Innovator dna

Innovation SPOTLIGHT ON INNOVATION Peter Crowther

Five “discovery skills” separate true innovators from the rest of us. | by Jeffrey H. Dyer, Hal B. Gregersen, and Clayton M. Christensen The Innovator’s DNA hbr.org | December 2009 | Harvard Business Review 61

Innovation SPOTLIGHT ON INNOVATION The Innovator’s DNA “How do I find INNOVATIVE PEOPLE for my organization? And how can I become more innovative myself?” These are questions that stump senior executives, But how do they do it? Our research led us to who understand that the ability to innovate is the identify five “discovery skills” that distinguish the “secret sauce” of business success. Unfortunately, most creative executives: associating, questioning, most of us know very little about what makes one observing, experimenting, and networking. We person more creative than another. Perhaps for this found that innovative entrepreneurs (who are also reason, we stand in awe of visionary entrepreneurs CEOs) spend 50% more time on these discovery ac- like Apple’s Steve Jobs, Amazon’s Jeff Bezos, eBay’s tivities than do CEOs with no track record for in- Pierre Omidyar, and P&G’s A.G. Lafley. How do novation. Together, these skills make up what we these people come up with groundbreaking new call the innovator’s DNA. And the good news is, if ideas? If it were possible to discover the inner work- you’re not born with it, you can cultivate it. ings of the masters’ minds, what could the rest of us learn about how innovation really happens? What Makes Innovators Different? In searching for answers, we undertook a six- Innovative entrepreneurs have something called year study to uncover the origins creative intelligence, which enables discovery yet of creative – and often disrup- differs from other types of intelligence (as sug- IDEA tive – business strategies in particularly innovative companies. gested by Howard Gardner’s theory of multiple intelligences). It is more than the cognitive skill of IN BRIEF Our goal was to put innovative being right-brained. Innovators engage both sides The habits of Steve Jobs, Jeff entrepreneurs under the micro- of the brain as they leverage the five discovery skills Bezos, and other innovative CEOs scope, examining when and how to create new ideas. reveal much about the underpin- they came up with the ideas on In thinking about how these skills work together, nings of their creative thinking. which their businesses were built. we’ve found it useful to apply the metaphor of DNA. Research shows that five discovery skills distinguish the most in- We especially wanted to examine Associating is like the backbone structure of DNA’s novative entrepreneurs from other how they differ from other execu- double helix; four patterns of action (questioning, executives. tives and entrepreneurs: Some- observing, experimenting, and networking) wind one who buys a McDonald’s fran- around this backbone, helping to cultivate new in- DOING chise may be an entrepreneur, sights. And just as each person’s physical DNA is » Questioning allows innovators but building an Amazon requires unique, each individual we studied had a unique to break out of the status quo and consider new possibilities. different skills altogether. We innovator’s DNA for generating breakthrough busi- studied the habits of 25 innova- ness ideas. » Through observing, innovators tive entrepreneurs and surveyed Imagine that you have an identical twin, en- detect small behavioral details – more than 3,000 executives and dowed with the same brains and natural talents in the activities of customers, sup- 500 individuals who had started that you have. You’re both given one week to come pliers, and other companies – that suggest new ways of doing things. innovative companies or invented up with a creative new business-venture idea. Dur- new products. ing that week, you come up with ideas alone in » In experimenting, they relent- We were intrigued to learn that your room. In contrast, your twin (1) talks with 10 lessly try on new experiences and at most companies, top executives people – including an engineer, a musician, a stay- explore the world. do not feel personally responsible at-home dad, and a designer – about the venture, » And through networking with for coming up with strategic inno- (2) visits three innovative start-ups to observe what individuals from diverse back- vations. Rather, they feel responsi- they do, (3) samples five “new to the market” prod- grounds, they gain radically ble for facilitating the innovation ucts, (4) shows a prototype he’s built to five people, different perspectives. process. In stark contrast, senior and (5) asks the questions “What if I tried this?” and THINKING executives of the most innovative “Why do you do that?” at least 10 times each day dur- » The four patterns of action companies – a mere 15% in our ing these networking, observing, and experiment- together help innovators associate study – don’t delegate creative ing activities. Who do you bet will come up with the to cultivate new insights. work. They do it themselves. more innovative (and doable) idea? 62 Harvard Business Review | December 2009 | hbr.org

