Smartlands

Interview with Stephen Rutter, The Scale Institute

September 9 2019

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Hello it's Kathy Gray. And I'd like to welcome you to Smartlands podcast. We've got game-changing stories of impact, innovation and regenerative growth.

Today I'm starting with agile innovation with Stephen Rutter, the founder of the Scale Institute as well as lots of other extraordinary ventures and innovative initiatives, including co-founder of the Neutopia education platform, education manager of the Spark Festival, and founder of the not for profit Centre for Civic Innovation.

Now Stephen broadly describes himself as empowering people to solve complex problems, and going back through some your information online I was really curious to find out about bodyboarding… How have you navigated waves in business and life, and is there a story you can tell about the shift from bodyboarding to education?

Stephen Rutter

Thanks Kathy, that's actually a good way to start because throughout my teenage years I preferred bodyboarding over school.

And I guess, to my mother's disgust, I didn't follow a university pathway. I really just focused on realising my passion in bodyboarding and got overcome by that and forgot to go to school. However a couple of my good friends became world champions. Port Macquarie, where I grew up, is a bit of a mecca for bodyboarding in Australia and I think they always were, let's say, in awe of the size of the waves that I'd go out to my home break at Light House Beach.

However once I finished school - I actually finished a below TER of 25, which in the olden days means you didn't do too well. But I think I still wanted a concrete job. I still wanted to go and start my career. I didn't want to actually go and be on the bodyboarding circuit around the world, for possibly an income that I didn't realise at that time, so I didn't have that risk appetite from an early age.

I guess the thing about catching a wave is you don't know where it's going to take you, and you don't know how big it's going to get to, and what are the repercussions if you don't make the ride.

But it took me throughout my career to actually take a chance. I think this is a vital part of this whole experience - whether it's to come up with ideas or learn something new - is just start. Because that's a barrier that everyone fails to overcome.

I think if I can actually state it in another way, it's closing the knowledge to action gap. So we can learn about something to the nth degree. But you don't need to. Just do something. Learn from what has happened and then that improvement will be the way forward. And this is where innovative thinking and an entrepreneurial mindset actually comes into play.

So Stephen, how do you bring this 'just start' or 'take a chance' approach, and how do you bring that to businesses to help them to innovate or to scale?

So firstly we focus on the users. So we actually go and ask either their existing customers, or the customers that they're wanting to sell their products and services into, what they're struggling with. Identify where their frustrations lay and what are the opportunities that the company can actually do to provide gains to those people.

So every business would think that it's working with the customer, they think that it's got something that's great to sell, that it's got great marketing expertise behind it. But why perhaps do we forget about the user, or why do we forget about what the customer wants?

I think it comes down to terminology.

First thing I do is to demystify all the buzzwords ran around us, whether it be in 'entrepreneurship' or 'innovation', even down to 'customer'. When I talk about a customer I could also talk about a user or a community member - it's someone that will be realising what you have to offer. And at the end of the day (what’s important), with the organisations we work with, is how we can actually create value for that person. It could even be an internal employee.

So I use that 'customer' term loosely, because the worst thing that we have as human beings is judgment and preconceived ideas. So as soon as we say one word everyone latches onto one word and the fixed mindset overshadows what the possibilities become.

What are some approaches you use or you like to share with people you're working with to help them shift their mindset?

I get them to stop talking. I get them to stop discussing as a group. And I ask them to draw. I allow them the opportunity without words to convey what they either see as a problem worth solving, or what they see as new products and services that I can provide to create value to that user, customer, employee - whoever it is. And that's challenging. I use a methodology called Crazy 8s. It's quite well renowned in the design space, but over eight minutes they come up with five new opportunities just in visual representations.

Can you share a story of what kind of curiosity or new ideas are being sparked through these processes?

Yeah -I was in Dubbo recently, I spent the weekend up there on behalf of Charles Sturt University and the Exchange to take 13 female entrepreneurs through a journey. And what had transpired over that eight minute exercise was that a lot of the women had similar ideas of how they could connect the community together. Looked at ways that they can work, and we actually combined ideas from different people together to form a really solid business opportunity that they're still working through today.

