Harvard Business School: 5 Ways to Make Your Company More Innovative

1. RESEARCH & IDEASFive Ways to Make YourCompany More InnovativePublished: May 23, 2012Authors: Garry Emmons, Julia Hanna, and Roger Thompson How do you create a…
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  • 1. RESEARCH & IDEASFive Ways to Make YourCompany More InnovativePublished: May 23, 2012Authors: Garry Emmons, Julia Hanna, and Roger Thompson How do you create a company that Associating that other experience to whats learn to act differently and think differently, andunleashes and capitalizes on innovation? HBS going on in my world may make me look by doing so increase your prospects forfaculty experts in culture, customers, creativity, brilliant, but in reality my brilliance was in developing innovative products and, and the DNA of innovators offer up seeing that this had been solved elsewhere.ideas. From HBS Alumni Bulletin. Observing and questioning go hand in glove. Innovators observe things, then question Rosabeth Moss Kanter why. If you want to be an innovative person, How Do You Create a Culture of In a hypercompetitive global economy, when you see things, you have to pay attention Innovation?creativity has never been more important for and then wonder why. Have you noticed the courage buried in thesuccess . But how do you create a company that A good illustration of observing and word encourage? To create a culture in whichunleashes and capitalizes on innovation? For questioning is Scott Cook (MBA 1976) and innovation flourishes takes courage.answers, writers at the HBS Alumni Bulletin QuickBooks. By observing and questioning, he Determined innovators persist despite setbacks.turned to five HBS faculty experts in culture, developed an important insight into why the But companies shouldnt count on peoplecustomers, creativity, marketing, and the DNA owners of small businesses typically wait until succeeding despite the odds; they should shiftof innovators. What they have to say might the last minute to update their books and file tax the odds. Here are three ways to do that.surprise you. forms. Most people would say they are just lazy Put innovation at the heart of strategy, and or undisciplined. But Cook observed what was tout it in every message. Think of innovation strategy as a pyramid: big bets at the top, a fewClayton Christensen happening and asked why. And the owners projects in development in the middle, and a replied, "Every minute I spend doing my taxes Can people learn to be more innovative? broad base of continuous improvements, or my books, Im not with a customer. So I dont want to overstate the case. I think incremental contributions, and early-stage new bookkeeping is the last thing I want to do." Forabout 40 percent of people just are not going to ideas at the bottom. For example, Verizon Cook, that produced an insight that led to thebe good at innovating regardless of what they placed big bets on Googles Android for development of QuickBooks, which greatlydo. And 5 percent are born with the instinct. smartphones and on fiber-optics for landlines, simplifies small-business accounting.There are things that they do and ways that they and now seeks new ways that wireless networks Networking is a skill that innovators use tothink that are intuitive. The rest of us could could run everything, including cars and identify and develop ideas by spending timelearn what these innovators do if somebody refrigerators. It has projects in development with a diverse group of people with differentwould just crawl inside their brains and codify with GMs OnStar and in cloud computing. In backgrounds and experiences. By engagingwhat to them is intuitive. addition, Verizon CEO Lowell McAdam sees with others, innovators increase the probability In a sense, that was our hope with The small "pots of gold" everywhere in the business, that they are going to gain useful insights.Innovators DNA, that we could articulate how even in the traditional landline side, preaching Finally, innovators are constantlyinnovative people think. So over a period of process innovations to technicians. experimenting. The critical insight here is thatyears, we interviewed hundreds of innovators Define jobs around innovation. Make it a for whatever reason, when God created theand almost 5,000 executives to identify ways of job prerequisite. Consider 3Ms move to world, he made data only available about thethinking that distinguish innovative people from become one of the first companies to tell past. As teachers at HBS, were trained to nailtypical executives. What we found is that professionals that they could spend 15 percent students to the wall if they ever make aninnovators "think different," to borrow a slogan of their time on projects of their own choosing. assertion in class discussion that is not backedfrom Apple. And thinking differently leads Now many high-tech companies know that they up with data and evidence in the case. So ourthem to act differently. From our research, cant get the best talent without providing this students come out of here with this elevatedconsistent patterns emerged that led us to kind of flexibility. And some