Innovator's DNA Read online

  Where did Bezos’s penchant for experimenting come from? Some of it clearly has its basis in genetics. His tinkering began early when, fed up with sleeping in his crib, he tried to take it apart with a screwdriver. As a twelve-year-old, Bezos desperately wanted a new device called the Infinity Cube, a set of small motorized mirrors that reflected off one another, so that it was like looking into infinity. Bezos was fascinated by this gadget, but it was very expensive. So he bought some mirrors and other parts, and, without any instructions to follow, he constructed his own version of the Infinity Cube. Beyond his natural inclinations to experiment, Bezos credits the annual summers on his grandparents’ ranch for giving him time to hone and develop his experimenting skill. “I really gained confidence in my creative ability by helping my grandfather fix things on his ranch,” he told us. “He often didn’t have the money to fix things, so we’d have to improvise. One time I helped him fix a Caterpillar tractor using nothing but a three-foot-high stack of mail-order manuals. You learn that when one way doesn’t work, you have to regroup and try another approach.”

  Bezos’s experience taught him that experimenting is so critical to innovation that he has, consequently, tried to institutionalize it at Amazon. “Experiments are key to innovation because they rarely turn out as you expect, and you learn so much,” Bezos told us. “I encourage our employees to go down blind alleys and experiment. We’ve tried to reduce the cost of doing experiments so that we can do more of them. If you can increase the number of experiments you try from a hundred to a thousand, you dramatically increase the number of innovations you produce.”

  Three Ways to Experiment

  We found that innovators who start new businesses and those who invent new products are the best experimenters. (See figure 6-1.) This is not surprising, since startup entrepreneurs and product innovators tend to launch something new to the market starting from ground zero (they also score much higher on risk taking). Of all the discovery skills, we found that experimenting was the best differentiator of innovators versus noninnovators, with noninnovators scoring in only the thirty-ninth percentile on experimentation. So if you want to find someone with a penchant for creativity and innovation, evaluating his or her experimenting skills is a great place to start.

  FIGURE 6-1

  Comparison of experimenting skills for different types of innovators and noninnovators

  Sample items:

  Has a history of taking things apart to see how they work.

  Frequently experiments to create new ways of doing things.

  Most innovators in our study engaged in at least one of three forms of experimentation. (See figure 6-2.) The first is trying out new experiences through exploration, as Steve Jobs did when he stayed at an ashram in India or dropped in on calligraphy classes at Reed College. The second is taking things apart—either physically or intellectually, as Michael Dell did when, at age sixteen, he disassembled a personal computer (more about this later). The third is testing an idea through pilots and prototypes, as Rent the Runway cofounder Jennifer Hyman did when trying different approaches to renting designer dresses (more on this shortly). We found that innovators often generated their best ideas when engaged in one of the three different experimenting approaches.

  FIGURE 6-2

  Three ways that innovators experiment

  We typically associate the word experimenting with the last of the three approaches. The classic laboratory approach to experimentation is to test an idea by creating a prototype to see if it will work, just as Edison did so often that he once reportedly said, “I haven’t failed . . . I’ve just found 10,000 ways that will not work.” But we found that a much broader interpretation of experimenting better reflects how innovators cultivate new ideas. For example, when simply trying out a new experience, you have no explicit intention to test an idea. It’s simply an exploratory journey to see what you can learn. The same can be said for taking things apart, either physically or intellectually. When Dell disassembled his first personal computer, he wasn’t looking to create a new computer or company; he just wanted to see how it worked. Experimenting can also involve launching a pilot or prototype, and then modifying it as you go along. Bezos’s online bookstore didn’t stay where it was after its initial success. It morphed into an online discount retailer, selling a full line of products, from toys to consumer electronics. Virgin started out as a record company, but Richard Branson experimented with all types of new businesses, from Virgin Records to Virgin Atlantic to the starry-eyed Virgin Galactic, which plans to carry megarich customers into space. And Apple hasn’t stayed solely a computer company, launching successful products in music (iPod), phones (iPhone), tablets (iPad), and watches (Apple Watch), as well as unsuccessful ones in PDAs (Newton) and digital cameras (Apple QuickTake). The argument that innovators are experimenters is certainly not new; everyone knows that. But what isn’t well understood is the different ways that they experiment to ignite new ideas.

  Try Out New Experiences

  Many executives view trying out new experiences as a waste of time if the experience is not directly linked to a desired learning outcome. Delivery-driven executives focus on efficiently solving the problem at hand. So if an activity doesn’t have a clear connection to a current deliverable, then they view it as a waste of time. By contrast, discovery-driven executives grasp the idea that trying out new experiences means engaging in interactive learning that may not have any obvious practical application. Indeed, from net present value logic (e.g., the size of the investment made discounted by the time horizon), the return on time invested when using any discovery skill produces a payback that is not only further into the future but also less likely to ever materialize. Steve Jobs never expected that spending time in calligraphy classes would have any practical application or payback. But the calligraphy experience turned out to be a major differentiator for the first Macintosh computer by allowing it to produce documents with beautiful typography.