Awesome. And I know from working with you in Wagga Wagga and some great roadtrips we've shared heading out that way, that you have had a lot to do with the start up and the building business community around regional New South Wales, and I think you're travelling across Australia for that. Can you give a bit of a sense of the challenges and opportunities you perceive in regional communities for business?

Yeah definitely. Well I'll start within urban areas because it's easy to work backwards, and being the education leader of Spark Festival, which is Australia's largest innovation and entrepreneurship festival. There's a plethora of events that someone could go to six times over every night to learn about the start up community, to learn about financing or even creativity or innovation.

However that, once you go into the regions, just gets evaporated up. So they are looking at the learning and you know the education of a new business opportunity via video or via webinar, things like that. And sometimes it's not about the content, it's about the people that you connect with. And it's hard to connect with people online.

So the start of any process that I take of building out ecosystems is a stakeholder engagement strategy. So looking at the resources that are currently within the region and working out how do we actually amplify that. Because there is this latent capacity of knowledge of resources, that can actually come back into the ecosystem. We call that 'pay it forward' so that they actually pay their a knowledge forward, or their capital investment into new ideas, or just other connections that are made outside the region.

So I really am focussed on the human element because, with everyone that I speak to, content is not the issue.

It's so important that you select the right people to develop entrepreneurial capability within the region, and traditionally it's been left to the business experts. And often the marketers will tell you that entrepreneurship sits in the business discipline, but they couldn't be further from the truth Kathy.

People that actually have the best ideas are these ‘T shape’ people. So they have a distinct discipline of knowledge but they're capable in a lot of different things. And the capability of the piece, which is the cross bar of the ‘T’ comes in those softer skills. So we're talking critical thinking, creativity, collaboration. We've heard it all before and we're probably sick to death of it because they'll talk about the future of work, and they'll be talking about 'these are the skills of the future' and things like that.

But at the end of the day, everyone's got those skills. It's just trying to amplify them out. And you amplify them out by working together, in working parties, in teams. And you have people that are willing to give you constructive feedback - we call it 'radical candour' in a couple of our programs - and allowing people to have permission to deliver hard messages.

A lot of people don't like being delivered hard messages, but it's the ones that take it and learn from it, are the ones that are going to be leaders of the future.

Yes. I do a lot of work with creative and arts and community-based people who feel a bit alienated from the business, the strategy and all the boxes they feel they need to tick to be successful. But as you say these skills these capacities are something that everybody has, and so how can we help amplify, support, build confidence in that, and support each other? So I think that's a great reference point there. And as you say these are the skills of the future.

So Tim Brown who created the T shape has now said X shape so X means two domains of knowledge...

Do you have a sense of what's working well out in a regional setting?

I think the camaraderie is working well you know, and we know in regional Australia that the challenges always outweigh the benefits. So we've seen that this weekend in the Queensland fires, northern New South Wales fires - hope you're okay Kathy.

Thank you.

But I really think what is working is the willingness to cooperate. It's just that they don't know how to ask how to break out of their cycle, and put their real vulnerable nature on the line. Because, especially when I was out in Dubbo, confidence was the biggest factor of not actually taking that next step.

Yeah interesting. And considering some of the start ups and the businesses that you've supported in that pre accelerate phase, how have you seen that journey in building businesses and connections? I can think of some success stories that I've worked with there. What have you observed?

Yeah. Totally I think, firstly there's no overnight successes in new venture creation. So the average time it takes a founder to get a dollar back is around 7.1 years, which is interesting because I was in the film production industry for over 15 years and producers only see a return around the same time, around seven point odd number of years. So I think it's all about connecting with the previous cohorts of entrepreneurs through our programs and keeping them engaged. So our program doesn't have a finite start and end. It's more about the journey. And they come back into the program to participate as mentors, advisers, potential business partners or founders.

So the idea is that we're just building the ecosystem, from an outcome of learning not a metric of how successful the business has been, how much money they've raised, and how many people have employed. All those vanity metrics come second. And again with any business, not only an early stage business or a large corporate, they have to get away from those vanity metrics. Because that that actually realises them to forget the short term KPIs, that they're bound to and look at what new opportunities exist.

