Innovator's DNA Read online

  Ask yourself: Am I good at generating innovative business ideas? Do I know how to find innovative people for my organization? Do I know how to train people to be more creative and innovative? Some executives respond to the last question by encouraging employees to “think outside the box.” But thinking outside the box is precisely what employees (and executives) are trying to figure out. We’ve even watched some executives answer the “How do I think outside the box?” question with another equally generic (and unhelpful) answer, “Be creative.”

  If you find yourself struggling with actionable answers to these questions, read on to gain a solid grasp of five skills that can make all the difference when facing your next innovation challenge. All leaders have problems and opportunities sitting in front of them for which they have no solution. It might be a new process. It might be a new product or service. It might be a new business model for an old business. In every case, the skills you build by putting into practice the innovator’s DNA may literally save your job, your organization, and perhaps your community. Indeed, we’ve found that if you want to rise to the highest levels of your organization—to the position of business-unit manager, president, or CEO—you need strong discovery skills. And if you want to lead a truly innovative organization, you likely will need to excel at those skills.

  We hope that The Innovator’s DNA will encourage you to reclaim some of your youthful curiosity. Staying curious keeps us engaged and our organizations alive.3 Imagine how competitive your company will be ten years from now without innovators if its people don’t find any new ways to improve its processes, products, or services. Clearly, your company would not survive. Innovators constitute the core of any company’s, or even country’s, ability to compete.

  A Disclaimer . . . Sort Of

  We think it is important to remember three significant points as you read The Innovator’s DNA. First, engaging in the discovery skills doesn’t ensure financial success. Throughout the book, we tell stories of people who were manifestly successful at innovating. We focus on the success stories because we are all more naturally drawn to success than failure. However, in our sample of five hundred innovators, only two-thirds launched ventures or products that met our criteria of success. Many were not successful. The innovators developed the right skills—questioning, observing, networking, and experimenting—that produced an innovative venture or product, but the result was not always a financial success. The point is that the discovery skills we describe are necessary, indeed critical, for generating innovative business ideas, but they don’t guarantee success.

  Second, failure (in a financial sense) often results from not being vigilant in engaging all discovery skills. The more financially successful innovators in our sample demonstrated a higher discovery creativity quotient (scored higher on the discovery skills) than less successful ones. If you fail with an innovation, it may be that you didn’t ask all the right questions, make all of the necessary observations, talk to a large enough group of diverse people, or run the right experiments. Of course, it is also possible that you did all these things but an even newer technology emerged or some other bright innovator came up with an even better idea. Or maybe you just didn’t excel at executing on the idea or have the resources to compete with an established firm that imitated your invention. Many factors can prevent a new product or business idea from gaining traction in the market. But the better you are at asking the right questions, engaging in the right observations, eliciting ideas and feedback through networking with the right people, and running experiments, the less likely you are to fail.

  Third, we spotlight different innovators and innovative companies to illustrate key ideas or principles, but not to set them up as perfect examples of how to be innovative. Some innovators we studied were “serial innovators,” as they had developed quite a number of innovations over time and appeared motivated to continue doing so. Others benefitted by being in the right place at the right time to make a critical observation, talk to a key person with particularly useful knowledge, or serendipitously learn from an experiment. They made an important discovery once, but they might not necessarily be able or motivated (perhaps due to financial success) to continue generating innovative ideas. In similar fashion, we have found that innovative companies can quickly lose their innovative prowess, while others can quickly improve it. In chapter 8, we show that Apple’s innovation prowess (as measured by its innovation premium) dropped dramatically after Jobs left in 1985, but then jumped up dramatically a few years after he returned to lead the company. Then it dropped again after his illness and death. Procter & Gamble was a solid innovation performer before Lafley took the helm, but increased its innovation premium by 30 percent under his leadership. Then after he stepped away Procter & Gamble’s innovation premium dropped again. The point is that people and companies can change and may not always live up to our lofty expectations.

  How The Innovator’s DNA Unfolds

  Like a pocket-sized map in a foreign place, our book serves as a guide to your innovation journey. The first part (chapters 1 through 6) explains why the innovator’s DNA matters and how the pieces can combine into a personalized approach to innovation. We put flesh onto the “think different” slogan by explaining in detail the habits and techniques that allow innovators to think differently. The chapters in part one give rich detail about how to master the specific skills that are key to generating novel ideas—associating, questioning, observing, networking, and experimenting.

