RESEARCH & IDEAS
Five Ways to Make YourCompany More InnovativePublished: May 23, 2012Authors: Garry Emmons, Julia Hanna, and Roger Thompson
How do you create a company thatunleashes and capitalizes on innovation? HBSfaculty experts in culture, customers, creativity,marketing, and the DNA of innovators offer upideas. From HBS Alumni Bulletin.
In a hypercompetitive global economy,creativity has never been more important forsuccess . But how do you create a company thatunleashes and capitalizes on innovation? Foranswers, writers at the HBS Alumni Bulletinturned to five HBS faculty experts in culture,customers, creativity, marketing, and the DNAof innovators. What they have to say mightsurprise you.
Clayton ChristensenCan people learn to be more innovative?I don't want to overstate the case. I think
about 40 percent of people just are not going tobe good at innovating regardless of what theydo. And 5 percent are born with the instinct.There are things that they do and ways that theythink that are intuitive. The rest of us couldlearn what these innovators do if somebodywould just crawl inside their brains and codifywhat to them is intuitive.
In a sense, that was our hope with TheInnovator's DNA, that we could articulate howinnovative people think. So over a period ofyears, we interviewed hundreds of innovatorsand almost 5,000 executives to identify ways ofthinking that distinguish innovative people fromtypical executives. What we found is thatinnovators "think different," to borrow a sloganfrom Apple. And thinking differently leadsthem to act differently. From our research,consistent patterns emerged that led us toidentify five primary discovery skills thatunderlie innovation: associating, observing,quetioning, networking, and experimenting.
First and foremost, innovators are good atassociational thinking, or simply associating.They make connections between seeminglyunrelated problems and ideas and synthesizenew ideas. I would frame associational thinkingby asking this question: Has somebody else inthe world solved a problem like this before? Itturns out that most problems have been solvedbefore by somebody in a different environment.
Associating that other experience to what'sgoing on in my world may make me lookbrilliant, but in reality my brilliance was inseeing that this had been solved elsewhere.
Observing and questioning go hand inglove. Innovators observe things, then questionwhy. If you want to be an innovative person,when you see things, you have to pay attentionand then wonder why.
A good illustration of observing andquestioning is Scott Cook (MBA 1976) andQuickBooks. By observing and questioning, hedeveloped an important insight into why theowners of small businesses typically wait untilthe last minute to update their books and file taxforms. Most people would say they are just lazyor undisciplined. But Cook observed what washappening and asked why. And the ownersreplied, "Every minute I spend doing my taxesor my books, I'm not with a customer. Sobookkeeping is the last thing I want to do." ForCook, that produced an insight that led to thedevelopment of QuickBooks, which greatlysimplifies small-business accounting.
Networking is a skill that innovators use toidentify and develop ideas by spending timewith a diverse group of people with differentbackgrounds and experiences. By engagingwith others, innovators increase the probabilitythat they are going to gain useful insights.
Finally, innovators are constantlyexperimenting. The critical insight here is thatfor whatever reason, when God created theworld, he made data only available about thepast. As teachers at HBS, we're trained to nailstudents to the wall if they ever make anassertion in class discussion that is not backedup with data and evidence in the case. So ourstudents come out of here with this elevatedrespect for data-driven, fact-based, analyticaldecision-making.
The problem is that data are only availableabout the past. If you're trying to be innovative,and you have this data-driven mindset, you can'tgo forward. So experimenting essentially says,"I don't want to wait until somebody providesdata. I need to get out there and create data."
Collectively, these five discovery skillsconstitute what we call the innovator's DNA,the code for creating innovative business ideas.By mastering these discovery skills, you can
learn to act differently and think differently, andby doing so increase your prospects fordeveloping innovative products and services.
Rosabeth Moss KanterHow Do You Create a Culture of
Innovation?Have you noticed the courage buried in the
word encourage? To create a culture in whichinnovation flourishes takes courage.Determined innovators persist despite setbacks.But companies shouldn't count on peoplesucceeding despite the odds; they should shiftthe odds. Here are three ways to do that.
