The Innovators DNA, four key behaviors characterize executives who engage in creative thinking, namely: Questioning, Observing, Networking, and Experimenting
Are you the next Steve JobS? You can be as innovative and impactful— if you can change your behaviors to improve your creative impact.
In The Innovator’s DNA, authors Jeff Dyer, Hal Gregersen, and bestselling author Clayton M. Christensen (The Innovator’s Dilemma, The Innovator’s Solution) build on what we know about disruptive innovation to show how individuals can develop the skills necessary to move progressively from idea to impact.
By identifying behaviors of the world’s best innovators—from leaders at Amazon and Apple to those at Google, Skype, and Virgin Group—the authors outline five discovery skills that distinguish innovative entrepreneurs and executives from ordinary managers: Associating, Questioning, Observing, Networking, and Experimenting.
Once you master these competencies (the authors provide a self assessment for rating your own innovator’s DNA), the authors explain how you can generate ideas, collaborate with colleagues to implement them, and build innovation skills throughout your organization to sharpen its competitive edge. That innovation advantage can translate into a premium in your company’s stock price—an innovation premium—that is possible only by building the code for innovation right into your organization’s people, processes, and guiding philosophies.
Practical and provocative, The Innovator’s DNA is an essential resource for individuals and teams who want to strengthen their innovative prowess.
Jeff Dyer is the Horace Beesley Professor of Strategy at the Marriott School, Brigham Young University. He is widely published in strategy and business journals and was the
fourth most cited management scholar from 1996–2006.
hAl GreGerSen is a professor of leadership at INSEAD. He consults to organizations around the world on innovation, globalization, and
transformation and has published extensively in leading academic and business journals.
ClAyton m. ChriStenSen is the Robert and Jane Cizik Professor of Business Administration at Harvard Business School and the architect of and the world’s
foremost authority on disruptive innovation.
(Continued on back flap)
(Continued from front flap)
j ac k e t d e s i g n : fac e o u t st u d i o
a u t h o r p h oto s : M a r k p h i l b r i c k ; k e n n e t h l i n g e ; st u a r t c a h i l l
get inspired. stay inforMed. join the discussion. Visit www.hbr.orG/bookS www.hbr.orG/bookS
M a n ag e M e n t u S $2 9. 9 5
“ Businesses worldwide have been guided and influenced by The Innovator’s Dilemma and The Innovator’s Solution. Now The Innovator’s DNA shows where it all starts. This book gives you the fundamental building blocks for becoming more innovative and changing the world. One of the most important books to come out this year, and one that will remain pivotal reading for years to come.” —mArC benioff, Chairman and CEO, salesforce.com; author, Behind the Cloud
“ The Innovator’s DNA is the ‘how to’ manual to innovation, and to the fresh thinking that is the root of innovation. It has dozens of simple tricks that any person and any team can use today to discover the new ideas that solve the important problems. Buy it now and read it tonight. Tomorrow you will learn more, create more, inspire more.” —SCott D. Cook, Chairman of the Executive Committee, Intuit Inc.
“ The Innovator’s DNA sheds new light on the once-mysterious art of innovation by showing that successful innovators exhibit common behavioral habits—habits that can boost anyone’s creative capacity.” —Stephen r. Covey, author, The 7 Habits of Highly Effective People and The Leader in Me
“ Having worked with Clayton Christensen on innovation for over a decade, I can see that The Innovator’s DNA continues to stretch our thinking with insights that challenge convention and enable progress in the important cause of innovation . . . so critical to competitiveness and growth.” —A.G. lAfley, retired Chairman of the Board and CEO, The Procter & Gamble Company
ISBN 978-1-4221-3481-8
9 7 8 1 42 2 1 3 48 1 8
9 0 0 0 0
Bestselling Author of The Innovator’s Dilemma
to learn More, Visit: innovAtorSDnA.Com Also by Clayton M. Christensen:
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THE INNOVATOR’S DNA
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100092 00 i-vi r1 rr.qxp 5/13/11 6:52 PM Page ii
THE INNOVATOR’S DNA MASTERING THE FIVE SKILLS OF DISRUPTIVE INNOVATORS
Jeff Dyer Hal Gregersen Clayton M. Christensen
H A R V A R D B U S I N E S S R E V I E W P R E S S
BOSTON, MASSACHUSETTS
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Copyright 2011 Jeff Dyer, Hal Gregersen, and Clayton M. Christensen
All rights reserved
Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
No part of this publication may be reproduced, stored in or introduced into
a retrieval system, or transmitted, in any form, or by any means (electronic,
mechanical, photocopying, recording, or otherwise), without the prior
permission of the publisher. Requests for permission should be directed to
permissions@hbsp.harvard.edu, or mailed to Permissions, Harvard Business
School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.
