Category: Leadership

Innovator’s DNA: Some are born, others can learn

A couple of related articles in INSEAD Knowledge (Innovator’s DNA and Innovator’s DNA: Some are born, others can learn) are quite interesting:

Some people are born innovators. Others can become innovators, providing they follow some simple guidelines. That’s the thesis of ‘The Innovator’s DNA’, just published by Harvard Business Review Press, by Hal Gregersen, INSEAD Senior Affiliate Professor of Leadership, with Jeffrey H. Dyer of Brigham Young University and Clayton Christensen of Harvard Business School.”

The premise is that we can all learn to be more innovative:

Research involving identical twins suggests that only about 20-25 per cent of our creativity ability is geneticically driven. “This means the other 75-80 per cent comes from the world we live in…

 Here is my takeaway about five skills that can make us more innovative:

  • Observing: Innovators are “intense observers.” They learn from observing others.
  • Questioning:  Innovators ask questions about what they have observed to find out if there is a better solution. 
  • Associating: Innovators make unexpected connections and combine known pieces into new solutions (such as iPhone or iPod).
  • Experimenting: Innovators experiment with solutions to potential problems to find the optimum.
  • Networking: “Innovators are intentional about finding diverse people who are just the opposites of who they are, that they talk to, to get ideas that seriously challenge their own.”
Here is all of it put together in a nice summary:

Take notes when observing others. “Step back from (the problem or situation), talk to people: ‘What did you learn? What surprised you? What was interesting?’ If you like to talk to people, talk to somebody different: maybe on another floor, a different building, a different office, another country, but talk to somebody who’s 180 degrees different from you. These are things that we can do and they don’t take a lot of time to do them.”


The Innovation Premium

INSEAD Knowledge had an intriguing article that I have been meaning to write about.  The Innovation Premium meanders along multiple themes (some of them untenable) but in the end has a couple of interesting observations.  The article discusses the book The Innovator’s DNA:

“Innovation makes millionaires and undermines monopolies. It raises the profitability of companies and puts a premium on the shares of the most successful. But how can companies foster it? New research sheds light on the innovation process and how firms can tap into it to raise their performance and their share price.”

To that end, the article defines innovative companies purely based on share prices:

Common to all companies on the list is the fact that their share prices are 25 percent or more above what would be justified by cash flow alone. The leader is cloud computing company Salesforce.com, with its AppExchange that offers more than 1,000 applications for businesses, and which recently launched Chatter draws on features of Facebook and Twitter to provide social software for enterprise collaboration. Market expectations for further innovations have given it a premium based on 2010 results of no less than 75 percent.

We have discussed in the past that Wall Street is NOT a consistent or dependable evaluator of innovation. In fact, Wall Street rewards predictability more than disruptive innovations.  The share price measure would move companies like Netflix from innovative to not in the matter of weeks! RIM and Blackberry has moved into the non-innovative group since the article was written a few weeks ago…

The lack of universally acceptable definition of innovation (such as the Oslo Framework) notwithstanding, the article still had some interesting points.  A key point is that the leaders in innovative companies ask a lot of questions, challenge the status quo and do so based on personal involvement / observation (as opposed to through subordinate presentations):

They, too, are always asking questions and looking out for the unexpected: “Why not this? Why couldn’t we do that? What’s going on here? How could we do this better?” When someone “behaves that way, acts differently, asks lots of questions, observes like an anthropologist, experiments constantly, networks for new ideas,” Gregersen observes, “they’re likely to get incredibly insightful ideas about new businesses, new products, new services, breakthrough processes: things that will make a difference for any company or country.”

The article also suggests (as we have discussed many times) that innovation starts from the top and that the leaders actually have to start the innovation process – not wait for it to bubble up from the bottom.  The article also disruptive innovation is hard to manage and integrate into the product line. Innovative leaders have to actually nurture innovation.  Since the article mentions Steve Jobs, and we can certainly learn from him as well.


Sparking creativity in teams

McKinsey Quarterly has a useful guide in Sparking creativity in teams:

In fact, our experience with hundreds of corporate teams, ranging from experienced C-level executives to entry-level customer service reps, suggests that companies can use relatively simple techniques to boost the creative output of employees at any level.

The article has four simple suggestions to increase creativity.  Lets dig in:
1. Immerse yourself: As we discussed in Steve Jobs Methodology, an engaged R&D manager is crucial to motivating R&D teams.  Many senior R&D managers I have met seem to have a hands-off approach to their teams.  As the McKinsey article points out, there is no alternative to clear engagement from the leadership:

The antidote is personal experience:p in ways that abstract discussions around conference room tables can’t. It’s therefore extremely valuable to start creativity-building exercises or idea generation efforts outside the office, by engineering personal experiences that directly confront the participants’ implicit or explicit assumptions. 

