Innovator's DNA Read online

  Processes

  4. Our organization or team frequently engages in brainstorming to generate wild or very different ideas by drawing analogies from other products, companies, or industries.

  5. Our organization or team encourages team members to ask questions that challenge the status quo or conventional ways of doing things.

  6. Our organization or team cultivates new ideas by giving people frequent opportunities to observe the activities of customers, competitors, or suppliers.

  7. Our organization or team has instituted formal processes to network outside the company to find new ideas for processes or products.

  8. Our organization or team has adopted processes to allow for frequent experiments (or pilots) of new ideas in search of new innovations.

  Philosophies

  9. Our organization or team expects everyone to offer creative ideas for how the company should change products, processes, and so on.

  10. People in our organization or team are not afraid to take risks and fail, because top management supports and rewards risk taking.

  To score your survey:

  Add up your total score for all ten questions. Your team or organization scores very high on the innovator’s DNA if the total score is 45 or above, high if the score is 40 to 44, moderate to high if the score is between 35 and 39, moderate to low if the score is 30 to 34, and low if the score is below 30. The short survey is drawn from a more systematic organization or team assessment available from the authors. For more information, see https://www.InnovatorsDNA.com.

  8

  Putting the Innovator’s DNA into Practice

  People

  “Innovation distinguishes between a leader and a follower.”

  —Steve Jobs, founder and longtime CEO, Apple Inc.

  EVERY DAY, your actions are the most powerful signal to your organization and team that innovation truly matters. Our interviews with dozens of senior executives of large organizations revealed that in most cases, they did not feel personally responsible for coming up with innovations. They only felt responsible for “facilitating the process” to make sure someone in the company was doing so. But in the world’s most innovative companies, senior executives like Jeff Bezos (Amazon), Marc Benioff (Salesforce), and Elon Musk (Tesla) didn’t just delegate innovation; their own hands were deep in the innovation process. As Andy Jassy, head of Amazon Web Services, said of Jeff Bezos: “One of the many things that Jeff does exceedingly well is look around corners. He comes up with a valuable new idea every two weeks. It’s amazing.”

  As we showed in chapter 1, leaders of highly innovative companies scored around the eighty-eighth percentile in discovery skills (an overall discovery quotient of 88 percent), but only around the fifty-sixth percentile in delivery skills. When asked about their lower delivery-skill scores, innovative executives typically responded that they didn’t have the time or didn’t want to spend the time on execution tasks. Their focus was innovation, so they actively engaged in questioning, observing, networking, and experimenting, which had a powerful imprinting effect on their organization and team. Because innovators excelled at the innovator’s-DNA skills, they valued such skills in others, so much so that others within the organization felt that reaching top executive positions required personal innovation capability. This expectation helped foster an innovation focus throughout the company.

  By contrast, a sampling of top executives without a personal innovation track record revealed that, on average, they scored at around the sixty-eighth percentile in discovery skills, but roughly the eightieth percentile in delivery skills. (See figure 8-1.) They were clearly above average in discovery, but it wasn’t their distinctive competence. Basically they were delivery-driven executives who had moved up the management ranks by executing and delivering results. Since they were role models for advancement, others marching up the management ladder were selected for a similar skill set. As a result, the entire management team of less innovative organizations displayed a lower discovery quotient.

  FIGURE 8-1

  Discovery-delivery skills matrix

  Apple’s performance under Steve Jobs, compared with that under other leaders, powerfully illustrates this concept. (See figure 8-2.) From 1980 to 1985, during Jobs’s initial tenure at Apple, the company’s innovation premium was 37 percent. However, during the 1985–1998 period without Jobs, Apple’s innovation premium dropped to an average of –31 percent. Apple quit innovating, and investors lost confidence in Apple’s ability to innovate and grow. When Jobs returned and restructured his senior management team with more discovery-driven capacity, Apple started to innovate again. It took a few years to get back on track, but between 2005 and 2010, Apple’s innovation premium jumped to 52 percent.

  FIGURE 8-2

  Innovation premium for Apple Inc.

  Why Innovative Leaders Make a Difference

  In chapter 1, we described how Jobs got key ideas for the Macintosh computer (mouse and GUI interface) during his pivotal visit to Xerox PARC. He recalled “being shown their rudimentary graphical-user interface. It was incomplete, some of it wasn’t even right, but the germ of the idea was there. And within ten minutes, it was so obvious that every computer would work this way someday.”a Jobs was so impressed that he took his entire programming team on a tour of PARC and returned to Apple laser-focused on developing a personal computer that incorporated and improved on the technologies they saw at PARC. Jobs assembled a team of brilliant engineers, gave them the needed resources, and infused the Macintosh team with a vision of what was possible. That’s what an innovative leader does.

