Jeff DeGraff: What Makes Innovation Different and Hard to Manage?

Uploaded by bigthink on 27.11.2012

What makes innovation different and so hard to manage? I’m asked this question all the
time by leaders who say, “Gosh, I’ve had these great leaders, I’ve given them an
innovation initiative or an innovation project and they seem to be struggling.” Well, there
are some basic things about innovation that are completely different than everything else
these leaders do in life. The first one is innovation is not so much
defined by what it is as what it is not. So anything in any area of endeavor there are
conventions or a normal way of doing things. Innovation, by definition, is a deviation
so innovators are deviants. We have to have deviants in order to make innovation happen.
So if in your field you’re in a really high, high velocity innovation field like biotechs
that are constantly coming up with new medicines, an innovation is going to have to have a faster
speed and magnitude than everything else. So it’s going to be the stuff that’s miracle
drugs and no one thought we could ever possibly do it.
But if you’re in an industry that has low velocity like say you’re making steel or
ice cream or something that’s rather conventional, if you did anything radical people wouldn’t
buy it. So in your industry innovation is going to have a lower magnitude and a lower
speed. It’s going to come in a new flavor. It’s going to be a designer metal. It’s
going to be a little bit different than what we currently have. So rather than worrying
about our definition of innovation we have to worry more about what is convention or
standard or the mean and how far away from that are we really trying to move. How big
and how fast are we moving away from that? Now the second issue about innovation that’s
radically different is innovation happens in the future for which we have no data right
now. What’s going to happen with the currencies? What’s going to happen with European policy?
What’s going to happen with political conflict in the Mideast? I don’t know. And you don’t
know either. But the classic challenge of innovation is
that in order to find out what’s going to happen in the future we have to run the meaningful
experiment. We can’t plan and plan and plan. Excessive planning is a form of resistance
to innovation because nobody takes action. Have you ever been to the meeting about the
meeting? Have you seen the plan about the plan? Right? While you’re doing all that
people are experimenting and they’re feeling their way to the future. So that’s going
to be an important thing. It’s often said that innovation is about building the bridge
as you walk over it. The third big thing is that innovation has
a shelf life. It goes sour like milk. An innovation doesn’t stay an innovation very long so
all the really cool stuff you bought for your kid last year at the appliance store, at the
Apple store, wherever it is you’re buying stuff from, this year, this Christmas it’s
junk. It’s crap. We want the new stuff. So the notion is it was an innovation last
year but this year it’s not an innovation anymore and this is important because underlying
innovation, all innovation is a concept of competition. It’s why are we gonna innovate
this? Because something else is going to be better than what we’ve got. So there is
a bit of Darwin to this that something has to be better in order to survive, in order
to thrive in the future. Another key thing which is very interesting
about innovation is innovation is not just manmade. It’s not just what people do. Actually
innovations are also produced by nature. Now this can sounds really funny to people but
if you think about it when I was coming up they always told us that the only people who
could innovate were human beings. And then we started discovering that chimpanzees could
do some types of innovation, orangutans, certain types of birds could do innovation, **** crows
could do innovation. They could actually use tools.
Well, the same is true with nature. If you think about it for a minute we get all kinds
of interesting materials, they come from the earth because nature sort of put them together
in certain ways and we often overlook that in order to make that interesting innovation,
like that brand new Boeing aircraft that’s made out of synthetic materials, in order
to make that aircraft fly we have to have materials that are innovative.
So nature innovates and in some ways we copy nature and there’s a term for this called
biomimicry, right. So the notion is we’re looking how nature does it, whether it’s
making a compound or whether it’s making something fly or the rudder to a boat that
looks like a whale fluke or the wings of a plane that look like birds wings. We have
to know that we’re not the only agents on earth that actually make innovation happen.
Now here’s where it gets really interesting. Innovation has something about it that’s
so foreign to leaders that it’s startling and most leaders can’t do it and it’s
this. In innovation failure is unavoidable. Let me repeat that. Failure is unavoidable.
Think about it for a minute. Any time you learn to do anything new, which is what innovation’s
about there’s a development cycle. It doesn’t matter how old you are. If you don’t believe
that take out a piece of paper, draw a picture of your dog and I can tell you at what age
you stopped learning to draw. Right? Speak a foreign language, play an instrument, it
doesn’t matter your age; you don’t know how to do it. You have to go through the learning
cycle. Now the learning cycle has a failure component.
Instead of trying to avoid the failure cycle what you’re trying to do is accelerate it.
So think about how venture capitalists invest. They’ll give money to, let’s say, 12 different
companies that are trying to produce a therapy for the same disease state. Why are they spreading
out so far? Because they’re trying to accelerate the failure cycle.