2. Overcome Orthodoxies: Personal engagement from leaders in required for the success of any organizational change.  However, the leaders also need to question conventional thinking and challenge teams to do better:

All organizations have conventional wisdom about “the way we do things,” unchallenged assumptions about what customers want, or supposedly essential elements of strategy that are rarely if ever questioned.
By identifying and then systematically challenging such core beliefs, companies can not only improve their ability to embrace new ideas but also get a jump on the competition.

3. Use Analogies: This is a new and interesting point. As the article points out, leaders need to frame the problem with analogies to actually help the teams do better.  The examples include: “How would Google manage this Data?” or “How would Southwest Airline cut these costs?”

Our own experience confirms the power of associations. We’ve found a straightforward, accessible way to begin harnessing it: using analogies. As we’ve seen, by forcing comparisons between one company and a second, seemingly unrelated one, teams make considerable creative progress, particularly in situations requiring greenfield ideas. We’re not suggesting that you emulate other organizations—a recipe for disappointment. Rather, this approach is about using other companies to stir your imagination.

4. Create Constraints: As we have discussed many times, managers are key to driving innovation.  Only managers have the cross-enterprise visibility to help frame the challenge for the R&D teams.

Imposing constraints to spark innovation may seem counterintuitive—isn’t the idea to explore “white spaces” and “blue oceans”? Yet without some old-fashioned forcing mechanisms, many would-be creative thinkers spin their wheels aimlessly or never leave their intellectual comfort zones.


Apple R&D and Steve Jobs Methodology: Engaged Leader

Let us continue our discussion on the Steve Jobs methodology. We discussed user centric design as the fundamental tenet of new product development under Jobs. We also talked about how a long-term vision, bounded by user centric design and supported by deep understanding of technology roadmaps is critical to long-term success.  However, it is not enough to just have that understanding.  A good R&D manager is able to roll up her or his sleeves and get engaged.  A leader has to take part in the product development – that is probably the only way one can really understand technology challenges and translate desired user experience into real delivered products.

In fact, when we look around, all great innovative companies seem to have leaders that are completely engaged in their R&D.  Bill Gates was driving product development personally in Microsoft’s hay day.  As we have all seen, Zukerberg has personally driven R&D at Facebook.  Google had to bring back their founders to actually get back to innovating.  It is important for the leaders to be engaged because only they can have the cross organizational perspective.  Steve Jobs also seems to personify this engaged leader.  However, there may be many ways in which the leaders can be engaged.  Let us start off with the information from the transcript of an interview with ex-Apple CEO John Sculley and see what we can learn…
Steve Jobs was engaged completely from the perspective of industrial design and user experience:

Whether it’s designing the look and feel of the user experience, or the industrial design, or the system design and even things like how the boards were laid out. The boards had to be beautiful in Steve’s eyes when you looked at them, even though when he created the Macintosh he made it impossible for a consumer to get in the box because he didn’t want people tampering with anything.

Furthermore, this interest was not just high level.

On one level he is working at the “change the world,” the big concept. At the other level he is working down at the details of what it takes to actually build a product and design the software, the hardware, the systems design and eventually the applications, the peripheral products that connect to it.

He actually worked to understand how better industrial design can be achieved:

The one that Steve admired was Sony. We used to go visit Akio Morita and he had really the same kind of high-end standards that Steve did and respect for beautiful products. I remember Akio Morita gave Steve and me each one of the first Sony Walkmans. None of us had ever seen anything like that before because there had never been a product like that. This is 25 years ago and Steve was fascinated by it. The first thing he did with his was take it apart and he looked at every single part. How the fit and finish was done, how it was built.

Many people can take apart products and learn from them. A great R&D leader actually builds a culture around the user experience.  Jobs learned about manufacturing from Sony and built it into the Apple manufacturing:

He was fascinated by the Sony factories. We went through them. They would have different people in different colored uniforms. Some would have red uniforms, some green, some blue, depending on what their functions were. It was all carefully thought out and the factories were spotless. Those things made a huge impression on him.

And the results were impressive:

That went all the way through to the systems when he built the Macintosh factory. It was supposed to be the first automated factory but what it really was a final assembly and test factory with a pick-to-pack robotic automation. It is not as novel today as it was 25 years ago, but I can remember when the CEO of General Motors along with Ross Perot came out just to look at the Macintosh factory. All we were doing was final assembly and test but it was done so beautifully. It was as well thought through in design as a factory, a lights out factory requiring many people as the products were.