Library of Congress Cataloging-in-Publication Data
Dyer, Jeff.
The innovator’s DNA : mastering the five skills of disruptive innovators/
Jeff Dyer, Hal Gregersen, Clayton M. Christensen.
p. cm.
ISBN 978-1-4221-3481-8 (hardback)
1. Creative ability in business. 2. Technological innovations.
3. Entrepreneurship. I. Gregersen, Hal B., 1958– II. Christensen,
Clayton M. III. Title.
HD53.D94 2011
658.4'063—dc22
2011008440
The paper used in this publication meets the requirements of the American
National Standard for Permanence of Paper for Publications and Documents
in Libraries and Archives Z39.48-1992.
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Contents
Introduction 1
Part One Disruptive Innovation Starts with You
1 The DNA of Disruptive Innovators 17
2 Discovery Skill #1 41
Associating
3 Discovery Skill #2 65
Questioning
4 Discovery Skill #3 89
Observing
5 Discovery Skill #4 113
Networking
6 Discovery Skill #5 133
Experimenting
Part Two The DNA of Disruptive Organizations and Teams
7 The DNA of the World’s Most
Innovative Companies 157
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8 Putting the Innovator’s DNA into Practice 175
People
9 Putting the Innovator’s DNA into Practice 193
Processes
10 Putting the Innovator’s DNA into Practice 215
Philosophies
Conclusion: Act Different, Think Different,
Make a Difference 235
Appendix A: Sample of Innovators Interviewed 241
Appendix B: The Innovator’s DNA Research Methods 245
Appendix C: Developing Discovery Skills 249
Notes 261
Index 269
Acknowledgments 283
About the Authors 295
vi CONTENTS
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Introduction
INNOVATION. It’s the lifeblood of our global econ-omy and a strategic priority for virtually every CEO around the world. In fact, a recent IBM poll of fifteen hun-
dred CEOs identified creativity as the number-one “leadership
competency” of the future.1 The power of innovative ideas to rev-
olutionize industries and generate wealth is evident from history:
Apple iPod outplays Sony Walkman, Starbucks’s beans and
atmosphere drown traditional coffee shops, Skype uses a strategy
of “free” to beat AT&T and British Telecom, eBay crushes classi-
fied ads, and Southwest Airlines flies under the radar of American
and Delta. In every case, the creative ideas of innovative entrepre-
neurs produced powerful competitive advantages and tremen-
dous wealth for the pioneering company. Of course, the
retrospective $1 million question is, how did they do it? And per-
haps the prospective $10 million question is, how could I do it?
The Innovator’s DNA tackles these fundamental questions—
and more. The genesis of this book centered on the question that
we posed years ago to “disruptive technologies” guru and coau-
thor Clayton Christensen: where do disruptive business models
come from? Christensen’s best-selling books, The Innovator’s
1
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2 INTRODUCTION
Dilemma and The Innovator’s Solution, conveyed important in-
sight into the characteristics of disruptive technologies, business
models, and companies. The Innovator’s DNA emerged from an
eight-year collaborative study in which we sought a richer under-
standing of disruptive innovators—who they are and the innova-
tive companies they create. Our project’s primary purpose was
to uncover the origins of innovative—and often disruptive—
business ideas. So we interviewed nearly a hundred inventors of
revolutionary products and services, as well as founders and
CEOs of game-changing companies built on innovative busi-
ness ideas. These were people such as eBay’s Pierre Omidyar,
Amazon’s Jeff Bezos, Research In Motion’s Mike Lazaridis,
and Salesforce.com’s Marc Benioff. For a full list of innovators
we interviewed whom we quote in this book, see appendix A;
virtually all of the innovators we quote, with the exception
of Steve Jobs (Apple), Richard Branson (Virgin), and Howard
Schultz (Starbucks)—who have written autobiographies or have
given numerous interviews about innovation—are from our
interviews.