of those respect for data-driven, fact-based, analyticalidentify five primary discovery skills that self-selected, self-organized projects might even decision-making.underlie innovation: associating, observing, result in a blockbuster product or line of The problem is that data are only availablequetioning, networking, and experimenting. business. For 3M, it was the Post-it note. about the past. If youre trying to be innovative, First and foremost, innovators are good at Recognize innovation in every part of the and you have this data-driven mindset, you cantassociational thinking, or simply associating. company. To build a culture of agility, go forward. So experimenting essentially says,They make connections between seemingly creativity, and innovation, Gillette developed an "I dont want to wait until somebody providesunrelated problems and ideas and synthesize innovation fair in which every unit could show data. I need to get out there and create data."new ideas. I would frame associational thinking off its most promising new concepts. I was Collectively, these five discovery skillsby asking this question: Has somebody else in privileged to judge the first one with the then constitute what we call the innovators DNA,the world solved a problem like this before? It CEO, where we gave an award to the legal the code for creating innovative business ideas.turns out that most problems have been solved department for its ethics program, featuring a By mastering these discovery skills, you canbefore by somebody in a different environment.COPYRIGHT 2012 PRESIDENT AND FELLOWS OF HARVARD COLLEGE 1
  • 2. HARVARD BUSINESS SCHOOL | WORKING KNOWLEDGE | HBSWK.HBS.EDUtakeoff on "get out of jail free" cards from the distinct strategy for the open and closed parts, the product to do. So relative advantage isboard game Monopoly. This wasnt a with special attention paid to the open parts. something you can play around like the new shaving systems for Create a center that will attract users to your The other big question is, how muchwomen, but it showed that everyone has a role space and get the user-innovators to behavior change do you embed in the product?to play in a culture of innovation. self-identify. Beyond that, foster a space where People resist change. They like the way they do To go from idea to successful innovation a community can collaborate and criticize both things now, for the most part. They might wishrequires a great deal of support and your work and their own work. Thats how to a familiar product was cheaper or faster, butcollaboration. When people are surrounded by get the most out of your customers in the 21st theyve gotten used to the way things currentlyconstant communication and encouragement, century. work. And so, if you dont take behavioralthey can find the courage to try, fail, redo, and change into account, youre going to miss outtry again. on a big piece of the equation. Its not how John Gourville economists would perceive it, weighing the How do you successfully market an costs and benefits. Its actually how much areCarliss Baldwin innovative product? you asking people to change, and are they How can companies tap their customers The idea that we rail against in class is that willing to do it?for innovative ideas? product development just throws a new product In short, most of what leads to a product Firms have a tendency to look at their over the wall to marketing and expects them to succeeding or failing has to do with the innatenavels. The first thing I would say to managers go sell it. For the last 50 years, innovation nature of the product itself, the features builtis that there is as much creativity and theorist Everett Rogers told us that the into it. And if you start with a product that doesknowledge among your customers as you could difference between a successful product and an well on these five factors, then life gets a lotever hope to generate within your own unsuccessful product has to do with how the easier.boundaries. Accept the reality that they product is designed-the physical attributes ofcollectively know more than you do about the product. And he came up with five factors:whatever it is your company makes, that Relative advantage: Is it better than what its Stefan Thomketechnology has almost completely democratized replacing? How can a company balance creativity andthe design process, and that these Compatibility: Is it compatible with the way innovation with the need for process anduser-innovators, thanks to the Internet, can go people currently do things? structure?through an iterative process much more quickly Complexity: Is it too complex to use? Before the issue of balance even comes up,and cheaply than was true in the past. Trialability: Can you try it in small doses? a company must allow sufficient time for what So, how do you encourage customer-driven Observability: Can you watch other people use may be the most underrated yet most importantinnovation and capture some of that value? it? part of the innovation process: problem First, consider the question of intellectual All of those things are inherent in the definition. Consider Apple: its genius lies in