Innovator's DNA

by Jeff Dyer

  But imagine that Sony wants to develop an iPad-like device that possesses features that leapfrog iPad (let’s call it the sPad). If Sony attempts to develop the new sPad device within the PS4 engineering group, the new device will likely reflect the knowledge and technology of an existing Sony game console. The same would be true if the Sony computer engineering group or the Sony TV group developed the device. To get something more radical, Sony would be better off pulling folks from each of these areas (and perhaps elsewhere) into a heavyweight team or autonomous business unit. A heavyweight team enables members to transcend the boundaries of their functional organizations. Heavyweight teams are colocated and led by a manager with significant clout. Members bring functional expertise to the team, but their primary loyalty and innovation mind-set must move beyond the limited interests of their functional group. For that reason, they become part of a real team (and not just a group of people who happen to meet together), possessed by a compelling collective responsibility to figure out a better way—new processes, new knowledge—to meet the project’s goals.

  In some cases, the innovation project differs so radically from a company’s existing offerings that it requires an entirely different business model (e.g., to serve different customers using different technologies). Then it makes sense to create a fully autonomous business unit to pursue the breakthrough innovation opportunity. For example, when Amazon decided to pursue and then launch a cloud-computing business, it created an autonomous business unit because the new opportunity demanded an entirely different business model from its online discount retailing business.

  The bottom line? Allocating resources to lots of platform or breakthrough innovation projects will not pay off if project teams don’t have the right level of autonomy to do their work. The more radical the innovation project, the more autonomy and the more diversity the project team requires. Remember, disruptive innovation demands a team staffed with folks displaying a broad diversity of knowledge in order to generate more radical ideas.

  Philosophy #4: Take “Smart” Risks in Pursuit of Innovation

  Most companies push platform and breakthrough innovation projects off the table as strategic priorities, because derivative projects leverage existing competencies more effectively. The companies view the success of derivative projects as more certain and less risky. To counter this dysfunctional resource-allocation dynamic, highly innovative companies exploit a fourth innovation philosophy to soundly back up the first three: “Take smart risks in the pursuit of innovation.”

  Breakthrough innovations require risk taking to make them happen. Pushing boundaries requires a willingness to fail. That’s a rare ethos in the corporate world, where every risk gets carefully weighed, and the safe path is usually the road traveled. Companies that foster a culture of risk taking and failure generate a lot more experiments. Amazon is a company that is particularly good at taking smart risks—and it has its share of failures, like the Fire phone, which was a famous flameout. “One area where I think we are especially distinctive is failure,” wrote Jeff Bezos in an annual letter to shareholders. “I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.”8 For innovators—and innovative companies alike—mistakes are nothing to be ashamed of. They are an expected cost of doing business. “You do enough new things and you’re going to bet wrong,” says Bezos. “But if the people running Amazon don’t make some significant mistakes, then we won’t be doing a good job for our shareholders because we won’t be swinging for the fences.”

  How Smart Is Your Company or Project Team about Risk Taking?

  To judge your organization’s propensity to take risks and learn from failure, reflect on the following questions:

  Does your organization encourage people to take risks in order to learn from them?

  Does your organization reward people for learning from failures? Or is punishment its default response?

  Can you name at least one successful innovation when your company celebrated learning from at least one failure to make the innovation ultimately work?

  Do your company’s top managers understand that they need to take risks and fail frequently in order to innovate?

  IDEO’s slogan “fail often to succeed sooner” frames a fundamental philosophy behind its success as the world’s leading innovation design firm. It posts the phrase companywide to remind employees that if they aren’t failing, they aren’t innovating (see chapters 8 and 9 for more about IDEO’s people and processes). Virgin’s Richard Branson also acknowledges the “ability to fail” as a core value. “It is impossible to run a business without taking risks,” he says. “Virgin would not be the company it is today if we had not taken risks along the way.”9

  Of course, innovative companies like IDEO and Amazon aren’t trying to fail. They just know that when a company tries out lots of new ideas, some won’t work. That’s the very nature of pushing the envelope. But they’re smart enough to recognize the difference between good and bad failures. Good failures at Google have two defining characteristics: (1) you know why you failed and have gained knowledge relevant to the next project, and (2) good failures happen fast enough and aren’t big enough to compromise your brand. As Google’s leaders have acknowledged, “we’re going to try things, and some things aren’t going to work. That’s okay. If it doesn’t work, we’ll move on.”10

