierarchy – in close touch with frontline employees but also with enough elevation to have visibility into other departments and divisions – mid-level coaches like Allianz’s innovation champions are uniquely well positioned to help forge such vital connections.

Allianz’s corporate-wide system for innovation, built heavily on the contributions of mid-level coaches in Allianz divisions around the world, has generated thousands of ideas and created tens of millions of dollars in value for its customers and its shareholders. In the process, the system itself has continued to evolve, as Allianz has modified and refined its workings in response to a growing body of evidence regarding what works and what doesn’t.

The Allianz story illustrates the essential role played by a company’s middle managers in the innovating process. They have the major role in creating, maintaining, and managing a system that will winnow the innovative ideas generated throughout the organisation, channel them in the best directions, develop them into viable business concepts, provide them with investment money, connect them to the key people in the organisation who can contribute to them, and ultimately launch them with the greatest-possible odds of success.

About the Author

Ben M. Bensaou is Professor of Technology Management and Professor of Asian Business and Comparative Management at INSEAD, Fontainebleau, France. He served as Dean of Executive Education in 2018–20. His book Built to Innovate: Essential Practices to Wire Innovation into Your Company’s DNA (McGraw-Hill, 2021) has been named one of the Thinkers50 Best New Management Books for 2022.

References

  1. The insights into innovating at Allianz came from author interviews with Jan Carendi, CEO, Allianz of Americas, Head of the NAFTA region/Latin America, and member of the Board of Management, 26 March 2007; Dr Werner Zedelius, Head of Growth Markets and member of the Board of Management, 11 November 2008; Cameron Pearson, General Manager, Growth Innovation & Marketing, Mondial Assistance, 26 January 2009 and 26 August 2010; Pramod Arikal, Head, International Business, Syncier (B2B2X Insurtech Allianz subsidiary company), 16 February 2021; and Veit Stutz, formerly head of i2S and now global head of business transformation at Allianz, 12 March 2021. Further information was provided by interviews with sixteen members of AGO unit (Allianz Group OPEX) and a member of Group Economic Research and Corporate Development, between 19 March 2009 and 17 May 2010, and communication with Helen Williams, head of organisational change and capability building at Allianz (email exchange dated 21 March 2021).
  2. Hind Benbya and Dorothy Leidner, “Harnessing Employee Innovation in Idea Management Platforms: Lessons from Allianz UK”, MIS Quarterly Executive, October 2017.
  3. Ibid.

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