Studies of identical twins separated at birth in- Associating is like a mental muscle that can grow dicate that our ability to think creatively comes stronger by using the other discovery skills. As in- one-third from genetics; but two-thirds of the innovators engage in those behaviors, they build their novation skill set comes through learning – first ability to generate ideas that can be recombined in understanding a given skill, then practicing it, ex- new ways. The more frequently people in our study perimenting, and ultimately gaining confidence in attempted to understand, categorize, and store new one’s capacity to create. Innovative entrepreneurs knowledge, the more easily their brains could natu- in our study acquired and honed their innovation rally and consistently make, store, and recombine skills precisely this way. associations. Let’s look at the skills in detail. Discovery Skill 2: Questioning Discovery Skill 1: Associating More than 50 years ago, Peter Drucker described Associating, or the ability to successfully connect the power of provocative questions. “The important seemingly unrelated questions, problems, or ideas and difficult job is never to find the right answers, it from different fields, is central to the innovator’s is to find the right question,” he wrote. Innovators DNA. Entrepreneur Frans Johansson described this constantly ask questions that challenge common phenomenon as the “Medici effect,” referring to the wisdom or, as Tata Group chairman Ratan Tata creative explosion in Florence when the Medici fam- puts it, “question the unquestionable.” Meg Whit- ily brought together people from a wide range of man, former CEO of eBay, has worked directly with disciplines – sculptors, scientists, poets, philosophers, a number of innovative entrepreneurs, including painters, and architects. As these individuals con- the founders of eBay, PayPal, and Skype. “They get nected, new ideas blossomed at the intersections of a kick out of screwing up the status quo,” she told their respective fields, thereby spawning the Renais- us. “They can’t bear it. So they spend a tremendous sance, one of the most inventive eras in history. amount of time thinking about how to change the To grasp how associating works, it is important world. And as they brainstorm, they like to ask: ‘If to understand how the brain operates. The brain we did this, what would happen?’” doesn’t store information like a dictionary, where Most of the innovative entrepreneurs we in- you can find the word “theater” under the letter terviewed could remember the specific questions “T.” Instead, it associates the word “theater” with they were asking at the time they had the inspira- any number of experiences from our lives. Some tion for a new venture. Michael Dell, for instance, of these are logical (“West End” or “intermission”), told us that his idea for founding Dell Computer while others may be less obvious (perhaps “anxiety,” sprang from his asking why a computer cost five from a botched performance in high school). The times as much as the sum of its parts. “I would take more diverse our experience and knowledge, the computers apart…and would observe that $600 more connections the brain can make. Fresh inputs worth of parts were sold for $3,000.” In chewing trigger new associations; for some, these lead to over the question, he hit on his revolutionary busi- novel ideas. As Steve Jobs has frequently observed, ness model. “Creativity is connecting things.” To question effectively, innovative entrepreneurs The world’s most innovative companies prosper do the following: by capitalizing on the divergent associations of Ask “Why?” and “Why not?” and “What if?” their founders, executives, and employees. For ex- Most managers focus on understanding how to ample, Pierre Omidyar launched eBay in 1996 after make existing processes – the status quo – work a linking three unconnected dots: (1) a fascination little better (“How can we improve widget sales in with creating more-efficient markets, after having Taiwan?”). Innovative entrepreneurs, on the other been shut out from a hot internet company’s IPO in hand, are much more likely to challenge assump- the mid-1990s; (2) his fiancée’s desire to locate hard- tions (“If we cut the size or weight of the widget to-find collectible Pez dispensers; and (3) the inef- in half, how would that change the value proposi- fectiveness of local classified ads in locating such tion it offers?”). Marc Benioff, the founder of the items. Likewise, Steve Jobs is able to generate idea online sales software provider Salesforce.com, was after idea because he has spent a lifetime exploring full of questions after witnessing the emergence of new and unrelated things – the art of calligraphy, Amazon and eBay, two companies built on services meditation practices in an Indian ashram, the fine delivered via the internet. “Why are we still loading details of a Mercedes-Benz. and upgrading software the way we’ve been doing hbr.org | December 2009 | Harvard Business Review 63