  The second part (chapters 7 through 10) amplifies the building blocks of innovation by showing how the discovery skills of innovators described in part one operate in organizations and teams. Chapter 7 introduces our ranking of the world’s most innovative companies based on each company’s innovation premium, a market-value premium based on investors’ expectations of future innovations. We also provide a framework for seeing how the innovator’s DNA works in the world’s most innovative teams and organizations. We call this the “3P” framework because it contains the discovery-driven building blocks of highly innovative organizations or teams—people, processes, and philosophies. Chapter 8 focuses on building-block number one, people, and describes how innovative organizations achieve maximum impact by actively recruiting, encouraging, and rewarding people who display strong discovery skills—and blending innovators effectively with folks who have strong execution skills. Chapter 9 shows innovative team and company processes that mirror the five discovery skills of disruptive innovators. In other words, innovative companies rely on processes to encourage—even require—their people to engage in questioning, observing, networking, experimenting, and associating. Chapter 10 focuses on the fundamental philosophies that guide behavior within innovative teams and organizations. These philosophies not only guide disruptive innovators but also get imprinted in the organization, giving people the courage to innovate. Finally, for those interested in building discovery skills in yourself, your team, and even the next generation (young people you know), in appendix C we guide you through a process of taking your innovator’s DNA to the next level.

  We’re delighted that you’re starting or continuing your own innovation journey. We have watched scores of individuals take the ideas in this book to heart and who describe how they have dramatically improved their innovation skills as a result. They continually confirm that the journey is worth taking. We think you’ll feel the same way once you’ve finished reading about and mastering the skills of a disruptive innovator.

  PART ONE

  Disruptive Innovation Starts with You

  1

  The DNA of Disruptive Innovators

  “I want to put a ding in the universe.”

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

  DO I KNOW HOW to generate innovative, even disruptive, business ideas? Do I know how to find creative people or how to train people to think outside the box? These questions stump most senior executives, who know that the ability to innovate is the “secret sauc
e” of business success. Unfortunately, most of us know very little about what makes one person more creative than another. Perhaps for this reason, we stand in awe of visionary entrepreneurs such as Apple’s longtime CEO Steve Jobs, Amazon’s Jeff Bezos, and Tesla’s Elon Musk. How do these people come up with groundbreaking ideas? If it were possible to discover the inner workings of the masters’ minds, what could the rest of us learn about how innovation really happens?

  Ideas for Innovation

  Consider the case of the legendary Steve Jobs, who was once ranked the world’s number one best-performing CEO in a study published by Harvard Business Review.1 You may recall Apple’s famous “Think Different” ad campaign, whose slogan says it all. The campaign featured innovators from different fields, including Albert Einstein, Picasso, Richard Branson, and John Lennon, but Jobs’s face might easily have been featured among the others. After all, everyone knows that Jobs was an innovative guy, that he knew how to “think different.” But the question is, just how did he do it? Indeed, how does any innovator think differently?

  The common answer is that the ability to think creatively is genetic. Most of us believe that some people, like Jobs, are simply born with creative genes, while others are not. Innovators are supposedly right brained, meaning that they are genetically endowed with creative abilities. The rest of us are left brained—logical, linear thinkers, with little or no ability to think creatively.

  If you believe this, we’re going to tell you that you are largely wrong. At least within the realm of business innovation, virtually everyone has some capacity for creativity and innovative thinking. Even you. So using the example of Jobs, let’s explore how he came up with some of his innovative ideas.

  Innovative Idea #1: Personal Computers Should Be Quiet and Small

  One of the key innovations in the Apple II, the computer that launched Apple, came from Jobs’s decision that it should be quiet. His conviction resulted, in part, from all the time he’d spent studying Zen and meditating.2 He found the noise of a computer fan distracting. So Jobs was determined that the Apple II would have no fan, which was a fairly radical notion at the time. Nobody else had questioned the need for a fan because all computers required a fan to prevent overheating. Getting rid of the fan wouldn’t be possible without a different type of power supply that generated less heat.

  So Jobs went on the hunt for someone who could design a new power supply. Through his network of contacts, he found Rod Holt, a forty-something, chain-smoking socialist from the Atari crowd.3 Pushed by Jobs, Holt abandoned the fifty-year-old conventional linear unit technology and created a switching power supply that revolutionized the way power was delivered to electronics products. Jobs’s pursuit of quiet and Holt’s ability to deliver an innovative power supply that didn’t need a fan made the Apple II the quietest and smallest personal computer ever made (a smaller computer was possible because it didn’t need extra space for the fan).