The same thinking is also visible in Pixar’s building architecture.  Jobs personally got involved in the design of the building to drive an interactive culture:

Our building, which is Steve Jobs’s brainchild, is another way we try to get people from different departments to interact. Most buildings are designed for some functional purpose, but ours is structured to maximize inadvertent encounters.

The same trend is also visible in the design of the iPod supply-chain:

If you look at the state of the iPod, the supply chain going all the way over to iPod city in China – it is as sophisticated as the design of the product itself. The same standards of perfection are just as challenging for the supply chain as they are for the user design. It is an entirely different way of looking at things.

So, the take home message is this: R&D managers have to be system level thinkers that can drop down into detailed development when needed to help translate the system vision for their employees.

It was always an end-to-end system with Steve. He was not a designer but a great systems thinker. That is something you don’t see with other companies. They tend to focus on their piece and outsource everything else.

Not to say that there are no problems with an engaged leader.  In case of Jobs:

His tradeoff was he believed that he had to control the entire system. He made every decision. The boxes were locked.

This desire to control can also lead to (arguably) poor decisions:

Before they could start designing the iPhone, Jobs and his top executives had to decide how to solve this problem. Engineers looked carefully at Linux, which had already been rewritten for use on mobile phones, but Jobs refused to use someone else’s software. They built a prototype of a phone, embedded on an iPod, that used the clickwheel as a dialer, but it could only select and dial numbers — not surf the Net. So, in early 2006, just as Apple engineers were finishing their yearlong effort to revise OS X to work with Intel chips, Apple began the process of rewriting OS X again for the iPhone.

However, as they say, the proof is in the pudding.  Apple’s market value has surpassed that of Microsoft! An example from the Wired article The Untold Story: How the iPhone Blew Up the Wireless Industry:

After a year and a half of secret meetings, Jobs had finally negotiated terms with the wireless division of the telecom giant (Cingular at the time) to be the iPhone’s carrier. In return for five years of exclusivity, roughly 10 percent of iPhone sales in AT&T stores, and a thin slice of Apple’s iTunes revenue, AT&T had granted Jobs unprecedented power. He had cajoled AT&T into spending millions of dollars and thousands of man-hours to create a new feature, so-called visual voicemail, and to reinvent the time-consuming in-store sign-up process. He’d also wrangled a unique revenue-sharing arrangement, garnering roughly $10 a month from every iPhone customer’s AT&T bill. On top of all that, Apple retained complete control over the design, manufacturing, and marketing of the iPhone.

In summary, it is my opinion that great leaders get engaged in product development for their companies.  They participate in the development and get to know their development teams (more about this in the next Apple post).  They have a vision for where the company wants to go and they communicate it through actions, not just words.  They have to realize that only they can tie together all the different disciplines involved in getting a product to the market and help achieve that.  What do you say?

For more, please continue to the next component of the Steve Jobs Methodology: Small Focused R&D Team.


R&D Executive Leadership

I have always been fascinated by the trend to blame and praise business leaders in the USA.  I have often wondered how anyone can justify paying a CEO as much as several hundred engineers.  Here is an excellent blog post by Prof. Sutton of Stanford University.

James Meindl’s research on “the romance of leadership” shows that leaders get far more credit—and blame—than they deserve, largely because, cognitively, it is easier and more emotionally satisfying to treat leadership as the primary cause of performance than to consider the convoluted and often subtle mishmash of factors that actually determine performance differences.

And there is some empirical evidence of the impact leaders have:

…many studies show that for more than 75 percent of employees, dealing with their immediate boss is the most stressful part of the job. Lousy bosses can kill you—literally. A 2009 Swedish study tracking 3,122 men for ten years found that those with bad bosses suffered 20 to 40 percent more heart attacks than those with good bosses.

I have slowly realized that organizations take on the culture of their leaders and behave like them. For example, in many service organization such as legal or management consulting, everyone is driven to become a partner. They do whatever it takes to make themselves look good to the partners – all the while complaining that people are not being rewarded for their skills, but on how they “kiss up to” the partners. Even so, when the become partners, they actually repeat the same behavior…

Linda Hudson, CEO of BAE Systems, got this message after becoming the first female president of General Dynamics. After her first day on the job, a dozen women in her office imitated how she tied her scarf. Hudson realized, “It really was now about me and the context of setting the tone for the organization. That was a lesson I have never forgotten—that as a leader, people are looking at you in a way that you could not have imagined in other roles.” Hudson added that such scrutiny and the consequent responsibility is “something that I think about virtually every day.”