  In stark contrast, the executive team at Xerox lacked the discovery skills necessary to exploit technologies developed in their own company. As PARC scientist Larry Tesler observed, “After an hour looking at demos, they [Jobs and Apple programmers] understood our technology and what it meant more than any Xerox executive understood after years of showing it to them.”b Jobs agreed with Tesler, saying, “Basically they were copier heads that just had no clue about a computer or what it could do. And so they just grabbed defeat from the greatest victory in the computer industry. Xerox could have owned the entire computer industry today.”c No wonder Tesler left PARC and joined Apple. Innovators want to work with and for other innovators. Moreover, companies with innovative leaders are much more likely to devote the resources required to pursue potentially revolutionary ideas.

  a. Interview with Steve Jobs, Rolling Stone, June 16, 1994.

  b. Robert X. Cringely, Triumph of the Nerds, PBS documentary, New York, 1996.

  c. Ibid.

  In similar fashion, P&G performed well as an innovative company before A. G. Lafley became CEO in 2000, as evidenced by the 23 percent average innovation premium from 1984 to 2000. However, Lafley’s innovation focus boosted P&G’s innovation capability and delivered a 35 percent innovation premium, on average, during his 2001 to 2009 tenure. (See figure 8-3.)

  FIGURE 8-3

  Innovation premium for Procter & Gamble

  Lafley, and other innovative leaders we studied, very consciously set the example by modeling innovation behaviors to help make them matter to others. “Lafley always gets out in marketplaces and wants consumer interactions,” recalls Gil Cloyd, a former member of his top management team and former chief technology officer. “He’s genuinely curious about it. This becomes important because it’s not just role modeling of something you’d like, but it’s an infectious curiosity to discover how we can provide an ever more delightful experience for our consumers, improving lives in yet another way.” By simply watching Lafley’s everyday actions and noticing how much time he personally spent generating new ideas, his team (and organization) “got it” about innovation. Lafley also demonstrated that innovation is not just an individual game but, in the end, a powerful team effort. “You remember the times when nobody knew what to do and you came through with something that people didn’t think you could come through with or when you create something that people di
dn’t think could be created,” Lafley observed. “When this happens in our company, it’s never one person. It’s always a group . . . Getting everybody in the same boat, rolling in the same direction, that is really what’s fun. Especially when you win.”

  This innovation-premium data on CEO impacts at Apple and P&G reflects a key finding in our research that if top executives want innovation, they need to stop pointing their fingers at someone else and take a hard look at themselves. They must lead the innovation charge by understanding how innovation works, improving their own discovery skills, and sharpening their ability to foster others’ innovation. Moreover, they must actively populate their team and organization with enough high-discovery-quotient individuals to truly make innovation a team game.

  Building a Team and Organization with Complementary Skills

  While ensuring that your organization is populated with folks who are good at the five discovery skills is important, we don’t want to leave the impression that discovery-driven people are all that matters in a team or organization. The fastest way for an organization to die is to stop executing. Discovery-driven leaders need the delivery-driven skills of people who excel at execution. Not only do effective leaders of innovative teams understand their own constellation of discovery and delivery skills, they actively balance their weaknesses with other people’s strengths.

  For example, during his highly successful 1990 to 2005 run at Dell Computer, Michael Dell engaged in a frequent tug of war between discovery and delivery with then president Kevin Rollins. Dell recalled:

  I gave Kevin a Curious George stuffed animal. The Curious George is for Kevin to ask questions, to be a little more inquisitive. Kevin responded by giving me a toy bulldozer driven by a little girl with a huge smile on her face. Sometimes I’ll get really excited about an idea and I’ll just start driving it. Kevin put the bulldozer on my desk, and it’s a signal to me to say, “Wait a second, I need to push it a little more and think through it and kind of slow down on this great idea that I’m working on.” We don’t use them that much, but they’re subtle little jokes between us.

  Complementary Discovery Skills Can Boost Innovation

  We accidently discovered something about the composition of highly innovative teams after Ross Smith, director of Windows Core Security at Microsoft, and Dan Bean, a member of the Microsoft Defect Prevention (DP) team, called us to discuss team innovation. Smith was managing roughly seventy teams (ranging from four to eight people each) working on various issues related to Windows security. He had observed that one of those teams, the six-person DP team, had been the most innovative for the past five years. The team had pioneered a number of innovations, perhaps the most valuable of which were clever “productivity games” for enticing users to give feedback on key Microsoft products.

  For instance, the DP team members created whimsical games that presented each of the Windows dialogues in a different language for native speakers. To get feedback, they sent the game to the thousands of Microsoft employees who spoke a language other than English, from Chinese to Slovakian. When playing the game, users received a colored electronic pen for highlighting language errors and dragging them to a “no good” bucket (for which they gained extra points). They could also type in comments when dragging errors to the bucket. “These productivity games had huge impact,” Smith told us. “We saved millions of dollars and improved quality to a level that we’ve never seen before.”

  Smith wanted to better understand why this particular team showed greater innovation results than some other teams staffed with equally talented software engineers. One answer, Smith believed, was that the DP team had developed a high level of mutual trust through active, focused effort. Another important ingredient—first noticed by team member Bean—was that team members seemed to possess complementary discovery skills. We tested and confirmed Bean’s hypothesis with our 360-degree innovator’s-DNA assessment.

