Innovation Archives
Some thoughts, quotes, and a presentation about innovation.
Last week I linked to a presentation I gave about innovation to VCU and some people seem to have liked it, so I figured I'd repost it here with a bit more context.
A few months ago I got an email from a BrandCenter student named Adam Wiese about adding a brand to Brand Tags. We got to chatting a bit and he suggested I should come down to BrandCenter and give a talk. I told him I'd be happy to and next think I knew I had an email from Caley Cantrell, who teaches innovation at the school, asking me if I'd like to come down.
I said yes, scheduled it for a few months later and all was well until about a month before when I realized that I was being asked to tackle a topic I sort of hate discussing. The word innovation makes my skin crawl a bit. It's so overused at this point that it's all but meaningless and I had no idea where to begin. So, that's where I began ... I decided that if I was going to go talk about innovation I was going to do my best to really define the word. In the end, I'm not sure I totally succeeded, but I did uncover a whole bunch of very interesting writing on the topic. Especially interesting to me were some of the ideas of early 20th century Austrian economist Joseph Schumpeter, who wrote extensively on entrepreneurialism and what he saw as an outgrowth: Innovation.
Okay, now a pause for the presentation.
Like I said, I'm not sure I succeeded at defining it, but I found Schumpeter's framework of invention, innovation and diffusion really helped guide my thinking. Schumpeter actually simplifies the ideas even further when he talks about entrepreneurs. Essentially he wrote that there were three separate roles in the innovation process: The capitalist, who provides the money, the inventor, who creates the idea and the entrepreneur, who adapts the idea and brings it to market. While these roles are often played by a single person, it does not make them a separate role. (He goes on to talk about the value of separating the financial burden from the entrepreneur to enable them to focus on the task at hand.)
I think this separation is often overlooked, and so did Schumpter:
Economic leadership in particular must hence be distinguished from "invention." As long as they are not carried into practice, inventions are economically irrelevant. And to carry any improvement into effect is a task entirely different from the inventing of it, and a task, moreover, requiring entirely different kinds of aptitudes. Although entrepreneurs of course may be inventors just as they may be capitalists, they are inventors not by nature of their function but by coincidence and vice versa. Besides, the innovations which it is the function of entrepreneurs to carry out need not necessarily be any inventions at all. It is, therefore, not advisable, and it may be downright misleading, to stress the element of invention as much as many writers do.
Finally, a bit about the role of research and its impact on innovation. In 1980 Robert Hayes and William Abernathy wrote a now well-known Harvard Business Review article titled Managing Our Way to Economic Decline. In it they wrote this about the role of research in organizations:
Our experience suggests that, to an unprecedented degree, success in most industries today requires an organizational commitment to compete in the marketplace on technological grounds--that is, to compete over the long run by offering superior products. Yet, guided by what they took to be the newest and best principles of management, American managers have increasingly directed their attention elsewhere. These new principles, despite their sophistication and widespread usefulness, encourage a preference for (1) analytic detachment rather than the insight that comes from hands-on experience and (2) short-term cost reduction rather than long-term development of technological competitiveness. It is this new managerial gospel, we feel, that has played a major role in undermining the vigor of American industry.
Twenty two years later, Clayton Christensen wrote this in a Technology Review article titled Rules of Innovation:
What drove Sony's shift from a disruptive to a sustaining innovation strategy? Prior to 1980, all new product launch decisions were made by cofounder Akio Morita and a trusted team of associates. They never did market research, believing that if markets did not exist they could not be analyzed. Their process for assessing new opportunities relied on personal intuition. In the 1980s Morita withdrew from active management in order to be more involved in Japanese politics. The company consequently began hiring marketing and product-planning professionals who brought with them data-intensive, analytical processes of doing market research. Those processes were very good at uncovering unmet customer needs in existing product markets. But making the intuitive bets required to launch disruptive businesses became impossible.
To be honest, I don't feel like we've gotten anywhere on this one. Christensen made the same point as Hayes/Abernathy 22 years later and here we are, eight years after that, complaining about the same thing (or praising Steve Jobs for not subscribing). Interestingly, Managing Our Way to Economic Decline places much of the blame on the shift in corporate mindset from a one that makes someone with a technical background president, to one that makes someone with a financial/legal background president (see chart below).