  Apple echoes the same philosophy. “One of the hallmarks of the [Apple] team, I think, is this sense of looking to be wrong,” says Jonathan Ive, principal designer of the iMac and senior vice president of industrial design. “It’s the inquisitiveness, the sense of exploration. It’s about being excited to be wrong because then you have discovered something new.”11 By embracing failure as a vehicle for learning, innovative companies embolden their employees to try new things. Companies would do well to embrace, as a company slogan, the innovation philosophy of creativity researcher and author Sir Ken Robinson: “If you’re not prepared to be wrong, you’ll never come up with anything original.”12

  But we emphasize that the innovative companies we studied were wrong less often. Why? Because they took smarter risks by hiring and developing discovery-driven people and institutionalizing processes that support people’s questioning, observing, networking, experimenting, and associating (as we recommended in chapters 8 and 9). Imagine that your company wants to invest in a new disruptive innovation project. What if you could assemble a dream team of innovators to pursue the project, including Jeff Bezos (Amazon), Elon Musk (Tesla), Marc Benioff (Salesforce), David Kelley (IDEO), Indra Nooyi (formerly of PepsiCo), and Mark Parker (Nike)? Would you invest in their innovation project? Our guess is yes. Somehow pursuing disruptive innovations with this type of team feels less risky (than doing it with a more common delivery-driven management team) because these folks boast strong discovery skills and understand the behaviors (and processes) required for generating a successful disruption. They know how to design fast experiments to test their hypotheses. No wonder the risk seems more calculated with them. The actual risk is low because putting the right people and innovation processes into place increases the probability of success (and decreases the probability of taking disastrous steps).

  The financially successful innovators in our study demonstrated a higher discovery quotient (stronger discovery skills) than less successful ones. We see the same equation at work in the world’s most innovative companies. Innovation failure (in a financial sense) often results because companies fail to consistently engage all discovery skills. They likely don’t ask all the right questions, don’t do all of the necessary observations, don’t talk to enough diverse people, or don’t run the right experiments to reduce the inherent risks of innovating. Quite the reverse is true for our dream team filled with innovators who know from experience that fully leveraging their innovator’s DNA actually red
uces the likelihood of failure. Similarly, making sure that your organization pays careful attention to putting the right people, processes, and philosophies in place takes out an insurance policy that tones down the risks associated with innovation.

  Highly innovative companies live by a set of key innovation philosophies that instill a deep, companywide commitment to innovation. First, these companies make clear that innovation is everyone’s job. Second, they make sure that disruptive innovation is an important part of the company’s innovation portfolio. Third, they create lots of small project teams and endow them with the right people, structure, and resources to power new ideas to market. Finally, they knowingly take risks in the pursuit of innovation. But they mitigate the inherent risks associated with innovation by deploying the right people and processes in their teams and by providing the right structure so that teams have proper autonomy levels. Ultimately, innovative companies rely on these philosophies to create a culture that not only ignites new ideas, but takes those ideas to market. When this happens, people work in a company culture that helps them answer the following four questions with a hearty yes:

  Philosophy #1: In your company, is innovation everyone’s job?

  Philosophy #2: Is disruption part of your company’s innovation portfolio?

  Philosophy #3: Are small project teams central to taking innovative ideas to market?

  Philosophy #4: Does your company take smart risks in the pursuit of innovation?

  Conclusion

  Act Different, Think Different, Make a Difference

  “Care about something enough to do something about it.”

  —Richard Branson, founder, Virgin Group

  BY THE END of our eight-year research project on some of the most innovative people and companies in the world, we came to believe that if individuals, teams, and organizations want to think differently, they must act differently. Now that you’ve nearly finished The Innovator’s DNA, we wonder where you stand. Do you believe that if you act differently, you can think differently? That if your organization acts differently, its members can think differently as well? We hope so, because the innovator’s journey, individually or collectively, can often feel like a road “less traveled.” Yet the road is worth taking, because it just might make “all the difference” in your life and the lives of many others.

  Mastering the five discovery skills of disruptive innovators and demonstrating the courage to innovate are what we’ve tried to share in this book. Doing so requires practice, personally, professionally, and organizationally (for a road map of how to master the five discovery skills, and even how to build them in the next generation, see appendix C). Consistent practice produces mastery, and mastery makes for new habits or, in organizations, new capabilities. By developing heavy-duty discovery skills, we really are different. We act differently and think differently, and by doing so we can make a concrete difference.

  Of course, there are a variety of ways to leverage your discovery skills to make a difference. Ideally, you will uncover a big, disruptive idea, initiating meaningful change in many lives. Certainly, Bezos, Musk, Benioff, and other innovative entrepreneurs have had an immense impact on the world. Their organizations employ hundreds of thousands of people, and their products influence—and most would say improve—the lives of hundreds of millions. No wonder many of these business innovators moved from disrupting industries to seeking an even greater impact by aiming their attention and resources (including innovator’s-DNA skills) at some of the toughest world challenges, such as poverty, education, and disease.

