"If you gonna go you got to go all in!"
Today with Danielle Ferry, from Moody's Analytics. In her role as Senior Director for New Product Innovation, evolving early-stage product ideas in order to transform them into future-growth initiatives is her daily business. Her mission: Empowering Moody’s customers to make better, faster decisions.
In this episode, Danielle introduces us to Moody's Innovation Growth Boards. Beyond talking about the effort involved in setting up such an innovation board, we also learn why staffing is not just about authority, but also about having the right mindset, asking the right questions, and being open to moving away from traditional structures and KPIs like asking about ROI. If you want to learn more about the Innovation Boards at Moody's - how they work, their impact on the business and their outcome then this is your episode!
Below you will find the full transcript for the episode.
Why are innovation growth boards important?
Chris: Hi and welcome back to the Innovation Rockstar interviews. My name is Chris Mühlrothand in this episode, I am happy to welcome Danielle Ferry, who is working with Moody's Analytics. In her current role as Senior Director of Strategy and Innovation, she is in charge of evolving early stage product ideas into transformative future growth initiatives. And she's also an advisor with the HALT Accelerator, which is a modern day broker, accelerating deals for fintech startups between corporate clients and investors. In addition, Danielle also holds a PhD in Economics from the City University of New York. Danielle, it is exciting to have you as a guest in this episode. Thank you so much for joining us.
Danielle: Hi Chris, thank you so much for having me. It's a pleasure.
Chris: All right. So we start right away with a short 60 seconds introduction sprint about you, your career, and your role at Moody's Analytics. So for the next 60 seconds, the stage is yours. Let's go.
Danielle: I have been with Moody's Analytics for almost 10 years now in a variety of different roles. Most recently, I transitioned from early stage product discovery and the Moody's Analytics Accelerator to new product innovation in a newly created business unit we built around the solutions for know your customer or KYC. My first job at Moody's was building stress testing models for banks that they used in the Federal Reserve's C-Card exercise. I've done a number of different roles across Wall Street in credit and economic modeling and macroeconomic strategy. Fun fact, my very first job on Wall Street was as an economist for a Bear Stearns hedge fund that was highly levered and heavily invested in subprime mortgages and went bankrupt. On the personal side, I live in New York City with my husband and my 10-year-old son and a mischievous little dog.
Chris: That was on spot 60 seconds. Great. Thanks. OK, now next. Here are basically three sentence starters for you. And I would like to ask you to complete the sentences. So number one: Innovation is not …
Danielle: … innovation is not wearing jeans to work and playing beer pong during lunch.
Chris: That's great. OK, number two: The biggest challenge for me in the last two years has been …
Danielle: … has been without a doubt being a working mom during a global pandemic.
Chris: Got it. All right. And number three, the last sentence: One of the most impactful technological disruptions in the next few years probably will be...
Danielle: I think the advancement of AI and machine learning to explainable AI in that today there are lots of really cool things you can do, but it is limiting when you cannot explain what is driving a model and there are applications, therefore, where it cannot be used such as credit modeling.
The Moody's Analytics Innovation Growth Board
Chris: Great answer. Got it. OK, cool. Now, Danielle, you know, I think it's fair to say that innovation and growth are understood in very different ways and, you know, companies around the world deal with them in such different ways. And I guess one of the observations we have made is that a growing number of companies are implementing venture capital mindsets to and mechanics to drive innovation. And as I learned at Moody's Analytics, you have recently brought the Innovation Growth Board concept to the organization. Can you speak a bit about the why and the what of innovation growth boards?
Danielle: First of all, innovation growth boards you can think of as the enterprise equivalent of venture capital. And the idea is to bring accountability and metered funding into the process of large corporations doing development. So the “why” for us at Moody's Analytics was that we wanted to bring innovation based approaches into our product development at a larger scale than had been done previously. And we also wanted to introduce this concept of VC style funding, which is very different from the way that Moody's typically does it, which is like a big sum of money for a many year project. And so we had experimented with and applied and successfully some of these concepts within the Moody's Analytics accelerator and had enough successes and built a track record such that when it was proposed to create a growth board at the Moody's Corporation level, the senior leadership was not only willing, but they're actually really excited to apply this at the corp level and see how it goes.
Chris: So that's an interesting concept. Who, you know, who typically should be or is part of such an innovation growth board? How is it, you know, what's the roles? What's the people that it's typically comprised of?