So, what is a leader to do? Here are Prof. Sutton’s suggestions:

  1. Take Control
    1. Express confidence even when you don’t feel it
    2. Don’t Dither
    3. Get and Give Credit
    4. Blame Yourself
  2. Bolster Performance
    1. Provide Psychological Saftey
    2. Shield People
    3. Make Small Gestures
In case you want more, here are many more related posts…

How To Be An Innovative Leader

Forbes.com had an article with three pointer towards how to drive innovation (How To Be An Innovative, Not Just Business, Leader):

  1. Reframe the challenge. 
  2. Focus on the customer experience.
  3. Practice rapid prototyping. 
Of the three, I find the first one of most interest.  We often forget to ask about the challenge itself and that in itself limits the possible solutions we come up with:

Innovative thinking can be used to redefine, or reframe, a problem. This is not a cosmetic or semantic change; it is a process of reexamining the situation. … By reframing problems, you uncover new places to innovate, or new angles to take. To reframe your challenge, ask powerful questions, challenge assumptions and bring in multiple perspectives. … He reframed the challenge away from fixing a past problem and toward differentiating the product and the company for the future. That was a vision that could focus and motivate the whole team. 

Here are a few more tips from another article in Forbes – Innovator’s Nirvana:

–Get strength at the top. “You can change business models,” said Miller, “but changing culture requires leadership.”

–Watch timing. The change may be great, but are all the support systems there? Remember what you innovate has to exist in an ecosystem to thrive.

–Communicate discovery for open innovation. The discoveries of Alcatel-Lucent’s scientists frequently end up in products far from their respective specialties.

–When ideas just keep failing despite tweaks to the prototype, have the guts to admit you were wrong. Just because it’s different, that doesn’t mean it was right. That judgment is more important. Plus admitting that and going on to try other new things can actually make you braver


Three Big Assumptions Leaders Should Question

In an article in the Washington Post, John Boldani points out Three Big Assumptions Leaders Should Question: 

  1. It is important for organizations to set firm goals
  2. Quick wins are essential to managers in transition
  3. Senior leaders believe in their CEOs
Many organizations I have seen suffer from too much focus on goals.  One widely known example of this is in “Stuffing the Channel” at the end of the measurement period to meet sales goals and get bonuses.

It is important for organizations to set firm goals. People need to have direction so it is important to point them in the right direction. But such a single-minded focus on goals may end up damaging individuals and the organization says a study conducted by Maurice Schweitzer of Penn’s Wharton School. Relentless pursuit of goals tempts managers to cross ethical boundaries and abandon ‘sound business practices.’ Unreached goals may then end up frustrating an organization rather than helping it to succeed.

However, if the goals are not firm than organizations tend to not really perform anyway.   If one enforces a culture that goals need not be met, how does one motivate and reward the organization?  I think a better approach would be to set up a tiered goal structure: An (exponentially) increasing reward for meeting or exceeding goals.  It is even more important to make these tiers somewhat achievable – encouraging teams to try to reach the next level (Remember the Lincoln Electric case in business school?)

Another key with goals is to have balanced goals: opposing goals that make sure that behavior does not become too goal focused.  In an R&D world for example, successful R&D projects are a goal most organizations have.  A success driven goal alone will encourage managers from hiding failures and impede risk taking.  A balancing metric would be wasted development effort: tying some fraction of bonuses to projects that fail – 90% of bonus for success and 10% for failures…  This would encourage R&D managers to take risks and encourage acceptance of failures.

The other recommendations are similar.  Senior leaders clearly should not always believe in the CEO.  However, a show of solidarity might be good for encouraging and motivating R&D teams.


Necessity is the mother of – Innovation

A couple of articles on driving innovation through Reverse Innovation.  One is from Wharton School of Business and another from Forbes.  The article suggests that historically innovation happened in the rich countries and moved to poor countries and now it needs to start in the emerging countries.

Vijay Govindarajan, professor of international business at the Tuck School of Business at Dartmouth College, who spent the last two years as a GE professor in residence and chief innovation consultant, calls the company’s strategy “reverse innovation”. “Historically, innovations have always happened in rich countries,” he points out, “But in the future, innovations will have to take place in countries like India and China, because this is where the bulk of the customers are. The needs are more pressing here and the sheer volumes will justify the investments that will be required for developing the appropriate products.”

The reality is that the emerging market is becoming more attractive and the need to drive down costs to meet the economical realities of that market is driving innovation at GE.  The reduced costs then have a great positive impact on other markets as well.  Similarly, there is a need for products of all sorts – such as cell phones – that need to fit the budgets of a whole new population.

One lesson I am learning from this is that R&D managers need to create situations where the technologists are challenged to generate new solutions.  Innovation is not just about people sitting around and free thinking in a cool room filled with new toys.  I am wondering if there is a structured way for managers to come up with challenges that get the same result without “Reverse Innovation.”

In any case, we can now safely modify Plato’s quote to say that “Necessity is the mother of Innovation.”

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