I hadn't ever seen this, and would be quite curious to see what this chart would look like with the last thirty years on it (I imagine finance and legal has taken an even larger chunk). I don't really have some great insight here, but it does go a long way to explaining why so many large organizations are so disappointing from an innovation perspective.
Anyway, I could keep going and going and going, but I'm going to stop (somewhat abruptly) here. I have some more quotes and stuff I collected and I quote post if folks are so inclined, but I can't imagine you've actually made it to the bottom of all this, so maybe that's best done in another post.
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Maybe it's an argument over semantics, but I think it's bigger than that.
What makes something "disruptive"? Wikipedia defines disruptive technology/disruptive innovation as a "a technological innovation, product, or service that eventually overturns the existing dominant technology or status quo product in the market." In the book Space Race the focus is much more on giving people something they didn't know they wanted: "Disruptive technologies emerge that are not what consumers think they want, or claim in resarch to want . . . ." (Thanks Adrian).
Personally, I take issue with both of these ideas. My definition of disruptive technology is something which re-routes a flow that once came from a single source. In other words, products themselves are not disruptive, rather the disruption is the effect. Disruption is normally achieved in one of two ways: Innovation or scale.
Some examples might help . . . Napster was a disruptive technology. It took an industry that once controlled the flow of music and democratized it by allowing people to freely trade and download. Joost, on the other hand, I wouldn't call disruptive (yet). The flow is still coming from the same location (big media), it's just being offered in a more innovative interface. If Joost were bought by someone like Sony, however, and they started loading it up on every flat-panel display they sold, that would disruptive. All of a sudden people would be able to get content without going through their cable company (other than a modem of course . . . ).
Google's a very interesting example. I wouldn't call Google's original offering disruptive. While they certainly changed the dynamics of the market, it didn't change the way information flowed: It was the same process as Yahoo!, just better algorithms (and PageRank, of course). However, what Google has done since they became the leader is pretty much constantly disrupt. They've done this through a combination of innovation and scale. Take Gmail: When Google decided it was going to give away something like 10x more storage than everyone else, competitors were forced to change their offerings. What was once costly became free. GOOG-411 is another example of this, because of their size they can afford to give away what others charge for. (Wal-Mart is pretty good at this as well.)
So finally onto the iPhone. Call it semantics, but I don't think the phone itself is disruptive. Innovative for sure, but as Umair points out the disruption comes what Apple does when it's shifted the way people think about what a device should be. Umair suggests, and I agree, that Apple couldn't open unlocked devices at first because of the pushback it would have gotten from the operators. However, if this is really a superior device and gets the market share people think it might, Apple will be able to disrupt the way the mobile market works. As Umair puts it, "after the iPhone shifts massive market power to Apple, network guys will have little choice but to play by Apple's rules, to accede to it's newer, better value chain design - because the pool of consumers Apple offers access to will simply be too large a percentage of the profit pool for decisions not to be dictated by them."
So there you have it . . .
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What do you think they are?
Inspired by a BusinessWeek article I got this email from my friend Scott:
What, in your opinion, are the five biggest innovations of the past decade?
I started writing my own list, which included online bill paying, truly laptop computers, BlackBerry, Google search, iPod and open source.
Then I decided it would be great to open it up to everyone here as well. Really interested in hearing your responses (and I'm sure Scott is as well).
So, I ask again, "What, in your opinion, are the five biggest innovations of the past decade?"
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Some random thoughts that have been running through my head and out my mouth.
It's time again for me. The one where write down a whole bunch of random things I've been talking/thinking about and let you choose whether there's a reason to write more.
Thoughtless Tools
Great tools make you want to use them. A site like Flickr is such a pleasure to interact with that I want to post my pictures there. Unfortunately, as far as business tools go, there aren't a whole lot that people don't despise (hence 37signals' success). What I've been wondering lately is whether it's possible to build tools that people use without even knowing it? That's not to say you're spying on them, but rather that you've created a tool with a barrier to entry of zero. Not quite sure how to make this happen, though I imagine something having to do with attention data would be a good start . . .
Long Tables
One of the coolest things about Naked is the long table we all sit at. While at first a bit intimidating and at times somewhat loud, the pros far outweigh the cons. Being able to overhear conversations and interject where appropriate is where a lot of good ideas come from. Gladwell talked about this kind of stuff in his great piece on office design (which I think I've sent to 10 people in the last week). Over the weekend I had a long conversation about how to maintain a small company feel when a company's not so small anymore. Clearly the space plays a big roll, but ultimately the question to me is how you foster a more serendipitous environment.
likemind as API
Working on a much longer piece on this, but I can't help but think of likemind as an API for much larger things the members of the community will accomplish in the near future.