Danielle: In terms of composition, the growth board should be made up of senior executives who have oversight over some key operations in the organization. That said, I think it's really, really important that they also have the right mindset and the attitude because the growth board is going to be responsible for ensuring that the company has a balanced portfolio of initiatives across different innovation horizon life cycle stages. It's responsible for clearing hurdles or assigning team members to clear hurdles for the project teams. And it's also responsible for ensuring that the teams are really being held accountable for, you know, utilizing best practices and innovation. And so they not only need to have the authority to impose those things, but they also just need to have the right mindset and ask the right questions and be open to stepping away from the traditional what's the ROI going to be on this project.
Chris: Exactly. Now, when I hear you, you know, talking about structures, processes, accountability, transparency, responsiveness, empowerment, and so on, it may sound a bit like, you know, the term governance to some rights. Some might argue that governance and innovations are actually too opposing or maybe even conflicting concepts. How can those two, you know, things can be combined? Doesn't governance, accountability and stuff ultimately hinder innovation?
“The key to innovation is always speed and agility. And so I think when you use right, when you find the right balance, you can use process and governance to actually be enablers of speed and learning.”
Danielle: Well, Chris, as you know, that's a popular urban myth, and it is definitely popular. There are certainly people who think that innovation is about loosey-goosey, anything goes. And for those folks, the word process tends to be a dirty word. I disagree strongly. I think that there is a very important role for process and governance to play in innovation. It is important that you do find the right balance, of course, right? You don't want to be creating barriers. The key to innovation is always speed and agility. And so I think when you use right, when you find the right balance, you can use process and governance to actually be enablers of speed and learning.
Chris: I think that's a great reply. And, you know, let's dive a little bit deeper into the growth part concept. Can you walk us through, you know, the journey, for example, how did you set up the innovation growth board? What does a setup actually look like? What's the process behind? That would be interesting to hear about.
Danielle: So our growth board sits at the Moody's Corporation level. So first, let's make that clear. There's Moody's Analytics, which I'm a part of, and there's Moody's Investor Service, which is the rating agency that most people are familiar with. And those two entities make up Moody's Corporation. And we had within Moody's Analytics and Accelerator that had been, like I said earlier, experimenting with elements of lean startup techniques and partnering with startups and exploring new technologies. And we learned a lot of things from that and wanted to bring a lot of that deeper into the organization and do that by introducing the growth board concept at Moody's. So the Moody's Corporation growth board is made up of members of the executive leadership team that have responsibilities in the areas of finance, HR, strategy, IT, as well as the two operating units I mentioned earlier. And the chief revenue officer and the chief product officer of Moody's Analytics. I act as its director. We also have an external advisor and coach who can bring, you know, they can be that person that sits in the room and challenges folks a little bit in a way that, you know, even I as a director can't because, you know, there's just internal sensitivities and politics and they kind of sit aside from that. We meet every two months for three hours, and we decided at the beginning to start out where it has purview over funding in just three domains. And they are three domains that we have identified as being really strategically important for the company's growth trajectory.
Chris: And that's probably also how you ensure strategic alignment of the growth board, right? Because one, you have, you know, senior management and leadership sitting at the growth board and also these focus areas. Now, you know, how do you actually organize funding at or around the innovation growth board? Is there also, you know, is it just traditional funding or is there some different mechanics that you actually use to decide and also then to fund your initiatives balancing out your portfolio?
Danielle: It's all metered funding. So like I said earlier, the traditional Moody's way of doing things, you know, we're a 112-year-old company. It's very traditional, does things in a traditional way. We typically have a group that would go to the board and ask for a big sum of money and say, you know, we'll deliver something to you in five years. And here's an ROI that let's be honest, they kind of made up, right? And so we really wanted to take a different approach to say we're not going to do things like that anymore. We are going to go on this experiment, try me or funding. So everything in that the growth board is overseeing is being handed out according to a metered funding model. Now that said, we are in a transition year, and that's because we locked down our budget for 2021 before we launched the growth board. It's very new. We just started it at the beginning of 2021. So technically, these domains have already had a certain sum of money that's been allocated to them to spend for the year. They're fairly large sums of money, but we are in the context of the growth board behaving as if that money has not been unlocked. So what I mean by that is the project teams are still coming to the growth board and presenting as if they need formally approval. Technically, they don't, but we act as if they do. And so this is kind of building that muscle memory so that next year, hopefully, we will not be in a transition anymore. And it really will be truly if you don't meet these criteria, you will not get this funding.