We also studied CEOs who ignited innovation in existing
companies, such as Procter & Gamble’s A. G. Lafley, eBay’s Meg
Whitman, and Bain & Company’s Orit Gadiesh. Some entrepre-
neurs’ companies that we studied were successful and well known;
some were not (for example, Movie Mouth, Cow-Pie Clocks,
Terra Nova BioSystems). But all offered a surprising and unique
value proposition relative to incumbents. For example, each of-
fered new or different features, pricing, convenience, or customiz-
ability compared to their competition. Our goal was less to
investigate the companies’ strategies than it was to dig into the
thinking of the innovators themselves. We wanted to understand
as much about these people as possible, including the moment
(when and how) they came up with the creative ideas that
launched new products or businesses. We asked them to tell us
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3 Introduction
about the most valuable and novel business idea that they had
generated during their business careers, and to tell us where those
ideas came from. Their stories were provocative and insightful,
and surprisingly similar.
As we reflected on the interviews, consistent patterns of action
emerged. Innovative entrepreneurs and executives behaved simi-
larly when discovering breakthrough ideas. Five primary discov-
ery skills—skills that compose what we call the innovator’s
DNA—surfaced from our conversations. We found that innova-
tors “Think Different,” to use a well-known Apple slogan. Their
minds excel at linking together ideas that aren’t obviously related
to produce original ideas (we call this cognitive skill “associational
thinking” or “associating”). But to think different, innovators
had to “act different.” All were questioners, frequently asking
questions that punctured the status quo. Some observed the
world with intensity beyond the ordinary. Others networked with
the most diverse people on the face of the earth. Still others placed
experimentation at the center of their innovative activity. When
engaged in consistently, these actions—questioning, observing,
networking, and experimenting—triggered associational think-
ing to deliver new businesses, products, services, and/or
processes. Most of us think creativity is an entirely cognitive skill;
it all happens in the brain. A critical insight from our research is
that one’s ability to generate innovative ideas is not merely a func-
tion of the mind, but also a function of behaviors. This is good news
for us all because it means that if we change our behaviors, we can
improve our creative impact.
After surfacing these patterns of action for famous innovative
entrepreneurs and executives, we turned our research lens to the
less famous but equally capable innovators around the world.
We built a survey based on our interviews that taps into the
discovery skills of innovative leaders: associating, questioning,
observing, networking, and experimenting. To date, we have
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4 INTRODUCTION
collected self-reported and 360-degree data on these discovery
skills from over five hundred innovators and over five thousand
executives in more than seventy-five countries (for information
about our assessments for individuals and companies, go to our
Web site: http://www.InnovatorsDNA.com). We found the same
pattern for famous as well as less famous leaders. Innovators were
simply much more likely to question, observe, network, and ex-
periment compared to typical executives. We published the re-
sults of our research in Strategic Entrepreneurship Journal, the top
academic journal focused on entrepreneurs (details of our study
are reported in appendix B).2 We also published our findings in an
article titled “The Innovator’s DNA,” which was the runner-up for
the 2009 Harvard Business Review McKinsey Award.
We then turned to see what we could learn about the DNA of
innovative organizations and teams. We started by looking at
BusinessWeek’s annual ranking of innovative companies. This
ranking, based on votes from executives, identified companies
with a reputation for being innovative. A quick look at the
BusinessWeek lists from 2005 to 2009 shows Apple as number one
and Google, number two. OK, intuitively that sounds right. But
we felt that the BusinessWeek methodology (executives voting on
which companies are innovative) produces a list that is largely a
popularity contest based on past performance. Indeed, do Gen-
eral Electric, Sony, Toyota, and BMW deserve to be on the list of
most innovative companies today? Or are they simply there be-
cause they have been successful in the past?
To answer these questions, we developed our own list of inno-
vative companies based on current innovation prowess (and ex-
pectations of future innovations). How did we do this? We thought
the best way was to see whether investors—voting with their wal-
lets—could give us insight into which companies they thought
most likely to produce future innovations: new products, services,
or markets. We teamed up with HOLT (a division of Credit Suisse
Boston that had done a similar analysis for The Innovator’s
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5 Introduction
Who Is Classified as an Innovator?