Innovation SPOTLIGHT ON INNOVATION The Innovator’s DNA all this time when we can now do it over the inter- lives,” Cook explained. “You see something and ask, net?” he wondered. This fundamental question was ‘Why do they do that? That doesn’t make sense.’” the genesis of Salesforce.com. Then a buddy got him a sneak peek at the Apple Imagine opposites. In his book The Opposable Lisa before it launched. Immediately after leaving Mind, Roger Martin writes that innovative thinkers Apple headquarters, Cook drove to the nearest res- have “the capacity to hold two diametrically op- taurant to write down everything he had noticed Sample of Innovative posing ideas in their heads.” He explains, “Without about the Lisa. His observations prompted insights Entrepreneurs panicking or simply settling for one alternative or such as building the graphical user interface to look from our Study the other, they’re able to produce a synthesis that is just like its real-world counterpart (a checkbook, superior to either opposing idea.” for example), making it easy for people to use it. SAM ALLEN Innovative entrepreneurs like to play devil’s ad- So Cook set about solving his wife’s problem and ScanCafe.com vocate. “My learning process has always been about grabbed 50% of the market for financial software MARC BENIOFF disagreeing with what I’m being told and taking in the first year. Salesforce.com the opposite position, and pushing others to really Innovators carefully, intentionally, and consis- JEFF BEZOS justify themselves,” Pierre Omidyar told us. “I re- tently look out for small behavioral details – in the Amazon.com member it was very frustrating for the other kids activities of customers, suppliers, and other compa- MIKE COLLINS Big Idea Group when I would do this.” Asking oneself, or others, to nies – in order to gain insights about new ways of SCOTT COOK imagine a completely different alternative can lead doing things. Ratan Tata got the inspiration that led Intuit to truly original insights. to the world’s cheapest car by observing the plight MICHAEL DELL Embrace constraints. Most of us impose con- of a family of four packed onto a single motorized Dell Computer straints on our thinking only when forced to deal scooter. After years of product development, Tata AARON GARRITY with real-world limitations, such as resource al- Group launched in 2009 the $2,500 Nano using a XanGo locations or technology restrictions. Ironically, modular production method that may disrupt the DIANE GREEN great questions actively impose constraints on our entire automobile distribution system in India. Ob- VMWare thinking and serve as a catalyst for out-of-the-box servers try all sorts of techniques to see the world ELIOT JACOBSEN insights. (In fact, one of Google’s nine innovation in a different light. Akio Toyoda regularly practices RocketFuel principles is “Creativity loves constraint.”) To initi- Toyota’s philosophy of genchi genbutsu – “going to JOSH JAMES ate a creative discussion about growth opportuni- the spot and seeing for yourself.” Frequent direct Omniture ties, one innovative executive in our study asked observation is baked into the Toyota culture. CHRIS JOHNSON Terra Nova this question: “What if we were legally prohibited JEFF JONES from selling to our current customers? How would Discovery Skill 4: Experimenting NxLight; Campus we make money next year?” This led to an insight- When we think of experiments, we think of scien- Pipeline ful exploration of ways the company could find tists in white coats or of great inventors like Thomas HERB KELLEHER and serve new customers. Another innovative CEO Edison. Like scientists, innovative entrepreneurs ac- Southwest Airlines prods his managers to examine sunk-cost con- tively try out new ideas by creating prototypes and MIKE LAZARIDIS straints by asking, “What if you had not already launching pilots. (As Edison said, “I haven’t failed. Research In Motion hired this person, installed this equipment, imple- I’ve simply found 10,000 ways that do not work.”) SPENCER MOFFAT mented this process, bought this business, or pur- The world is their laboratory. Unlike observers, who Fast Arch of Utah sued this strategy? Would you do the same thing intensely watch the world, experimenters construct DAVID NEELEMAN you are doing today?” interactive experiences and try to provoke unortho- JetBlue; Morris Air dox responses to see what insights emerge. PIERRE OMIDYAR eBay Discovery Skill 3: Observing The innovative entrepreneurs we interviewed all JOHN PESTANA Discovery-driven executives produce uncommon engaged in some form of active experimentation, Omniture business ideas by scrutinizing common phenomena, whether it was intellectual exploration (Michael PETER THIEL particularly the behavior of potential customers. In Lazaridis mulling over the theory of relativity in PayPal observing others, they act like anthropologists and high school), physical tinkering (Jeff Bezos taking MARK WATTLES social scientists. apart his crib as a toddler or Steve Jobs disassem- Hollywood Video Intuit founder Scott Cook hit on the idea for bling a Sony Walkman), or engagement in new COREY WRIDE Quicken financial software after two key observa- surroundings (Starbucks founder Howard Shultz Movie Mouth tions. First he watched his wife’s frustration as she roaming Italy visiting coffee bars). As executives NIKLAS struggled to keep track of their finances. “Often the of innovative enterprises, they make experimenta- ZENNSTRÖM Skype surprises that lead to new business ideas come from tion central to everything they do. Bezos’s online watching other people work and live their normal bookstore didn’t stay where it was after its initial 64 Harvard Business Review | December 2009 | hbr.org