You need to actually learn from the experiments you take, and learn from the customers that you interview, or learn from your experts - your employees - and what really are the pains that the current customers are providing.

Do you see some relationships between these lean and agile business methodologies, and the work you're doing to support social innovation?

Absolutely Kathy. I am delivering the Agritech Incubator down at Charles Sturt. And I am not from a farm. I'm from the coast and I used to surf every day. And I'm not that familiar with agriculture. Now I can do that because I build ecosystems around so the subject matter experts, that have the experience in the technical disciplines, come in to support the innovation and creative exercises and initiatives and programs that I design. And I think that provides such an agility to it.

So to answer your question, can it be used in a social context? Absolutely.

Amelia Loye, who's a colleague of mine who runs engage2, we've just established a not for profit called Centre for Civic Innovation. And the idea behind that is to give citizens a voice, allow them to come up the problems with solving, and then go to the governments when there is a business opportunity or a social innovation for them to finance. And allow governments to do what they do best, and enable the community to foster innovation and potentially build sustainable initiatives for the future.

I think you know if if there's one thing that I want to leave behind, and it's cutting to the heart of the matter that I do in most of the work across regions, is what's stopping us from scaling activity in innovation and entrepreneurial thinking? To empower people just to get started, and have the freedom and autonomy to come back to the traditional gatekeepers - so the gatekeepers could be the existing managers of an organisation or the existing custodians of a LGA, things like that - we need to democratise that leadership process.

Allow everyone to form these small working teams together, to come up with not only new initiatives, but new initiatives that have been thought out by different people involved with them. And I think the diversity and opportunity to sell or have someone experience that product or service in a brand new region to the one they're operating in, is so exciting.

Well that is exciting. And do you see that people in regional communities, diverse voices, people who have ideas that they want to bring forward, they can work with say the Neutopia platform or the new Centre for Civic Innovation or perhaps with the Scale Institute in order to develop their ideas, work with expert peers advance these initiatives, how do you see that you can be a contributor?

Yep. I think first of all we talk about geography and breaking down those physical boundaries. Not to say that online's the answer because, as I explained before it's not, however, it's the opportunity it brings.

Now I think if you can allow people to connect with like-minded individuals, then you break the ice and you allow the serendipitous nature of networking and mentoring and finding what whatever your after to form.

Do you find yourself dealing with the question - when you're talking about getting beyond the short term, and KPI as the vanity metrics - talking about what that bigger impact might be or those bigger questions or problems with solving it. How do you approach that mindset and those methodologies?

With short steps. It gets back to my original idea that people just need to start. People don't start because I get overwhelmed.

And I think - I'll use an analogy. So I did an Executive MBA when I needed to move out of my entertainment role into a (inverted commas) corporate role, and it was a two year program. Now I was working full time, studying full time, had a young family, and I think that in itself just overwhelms people. However, if you could just then chunk it up to the first three months and then go, "this is what I need to deliver for the first three months"...

And I was lucky. Remember, I didn't pass high school. So the director the executive MBA was questioning my ability to finish the MBA, and I said to him in no uncertain terms, "well I've had 18 years between high school and now, and you know I grew a business unit to 33 million dollars a year in recurring revenue. I think I can handle an MBA."

Touche!

And I realised that I needed to get a credit average to get through the first three months. So that was my milestone.

If we can actually just create milestones to allow people to either grow as human beings, or deliver on new objectives or outcomes, then that whole 'forest through the trees' mentality dissipates. Because we're actually just looking at small things, and the start up communities do it extremely well.

So Erik Ries, the author of "The Lean Start-Up Method", calls it a metred funding system. Okay, so if a project needs to be obviously explored, they don't look at a five million dollar project budget. They might look at a hundred thousand dollar project budget, and it gets financed and in that set period of time then - let's call them - the innovators have to prove that they've met significant learning metrics. What have they learned from that hundred thousand dollar investment, that can then finance the next hundred, five hundred, million dollar investment, to take it further?

So that's the methodology I use at the Scale Institute with our innovation customers. We've just renewed an innovation project that we've been working on over the last six months for another four months, til it can go to their board for approval for another 12 months. So we actually are derisking the new opportunities by, at any point in time, backing out when the business model breaks.