Perhaps one of the most surprising findings from the past
thirty years of entrepreneurship research is that entrepreneurs
do not differ significantly (on personality traits or psychomet-
ric measures) from typical business executives.a We usually
meet this finding with skepticism, since most of us intuitively
believe that entrepreneurs are somehow different from other
executives. Note that our research focused on innovators
and, in particular, innovative entrepreneurs rather than entre-
preneurs. Here’s why. Innovative entrepreneurs start compa-
nies that offer unique value to the market. When someone
opens a dry cleaner or a mortgage business, or even a set of
Volkswagen dealerships or McDonald’s franchises, re-
searchers put them all in the same category of entrepreneur
as the founders of eBay (Pierre Omidyar) and Amazon (Jeff
Bezos). This creates a categorization problem when trying to
find out whether innovative entrepreneurs differ from typical
executives. The fact is that most entrepreneurs launch ven-
tures based on strategies that are not unique and certainly
not disruptive. Among entrepreneurs as a whole, only 10 per-
cent to 15 percent qualify as “innovative entrepreneurs” of the
kind we’re discussing.
Our study includes four types of innovators: (1) start-up en-
trepreneurs (as we described earlier), (2) corporate entrepre-
neurs (those who launch an innovative venture from within the
corporation), (3) product innovators (those who invent a new
product), and (4) process innovators (those who launch a
breakthrough process). Our process inventor category in-
cludes folks like A. G. Lafley, who initiated a set of innovative
processes at Procter & Gamble that sparked numerous new
product innovations. In all cases, the original idea for the new
(continued)
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Solution) to develop a methodology for determining what per-
centage of a firm’s market value could be attributed to its existing
businesses (products, services, markets). If the firm’s market value
was higher than the cash flows that could be attributed to its exist-
ing businesses, then the company would have a growth and inno-
vation premium (for our purposes, we’ll just call it an innovation
premium). An innovation premium is the proportion of a com-
pany’s market value that cannot be accounted for from cash flows
of its current products or businesses in its current markets. It is
the premium the market gives these companies because investors
expect them to come up with new products or markets—and they
expect the companies to be able to generate high profits from
them (see chapter 7 for details on how the premium is calculated).
business, product, or process must be the innovator’s idea.
While these different types of innovators have numerous sim-
ilarities, they also have some differences, as we will show in
the chapters that follow.
6 INTRODUCTION
a. This is evident in the conclusions of numerous studies on entrepreneurs,
including the following:
“After a great deal of research, it is now often concluded that most of
the psychological differences between entrepreneurs and managers
in large organizations are small or non-existent” (L. W. Busenitz and
J. B. Barney, “Differences Between Entrepreneurs and Managers in
Large Organizations,” Journal of Business Venturing 12, 1997).
“There appears to be no discoverable pattern of personality charac-
teristics that distinguish between successful entrepreneurs and
non-entrepreneurs” (W. Guth, “Director’s Corner: Research in Entrepre-
neurship,” The Entrepreneurship Forum, winter 1991).
“Most of the attempts to distinguish between entrepreneurs and small
business owners or managers have discovered no differentiating
features” (R. H. Brockhaus and P. S. Horwitz, “The Psychology of the
Entrepreneur” in The Art and Science of Entrepreneurship, 1986).
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It is a premium that every executive, and every company, would
like to have.
We unveil our list of the most innovative companies—ranked
by innovation premium—in chapter 7. Not surprisingly, we
found that our top twenty-five companies include some on the
BusinessWeek list—such as Apple, Google, Amazon, and Procter &
Gamble. These companies averaged at least a 35 percent innova-
tion premium over the past five years. But we also learned that
companies such as Salesforce.com (software), Intuitive Surgical
(health care equipment), Hindustan Lever (household products),
Alstom (electrical equipment), and Monsanto (chemicals) have
similar premiums. And as we studied these firms in greater detail,
we learned that they are also very innovative. As we examined
both our list and the BusinessWeek list of innovative companies,
we saw several patterns.
First, we noticed that compared to typical companies they
were far more likely to be led by an innovative founder or a leader
who scored extremely high on the five discovery skills that com-
pose the innovator’s DNA (their average discovery quotient was
in the eighty-eighth percentile, which meant they scored higher
than 88 percent of people taking our discovery skills assessment).
Innovative companies are almost always led by innovative leaders.