How Innovators Stack Up This chart shows how four well-known innovative entrepreneurs rank on each of the discovery skills. All our high-profile innovators scored above the 80th percentile on questioning, yet each combined the discovery skills uniquely to forge new insights. ASSOCIATING QUESTIONING OBSERVING EXPERIMENTING NETWORKING 100 Michael Dell Michael Lazaridis 80 Pierre Omidyar Scott Cook 60 Noninnovators Rankings are based on a survey of more than 40 3,000 executives and PERCENTILE entrepreneurs. success; it morphed into an online discount retailer, stronger financial results than companies run by selling a full line of products from toys to TVs to CEOs without such experience – roughly 7% higher home appliances. The electronic reader Kindle is market performance on average. P&G’s A.G. Lafley, an experiment that is now transforming Amazon for example, spent time as a student studying his- from an online retailer to an innovative electron- tory in France and running retail operations on U.S. ics manufacturer. Bezos sees experimentation as so military bases in Japan. He returned to Japan later critical to innovation that he has institutionalized it to head all of P&G’s Asia operations before becom- at Amazon. “I encourage our employees to go down ing CEO. His diverse international experience has blind alleys and experiment,” Bezos says. “If we can served him well as the leader of one of the most get processes decentralized so that we can do a lot innovative companies in the world. of experiments without it being very costly, we’ll get a lot more innovation.” Discovery Skill 5: Networking Scott Cook, too, stresses the importance of cre- Devoting time and energy to finding and testing ating a culture that fosters experimentation. “Our ideas through a network of diverse individuals gives culture opens us to allowing lots of failures while innovators a radically different perspective. Unlike harvesting the learning,” he told us. “It’s what sepa- most executives – who network to access resources, rates an innovation culture from a normal corpo- to sell themselves or their companies, or to boost rate culture.” their careers – innovative entrepreneurs go out of One of the most powerful experiments innova- their way to meet people with different kinds of tors can engage in is living and working overseas. ideas and perspectives to extend their own knowl- Our research revealed that the more countries a edge domains. To this end, they make a conscious person has lived in, the more likely he or she is effort to visit other countries and meet people from to leverage that experience to deliver innovative other walks of life. products, processes, or businesses. In fact, if man- They also attend idea conferences such as Tech- agers try out even one international assignment nology, Entertainment, and Design (TED), Davos, before becoming CEO, their companies deliver and the Aspen Ideas Festival. Such conferences hbr.org | December 2009 | Harvard Business Review 65