  Specifically, we found that each team member excelled at a different discovery skill. Smith excelled at associating, Bob Musson at questioning, Bean at questioning and observing, Joshua Williams at networking, and Harry Emil at experimenting. Thus, the team displayed a collective discovery aptitude that was extremely high, thanks to team members’ complementary discovery skills. In short, the team achieved higher synergies in discovery because team members brought different novel inputs to the team through different discovery skills. “All I know,” says Bean, “is that the discussions we have in this team are the most creative and stimulating I have run into at Microsoft. And that makes it really fun to work in the team.” It also didn’t hurt that team leader Smith, according to team members, is someone who “trusts his people,” “encourages folks to come up with new ideas and take risks,” “values independent thinkers,” “encourages and inspires new ideas,” and “evangelizes the work of others and has a tendency to downplay his own contribution.” In short, Smith has done exactly what a good leader does to create a safe space for others to innovate (more on this in chapter 10).

  Beyond Microsoft, we noticed similar patterns in other highly innovative teams. When complementary discovery skills exist, the rich skill diversity increases the team’s overall ability to innovate. Thus, the team’s capacity to generate new ideas consistently outstrips the ability of either any individual team member or any team whose members excel at the same discovery skill (e.g., networking is the primary source of new ideas for all team members). Moreover, when different team members shine at different discovery skills, they can learn more from each other, creating further innovation synergies.

  Rollins acknowledged that he and Dell played different roles, telling us, “Michael simply owns more of the entrepreneurial-juice stuff. He has an idea a day, an hour. In big companies, you can’t do an idea a day. I’m the governor of the innovation engine.”

  Similarly, eBay founder Pierre Omidyar was aware that he was strong at discovery but weak at execution. Identifying this need for stronger execution skills on his team, he invited Jeff Skoll, a Stanford MBA, to join him. “Jeff and I had very complementary skills,” Omidyar told us. “I’d say I did more of the creative work developing the product and solving problems around the product, while Jeff was involved in the more analytical and practical side of things. He was the one who would listen to an idea of mine and then say, ‘OK, let’s figure out how to get this done.’” Omidyar grasped the power of complementary skills in building a top management team at eBay.

  The takeaway from these stories is that successful innovation as a team requires both the ability to generate novel ideas and the ability to execute those ideas on the team. Both skills sets are necessary. Innovation is a team sport. Smart leaders know this and consciously think about team composition, making sure the team is balanced enough in terms of discovery and delivery skills. Figure 8-4 shows discovery and delivery skills temporarily “in balance” on a team. But remember that perfect balance is not necessarily the perfect solution.

  FIGURE 8-4

  Balancing discovery and delivery skills in a team or company

  Sometimes discovery skills should weigh more heavily on a team or throughout an organization (particularly during the founding stage of an organization or if the team is charged with product development, marketing, or other business-development tasks). At other times, delivery skills are relatively more important, and those skills should be given greater weight on the team (during growth or the mature stage of a business, or in functional areas related to operations and finance). In figure 8-5, we show the average desirable team profile for different types of high-performing teams in organizations (assuming each team averages about the seventieth percentile across both skill sets).

  FIGURE 8-5

  Desired skills composition in different types of teams

  People in product-development and marketing teams should score, on average, higher on discovery than delivery skills (though having some team members who excel at execution might work best). In contrast, people on finance and
operations teams should score, on average, higher on delivery than discovery skills (again, it’s not a bad idea to have a few folks strong at discovery in the mix). The trick is first knowing who has what skills and then figuring out how to combine complementary strengths within a team to generate ideas with impact.

  The relative importance of discovery and delivery skills on a particular team also varies with the team’s particular role in the innovation funnel (or innovation cycle). For example, at Big Idea Group (BIG), a company that has used the business model of the American Idol TV show to find inventors and bring their products to market, CEO Mike Collins wants a different mix of discovery and delivery skills at each stage of the innovation funnel.

  Stage one at BIG is “idea generation,” when his organization actively looks for innovative ideas from inventors around the world. His company engages in “big idea hunts” through road shows in different cities, internet and newsletter solicitations, and connections with professional inventor groups. Over time, BIG has developed a network of professional inventors that it taps not only for their own product ideas but also for BIG’s clients. BIG makes money from taking inventors’ ideas to market and by using its inventor network to come up with new product ideas for specific clients wanting such ideas from outside their companies. In effect, companies outsource new product development to BIG just as they outsource innovative product designs to IDEO.

  During stage two, called “winnowing,” Collins invites (and pays) individuals with strong discovery skills to participate on a panel to listen to inventors’ ideas and evaluate whether a new product idea shows market potential. Over time, he’s learned that the panel works best when it includes people with strong discovery skills, because they see beyond the initial idea in search of ways to improve it. “On one occasion, we were evaluating ideas for new toys, and we asked a senior merchandising executive from a major toy retailer to participate on the panel,” Collins told us. “But he was useless, because all he could do was analyze why an idea wouldn’t work. He was all about execution, and at the idea stage, you need people who can find creative ways to make an idea work.” Collins’s experience suggests that the first two stages of the innovation funnel need people very strong at discovery, but these skills become less critical in stages three and four.