Let us say this again: Innovative companies are almost always led by
innovative leaders. The bottom line: if you want innovation, you
need creativity skills within the top management team of your
company. We saw how innovative founders often imprinted their
organizations with their behaviors. For example, Jeff Bezos
personally excels at experimenting, so he helped create institu-
tionalized processes within Amazon to push others to experi-
ment. Similarly, Intuit’s Scott Cook shines at observing, so he
pushes observation at Intuit. Perhaps not surprisingly, we discov-
ered that the DNA of innovative organizations mirrored the DNA
of innovative individuals. In other words, innovative people
7 Introduction
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8 INTRODUCTION
systematically engage in questioning, observing, networking, and
experimenting behaviors to spark new ideas. Similarly, innovative
organizations systematically develop processes that encourage
questioning, observing, networking, and experimenting by em-
ployees. Our chapters on building the innovator’s DNA in your
organization and team describe how you too can actively encour-
age and support others’ innovation efforts.
Why the Ideas in This Book Should Matter to You
Over the last decade, many books on the topic of innovation and
creativity have been written. Some books focus on disruptive in-
novation, such as Clayton Christensen’s The Innovator’s Dilemma
and The Innovator’s Solution. Others, such as Ten Rules for Strate-
gic Innovators (Govindarajan and Trimble), Game Changer (A. G.
Lafley and Ram Charan), and The Entrepreneurial Mindset (Rita
McGrath and Ian MacMillan), examine how organizations, and
organizational leaders, encourage and support innovation. Oth-
ers look more specifically at product development and innovation
processes within and across firms, such as How Breakthroughs
Happen (Andrew Hargadon) and The Sources of Innovation
(Eric von Hippel). Other books on innovation look at the roles
individuals play in the innovation process within companies,
such as The Ten Faces of Innovation and The Art of Innovation
(both by Tom Kelley of IDEO), or A Whole New Mind (Daniel
Pink). Finally, other books like Creativity in Context (Teresa
Amabile) and Creativity (Mihaly Csikszentmihalyi) examine
individual creativity and, more specifically, theories and research
about creativity. Our book differs from the others in that it is
focused squarely on individual creativity in the business context
and is based on our study of a large sample of business innova-
tors, including some big-name innovators such as Jeff Bezos
(Amazon.com), Pierre Omidyar (eBay), Michael Lazaridis
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9 Introduction
A Disclaimer . . . Sort of
We think it is important to remember three significant points as
you read The Innovator’s DNA. First, engaging in the discovery
skills doesn’t ensure financial success. Throughout the book,
we tell stories of people who were manifestly successful at
innovating. We focus on the success stories because we are all
more naturally drawn to success than failure. However, in our
sample of five hundred innovators, only two-thirds launched
ventures or products that met our criteria of success. Many
were not successful. The innovators developed the right skills—
questioning, observing, networking, and experimenting—that
produced an innovative venture or product, but the result was
not always a financial success. The point is that the discovery
skills we describe are necessary, indeed critical, for generating
innovative business ideas, but they don’t guarantee success.
Second, failure (in a financial sense) often results from not
being vigilant in engaging all discovery skills. The more finan-
cially successful innovators in our sample demonstrated a
higher discovery quotient (scored higher on the discovery
skills) than less successful ones. If you fail with an innovation,
it may be that you didn’t ask all the right questions, make all
of the necessary observations, talk to a large enough group
of diverse people, or run the right experiments. Of course, it is
also possible that you did all these things but an even newer
technology emerged or some other bright innovator came up
with an even better idea. Or maybe you just didn’t excel at
executing on the idea or have the resources to compete with
an established firm that imitated your invention. Many factors
can prevent a new product or business idea from gaining
traction in the market. But the better you are at asking the
(continued)
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10 INTRODUCTION
(Research In Motion/BlackBerry), Michael Dell (Dell), Marc
Benioff (Salesforce.com), Niklas Zennström (Skype), Scott Cook
(Intuit), Peter Thiel (PayPal), David Neeleman (JetBlue and Azul
airlines), and so on. The premise of our book is that we explain
how these big names got their “big ideas” and describe a process
right questions, engaging in the right observations, eliciting
ideas and feedback through networking with the right people,
and running experiments, the less likely you are to fail.