Innovation SPOTLIGHT ON INNOVATION The Innovator’s DNA draw together artists, entrepreneurs, academics, problems by talking with people in other fields. One politicians, adventurers, scientists, and thinkers expert from Polaroid with in-depth knowledge of from all over the world, who come to present their film technology knew how to make the ceramic newest ideas, passions, and projects. Michael Laza- composite stronger. Experts in sperm-freezing tech- ridis, the founder of Research In Motion, notes that nology knew how to prevent ice crystal growth on the inspiration for the original BlackBerry occurred cells during freezing, a technique that CPS applied at a conference in 1987. A speaker was describing to its manufacturing process with stunning success. a wireless data system that had been designed for Coke; it allowed vending machines to send a signal Practice, Practice, Practice when they needed refilling. “That’s when it hit me,” As innovators actively engage in the discovery skills, Lazaridis recalls. “I remembered what my teacher they become defined by them. They grow increas- said in high school: ‘Don’t get too caught up with ingly confident of their creative abilities. For A.G. computers because the person that puts wireless Lafley, innovation is the central job of every leader, technology and computers together is going to regardless of the place he or she occupies on the make a big difference.’” David Neeleman came up organizational chart. But what if you – like most ex- with key ideas for JetBlue – such as satellite TV at ecutives – don’t see yourself or those on your team every seat and at-home reservationists – through as particularly innovative? networking at conferences and elsewhere. Though innovative thinking may be innate to Kent Bowen, the founding scientist of CPS tech- some, it can also be developed and strengthened nologies (maker of an innovative ceramic compos- through practice. We cannot emphasize enough ite), hung the following credo in every office of his the importance of rehearsing over and over the start-up: “The insights required to solve many of behaviors described above, to the point that they our most challenging problems come from outside become automatic. This requires putting aside time our industry and scientific field. We must aggres- for you and your team to actively cultivate more sively and proudly incorporate into our work find- creative ideas. ings and advances which were not invented here.” The most important skill to practice is question- Scientists from CPS have solved numerous complex ing. Asking “Why” and “Why not” can help turbo- charge the other discovery skills. Ask questions that both impose and eliminate constraints; Put a Ding in the Universe this will help you see a problem or opportunity from a different angle. Try spending 15 to 30 minutes each day writing down 10 new ques- WHY DO INNOVATORS prefer an existing state of affairs to tions that challenge the status quo in your com- question, observe, experiment, alternative ones. pany or industry. “If I had a favorite question to and network more than typical Embracing a mission for change ask, everyone would anticipate it,” Michael Dell executives? As we examined what makes it much easier to take risks told us. “Instead I like to ask things people don’t motivates them, we discovered two and make mistakes. For most of the think I’m going to ask. This is a little cruel, but common themes: (1) They actively innovative entrepreneurs we studied, I kind of delight in coming up with questions desire to change the status quo, and mistakes are nothing to be ashamed that nobody has the answer to quite yet.” (2) they regularly take risks to make of; in fact, they are expected as a cost To sharpen your own observational skills, that change happen. Throughout our of doing business. “If the people run- watch how certain customers experience a research, we were struck by the con- ning Amazon.com don’t make some product or service in their natural environ- sistency of language that innovators significant mistakes,” explained Be- ment. Spend an entire day carefully observing use to describe their motives. Jeff zos, “then we won’t be doing a good the “jobs” that customers are trying to get done. Bezos wants to “make history,” Steve job for our shareholders because we Try not to make judgments about what you see: Jobs to “put a ding in the universe,” won’t be swinging for the fences.” Simply pretend you’re a fly on the wall, and Skype cofounder Niklas Zennström In short, innovators rely on their observe as neutrally as possible. Scott Cook ad- to “be disruptive, but in the cause “courage to innovate” – an active vises Intuit’s observers to ask, “What’s different of making the world a better place.” bias against the status quo and an than you expected?” Follow Richard Branson’s These innovators steer entirely clear unflinching willingness to take example and get in the habit of note taking of a common cognitive bias called risks – to transform ideas into power- wherever you go. Or follow Jeff Bezos’s: “I take the status quo bias – the tendency to ful impact. pictures of really bad innovations,” he told us, “of which there are a number.” 66 Harvard Business Review | December 2009 | hbr.org

Try spending 15 to 30 minutes each day writing down questions that challenge the status quo in your company. To strengthen experimentation, at both the tries. Get them to tell you about their innovative individual and organizational levels, consciously ideas and ask for feedback on yours. approach work and life with a hypothesis-testing ••• mind-set. Attend seminars or executive education Innovative entrepreneurship is not a genetic pre- courses on topics outside your area of expertise; disposition, it is an active endeavor. Apple’s slogan take apart a product or process that interests you; “Think Different” is inspiring but incomplete. We read books that purport to identify emerging trends. found that innovators must consistently act differ- When you travel, don’t squander the opportunity ent to think different. By understanding, reinforcing, to learn about different lifestyles and local behav- and modeling the innovator’s DNA, companies can ior. Develop new hypotheses from the knowledge ﬁnd ways to more successfully develop the creative you’ve acquired and test them in the search for new spark in everyone. products or processes. Find ways to institutional- ize frequent, small experiments at all levels of the Jeffrey H. Dyer (jdyer@byu.edu) is a professor of organization. Openly acknowledging that learning strategy at Brigham Young University in Provo, Utah, through failure is valuable goes a long way toward and an adjunct professor at the University of Penn- building an innovative culture. sylvania’s Wharton School. Hal B. Gregersen (hal. To improve your networking skills, contact the gregersen@insead.edu) is a professor of leadership ﬁve most creative people you know and ask them at Insead in Abu Dhabi, UAE, and Fontainebleau, to share what they do to stimulate creative thinking. France. Clayton M. Christensen (cchristensen@ You might also ask if they’d be willing to act as your hbs.edu) is a professor of business administration at creative mentors. We suggest holding regular idea Harvard Business School in Boston. lunches at which you meet a few new people from Reprint R0912E To order, see page 131. diverse functions, companies, industries, or coun- Roy Delgado “The numbers aren’t working.” hbr.org | December 2009 | Harvard Business Review 67

Innovator dna

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