Chris: Can you walk us through maybe just a few examples of metered funding, some of the metrics or KPIs that you typically would use?
Danielle: Yeah, so we think about it. We've defined our definition of the stages of the innovation lifecycle. They're similar to what many others use. We just kind of put it into our own language. But at each stage, we have here's what are the expected activities and here are the metrics that we use to track success. And there's been a lot of training involved, frankly, in getting both the project teams and the growth board members kind of understanding what each of those stages are, what the metrics are, what are the activities that they should expect to see happen in them, because it is different. Like I said, the questions typically are always what's ROI, and we are encouraging very strongly and people have been very receptive to this, that especially at the early stages of innovation, that's the wrong question to ask. So the very first stage is just simply discovery. We've got to understand the problem space. So we got to do a bunch of customer interviews. So there's a metric. How many customer interviews did you do? How many interesting learnings did you get out of that? And what they report out is kind of a summary of we talked to 20 customers, here's the key learnings. And on the basis of all of this research, we think we should proceed to the next step, which might be we're going to do a design sprint, which would be a five-day process of, you know, kind of focusing in on what is this thing, the problem space, getting comfortable with it, and coming up with a very, very early prototype of a potential solution, putting it in front of customers, getting feedback. And again, a metric here is how many user testers did you put this in front of? What did they think of it? What did you learn from this? How many design sprints have you done kind of within your domain space? Those are the kind of the key questions that we care about in the growth board and in the innovation work space. At that stage, it's only much later when you're at the point of we're scaling this thing that we start to ask questions about, like, what's your customer traction? What do you think you're going to make off of this? That sort of thing.
Chris: Got it. So could you also maybe argue that this is some sort of in-market testing, like rapid in-market testing that you're doing very early in the stage?
Danielle: Yeah, it's rapid prototyping. Exactly. And again, the traditional Moody's way of doing things is you spend a year building something, and you put it in front of customers, and you find out they liked it, or they didn't like it. And here in a week, we can find out, do they like it? And we always get really, really good feedback that allows us to make tweaks that literally in the next week only we can have significant improvements upon what we've already built.
Chris: You know, since the introduction of the growth board, how would you describe its impact on the organization so far? I mean, sure, it's about speed, it's about agility, it's about different ways of accounting, innovation, managing innovation, and also, you know, testing innovation in market. What would be, if you would say it in your own words, the impact on the organization apart from this process change or the mindset change?
"It's really important to have buy in by your key stakeholders. This thing has to have teeth if it's going to work. And if you don't have support from the senior most levels of the company, it's not going to work. If you're going to go, you got to go all in.”
Danielle: Well, I really think you can't overstate the impact of the process change because outside of Moody's Analytics Accelerator, very few people were doing this sort of approach to product development. And so we're almost imposing this on the project teams, which are in these key domains in these business units. And so I am seeing in the adoption, not only in those project teams, but also spreading it outside in other parts of the organization, the use of tools like design sprints. The other impact I would say is, you know, getting these three domains into a meeting together and hearing the others present, they are identifying opportunities to collaborate that wouldn't have happened otherwise. But then they're also doing that in front of senior management, who is then also kind of getting that message of, oh, there's a whole ton of more opportunities for collaboration. I can help enable that because collaboration has not always been our strong suit and having senior leadership buying in and encouraging that is extremely helpful. I'd say another impact is, again, you know, having all these three teams coming together and sharing challenges, we're recognizing that there are common challenges that the growth board members are in a position to help with. So a key example here is hiring. We have a very ambitious growth target and part of that involves we need to do a ton of hiring, and we're having trouble, frankly, doing that at the speed that we need to. Well, we have the deputy chief HR officer on the growth board. And so, you know, a takeaway item for a recent meeting was, can you please go away and meet with these people and meet with your people and start to come up with a plan for how we can accelerate hiring? And that was a really great outcome.
Chris: Got it. OK, now, you know, suppose there is another organization and this organization wants to consider implementing a growth board or an innovation growth board. What would you recommend? What are some of the pitfalls or even decision-making biases to consider?
