July 21, 2011

In 2003, three scholars of innovation got together to chat about innovation: Jeff Dyer of Brigham Young University's Marriott School, Hal Gregersen of INSEAD and Harvard Business School's Clayton Christensen (originator of the phrase "disruptive innovation" in his seminal book, The Innovator's Dilemma). At the center of the discussion was a single question: where do disruptive strategies come from?

With that question in mind, the three embarked on an eight-year study to uncover the origins of innovative business ideas, and found that all roads led back to the individual. Their goal was less to investigate the companies’ strategies than it was to dig into the thinking of the innovators themselves: understanding when, where and how they came up with their novel ideas, since it is individual creativity in business that is the root of all innovation.

Here, Dyer and Gregersen answer a few questions about what they found.

Q: What did you discover about the characteristics of business innovators that contribute to their ability to generate disruptive business ideas?

JD: What we learned confirms the findings of psychologists: creativity is not just a genetic endowment magically given to some and not others. Everyone has the ability to be a more creative problem solver—but they must develop the five discovery skills of disruptive innovators: 1) Associating, 2) Questioning, 3) Observing, 4) Networking, 5) Experimenting.

HG: Moreover, every company has the ability to increase its innovation capability by understanding the DNA of innovative organizations—the characteristics of people it needs to hire, processes it needs to establish and philosophies it needs to embed within the company culture.

Q: The one thing that sounds new or different from what others have written is 'associating.' What do you mean by it, and how does it relate to the other four skills?

HG: We found that the most important skill innovators count on is a cognitive skill we call “associational thinking.” It happens as the brain tries to synthesize and make sense of novel inputs. It helps innovators discover new directions by making connections across seemingly unrelated questions, problems or ideas, at the intersection of diverse disciplines and fields. This is where innovative breakthroughs truly happen. It’s what Apple means when they say, “Think Different.”

JD: Everyone knows they need to “think outside the box.” The million dollar question has always been: How? The most exciting thing we discovered is that the other four skills are behaviors that, when practiced regularly, trigger associational thinking. Meaning, if you act a certain way, you can, indeed, “think different.” Collectively, these five discovery skills work together to constitute the genetic code for generating business ideas, and it’s a code that anyone can follow. Bottom line: creativity is an active endeavor.

Q: You write in new your book The Innovator's DNA based on your research that the majority of business people excel at “delivery” skills, rather than these five “discovery” skills. What is the difference between the two, and why do they matter?

HG: Innovators excel at the five discovery skills and seek to fundamentally change existing business models, products or processes. In contrast, we found that most business professionals excel at execution—they work hard to efficiently deliver the next thing that should be done given the existing business model. The people we interviewed were extremely intelligent and accomplished at delivering results—but they didn’t have much direct, personal experience with generating innovative business ideas. They excelled at “delivery skills”: analyzing, planning, detail-oriented implementing and disciplined executing.

JD: But we found that many companies fail at disruptive innovation because the top management team is dominated by individuals who have been selected for delivery—execution—skills, not discovery skills. You need both skill sets to be successful, so it’s imperative to craft a business team that not only possesses both sets of skills, but also understands the importance of each.

Q: One thing that intrigues me in your book is the list you compiled of the world’s most innovative companies. It's not dominated by the usual "big name" suspects, which is refreshing. In fact, it stands in stark contrast to other "Top Innovation" lists. What’s the most surprising thing about this list, and what does it mean for other companies, especially smaller companies, out there?

HG: The biggest surprise about our list is that some of the world’s most innovative companies aren’t necessarily household names. Several of the top 25 companies on our list are relatively unknown, such as Intuitive Surgical and Keyence Corporation, and completely off the radar screen of organizations that rank the world’s most innovative companies.

JD: Other lists, like the one compiled by Bloomberg BusinessWeek, are essentially popularity contests based on past performance. The “winners” are those companies that business executives have heard about and who have been innovative in the past—companies like Nokia, 3M, GE, Sony and Toyota.

HG: Rather than looking at the past, our methodology focuses on current and future innovation performance. Our list of the most innovative companies is based on what we call an “innovation premium”—a stock market premium based on investors’ belief that a company will produce innovations, and even bigger income streams, in the future. Investor insight is key—they’re voting with their wallets.

JD: Our list of the top 50 most innovative companies does not include Nokia, 3M, Sony, GE or Toyota. Instead, it’s led by companies like Salesforce.com, a company who led the cloud computing charge, and Intuitive Surgical, a company who makes million dollar medical robots that perform surgeries with incredible precision. These companies may not be as well-known as some companies on the Bloomberg BusinessWeek list, but investors are impressed with their growth prospects.

Q: What advice would you give to owners or operators of a small but rapidly growing company regarding ensuring that, as they grow and add layers to the organization, innovation remains alive and well throughout the company?

HG: One of the most important findings of our research is that if you want innovation, don't point the finger at someone else. Our interviews with dozens of managers revealed that in most cases, they did not feel personally responsible for coming up with innovations. They only felt responsible for “facilitating the process” to make sure someone in the company was doing so.

JD: But in the world’s most innovative companies, the leaders didn’t just delegate innovation; their own hands were deep in the innovation process. In fact, our research found that executives at the world’s most innovative companies—leaders like Amazon's Jeff Bezos and Marc Benioff of Salesforce.com—personally spend 50 percent more of their time every week trying to come up with innovative ideas for new products, processes and businesses that generated profits for their companies.

HG: In order for executives to spread innovation throughout the company, they must lead the innovation charge by understanding how innovation works, improving their own discovery skills and sharpening their ability to foster others’ innovation capability.

The findings of Dyer, Gregersen and Christensen are important for any small business to take into account as they grow. How much of your time is spent innovating?

Related Topics

• Innovation

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Matthew E. May, Article, disruptive innovation

Join the conversation ( 1 )

• Jeff Frank 10 months ago

  

  As a successful disruptive innovator I believe you have left out one critical component in your description of the 5 habits -- an obsessive personality that thrives on the challenges presented when people all around try to convince you your ideas will not work.In my case I opened a furniture manufacturing firm in November, 2007. This was a time when nobody was opening new furniture manufacturing firms and financing for new furniture manufacturers was non-existent.I created my company in response to a perceived void in the market place.Although I knew how these new products should look and function, I did not have the technical expertise required to actually design and build them myself. I had to find someone with that technical expertise who would agree to spend hundreds of hours over many years working with me to create the product prototypes.Over the years a very limited number of products with similar characteristics had been developed only to fail because they tried to compete against lower priced (less functionally sophisticated) imports. Therefore my marketing strategy stressed high quality, improved functionality and "extreme" customer service which differentiated the products from the low priced overseas competition.The manufacturing process utilized a system of modular customization, enabling production of a large variety of custom product options, using a limited number of component parts.The marketing plan called for selling direct to consumers through a company website. Bypassing retailers created many advantages, including far higher profit margins and the establishment of the furniture industry's first revenue-generating customer service model. Since the recession began Simplicity Sofas has been one of the few rapidly growing furniture manufacturers in the U.S. achieving its first $100,000 month (one consumer at a time) only 2.5 yrs. after opening.Jeff Frank, OwnerSimplicity Sofaswww.simplicitysofas.com