From the HBS Alumni Bulletin

1. RESEARCH & IDEAS
Five Ways to Make Your
Company More Innovative
Published: May 23, 2012
Authors: Garry Emmons, Julia Hanna, and Roger Thompson
How do you create a company that Associating that other experience to what's learn to act differently and think differently, and
unleashes and capitalizes on innovation? HBS going on in my world may make me look by doing so increase your prospects for
faculty experts in culture, customers, creativity, brilliant, but in reality my brilliance was in developing innovative products and services.
marketing, 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 the
success . But how do you create a company that A good illustration of observing and word encourage? To create a culture in which
unleashes 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 shouldn't count on people
customers, creativity, marketing, and the DNA owners of small businesses typically wait until succeeding despite the odds; they should shift
of 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 few
Clayton 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, I'm not with a customer. So
I don't want to overstate the case. I think incremental contributions, and early-stage new
bookkeeping is the last thing I want to do." For
about 40 percent of people just are not going to ideas at the bottom. For example, Verizon
Cook, that produced an insight that led to the
be good at innovating regardless of what they placed big bets on Google's Android for
development of QuickBooks, which greatly
do. 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 to
think that are intuitive. The rest of us could could run everything, including cars and
identify and develop ideas by spending time
learn what these innovators do if somebody refrigerators. It has projects in development
with a diverse group of people with different
would just crawl inside their brains and codify with GM's OnStar and in cloud computing. In
backgrounds and experiences. By engaging
what 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.
Innovator's DNA, that we could articulate how even in the traditional landline side, preaching
Finally, innovators are constantly
innovative people think. So over a period of process innovations to technicians.
experimenting. The critical insight here is that
years, we interviewed hundreds of innovators Define jobs around innovation. Make it a
for whatever reason, when God created the
and almost 5,000 executives to identify ways of job prerequisite. Consider 3M's move to
world, he made data only available about the
thinking that distinguish innovative people from become one of the first companies to tell
past. As teachers at HBS, we're trained to nail
typical executives. What we found is that professionals that they could spend 15 percent
students to the wall if they ever make an
innovators "think different," to borrow a slogan of their time on projects of their own choosing.
assertion in class discussion that is not backed
from Apple. And thinking differently leads Now many high-tech companies know that they
up with data and evidence in the case. So our
them to act differently. From our research, can't get the best talent without providing this
students come out of here with this elevated
consistent patterns emerged that led us to kind of flexibility. And some of those
respect for data-driven, fact-based, analytical
identify 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 available
quetioning, networking, and experimenting. business. For 3M, it was the Post-it note.
about the past. If you're 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 can't
associational 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 don't want to wait until somebody provides
unrelated 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 skills
by asking this question: Has somebody else in privileged to judge the first one with the then
constitute what we call the innovator's 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 can
before by somebody in a different environment.
COPYRIGHT 2012 PRESIDENT AND FELLOWS OF HARVARD COLLEGE 1

2. HARVARD BUSINESS SCHOOL | WORKING KNOWLEDGE | HBSWK.HBS.EDU
takeoff on "get out of jail free" cards from the distinct strategy for the open and closed parts, the product to do. So relative advantage is
board game Monopoly. This wasn't a with special attention paid to the open parts. something you can play around with.
blockbuster like the new shaving systems for Create a center that will attract users to your The other big question is, how much
women, 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 wish
requires a great deal of support and your work and their own work. That's how to a familiar product was cheaper or faster, but
collaboration. When people are surrounded by get the most out of your customers in the 21st they've gotten used to the way things currently
constant communication and encouragement, century. work. And so, if you don't take behavioral
they can find the courage to try, fail, redo, and change into account, you're going to miss out
try again. on a big piece of the equation. It's not how
John Gourville economists would perceive it, weighing the
How do you successfully market an costs and benefits. It's actually how much are
Carliss 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 innate
navels. The first thing I would say to managers go sell it. For the last 50 years, innovation nature of the product itself, the features built
is that there is as much creativity and theorist Everett Rogers told us that the into it. And if you start with a product that does
knowledge among your customers as you could difference between a successful product and an well on these five factors, then life gets a lot
ever 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 of
collectively 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 it's Stefan Thomke
technology has almost completely democratized replacing? How can a company balance creativity and
the design process, and that these Compatibility: Is it compatible with the way innovation with the need for process and
user-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 important
innovation 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 the
property (IP). Divide your knowledge cleanly product itself. Rogers's research found that 75 ability to get to the heart of a problem and not
between those pieces you want to protect-the percent of the variance between products that settle for convoluted solutions until they find, in
component on which you'll build the succeed and products that don't succeed has to the late Steve Jobs's words, "the key, underlying
value-capturing part of your business-and the do with those five factors. Once you have those principle of the problem" and then the
knowledge that you're 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, it's a lot easier to market the product. Once the problem has been defined and the
open parts of the system, but be aware it's a Relative advantage is the starting point. It's desired target established, there are two key
delicate balance. The last thing you want to do a necessary but not sufficient condition. You functions in innovation: brainstorming new
is foster competition down the line, as IBM did have to be better than what you're replacing on ideas, and deciding which of those ideas are
when it let the IP of essential components slip some dimension. How can marketing get worth pursuing. When most people hear a new
out of its own hands and into the grasp of involved? Well, if you think about relative idea, it's human nature to see its flaws, so
Microsoft 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 who
desire to innovate in your system can be like cost, the same benefits for less cost, or a lot brings along a squirt gun to brainstorming
looking for needles in a haystack, but that's more benefits for slightly more cost. Each of sessions. After a few squirts, people learn to
where crowdsourcing comes in-defining a those has a different behavioral feel for the silence their critical voices. The design firm
challenge and offering an incentive, whether in consumer. So, even thinking about what IDEO, in its brainstorming sessions, tells
status or money, can get people to self-select as features you put into a product affects how easy participants to produce, for example, 150 ideas
resources to you. You may even want to hire it will be to market. in less than 45 minutes. The impossible time
some of them. So this strategy can play into There's always this idea of feature creep that limit and quota forces them to submit whatever
talent acquisition in addition to generating new leads to adding bells and whistles. But every comes to mind, even seemingly crazy
product ideas. time you add bells and whistles, chances are suggestions. Only after the brainstorming
Sometimes a community of users will form you're also adding costs. The ideal situation is session has concluded does IDEO then subject
independently 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, "What's 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 and
both the community building and the criticism. add all these bells and whistles? Or do critics, between the idea people and the process
It takes a great deal of courage and leadership to consumers just basically want something that people, to work toward Jobs's "beautiful,
embrace this model where you enable and gets the job done?" My colleague Clay elegant solution." This requires companies to be
encourage users through various challenges and Christensen has this idea that people hire astute about how they prototype and test. IDEO
allow the community the degree of autonomy it products to do a job. It's that exact sort of thing. adheres to the "three Rs" rule: rough, rapid, and
needs to be healthy. You don't need to add features that really aren't 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.EDU
prototypes can be carved quickly from foam but coexist and even feed off each other, if you Garry Emmons, Julia Hanna, and Roger
the shapes need to be exact, to see if they'll fit manage their different and sometimes opposing Thompson are on the staff of the HBS Alumni
when 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 can't have one
Innovation and process within a firm can without the other.
COPYRIGHT 2012 PRESIDENT AND FELLOWS OF HARVARD COLLEGE 3