In the next round, the mezzanine round, maybe only two or three companies survive and by
the time the company has an initial public offering or an IPO, one. So what they’re
doing is they’re very quickly turning over or churning their portfolio to figure out
what works and what doesn’t. In innovation don’t move in straight lines, don’t fall
in love with your solution, fall in love with the problem.
Innovation does not happen in the middle of the organization. It happens from the edges,
the outside of the organization. Now I want you to think about a bell curve. I want you
to think about a bell curve and I want you to think about what goes on in the middle
of your organization. We have all kinds of hurdle rates about who gets money. We have
a lot of measures about what we’re going to do. We’ve got a lot of rules about who
we’re going to hire. So the middle of the organization is designed to eliminate variation.
It’s designed to become efficient or optimize. Now I want you to think about the edges of
the organization where you have a crisis or things are on a roll, really going well. Whenever
there’s a crisis the risk of innovating and the reward of staying where you’re at
is reversed. Think about Apple which in 1997 was trading at less than seven dollars a share
and is now the most valuable company in the world. Well, you know in the words of Bob
Dylan, when you ain’t got nothing you got nothing to lose. You’ve got nothing to lose
when you’re almost dead. When you’re almost dead you start trying stuff and the same is
true for people. And the same is true when you’re on a roll.
When you’re on a roll you graduate. You’re in love which is the best feeling in the world.
You’re in love, you can do anything. The same is true. We call this risk capital. When
you’ve got risk capital you can try lots and lots of stuff and we all do.
Now here’s the point. Don’t launch your innovation in the middle that’s designed
to get rid of variation. Launch the innovation at the end where risk and reward is reversed
because that’s fertile ground for innovation. So start from the outside and move in. It’s
a pincer maneuver, not an inside out maneuver. Innovation is not produced by alignment. Go
to any really highly innovative company. Go to a great university research lab. Well I
teach at one of those great universities and go to some of the meetings. It’s not polite
tea and crumpets conversation. It’s not everybody follow me. It’s pushing and shoving.
Okay, it’s constructive conflict, it’s positive tension but it’s not agreeing.
The whole idea that you have an idea, a thesis, anti-thesis or antithesis, synthesis comes
from between them. So innovation is not produced by alignment. Innovation is produced by this
constructive conflict, this positive tension of putting these together.
Now there’s a couple of other key things about innovation, which is innovation doesn’t
usually happen within one discipline. It happens between disciplines. They sometimes referred
to this as bissociation, right? And the object is or diffusion it means sometimes parts of
an organization come together that are not used to coming together. So if we’re trying
to find a way to look through a freight container, which is something that we really are working
on, to look through a freight container and make sure there’s nothing bad inside of
it. One field that looks through freight containers might be something like what we do with sonic
waves. Another one might be something that we do
with ultraviolet light or the light spectrum. You put the two things together and all of
a sudden we can build a composite that’s sort of like an MRI and we can actually look
inside of that thing. So it didn’t happen within a field, it happened between fields.
Innovation doesn’t happen in straight lines. I want you to imagine that you’re walking
up a mountain and I want you to imagine that you’re going in a circle up the mountain.
That’s kind of how innovation really works. It’s highly iterative. And, in fact, one
of the classic mistakes people make is that they think they know everything at the beginning.
You don’t know anything at the beginning. The object in going around, why you build
a version 1.0, 2.0. Why you build what we call thick and thin versions of products which
means the simpler one and the more complicated one later is because we know we’re going
to learn some things along the way. So in innovation there’s a lot of twisting, there’s
a lot of turning, there’s a lot of doubling back, there’s a lot of paying attention
to what we know now. What did we learn from our experiences and our experiments?
Finally and probably most importantly, the biggest thing to understand about innovation
is that it’s never fully realized. There is no there. There’s no there to innovation.
So you developed a miracle drug, there’s always another miracle drug. You developed
a great restaurant, there’s always a second restaurant. You developed a software solution
to keep everybody safe, there’s always another software solution because there’s always
someone else pushing back with an alternative so that you have to keep going. So we never
really fully arrive. My favorite hero is Benjamin Franklin. And
I love Franklin who was a penniless runaway. Right? He became a printer and then he became
an entrepreneur and then he created a library and then he created a university. Then he
created, you know, the original self-help group. Then he became a diplomat. Before he
was a diplomat he became this great scientist and invented everything from the Franklin
stove to the lightening rod to bifocals, which he didn’t patent because he thought everybody
should be able to use them. Diplomat, politician, patriot, on and on it goes.
Now I want you to think about this. What if at any time in Franklin’s life he thought
he had arrived. He would have never become that amazing polymath, that Renaissance person
that we all want to be. So I think it’s an absolute gift that we never really get
there because that’s what pulls us forward.