So Stephen I really hear what you're saying about overwhelm and about breaking things up into smaller pieces and milestones and helping you just start. So, I'm now working from a regional perspective as well, and I totally hear you about the sense that there is so much jargon out there, and often there is too little connectivity actually between the people in regional settings who can build the ecosystem together or innovate ourselves.

So when you're looking at all the terminology, all the ideas, all the wonderful stories of innovation that happen around the world at a rapid pace, how do you help start ups or businesses who are wanting to embed this meaningfully within what they do? How do you help them to approach agile innovation and build that sustainably for growth?

Slowly. You know you can't boil the ocean and you can't take people on a quick journey.

I think I realised that when I was at UTS, and over the course of twelve days and 4500 people at a large bank we could teach them design led innovation. And what design led innovation means to me as a layman, is really just creating value by focussing on the user with minimal resources. 

So that's the approach I take in in any of our innovation consultancy assignments, but also more importantly to build regional ecosystems. So we need to identify first what we want to achieve and then we take - I'll call it - an audit or a health check of the whole community and we can do that through eight pieces of agile innovation. This was coined and designed by me and a colleague Dr Tim Rayner, who taught in the MBA in Entrepreneurship that I launched at UTS and now is focussed on design sprints up in your way in Byron Bay.

We talked about the eight levers of innovations which go through learning culture decision making incentives and rewards and and and so on. But the idea was to look at what has worked well in the past and what is working well now. Because once you can identify that, you then can work out what's going to work in the future.

So you can't just translate Sydney start up hub into a regional centre - there are too many environmental factors that do not exist in a regional centre. So you want to actually just focus on the strengths of that region and just bring in the elements that the culture is going to adopt. Like whether it's internally within the business or across the community.

If the people don't engage in it, then nothing's going to change.

Beautiful. And if you don't mind Stephen, I'm going to share some of the ventures that you're involved with and some of the resources that you're mentioning as well. I understand you're presenting some of this to the Regional Development Australia conference in 2019 if this podcast is heard later. So you'll have some information to share around that.

Yeah most definitely.

You know that the further and the wider we actually allow people to embrace uncertainty and think differently, this is going to benefit every part of our society. 

I think we always get focussed up in the IP, the competitive nature of how we operate, and we need to work towards more of a collaborative business model approach. The Scale Institute is run in that way - we look at the projects, we look at who are the best thought leaders or subject matter experts to bring into that environment, because the focus is on the sponsor and ensuring that the quality is what they expect.

So I want everyone to adopt the learnings that I've had, from the waves in Port Macquarie through to my business career building up film and TV productions, and really learning at the coalface by doing. And then going into that more formal education at university when I was a whippersnapper of 32, realising that people don't learn that way. People don't learn in this classroom environment and then apply the learnings afterwards.

So I've also become a co-founder of Neutopia, which is a learning experience platform because we want to make the learners curious. And I think, from that creativity and curiosity perspective, we have really - without the physical bruises - beat it out of kids. And you know I think going forward, I'd love to let the Scale Institute slide and focus on 12 to 15 year-olds, and how we spark their imagination, build their entrepreneurial mindsets.

Because they're the leaders of the future. And it's not just for start up enterprises. They going to move into government roles, into large businesses or family-owned enterprises. But the fundamental thing that we need to have them attribute is, what an entrepreneurial mindset is.

We've talked a bit about kids in the time I've known you Stephen. And I was wondering if you've learned lessons from them as well, about what an entrepreneur mindset might be or what lessons we can take forward for learning and growth moving forward?

I think the biggest lesson that I have is actually to listen to them.

It's not the person with the highest authority, the person that takes home the biggest paycheque at the end of the day, or sit in the corner office.

It's the people that are experiencing those levels of frustrations or happiness or whatever would be, but they're the ones that have the greatest insight. So I think as a parent and as a person that goes into schools and universities, these amazing minds come up with great ideas. They may not translate directly into a business strategy but that's because they don't have industry experience. So we need to manage those expectations as well.

So we need to have a connection between these children or these university students with industry, so that we can plug in creative ideas into implementable innovations that can be realised pretty quickly.