  Innovators understand that diversity of experience allows you to engage in divergent thinking, as you draw on a broader set of ideas when associating. “Of course, it was impossible to connect the dots looking forward when I was in college,” Jobs once said. “But it was very clear looking backward ten years later. So you have to trust that the dots will somehow connect in your future . . . believing that the dots will somehow connect down the road will give you the confidence to follow your heart even when it leads off the well-worn path. And that may make all of the difference.”1 Trying out new experiences may prove worthless from a financial standpoint, but it also might be vital when searching for disruptive ideas.

  Take, for instance, the example of Kristin Murdock, an entrepreneur who literally figured out how to turn cow pies (manure) into money. Murdock has done this by offering an interesting, if rather disgusting, new product that’s caught interest inside and outside the United States: Cow-Pie Clocks. Not surprisingly, Murdock didn’t just wake up one day and say, “I think I’ll take a bunch of desert-baked cow pies, cover them with glaze, insert a clock in them, and sell them to people who want a truly unique clock.” Rather, while watching her sons ride motorcycles in the desert areas of southern Utah, she stepped over some “interesting looking old petrified cow pies. So I picked one up, smelled it, and it didn’t smell bad; it was really baked,” she said. “I started collecting them and brought them home and put them in the garage. It kind of freaked my kids out.” She had no idea what she would do with them; she just thought they were interesting.

  Within a few days, some of them started to disintegrate. So to keep them intact, she applied a glaze and liked what she saw. They were like shiny, petrified pieces of wood, and she thought they were pretty due to the color variations or the interesting rocks embedded in them. Then one night while lying in bed, she hit on the idea to insert a clock into the petrified cow pie and give it away as a gag gift. So she started inserting clocks into the cow pies and giving them to girlfriends with funny sayings, like: “You Dung G
ood,” or “For all you do, this crap’s for you.” “None of my girlfriends liked them,” she says. “They hated them . . . they thought it was so sick.” Her big break came after she gave a clock to a relative who was a friend of entertainer Donny Osmond. Murdock said Osmond called her wanting a clock for himself, so she made one for him. A few weeks later, her relative called and said, “Turn on Donny and Marie,” Osmond’s daily talk show. There, Murdock saw Osmond showing off the clock to a nationwide audience. The calls started to flood in. She quickly set up an internet business. Each cow-pie clock comes with a display stand and a saying attached such as, “Happy Birthday, You Old Poop.” Murdock will provide whatever saying the customer wants. She has lists of suggestions to choose from, with more coming in continually from customers and friends.

  But she didn’t stop there. She kept all of the funny sayings people sent her and created a cow-pie greeting-card line. She hired a graphic designer to create a signature cow and cow pie and sold a line of cow-pie greeting cards to Hallmark. The business has been extremely profitable because she gets paid a royalty for the ideas and cow-pie brand, but she doesn’t have to actually print the cards. As in Jobs’s experience with calligraphy, Murdock had no way of knowing that collecting cow pies could lead to any practical application in her life. It all started because she was curious enough to collect a few cow pies while wandering in the desert. Murdock jokingly sums up her success saying, “I’m an entre-manure.”

  Innovators like Bezos and Murdock seem to intuitively understand the value that can come from trying out new experiences in new environments. Our research on innovators revealed that one of the most powerful experiments innovators can try out is living and working in different cultures. The more countries someone lives in, the more likely he or she is to leverage that experience to deliver innovative products, processes, or businesses. Individuals who live in a foreign country for at least three months are 35 percent more likely to start an innovative venture or invent a product (each additional country brings additional benefit, though there are diminishing returns after living in two countries). Moreover, if managers try out even one international assignment before becoming CEO, their companies deliver stronger financial results than companies run by CEOs without such experience, roughly 7 percent higher market performance on average.2 And part of that performance premium comes from the innovation capability that a CEO has acquired by living overseas.

  Former P&G CEO A. G. Lafley, for example, spent time as a student studying history in France; later on, he ran retail operations on US military bases in Japan. He eventually returned to Japan as head of P&G’s Asia operations before becoming CEO. His diverse international experience served him well as the leader of one of the oldest and most innovative companies in the world. Similarly, innovator Reed Hastings’s experience working for the Peace Corps in Swaziland continues to influence his innovative strategy and leadership (as founder and CEO) of highly successful Netflix.

  In similar fashion, the more industries or companies someone works in, the more likely he or she is to be an innovator. Each additional industry offers an even bigger boost to innovation than living in a foreign country. Working in different company environments helps you develop deep experience with a variety of people, processes, and products. You also learn various ways to solve problems, since each company and industry tends to have distinctive approaches. P&G (at the time led by Lafley) and Google (led by founders Larry Page and Sergey Brin) understand the value of seeing how things work in diverse company environments, which is why these companies orchestrated a three-month swap of employees to see how a very different but highly successful company operates (more on this in chapter 9). These types of experiences boost a person’s capacity to look at a problem from a variety of angles and perspectives.