  Take a look at Salesforce, where Benioff built a company to not only disrupt the entire enterprise-software industry, but also to make a difference wherever it operates. He did this through a 1-1-1 philosophy, where 1 percent of all employees’ time, 1 percent of all its products, and 1 percent of all its equity go toward improving communities and promoting compassionate capitalism. As Benioff puts it, he’s in the “business of changing the world.” His approach relies on hundreds of thousands of employee hours and millions of dollars to tackle problems ranging from sanitation to homelessness. Benioff is not alone in taking on tough issues. Bill and Melinda Gates, Richard Branson, and many others do the same in their own shape and form.

  On a smaller scale but a highly similar focus, we have also worked with social innovators around the world who rely on innovator’s-DNA skills to create profound solutions to some of society’s most difficult problems. (For a deeper look at how leaders in all sectors can build better outcomes by focusing on creating prosperity instead of removing poverty, see The Prosperity Paradox: How Innovation Can Lift Nations Out of Poverty, by Clayton Christensen, Efosa Ojomo, and Karen Dillon.) For example, Andreas Heinecke founded a for-profit social enterprise, Dialogue in the Dark, when working as a newspaper journalist in Germany. Heinecke’s boss had brought a blind coworker to his desk and asked him to teach the person how to become a journalist. Heinecke had no idea how to approach the situation, but quickly threw himself into the task of figuring out how to make it work, in part because he had less than perfect hearing. Heinecke not only helped his blind colleague to become a journalist but, in the process, used his innovator’s-DNA skills to found Dialogue in the Dark, which hires blind experts to take sighted visitors into a world of complete darkness for one to three hours. (Our assessment showed Heinecke as exceptional at idea networking and questioning.) Heinecke observed that to better understand and appreciate blind people, you must experience the world as they do.

  To date, over six million visitors in thirty different countries have experienced the exhibitions where people learn to navigate through parks and across streets, and to eat in completely dark spaces. Dialogue in the Dark also conducts very successful leadership development sessions at companies and conferences, including the World Economic Forum Davos events. (We regularly collaborate with Heinecke to produce “Innovator’s DNA in the Dark” experiences that deliver a unique and profound learning context for cultivating the innovator’s-DNA skills with companies like the leading logistics firm in the Middle East, Aramex, and the world’s leading art business, Christie’s.) Dialogue in the Dark is now one of the largest worldwide employers of blind people (hiring and training thousands so far). All this was triggered because Heinecke decided to focus his persistent questions and conversations on a search for new ways to create jobs for the blind and to overcome barriers in all walks of life.

  In the end, most of us will likely make a difference through many minor (derivative) innovations. An idea with impact might be a new process for hiring that helps your company find more talented people (such as Google’s Code Jam tournament described in chapter 9). It might be a new approach to marketing your company’s products (such as P&G’s new use of bloggers and customer-generated content described in chapter 9). Or it might be building a business model based on the premise that for every pair of shoes sold, the company will give away one pair, as Blake Mycoskie did when he founded TOMS Shoes (after traveling to Argentina in 2006 and seeing so many children with foot diseases because they lacked shoes).

  Clearly, the process of creative discovery can be difficult, but the rewards far outstrip the challenges. Being a creator is exciting, and to author or coauthor an idea that leads to a new product, service, process, or business energizes. Being an innovator is psychologically and emotionally gratifying in a way that making money simply isn’t, even though the financial rewards of successful innovation can be significant. Mark Ruiz, cofounder of MicroVentures and finalist for the Entrepreneur of the Year Philippines 2010 award, admitted the same when he told us, “even though I’m an entrepreneur, what drives me is not really the money. What really drives me is a deep sense of mission and purpose. I just see problems that are screaming for new and innovative solutions.” Ruiz works nonstop to build new venture after new venture to take on these problems in his home country, the Philippines.

  Ruiz and all the other disruptive innovators we encountered while working on this b
ook take seriously the questions, “If not you, who?” “If not now, when?” They do not sit still. They are physically active, always asking questions, observing, networking, and experimenting. Others can actually “see” their discovery skills at work because their innovation work is far from sedentary. Judi Sandrock, CEO of the Branson Centre for Entrepreneurship, told us that she lives by the question, “How do I do this now?” and works tirelessly to help emerging entrepreneurs in South Africa do the same. In his path-breaking research on risk and uncertainty, economist Frank Knight saw innovative entrepreneurs as a class of individuals with the “disposition to act” in spite of the uncertain context in which they operated. We heard this over and over from various innovators, including Virgin’s Branson—who lives by the saying “Screw it. Let’s do it”—and Skype and Kazaa cofounder Niklas Zennström, who made the following analogy between action and entrepreneurial success: