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Every manager knows that innovation requires drastically different practices from those required for routine work, yet many companies still struggle to switch gears when shifting from the routine to the innovative. Even when managers say they want more innovation, their organizations often undermine it. A big part of the problem is that managers instinctively recoil when they see what innovation actually requires: The right practices seem strange, even wrongheaded. In particular, many managers can’t bring themselves to lose money right now to test ideas that may never make money, in hopes that a tiny percentage of those ideas will make money later.
A few years ago, I met with an executive about sparking innovation in her multibillion-dollar corporation. Profits were falling and stock analysts were complaining that the company wasn’t innovative. The manager complained that her CEO hated taking risks and that he would reject any program that might reduce quarterly profits, even if it had long-term benefits. He believed the company could innovate without deviating from the practices that were making money right now.
The CEO was dreaming the impossible dream, but he is not alone. There are managers in every industry who keep saying they want innovation but keep doing things to stifle it. Fortunately, there are some weird but proven ways to avoid this common syndrome.
Organizing for Routine Versus Innovative Work
Stanford University’s James March expresses the difference between routine and innovative work as exploiting old ideas versus exploring new possibilities. Exploiting means relying on past history, well-developed procedures and proven technologies to make money now. McDonald’s Corp., for example, knows that customers expect every Big Mac to look and taste the same, so the company uses old knowledge to make the next Big Mac just like the last one.
But in the long run, companies cannot survive by relying only on tried-and-true actions. They must keep exploring new procedures and technologies to satisfy customer demand, to gain advantage over competitors or just to keep pace. McDonald’s uses some of the cash from all those hamburgers to explore new possibilities. For example, the company is experimenting with a technology for cooking its fries in 65 seconds rather than the current 210 seconds. Both exploration and exploitation are necessary for moving forward, even though the principles behind them differ by 180 degrees. No wonder the practices that are so right for one are so wrong for the other.
The basic organizing principles for exploration are enhancing variance, seeing old things in new ways and breaking from the past.
Innovation requires increasing the diversity of ideas in a company. As Thomas Edison said about inventing, “You need a good imagination and a pile of junk.” Promising ideas can come from what appear to be varied sorts of junk. That is true not only for inventing new technologies, products and compounds, but also for improving established processes. So even when Toyota Motor Corp. or Intel Corp. want to reduce variance in manufacturing processes, they use brainstorming, constructive confrontation and experiments to increase variance in the pool of solutions considered.
See Old Things in New Ways
Sailing champion Jeff Miller has said that great sailors have vu ja de, a play on the phrase déjà vu. Vu ja de lets sailors (who race in the same places again and again) see things in a new light each time so that they can keep learning from every race. Innovative people have the same ability. Consider statistician Abraham Wald and his discovery of the best places to strengthen U.S. warplanes during World War II.
Military leaders were concerned because so many planes were being shot down. They thought more armor could help but didn’t know where to put it. Wald marked bullet holes in the airplanes that returned from battle. He found that two sections of the fuselage — between the wings and between the horizontal stabilizers on the tail — had far fewer holes than other parts of the plane. He suggested putting more armor there, rather than where there were many holes. Why? The planes he analyzed had not been shot down. So it was the holes Wald wasn’t seeing — in the planes that weren’t returning — that needed extra protection.
Break From the Past
There is a lot of hype, much of it justified, about the dangers of clinging to the past. Yet all the excitement can make us forget that most new ideas are bad and most old ideas are good. The failure rate for new products and companies is dramatically higher than for old ones. Dozens of new breakfast cereals fail every year, but Cheerios and Wheaties persist. If there were truth in advertising, the slogan “innovate or die” would be replaced with “innovate and die.” Tried and true wins out over new and improved most of the time.
But not all the time. The world does change, new technologies and products are developed, and consumer preferences do shift. So although the failure rate may be high, every company needs to keep trying to break from the past.
Consider the tea bag. Tea bags had been square since being introduced to British consumers in 1951. No company tried to change the shape until 1986, when Tetley began studying consumer reactions to round bags. After the round-bag rollout in January 1990, Tetley’s share of the English tea market rose from 15% to 20%, slightly behind Brooke Bond’s PG Tips. Not to be outdone, PG Tips introduced in 1996 the Pyramid tea bag, with a 3-D shape — and was soon reporting that sales were eclipsing Tetley’s round bags in many regions.