Put innovation at the heart of strategy, andtout it in every message. Think of innovationstrategy as a pyramid: big bets at the top, a fewprojects in development in the middle, and abroad base of continuous improvements,incremental contributions, and early-stage newideas at the bottom. For example, Verizonplaced big bets on Google's Android forsmartphones and on fiber-optics for landlines,and now seeks new ways that wireless networkscould run everything, including cars andrefrigerators. It has projects in developmentwith GM's OnStar and in cloud computing. Inaddition, Verizon CEO Lowell McAdam seessmall "pots of gold" everywhere in the business,even in the traditional landline side, preachingprocess innovations to technicians.
Define jobs around innovation. Make it ajob prerequisite. Consider 3M's move tobecome one of the first companies to tellprofessionals that they could spend 15 percentof their time on projects of their own choosing.Now many high-tech companies know that theycan't get the best talent without providing thiskind of flexibility. And some of thoseself-selected, self-organized projects might evenresult in a blockbuster product or line ofbusiness. For 3M, it was the Post-it note.
Recognize innovation in every part of thecompany. To build a culture of agility,creativity, and innovation, Gillette developed aninnovation fair in which every unit could showoff its most promising new concepts. I wasprivileged to judge the first one with the thenCEO, where we gave an award to the legaldepartment for its ethics program, featuring a
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takeoff on "get out of jail free" cards from theboard game Monopoly. This wasn't ablockbuster like the new shaving systems forwomen, but it showed that everyone has a roleto play in a culture of innovation.
To go from idea to successful innovationrequires a great deal of support andcollaboration. When people are surrounded byconstant communication and encouragement,they can find the courage to try, fail, redo, andtry again.
Carliss BaldwinHow can companies tap their customers
for innovative ideas?Firms have a tendency to look at their
navels. The first thing I would say to managersis that there is as much creativity andknowledge among your customers as you couldever hope to generate within your ownboundaries. Accept the reality that theycollectively know more than you do aboutwhatever it is your company makes, thattechnology has almost completely democratizedthe design process, and that theseuser-innovators, thanks to the Internet, can gothrough an iterative process much more quicklyand cheaply than was true in the past.
So, how do you encourage customer-driveninnovation and capture some of that value?
First, consider the question of intellectualproperty (IP). Divide your knowledge cleanlybetween those pieces you want to protect-thecomponent on which you'll build thevalue-capturing part of your business-and theknowledge that you're going to put into thepublic domain. Let your users go to town on theopen parts of the system, but be aware it's adelicate balance. The last thing you want to dois foster competition down the line, as IBM didwhen it let the IP of essential components slipout of its own hands and into the grasp ofMicrosoft and Intel.
Finding those people who have the will anddesire to innovate in your system can be likelooking for needles in a haystack, but that'swhere crowdsourcing comes in-defining achallenge and offering an incentive, whether instatus or money, can get people to self-select asresources to you. You may even want to hiresome of them. So this strategy can play intotalent acquisition in addition to generating newproduct ideas.
Sometimes a community of users will formindependently of the company. That can betricky, because they will not want to becontrolled, and they will want to criticize yourproduct. The best policy is probably to fosterboth the community building and the criticism.It takes a great deal of courage and leadership toembrace this model where you enable andencourage users through various challenges andallow the community the degree of autonomy itneeds to be healthy.
So, in a nutshell: Split your IP. Have a
distinct strategy for the open and closed parts,with special attention paid to the open parts.Create a center that will attract users to yourspace and get the user-innovators toself-identify. Beyond that, foster a space wherea community can collaborate and criticize bothyour work and their own work. That's how toget the most out of your customers in the 21stcentury.
John GourvilleHow do you successfully market an
innovative product?The idea that we rail against in class is that
product development just throws a new productover the wall to marketing and expects them togo sell it. For the last 50 years, innovationtheorist Everett Rogers told us that thedifference between a successful product and anunsuccessful product has to do with how theproduct is designed-the physical attributes ofthe product. And he came up with five factors:
Relative advantage: Is it better than what it'sreplacing?Compatibility: Is it compatible with the waypeople currently do things?Complexity: Is it too complex to use?Trialability: Can you try it in small doses?Observability: Can you watch other people useit?