  Finally, taking the opportunity to learn new skills in different arenas—as Jobs did when learning calligraphy—can boost your innovation capability. For example, Nate Alder (inventor of the Klymit vest) decided to pick up scuba diving during a trip to Brazil. During the scuba certification, he learned about argon gas as an insulator to keep dry suits warm. He thought, “Hey, that’s a cool idea. I wonder if I could put argon gas in a snowboard jacket to keep me warm?” (Alder was a snowboard instructor at the time.) This experience was the catalyst for the creation of the Klymit vest (insulated with argon gas) and a variety of other products using argon gas. As described in chapter 2, innovators tend to be T-shaped in terms of their expertise, with deep knowledge in at least one area and some expertise in a wide variety of knowledge areas. Developing new skills in new areas is a great way to build diversity of knowledge in your head.

  In summary, living in a different country, working in a different industry, and learning a new skill are three ways to try out new experiences and boost your creativity. Experimenters seek these types of experiences because they expand the diversity of their knowledge and increase their capacity to innovate.

  Take Apart Products, Processes, and Ideas

  In 1980, Michael Dell looked forward with great anticipation to his sixteenth birthday. However, he was most excited because his parents had finally agreed to let him purchase his own computer—an Apple II. On the day the computer arrived, Dell was so anxious to get his hands on it that he made his dad drive him down to the UPS office to pick it up. What he did next both shocked and dismayed his parents, but it also proved to be instrumental in his discovery of the “direct from Dell” business model. “After we pulled into my driveway,” Dell recalled, “I jumped out of the car, carried the precious cargo to my room, and the first thing I did was take my new computer apart. My parents were infuriated. An Apple cost a lot of money in those days, and they thought I had demolished it. But I just wanted to see how it worked.” Dell’s desire to understand what made his Apple II tick led to a variety of experiments designed to make his computer work better and faster. He bought a variety of components and add-ons to enhance his personal computer, like more memory, disk drives, faster modems, and bigger monitors. He soon learned how to make some money from his “hobby.” “I would enhance a PC the way another guy would soup up a car. Then I would sell it for a profit and do it again,” says Dell. “I was soon going to distributors and buying PC components in bulk to reduce the costs. I remember my mother complained that my room looked like a mechanic’s shop.”

  Dell soon gained enough familiarity with the cost of PC components that he acquired an important insight. At the time, an IBM PC sold in a store for around $2,500 to $3,000. But the exact same components could be purchased for $600 or $700, and IBM didn’t own the technology. Dell told us that this raised a critical question in his mind: “Why does it cost five times more to buy a PC in the store than the parts cost?” He realized that he could buy the latest components, assemble them in the exact configuration a customer wanted, and deliver it for far less than the retail price in a store. Thus, the “direct from Dell” business model was born.

  Like Dell, many innovators hit on an innovative idea while taking something apart—a product, a process, a company, a technology. For example, Google’s Page is also a tinkerer who likes to deconstruct things. Page’s brother gave him a set of screwdrivers when he was nine years old, which he used to completely take apart every power tool his family had in the house. In similar fashion, Page tinkered with various ideas related to efficiently searching the web, eventually hitting on the page-ranking idea that searched the web in a way that was very different from the other search engines at the time. Another experimenter, Albert Einstein, took apart Newton’s theory of time and space—intellectually, rather than physically—to come up with his innovative theory of relativity. Einstein is reported to have generated his insights “based purely on thought experiments—performed in his head rather than in a lab.”3

  In summary, experimenters love to deconstruct—products, processes, ideas—to understand how they work. In the process of taking things apart, they also ask questions about why things work the way they do. T
his often triggers new ideas for how things might work better.

  Test New Ideas through Pilots and Prototypes

  Max Levchin, cofounder of PayPal, majored in computer science during college, where he developed an intense interest in security and encryption technology. In the summer of 1998, Levchin moved to Silicon Valley to pursue his dream of starting a company offering security software. One hot summer day, he decided to drop in on an encryption-technology lecture at Stanford University to see if he could spawn any ideas to further his dream. Only six people attended the lecture, so it wasn’t hard to start up a conversation with Peter Thiel, a hedge-fund manager who was interested in using encryption technology to secure financial transactions. The two immediately hit it off and decided to start a company based on security software for handheld devices like the PalmPilot.

  The initial idea was to turn the PalmPilot into a wallet, in which users could secure private information like credit-card numbers or passwords. Levchin and Thiel launched the product with great anticipation but soon learned that the market was quite small, limited to those few users of PalmPilots who cared about securing private information. So they decided to try out a different business idea: provide software that would allow a PalmPilot to store money that could be beamed from one PalmPilot to another.