theproperty (IP). Divide your knowledge cleanly product itself. Rogerss research found that 75 ability to get to the heart of a problem and notbetween those pieces you want to protect-the percent of the variance between products that settle for convoluted solutions until they find, incomponent on which youll build the succeed and products that dont succeed has to the late Steve Jobss words, "the key, underlyingvalue-capturing part of your business-and the do with those five factors. Once you have those principle of the problem" and then theknowledge that youre going to put into the things, if they are all pointing in the right "beautiful, elegant solution that works."public domain. Let your users go to town on the direction, its a lot easier to market the product. Once the problem has been defined and theopen parts of the system, but be aware its a Relative advantage is the starting point. Its desired target established, there are two keydelicate balance. The last thing you want to do a necessary but not sufficient condition. You functions in innovation: brainstorming newis foster competition down the line, as IBM did have to be better than what youre replacing on ideas, and deciding which of those ideas arewhen it let the IP of essential components slip some dimension. How can marketing get worth pursuing. When most people hear a newout of its own hands and into the grasp of involved? Well, if you think about relative idea, its human nature to see its flaws, soMicrosoft and Intel. advantage, you can achieve it several ways. during the brainstorm processing, no criticism Finding those people who have the will and You can provide more benefits for the same should be allowed. I know of a manager whodesire to innovate in your system can be like cost, the same benefits for less cost, or a lot brings along a squirt gun to brainstorminglooking for needles in a haystack, but thats more benefits for slightly more cost. Each of sessions. After a few squirts, people learn towhere crowdsourcing comes in-defining a those has a different behavioral feel for the silence their critical voices. The design firmchallenge and offering an incentive, whether in consumer. So, even thinking about what IDEO, in its brainstorming sessions, tellsstatus or money, can get people to self-select as features you put into a product affects how easy participants to produce, for example, 150 ideasresources to you. You may even want to hire it will be to market. in less than 45 minutes. The impossible timesome of them. So this strategy can play into Theres always this idea of feature creep that limit and quota forces them to submit whatevertalent acquisition in addition to generating new leads to adding bells and whistles. But every comes to mind, even seemingly crazyproduct ideas. time you add bells and whistles, chances are suggestions. Only after the brainstorming Sometimes a community of users will form youre also adding costs. The ideal situation is session has concluded does IDEO then subjectindependently of the company. That can be one with the same cost and much higher the various ideas to critical voices.tricky, because they will not want to be benefits. And so, part of what marketing does is Once some really solid ideas have emerged,controlled, and they will want to criticize your ask, "Whats absolutely necessary to make this only then should you begin "toggling,"product. The best policy is probably to foster product attractive to consumers? Do we have to switching back and forth between creators andboth the community building and the criticism. add all these bells and whistles? Or do critics, between the idea people and the processIt takes a great deal of courage and leadership to consumers just basically want something that people, to work toward Jobss "beautiful,embrace this model where you enable and gets the job done?" My colleague Clay elegant solution." This requires companies to beencourage users through various challenges and Christensen has this idea that people hire astute about how they prototype and test. IDEOallow the community the degree of autonomy it products to do a job. Its that exact sort of thing. adheres to the "three Rs" rule: rough, rapid, andneeds to be healthy. You dont need to add features that really arent right. For example, when testing the So, in a nutshell: Split your IP. Have a delivering on the job that consumers are hiring ergonomics of a new type of telephone receiver,COPYRIGHT 2012 PRESIDENT AND FELLOWS OF HARVARD COLLEGE 2
  • 3. HARVARD BUSINESS SCHOOL | WORKING KNOWLEDGE | HBSWK.HBS.EDUprototypes can be carved quickly from foam but coexist and even feed off each other, if you Garry Emmons, Julia Hanna, and Rogerthe shapes need to be exact, to see if theyll fit manage their different and sometimes opposing Thompson are on the staff of the HBS Alumniwhen people cradle them between head and functions smartly. Indeed, if you want to be an Bulletin, where this article first appeared.shoulder. innovative company, you cant have one Innovation and process within a firm can without the other.COPYRIGHT 2012 PRESIDENT AND FELLOWS OF HARVARD COLLEGE 3
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