  Had Jobs never asked, “Why does a computer need a fan?” and “How do we keep a computer cool without a fan?” the Apple computer as we know it would not exist.

  Innovative Idea #2: The Macintosh User Interface, Operating System, and Mouse

  The seed for the Macintosh, with its revolutionary operating system, was planted when Jobs visited Xerox PARC in 1979. Xerox, the copier company, created the Palo Alto Research Center (PARC), a research lab charged with designing the office of the future. Jobs wangled a visit to PARC in exchange for offering Xerox an opportunity to invest in Apple. Xerox didn’t know how to capitalize on the exciting things going on at PARC, but Jobs did.

  Jobs carefully observed the PARC computer screen filled with icons, pull-down menus, and overlapping windows—all controlled by the click of a mouse. “It was incomplete, some of it wasn’t even right,” Jobs said, “but the germ of the idea was there. And within ten minutes, it was so obvious that every computer would work this way someday.”4 He spent the next five years at Apple leading the design team that would produce the Macintosh computer, the first personal computer with a graphical user interface (GUI) and mouse. Oh, and he saw something else during the PARC visit. He got his first taste of object-oriented programming, which became the key to the OSX operating system that Apple acquired from Jobs’s other startup, NeXT Computers. What if Jobs had never visited Xerox PARC to observe what was going on there?

  Innovative Idea #3: Desktop Publishing on the Mac

  The Macintosh, with its LaserWriter printer, was the first computer to bring desktop publishing to the masses. Jobs claimed that the “beautiful typography” available on the Macintosh would never have been introduced if he hadn’t dropped in on a calligraphy class at Reed College in Oregon:

  Reed College offered perhaps the best calligraphy instruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully hand-calligraphed. Because I had dropped out and didn’t have to take the normal classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science can’t capture, and I found it fascinating. None of this had even a hope of any practical application in my life. But ten years later, when we were designing the first Macintosh computer, it all came back to me. And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it’s likely that no personal computer would have them.5

  What if Jobs hadn’t decided to drop in on the calligraphy classes when he had dropped out of college?

  So what do we learn from Jobs’s ability to think differently? Well, first we see that his innovative ideas didn’t spring fully formed from his head, as if they were a gift from the Idea Fairy. When we examine the origins of these ideas, we typically find that the catalyst was: (1) a question that challenged the status quo, (2) an observation of a technology, company, or customer, (3) an experience or experiment where he was trying out something new, or (4) a conversation with someone who alerted him to an important piece of knowledge or opportunity. In fact, by carefully examining Jobs’s behaviors and, specifically, how those behaviors brought in new, diverse knowledge that triggered an innovative idea, we can trace his innovative ideas to their source.

  What is the moral of this story? We want to convince you that creativity is not just a genetic endowment and not just a cognitive skill. Rather, we’ve learned that creative ideas spring from behavioral skills that you, too, can acquire to catalyze innovative ideas in yourself and in others.

  What Makes Innovators Different?

  So what makes innovators different from the rest of us? Most of us believe this question has been answered. It’s a genetic endowment. Some people are right brained, which allows them to be more intuitive and divergent thinkers. Either you have it or you don’t. But does research really support this idea? Our research confirms others’ work that creativity skills are not simply genetic traits, endowed at birth, but that they can be developed. In fact, the most comprehensive study confirming this was done by a group of researchers, Marvin Reznikoff, George Domino, Carolyn Bridges, and Merton Honeymon, who studied creative abilities in 117 pairs of identical and fraternal twins. Testing twins aged fifteen to twenty-two, they found that only about 30 percent of the performance of identical twins on a battery of ten creativity tests could be attributed to genetics.6 In contrast, a more recent study found that roughly 80 percent to 85 percent of twins’ performance on general intelligence (IQ) tests could be attributed to genetics.7 So general intelligence (at least the way scientists measure it) is basically a genetic endowment, but creativity is not. Nurture trumps nature as far as creativity goes. Six other creativity studies of identical twins confirm the Reznikoff et al. result: roughly
25 percent to 40 percent of what we do innovatively stems from genetics.8 That means that roughly two-thirds of our innovation skills still come through learning—from first understanding the skill, then practicing it, and ultimately gaining confidence in our capacity to create.