There must be more stuff I'm thinking about that I just can't pull out of my brain right now. So how about all of you? What are you thinking about? What kind of half-baked ideas do you have?
Oh, and would anyone have an interest in writing something for the site? I am thinking about doing one day a week where I post something someone else wrote. Is this appealing?
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How Nintendo beat the big boys by changing the conversation.
Right now the Nintendo Wii seems like the perfect case study in approaching a problem from a different angle. With everyone else spending their time trying to figure out how to pack more power than a Ferrari into a little box, Nintendo decided to take a different approach and it seems to be paying off.
What they did is spend a lot of time looking at the video game market, something they once lead by 20 lengths, and reassessed it. They examined the market and realized that hardcore gamers were driving the choices of its biggest competitors (Microsoft and Sony). They were the ones demanding more power and life-like games.
According to Time Magazine amongst the questions the Nintendo folks asked themselves is "Why do people who don't play video games not play them?" The article continues:
[Nintendo president] Iwata has been asking himself, and his employees, that question for the past five years. And what Iwata has noticed is something that most gamers have long ago forgotten: to nongamers, video games are really hard. Like hard as in homework. The standard video-game controller is a kind of Siamese-twin affair, two joysticks fused together and studded with buttons, two triggers and a four-way toggle switch called a d-pad. In a game like Halo, players have to manipulate both joysticks simultaneously while working both triggers and pounding half a dozen buttons at the same time. The learning curve is steep.
So they did the obvious: They rebuilt the controller from the ground up. No one had actually considered that up to this point, all the biases of the industry had prevented them from seeing a seemingly simple alternative. Instead of one of those confusing controllers with 62 buttons, they built a simple one that looks just like the remote control you know and love. The catch on this special controller is the built-in motion sensor, after all, what could be easier than swinging your arm around to control a game?
They took an approach similar to the one Gordon Rugg took to solve a code that had been plaguing mathematicians for centuries. Rugg's method, which he called 'The Verifier Approach' involves three easy steps: "watching how they work and think, testing their logic, and uncovering ways to help them solve problems."
Shifting gears for one quick second, one of my favorite marketing stories is probably not true, but it goes something like this: P.T. Barnum or another equally mythic figure bought a tuna fish company. At the time, every other tuna brand on the market had grey tuna. There was nothing wrong with it, that was just the color it was for whatever reason. Needing to find a way to compete [insert mythic figure here] decided to change the conversation and came up with the slogan "never goes grey." All of a sudden the world everyone once knew had been flipped on its head. Disregarding any ethical issues for a second, the point I walk away with is sometimes you just need to change the conversation.
That's what they did. They changed the conversation and in doing so created one of the most amazing gaming systems I've ever experienced. I have played a fair amount of Wii in the last two weeks and the magic of it doesn't seem to go away. It's a system made for social play, it makes people smile. It inspires people to create ads for free.
The only problem: They're all sold out.
Update (2/6/07): It must be Wii day because Steven Johnson wrote up a few thoughts on the new system as well.
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Some thoughts on where innovation comes from.
How do you create an environment where innovation flourishes?
There are lots of people getting paid lots of money to answer that question. Companies are creating VPs of innovation and BusinessWeek thought it was a hot enough topic to devote a magazine to the subject.
Personally, it's something I've thought a lot about. Working at an idea factory as I do, it's hard to analyze where innovative thinking comes from.
After digging through what I've read, what I've experienced and the rest of the random thoughts in my head, I've more of less landed on two core criteria for creating an innovative environment.
- Create a place where people want to bring great ideas.
- Teach people how to think better.
Now I think the first one is pretty obvious. One goal of an organization focused on innovation should be to inspire their employees to bring their innovative ideas to the office rather than leaving them at home. Lots of successful companies and products have come from a few employees within another organization. So why did they decide to take their idea with them instead of building it inside? How do you create a culture where people want to bring you their ideas.
One option is Google's 20 percent time, where you give you engineers the flexibility to follow their passions for 1/5 of their week. Clearly this incentive has paid off, leading to Google News, Google Suggest and AdSense for Content to name a few.