Eight Gear-Switching Techniques
I offer eight weird techniques to get teams and companies to stop doing work by rote and start innovating. Each technique either provokes emotions (generally unpleasant) that interrupt mindless action, busts up the cognitive frame, makes you identify and reject your dearest beliefs or explodes the composition of organizations and teams. Perhaps not all the practices will work for every company, but each is inspired by sound research and actually is used in innovative companies.
Inciting Discomfort and Dissatisfaction
Being uncomfortable or unhappy may not be fun, but it helps people break free of ingrained and mindless actions.
Provoke unpleasant emotions in others.
Colleagues and others may react to the unfamiliar with feelings such as irritation, anxiety and disapproval. But if everyone always likes your ideas, it probably means they aren’t new.
The belief that new ideas provoke discomfort is helping Herman Miller develop Resolve, a furniture system that “resolves” the dull uniformity of the traditional cubicle environment. “Instead of muted-gray walls and severe right angles, it features lightweight, translucent screens and generous 120-degree angles,” lead designer Jim Long told Fast Company for their April 2000 issue. “My metaphor is a screen door. … It offers openness, but not complete openness, not total visibility.” When Long showed a Resolve prototype to 200 managers, designers and facility managers and received complaints and criticisms, he was pleased; if the reaction had been more positive, it “would have meant that the ideas were too ordinary.”
Make yourself uncomfortable.
Innovation requires inventors to work on ideas that make them squirm, too. After all, discomfort is a sign that the project is unfamiliar or risky. That is why at Intel, Mary Murphy-Hoye exhorts researchers on her team, “Scare yourself, otherwise you aren’t doing anything new.”
Smashing the Cognitive Frame
To change rigid mind-sets, it is helpful to treat everything as temporary and to ignore the experts.
Treat everything like a temporary condition.
The principles for routine work reflect the assumption that everything is a permanent condition. The principles for innovative work reflect the reverse assumption. Both are useful fictions. Exploiting old knowledge makes sense only if what worked will keep on working. Breaking from the past makes sense only when old ways are obsolete or about to be. Leaders of innovative companies constantly warn that just because things are working well now doesn’t mean that they will work later. In June 2000, Dow Jones Online News quoted Jorma Ollila, CEO of Finnish telephone giant Nokia: “We are not as quick as we were six years ago. … You start to believe that what you created three years ago is so good because it was good two years ago and 18 months ago and you continue to make money. And then there’s someone in Israel and Silicon Valley just loving to kill you with a totally new technology.”
Sustaining innovation requires treating everything, including teams, organizations, procedures and product lines, as temporary. When CEO Bob Galvin was considering how to market Motorola’s color televisions in 1967, for example, he used the name Quasar to keep the product distinct from the Motorola brand. He treated the line as temporary, so that if Motorola ever wanted to sell the Quasar business, the company wouldn’t have to disentangle it from the Motorola brand. In time, televisions became commodities with slim profit margins, and in 1974, Motorola was able to sell Quasar to Matsushita Electrical Industrial Co.
Ignore the experts.
In the creative process — especially in the early stages — ignorance is bliss. People who don’t know how things are supposed to be aren’t blinded by existing beliefs. They can see things that so-called experts have rejected or never thought about. The virtues of ignorance and detachment are evident in Nobel Prize-winning work, including James Watson and Francis Crick’s discovery of DNA structure, Kary Mullis’ invention of polymerase chain reaction and Richard Feynman’s contributions to physics. In “Genius,” Feynman’s biographer, James Gleick, describes how Feynman refused to read the academic literature. Feynman “chided graduate students who would begin their work in the normal way, by checking what had already been done. That way, he told them, they would give up the chances of finding something original.”
Jane Goodall’s groundbreaking research on chimpanzees also illustrates the virtues of naiveté. Anthropologist Louis Leakey wanted to hire Goodall to do two years of intensive chimpanzee observation. Because she lacked scientific training, Goodall hesitated to take the job, but as she describes it in her memoir “In the Shadow of Man,” Leakey convinced her that he wanted someone “with a mind uncluttered and unbiased by theory, who would make the study for no other reason than a real desire for knowledge.” Later, Goodall and Leakey concluded that if she had not been ignorant of existing theories, she never would have been able to observe and explain so many new chimp behaviors.