Danielle: Yeah, so I think first, it's really important to have buy in by your key stakeholders. This thing has to have teeth if it's going to work. And if you don't have support from the senior most levels of the company, it's not going to work. I think, you know, if you're going to go, you got to go all in. That's number one. Number two is almost a variation on that theme. It's actually a really tremendous amount of work to set this up and to run it on an ongoing basis. And I know that firsthand taking a lot of my time. And so, again, you know, you really have to be committed. You got to go all in. You got to accept that this is something that you can't just do kind of as a hobby. It has to be a real thing. And then third, I think it's really important that you go in knowing that this is going to be something that, you know, there's a blueprint for how to create an innovation growth board, but you are going to have to tailor it for your organization and your culture. And you're probably not going to get it right the first time. And so you have to be both, you know, those who are setting it up, as well as the growth board members, as well as the project teams, you know, open to the idea of this is going to be itself an experiment that we are going to iterate on together. And we're in, you know, we're not going to get it right the first time. And that's OK. We'll just keep moving.
Lean startup techniques: Lessons from Moody's Accelerator journey
Chris: Great advice. And I already love the quote. If you go, go all in. That's great. Now, thanks for that advice. And maybe let's move over to another topic, namely the Moody's Accelerator. Right. So I got to know that Moody's Analytics also, and as I mentioned before, it has its own accelerator program. And until recently, you were a part of the accelerator of that unit. So, you know, maybe some same question as with a growth board before. How does the accelerator fit into the overall organization? And then how does it work just in principle?
Danielle: Yeah, so we created the Moody's Analytics Accelerator in, I believe, 2016. And we had three objectives which have carried forward, which were we wanted to create a culture of innovation throughout the organization. We wanted to produce next generation products for our company. And we wanted to explore new technologies. And so, you know, those things are things that we have done throughout the history of the accelerator. And we will continue to do. However, we have just gone through a pretty big reorganization of Moody's Analytics. And we are about to launch Accelerator 2.0, which is exciting. But there's a lot still, I think, to be known and to be determined. Through the reorg, we did reaffirm the value of the accelerator. That's number one. That's really important. But I think it is going to look a little bit different in the future. I think it's going to be a little bit less product focused and more focused on enabling other teams within the organization to do innovation. If this sounds, you know, a little bit vague, that's because we are hiring a new head of innovation who is starting in August. She hasn't started yet. And we've actually deliberately left some things kind of open because we don't want her to come in with a set of instructions, but rather we want to give her space to make it her own.
Chris: Makes perfect sense. And, you know, earlier in this episode, you touched on that briefly. Just to clarify, how do the growth board on the one hand, the accelerator program on the other hand, go together? Where's the connection?
Danielle: When we launched the accelerator, the initial vision involved the members of the accelerator are going to teach people in other parts of the organization how to apply lean startup techniques. And Chris, I'm sure you're not be surprised to learn that that didn't go over very well. People didn't, you know, they don't like to be told you don't know how to innovate, or I will tell you how to innovate. And so we made a quick pivot, and we decided instead we will just apply these techniques internally in the accelerator. We will show success, and we will win over the detractors. And that's actually worked. So today, you know, we have this idea of we've created the growth board and that's a large part related to the success of the accelerator. And the growth board is kind of now pushing those ideas kind of top down. But then on the other hand, accelerator 2.0, particularly through its enabling function that we envision for the future, is going to be doing that from the bottoms up. We've kind of created a culture where there is now an appetite for others in the organization to come to us and say, can you help me apply some of these tools? That wasn't there when the unit was untested, but now it is. And then honestly, the third leg here is that former members of accelerator 1.0, including myself, have been dispersed throughout the organization. And we're almost like, you know, good Trojan horses now that we're able to teach our operating units how to apply these things, you know, organically through our own product development.
“The initial vision involved the members of the accelerator are going to teach people in other parts of the organization how to apply lean startup techniques. But that that didn't go over very well because people don't like to be told ‘you don't know how to innovate’, or ‘I will tell you how to innovate’. So we made a quick pivot, and decided instead to just apply these techniques internally in the accelerator.”
Chris: Got it. Now, that's what I call a smart way. And now I would assume you actually focus on some specific areas for the accelerator. So Danielle, if true, what are some of the focus areas of the accelerator you're specifically looking into?