There are certainly other incentives companies can dream up, but I'm going to leave number one on the table and jump to the second core criteria for creating an innovative environment.
Teach people how to think better.
This one is big and I think most often overlooked. It's not about corporate training it's about learning. As John Hagel put it, "When companies do focus on developing talent, they often emphasize formal training programs. While these programs certainly have a role in talent development, they pale in comparison to the rapid learning that occurs when employees are put in situations that challenge them to get better faster on a daily basis." Bottom line is that there is a big difference between teaching people how to do and teaching people how to think.
You can help people think better. You can help them understand that the world is full of inspiration and learning can be fun. You can teach them to open their minds to unexpected places and follow whatever path it leads them down. You can teach them how to interpret things. That way instead of relying on a limited few in some R&D lab, you can open up the process. In turn you will create more value for both the company and the employees.
I've been meaning to write this for a long time, but was waiting for the right piece of motivation. Funnily enough, today it came in a New York Magazine article about the possibility of Mike Bloomberg running for President. Towards the end of the article when talking about what Bloomberg might do next, his unique take on philanthropy comes up:
But Bloomberg tells me he has another concept brewing. “There’s the area of, how do you encourage more democracy,� he says. “Whether it’s getting good people to go into public service, or finding ways for the public to measure the people they elect and whether they deliver what they promise.�
You’re talking about merging your politics to your philanthropy, I say.
“Yes, but you’ve got to distinguish between what I’m talking about and what George Soros is trying to do. Soros uses his money to push his views. I’d be more inclined to use my money to give people the ability to make up their own minds and express themselves.�
That sealed it for me. The common approach is to use your money or power to get people to make the decisions you want. What Bloomberg is trying to do is use those same things to get people to make the decisions they want.
That, to me, is how innovation happens. It's when people stop making the decisions they think their boss wants and start thinking for themselves: Bringing their own ideas to the table.
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What keeps big companies from innovating? It could be a lack of storming brains around the office.
If you asked me what I like most about my job, I'd be quick to answer. That's because since the day I started, brainstorming has been something I've not only enjoyed, but has also made me think a great deal about creativity, business and thinking (amongst others).
You see, brainstorming is just an incredibly different way of approaching a problem when compared to what you encounter on a day-to-day basis. Normally, we think about a problem by starting with the ultimate goal and trying to fill in the pieces that lead up to it. If we wanted to take over the world, we'd start by trying to figure out how to do it. What will we need to take France? Should we start with Canada? And so on and so on.
Brainstorming, however, is about taking a markedly different approach to solving a problem that has plagued megalomaniacs for ages. Instead of starting with trying to answer the big questions, we'd start with what we know and work our way up. We know roughly how many people live in the world, where they live and how they live. We have a basic idea of their languages, cultures and religions.
By first taking inventory of those things, we can start by thinking about just what it means to take over the world. This is where we let the thoughts flow, allowing our mind to work without the barriers that normally hold it back. We can and should say anything, we can worry about judging ideas later. Maybe one person suggests it's about unification, which leads us to a conversation about commonalities in the world's cultures. Eventually, we come up with a plan to preach a story of mutual understanding that celebrates cultural differences instead of trying to make everyone the same. Whether or not this would change the world is not the point, what we can see with this example is that what seemed like a problem about guns and blood turned into an answer of peace and love. By abandoning the traditional notions we came to an unexpected conclusion.
Disregarding the absurdity of the example, my point is that brainstorming can lead to new answers, which to me means innovation. In a recent entry, Kareem Mayan discussed the reasons so many big companies have trouble innovating. Mayan spends time focusing on the fact that many big companies see the negative in new ideas, shooting them down before they have a chance to grow. Or, even worse, creating a corporate culture where employees internally censor, making the decision not to come out with that new idea because their boss will just think it's dumb. It's this kind of culture, one where so many employ the devil's advocate approach that stands in the way of innovation.
It's also just that kind of culture that could learn a whole lot from brainstorming. The same rules employed to make a great brainstorm, can also make a great company, even a great big company.
Walk in Stupid
This is one of the five rules of Wieden + Kennedy, by coming to work without preconceived notions you allow new ideas to flourish. Throughout history some of the most unexpected people have solved some of the most vexing problems. That's because so often specialists who all know the same things come to same conclusion. When you bring in someone new who's willing to try new things, who doesn't know this or that method won't work, sometimes they can imagine a completely different kind of answer.