When Daniel Ng in his innocence opened the first McDonald’s in Hong Kong in 1975, experienced competitors snorted, “Selling hamburgers to the Cantonese? You must be joking!” In the May–June 2000 issue of Foreign Affairs magazine, Ng reflected that his initial success was probably due to his lack of management training. He now operates more than 150 McDonald’s restaurants in Hong Kong.
Identifying and Rejecting Your Dearest Beliefs
Everyone has preconceptions about what makes sense, but sometimes it’s useful to forget them and pursue the absurd and unacceptable. This can help teams and companies to recognize when routine practices have become sanctified and to start questioning their dearest beliefs.
Think of something ridiculous and plan to do it.
Thinking up dumb things to do helps bring to the surface what people believe but have a hard time articulating. Unlike talking about only “smart” ideas, it creates a broad palette of options, which promotes both vu ja de and constructive variance.
Justin Kitch, currently CEO of Web-site builder Homestead, once worked at Microsoft Corp. developing educational products for children. One day, he led a brainstorming session on the worst product the company could possibly build. He thought that if the team came up with something really bad and did the opposite, a strong, original product could result. With great hilarity, the team decided that a computer-controlled talking Barney doll for teaching numbers would be the product with the least possible educational value. (Contemporary educational-media theorists believed that designing software for rote learning was a laughable waste of the medium’s power.) Kitch reports, “I still have the drawing. I made it as a total joke, and I gave it to my boss. … I couldn’t believe it: They built exactly what we brainstormed would be the worst possible product.” Kitch refuses to accept any credit — or blame — for Microsoft’s ActiMates Interactive Barney even though it won numerous awards for its educational value when it was sold a few years later. I still think he was on to something that more companies ought to do to spark innovation.
Dumb ideas can lead to good ideas, or, as in the case above, they can turn out to be good ideas themselves. A useful technique is to have people list products, services and business models that seem destructive and impractical — and then to imagine that the ideas are smart. This technique has two advantages. First, it forces people to expose and challenge assumptions that might be getting in the way of developing great ideas. Second, if a good idea arises that many people think is stupid, it’s probably one competitors won’t copy soon.
When the first Palm Pilot came out, for example, most observers thought it was doomed to failure. After all, Apple Computer, Microsoft and many startups had lost hundreds of millions of dollars on handheld computers. When Palm sought funding, the typical venture capitalist said, “Please, no more pen-based computers. We have already lost enough of our investors’ money on this failed concept.” The experts’ skepticism proved to be a huge advantage because competitors didn’t respond until Palm’s operating system had already become industry standard.
Hold a “sacred cow” workshop.
Another way to question ingrained beliefs is to create special moments, meetings and task forces in which people are charged with hunting down and eliminating sacred cows. (Sacred cows are ineffective ways of thinking and acting that have outlived their usefulness but that people don’t think about or are afraid to change.) In one innovative company, the CEO bought everyone “Daisy the Black and White Cow,” a Beanie Baby, and told people to throw the stuffed toys at colleagues defending sacred cows. A manager later confided that, although the exercise seemed silly, the Beanie Babies helped the company eliminate some meaningless procedures.
Pillsbury, Madison and Sutro (now called Pillsbury Winthrop) used a more serious program to eliminate sacred cows. In 1999, the 125-year-old San Francisco-based law firm was still clinging to practices that the information revolution had rendered obsolete. The firm’s chairwoman, Mary Cranston, and managing partner Marina Park established a sacred-cow task force to identify and eliminate habits that slowed change and wasted money. The task forces identified more than 100 sacred cows, and specific attorneys and administrators were charged with eliminating them.
For example, each local office had its own method for billing clients and collecting late payments. Several senior partners insisted that such autonomy was crucial because clients would be offended by impersonal bills. The task force implemented a simpler, centralized system, but allowed each bill to be sent with a personal letter from the responsible partner. The new system decreased the average time it took clients to pay bills from 4.5 months to 3.2 months, reduced related labor costs by 25% and added several million dollars to the bottom line.
Exploding the Composition of Organizations and Teams
Companies need to re-energize their organizations to pursue innovation effectively. Techniques include bringing in workers who march to a different drummer as well as breaking up atrophied teams and building new ones.
Bring in some slow learners.