Brilliant. Now Stephen you've also taught me quite a bit about some wonderful changes in passion and career in your journey getting to the Scale Institute where you are. There've been lots of learnings. Can you tell me your favourite mistake that you've made?

Favourite mistake.

What's the best mistake you made?

What what's my best mistake? I think my best mistake was not going on the world bodyboarding tour. No actually, I'm always envious! But I think at that time it was it would have been silly for me to do that, especially when I just bought a house on the weekend. I don't think I would be as right for it as I could.

However I think I left corporate, or you know a salaried job, far too late. I only set up the Scale Institute two years ago, and I didn't back myself early enough.

I'm incredible with my work ethic and my stakeholder relationships. And you know the way that I think and add value. But I just didn't have that in me to do it early enough. And since I started Scale Institute and realised that I could enable others to help me on the journey, it gave me a lot more gratification. The projects that I deliver, the customers that I have are not transactional anymore. And I think over 13 years I was organising the logistics of over a thousand film and television productions, and they were just projects for me. But this is now my life.

I think the great gain comes in the self reflection. What would I do differently next time to make it better?

So I think again I don't like having measures of importance, because whether I'm just taking a different route to work and not listening to the GPS, which tends to always get it wrong or at least we blame our Uber drivers or our partners for taking the wrong way, right. I think the ability to be flexible and adaptable enough, to not go on your past experiences - I really value that in everyone we meet, we work for, and help guide the programs that they are participating in.

Yeah that's really profound Stephen to think about now - where we are in business and social growth and how we can really reflect on that, but not necessarily be defined by that moving forward.

And I think the idea is that we want to connect different innovation centres together. Because you might be focussed on agriculture in one, and smart cities or clean energy in another, but the methodology remains the same. However, our traditional funding model is that we reinvent the wheel, each and every time.

And I think my parting comments to government organisations and people that are investing in significant resources into regional communities, is to see what's happened prior. Learn from that, and get it done better and cheaper and quicker. That's agile innovation.

Thank you Stephen. I am going to share all of your links and resources and some great notes wrapping this up, and I really am pleased to be connecting online for this conversation - and to hopefully be catching up with you face to face another time soon. Thank you for all you've done so far and the great ideas and provocations shared here. And we look forward to the next chat. Thank you.

Good luck in Wagga, and the entrepreneurs we have down there at the moment are really inspiring.

Absolutely, I can't wait! Thanks Stephen.

Thank you Kathy.

Add speaker

It's so important that you select the right people to develop entrepreneurial capability within the region, and traditionally it's been left to the business experts. And as often as is marketing we'll tell you that entrepreneurship sits in the business discipline, but they couldn't be further from the truth Kathy.

Add speaker

People that actually have the best ideas are these 'T shape' people - so they have a distinct discipline of knowledge but they're capable in a lot of different things. And the capability of the piece, which is the cross bar of the 'T' comes in those softer skills. So we're talking critical thinking, creativity, collaboration. We've heard it all before and we're probably sick to death of it because they'll talk about the future of work, and they'll be talking about 'these are the skills of the future' and things like that. But at the end of the day, everyone's got those skills. It's just trying to amplify them out. And you amplify them out by working together, in working parties, in teams. And you have people that are willing to give you constructive feedback - we call it 'radical candour' in a couple of our programs - and allowing people to have permission to deliver hard messages. And a lot of people don't like being delivered hard messages, but it's the ones that take it and learn from it, are the ones that are going to be leaders of the future.

Add speaker

Well done Stephen. I'm going to add quickly that I love that diagram of the shape people I do a lot of work with creative and arts and community based people who feel a bit alienated from the business, the strategy and all the boxes they feel they need to tick to be successful. But as you say these skills these capacities is something that everybody has, and how can we help amplify, support, build confidence in that, and support each other? So I think that's a great reference point there. And as you say these are the skills of the future.

Add speaker

So Tim Brown who created the T shape has now said X shape so X means two domains of knowledge...

Kathy

Welcome Stephen, and thank you for joining me on Smartlands.

Stephen

Thank you Kathy, it's great to be here.