No Negativity
This is the number one rule of improvisation. Don't shoot down anyone's idea, instead add to it, let it play itself out and then decide whether it's good or not. What you come up with in a brainstorm is a seed of an idea that needs to be cultivated to grow. You'll never know what that tree looks like if you don't plant the seed.
Cultivate Diversity
Mutts are generally healthier than pure-bread dogs because they have a much wider range of genes. Ideas work the same way. The more different the people are who are working on an idea, the more diverse their experiences, the strong the idea can be. When everyone brings something different to the table, you can be sure an idea won't be one-dimensional. Someone will be willing to ask the "stupid" question, someone else willing to make the "stupid" suggestion because they don't know any better. (And because there are no stupid questions or ideas in brainstorms!) But it's those kinds of questions, which may seem obvious to some, that can lead to innovative ideas.
Remember: Big Ideas Grow, They Don't Hatch
I've written about this in the past, but it's important not to forget that big ideas must evolve into being. They don't just happen all of a sudden. Too many people think that they just hatch out of thin air, already fully developed ideas, instead of trying to come up with small ideas and working them, massaging them and cultivating them into big ones. By creating a culture where this is understood, people will be more willing to just throw ideas out there without fear.
Stay Small
Keep a brainstorm small (I've found around eight people or less is best), creates an atmosphere where everyone has a chance to make their voice heard and a group who can move quickly from idea to idea. This, however, is the most difficult rule to translate to a large company. After all, by definition, a big company is no longer small. But that doesn't mean they can't act that way. What makes small companies so successful is their ability to move quickly and encourage ideation to flow from the bottom up, better utilizing a staff of smart and talented people. These ideas can be translated, but it's probably one of the most difficult thing a big company will face. Many look to Google, who allow their employees to spend 20 percent of their time working on their own projects. What this does is create a corporate culture where ideas flow from the bottom-up, just as they do in a small company, as opposed to the top-down. When employees feel involved in the process it's good for everyone: ideas tend to be better than those that come out of the boardroom, employees are happy with their contributions and turnover rates are lower.
Of course, not every company can or should add a 20 percent rule, but they can create other ways to encourage the company to act small. Kareem also talked about Google's Founders' Awards, which awards stock to employees who have deliver lucrative projects. In essence they've created a culture where everyone feels some ownership in the company, and isn't that what really differentiates the big companies from the little ones?
Obviously these rules won't work for everyone company out there, but by employing a bit of brainstorm into the business, innovation seems a whole lot more likely.
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As I was walking to the subway this morning I realized I made a glaring omission in
talking about innovation and openness in technology (and specifically tagging). I forgot to mention APIs and specifically point everyone to a great article on the power of the API as a way to innovate outside the company. Read the
MIT Technology Review article titled
"Amazon: Giving Away the Store". It's all about how
Amazon's open API is allowing people to tap in to the network and create new things, which can in turn earn them money as referrers. Check out this choice paragraph from the article:
While companies such as Google and Microsoft are also experimenting with the idea of letting outsiders tap into their databases and use their content in unpredictable ways (see “What’s Next for Google?â€?), none is proceeding more aggressively than Amazon. The company has, in essence, outsourced much of its R&D, and a growing portion of its actual sales, to an army of thousands of software developers, who apparently enjoy nothing more than finding creative new ways to give Web surfers access to Amazon merchandiseâ€â€and earning a few bucks in the process. The result: a syndicate of mini-Amazons operating at very little cost to Amazon itself and capturing customers who might otherwise have gone elsewhere. It’s as if Starbucks were to recruit 50,000 of its most loyal caffeine addicts to strap urns of coffee to their backs each morning and, for a small commission, spend the day dispensing the elixir to their officemates.
Also, while I'm on the topic of omissions, I left out a quote from a recent entry from
Scott Rafer of
Feedster. Scott was discussing tag spam and wrote: "tagging other people's content has value, and tagging one's own content leads directly to spam." That is, when you're tagging on
del.icio.us you're annotating someone else's article, as opposed to tagging your own posts for
Technorati. While I agree with what he's saying about tag spam generally, my only question revolves around
Flickr, where you're tagging your own content. Scott?
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Hi, I'm 