I am not advising you to hire stupid people; rather, I am advising you to hire people with a special kind of stupidity or stubbornness. To get variation, companies need people who are unable or unwilling to learn the organizational code. In the March–April 1991 issue of Organization Science, James March described code as a company’s “knowledge and faiths,” its history, memories and rules — those taken-for-granted and often unspoken assumptions about what is to be done and why. Most companies bring in newcomers who are similar to insiders, who learn the code quickly and see things as insiders do. That makes sense if you want people to mimic tried and true ways. But innovation requires people who see things differently and aren’t easily brainwashed.
March has shown that companies with large numbers of people who don’t follow the code do better at exploration. Such people rely on their own knowledge to get work done, which produces more varied solutions. Companies that want innovation need to tolerate contrarians, heretics and eccentrics, even though many of their ideas lead to failure. Hiring only fast learners may be cost-effective in the short term but undermines innovation over the long haul.
You might even hire some smart people who had bad grades in school. In his 1999 book “Origins of Genius,” creativity researcher Dean Keith Simonton points out, “To obtain high marks in school often requires a high degree of conformity to conventional ways of looking at the world and people.” By contrast, smart people who get bad grades are listening to their inner voice, doing what they find interesting and right. Simonton writes, “Darwin disliked school and was quite content to be a mediocre student at the university; yet he was also deeply committed to self-education through extensive reading, scientific explorations of the English countryside and conversations with established scientists.”
Successful slow learners are often paired with fast learners who protect and insulate them — and translate and promote their ideas. As the book “Strawberry Fields Forever: John Lennon Remembered” recounts, the late John Lennon often disagreed “out of sheer whim and perversity” with those around him, especially fellow Beatle Paul McCartney and manager Brian Epstein; he couldn’t resist infuriating them with boasting and insults. Nevertheless, Lennon realized he needed them and admitted, “Paul and Epstein did have to cover up a lot for me … containing my personality from causing too much trouble.” Lennon’s talents might never have developed without their protection and compensating diplomacy.
Disband and re-form teams.
Teams can get trapped in the past. The longer groups are together, the more likely it is that they will become cliquish and ignore outsiders. A study of 50 teams by Ralph Katz, a professor of research-and-development management at Northeastern University, found that during research-and-development teams’ first two years, the number of ideas is high, but after about three or four years, the creative output peaks and declines. Katz believes that over time, team members focus more strongly on the virtues of their own ideas and a not-invented-here attitude toward outsiders’ ideas develops.
Katz proposes that one way to avoid a drop in creativity is to make sure teams die before they get old. That is what Lars Kolind did as CEO of Oticon, one of the world’s leading makers of hearing aids. In late 1995, he noticed that product developers had spent a full year obsessed with a line of digital hearing aids: “The downside to this productive focus was a sense that longstanding project teams were hardening into something dangerously close to departments,” he told Fast Company for their June 1996 issue. “I exploded the organization.” All the teams were disbanded, and new teams were formed on the basis of time horizon rather than function. According to Kolind, “It was total chaos. … Within three hours, over a hundred people had moved. To keep the company alive, one of the jobs of top management is to keep it disorganized.”
Weird and Wise
The strange practices introduced here are grounded in research and used in innovative companies. But the exact methods a company uses to spark novel ideas and actions aren’t as important as how people feel about what they do. Psychologists tell us that feelings — not cold cognitions — drive people to turn ideas into reality. Passion is part of what it takes. Joey Reiman is founder of BrightHouse, an “ideation” company that charges clients such as Coca-Cola Co. and Georgia-Pacific Corp. $500,000 to $1 million for a single idea. I can see Reiman in my mind’s eye, roller skating around a circular stage in Berlin, bellowing to an audience of advertising executives, “We do heartstorming, not brainstorming. Creativity is much more about what people feel than they what they think.” The passion is more subtle in other innovative companies, but you can always find it.
People in innovative companies also alternate between periods of unwavering belief and deep cynicism. This means that when you think about a weird management practice, convince yourself, for just a little while, that it will be extraordinarily effective. Ask yourself, “How should my company be organized or managed differently?” But the weird ideas presented here are not immutable truths. So a switch to cynicism is required to use them best. Treat them like toys that you might buy to mess around with: Try to break them, take apart the pieces to see how they work, try to improve them, and mix them with your other toys. You will probably develop even better ideas along the way. Ultimately, anything that brings in new knowledge, helps people see old things in new ways or helps a company break from the past will do the trick.