All of those things are inherent in theproduct itself. Rogers's research found that 75percent of the variance between products thatsucceed and products that don't succeed has todo with those five factors. Once you have thosethings, if they are all pointing in the rightdirection, it's a lot easier to market the product.
Relative advantage is the starting point. It'sa necessary but not sufficient condition. Youhave to be better than what you're replacing onsome dimension. How can marketing getinvolved? Well, if you think about relativeadvantage, you can achieve it several ways.You can provide more benefits for the samecost, the same benefits for less cost, or a lotmore benefits for slightly more cost. Each ofthose has a different behavioral feel for theconsumer. So, even thinking about whatfeatures you put into a product affects how easyit will be to market.
There's always this idea of feature creep thatleads to adding bells and whistles. But everytime you add bells and whistles, chances areyou're also adding costs. The ideal situation isone with the same cost and much higherbenefits. And so, part of what marketing does isask, "What's absolutely necessary to make thisproduct attractive to consumers? Do we have toadd all these bells and whistles? Or doconsumers just basically want something thatgets the job done?" My colleague ClayChristensen has this idea that people hireproducts to do a job. It's that exact sort of thing.You don't need to add features that really aren'tdelivering on the job that consumers are hiring
the product to do. So relative advantage issomething you can play around with.
The other big question is, how muchbehavior change do you embed in the product?People resist change. They like the way they dothings now, for the most part. They might wisha familiar product was cheaper or faster, butthey've gotten used to the way things currentlywork. And so, if you don't take behavioralchange into account, you're going to miss outon a big piece of the equation. It's not howeconomists would perceive it, weighing thecosts and benefits. It's actually how much areyou asking people to change, and are theywilling to do it?
In short, most of what leads to a productsucceeding or failing has to do with the innatenature of the product itself, the features builtinto it. And if you start with a product that doeswell on these five factors, then life gets a loteasier.
Stefan ThomkeHow can a company balance creativity and
innovation with the need for process andstructure?
Before the issue of balance even comes up,a company must allow sufficient time for whatmay be the most underrated yet most importantpart of the innovation process: problemdefinition. Consider Apple: its genius lies in theability to get to the heart of a problem and notsettle for convoluted solutions until they find, inthe late Steve Jobs's words, "the key, underlyingprinciple of the problem" and then the"beautiful, elegant solution that works."
Once the problem has been defined and thedesired target established, there are two keyfunctions in innovation: brainstorming newideas, and deciding which of those ideas areworth pursuing. When most people hear a newidea, it's human nature to see its flaws, soduring the brainstorm processing, no criticismshould be allowed. I know of a manager whobrings along a squirt gun to brainstormingsessions. After a few squirts, people learn tosilence their critical voices. The design firmIDEO, in its brainstorming sessions, tellsparticipants to produce, for example, 150 ideasin less than 45 minutes. The impossible timelimit and quota forces them to submit whatevercomes to mind, even seemingly crazysuggestions. Only after the brainstormingsession has concluded does IDEO then subjectthe various ideas to critical voices.
Once some really solid ideas have emerged,only then should you begin "toggling,"switching back and forth between creators andcritics, between the idea people and the processpeople, to work toward Jobs's "beautiful,elegant solution." This requires companies to beastute about how they prototype and test. IDEOadheres to the "three Rs" rule: rough, rapid, andright. For example, when testing theergonomics of a new type of telephone receiver,
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prototypes can be carved quickly from foam butthe shapes need to be exact, to see if they'll fitwhen people cradle them between head andshoulder.
Innovation and process within a firm can
coexist and even feed off each other, if youmanage their different and sometimes opposingfunctions smartly. Indeed, if you want to be aninnovative company, you can't have onewithout the other.
Garry Emmons, Julia Hanna, and RogerThompson are on the staff of the HBS AlumniBulletin, where this article first appeared.
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