Danielle: So I can really only speak to it from a historical perspective. Like I said, what's in the future? I don't know for sure. Historically, our focus has been on how do we utilize technologies that might enable us to become more disruptive in the spaces that we play in or and or to expand into new spaces. So an example of that is commercial real estate and know your customer. We spent a lot of time in the accelerator incubating ideas and both of those domains, which historically we either had not been at all or had only been tiny little players in. And particularly those aspects in which technology really played a big factor. And as a result of all that incubation work in the accelerator, those are actually two of the three strategic domains that I mentioned earlier that we've identified as being really important for our growth. And furthermore, we have created in our rework two entirely new business units around those domains.
Chris: Got it. OK, so KYC, commercial real estate and the third one. Can you share maybe one or two project examples in those areas? So in KYC or commercial real estate and maybe also maybe just one that did work out and another one that actually did not.
Danielle: OK, well, I'm going to tell a clear winner. It actually doesn't fall on this domain, but it's one we always point to. It's one of our earliest projects. It's now a fully functioning product that's in the market. We call it quick spread. It's an automated spreading tool that utilizes machine learning. When we first got into this, we had no in-house machine learning capabilities. We didn't really even know that much about it. And so we partnered with an external firm that was based in Eastern Europe in order to build that tool. And now we have a blend of it's a partnership, and we have internal folks. As a result of all that work, we went on to build internally a quite robust machine learning practice. We launched more work in the machine learning space and that product has now graduated out of the accelerator, and it lives in one of our operating units. Something that didn't work out as well kind of falls within the KYC space. It's adjacent, I guess I should say. So during the pandemic, when it started, we all just really wanted to do something to help. And we thought about ways that we could do something given what we have. We thought, well, we have some assets that we could put together and some partners we could lean on to build a tool that might help. So we created something. We called it the Know Your Supplier Portal. It is free, and it's designed to help health care providers to vet suppliers of PPE. You might remember that there was a major shortage and hospitals were having to go outside their normal supply chain channels. They were getting bombarded by every Joe off the street saying they could sell them PPE. So we put together a really neat little tool in just two weeks' time. So on the one hand, that's a win. We also, to be honest, we kind of wowed senior management with what we were able to do with such speed and agility. But the flip side is that despite the fact that we did get positive user feedback, we got repeated promotion by the American Hospital Association, we just didn't get very much adoption of this tool. So as a result, it's still available. It's free to health care providers. We have very few users. We thought that perhaps this would be something that we could turn into a commercial opportunity. We have abandoned those aspirations. I think it's partly the health care industry is probably not the right industry for us to enter the Know Your Supplier space. There are lots of intricacies to that we're just not prepared for. But also, it wasn't the right thing for us. That said, we will be certainly doing more in the Know Your Supplier space, but we certainly learned that this isn't the right entry point for us.
Chris: That sounds very exciting. And frankly speaking, no one ever has had a hit rate of 100 percent, right? But I think these are some great examples that actually highlight the complexity in this area. Innovation always inherits risk, right? That's a given. But I'm sure we'll be hearing a lot more about this in the years to come, specifically when the Moody's Analytics and the Accelerator 2.0 will be released. So very interesting to see where this goes. And Daniel, also before the end of this episode, I'd like to hear your answer to our signature question. If you look back on your career at Moody's analytics so far, what would you say was your greatest Innovation Rockstar moment?
Danielle: Well, aside from being on your podcast, a few years ago I was honored with being able to open the Fintech Sandbox demo day that we hosted in our New York offices. Fintech Sandbox is an organization that helps Fintech startups to access data from established data partners like Moody's. It's a very cool organization. And the event, the demo day, is just a really kind of fun and exciting showcase of the startups that they've been able to help.
Chris: Great Rockstar moment. Congratulations. Now, I think, Daniel, that's already it for this episode. Thank you so much again for being my guest. It was really inspiring to discuss with you the concepts of innovation growth boards and also the mechanics of the accelerator. Thanks for being there.
Danielle: Thank you so much for having me. This is really fun and a great break from my day.
Chris: All right. And to everybody listening or watching, if you want to learn more about the concept of innovation growth boards, simply leave us a comment on this episode or just drop us an email at info@innovation-rockstars.show. That's it. Thanks for listening. Take care. Bye-bye.
About the authors
Dr. Christian Mühlroth is the host of the Innovation Rockstars podcast and CEO of ITONICS. Danielle Ferry is Senior Director for New Product Innovation at Moody's Analytics.
The Innovation Rockstars podcast is a production of ITONICS, provider of the world’s leading Operating System for Innovation. Do you also have an eduspiring story to tell about innovation, foresight, strategy or growth? Then shoot us a note!