Third, we spotlight different innovators and innovative com-
panies to illustrate key ideas or principles, but not to set them
up as perfect examples of how to be innovative. Some innova-
tors we studied were “serial innovators,” as they had devel-
oped quite a number of innovations over time and appeared
motivated to continue doing so. Others benefitted by being in
the right place at the right time to make a critical observation,
talk to a key person with particularly useful knowledge, or
serendipitously learn from an experiment. They made an
important discovery once, but they might not necessarily be
capable or motivated (perhaps due to financial success) to
continue generating innovative ideas. In similar fashion, we
have found that innovative companies can quickly lose their
innovative prowess, while others can quickly improve it. In
chapter 8, we show that Apple’s innovation prowess (as meas-
ured by its innovation premium) dropped dramatically after
Jobs left in 1984, but then jumped up dramatically a few years
after he returned to lead the company. Procter & Gamble was
a solid innovation performer before Lafley took the helm, but
increased its innovation premium by 30 percent under his
leadership. The point is that people and companies can
change and may not always live up to our lofty expectations.
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11 Introduction
that readers can emulate. We describe in detail five skills that
anyone can master to improve his or her own ability to be an
innovative thinker.
Ask yourself: Am I good at generating innovative business
ideas? Do I know how to find innovative people for my organiza-
tion? Do I know how to train people to be more creative and
innovative? Some executives respond to the last question by
encouraging employees to think outside the box. But thinking
outside the box is precisely what employees (and executives) are
trying to figure out. We’ve even watched some executives answer
the “How do I think outside the box?” question with another
equally generic (and unhelpful) answer, “Be creative.”
If you find yourself struggling with actionable answers to these
questions, read on to gain a solid grasp of five skills that can make
all the difference when facing your next innovation challenge. All
leaders have problems and opportunities sitting in front of them
for which they have no solution. It might be a new process. It might
be a new product or service. It might be a new business model for
an old business. In every case, the skills you build by putting into
practice the innovator’s DNA may literally save your job, your or-
ganization, and perhaps your community. Indeed, we’ve found
that if you want to rise to the highest levels of your organization—
to a business unit manager, president, or CEO position—you need
strong discovery skills. And if you want to lead a truly innovative
organization, you likely will need to excel at those skills.
We hope that The Innovator’s DNA will encourage you to re-
claim some of your youthful curiosity. Staying curious keeps us
engaged and our organizations alive.3 Imagine how competitive
your company will be ten years from now without innovators if
its people didn’t find any new ways to improve its processes,
products, or services. Clearly, your company would not survive.
Innovators constitute the core of any company’s, or even coun-
try’s, ability to compete.
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12 INTRODUCTION
How The Innovator’s DNA Unfolds
Like a pocket-sized map in a foreign place, our book serves as a
guide to your innovation journey. The first part (chapters 1
through 6) explains why the innovator’s DNA matters and how
the pieces can combine into a personalized approach to innova-
tion. We put flesh onto the “think different” slogan by explaining
in detail the habits and techniques that allow innovators to think
differently. The chapters in part one give rich detail about how
to master the specific skills that are key to generating novel
ideas—associating, questioning, observing, networking, and
experimenting.
The second part (chapters 7 through 10) amplifies the build-
ing blocks of innovation by showing how the discovery skills of
innovators described in part one operate in organizations and
teams. Chapter 7 introduces our ranking of the world’s most in-
novative companies based on each company’s innovation pre-
mium, a market value premium based on investors’ expectations
of future innovations. We also provide a framework for seeing
how the innovator’s DNA works in the world’s most innovative
teams and organizations. We call this the “3P” framework because
it contains the discovery-driven building blocks of highly innova-
tive organizations or teams—people, processes, and philosophies.
Chapter 8 focuses on building-block number one, people, and de-
scribes how innovative organizations achieve maximum impact
by actively recruiting, encouraging, and rewarding people who
display strong discovery skills—and blending innovators effec-
tively with folks who have strong execution skills. Chapter 9
shows innovative team and company processes that mirror the five
discovery skills of disruptive innovators. In other words, innova-
tive companies rely on processes to encourage—even require—
their people to engage in questioning, observing, networking,
experimenting, and associating. Chapter 10 focuses on the funda-
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13 Introduction
mental philosophies that guide behavior within innovative teams
and organizations. These philosophies not only guide disruptive
innovators but also get imprinted in the organization, giving
people the courage to innovate. Finally, for those interested in
building discovery skills in yourself, your team, and even the next
generation (young people you know), in appendix C we guide you
through a process of taking your innovator’s DNA to the next
level.
We’re delighted that you’re starting or continuing your own
innovation journey. We have watched scores of individuals take
the ideas in this book to heart and who describe how they have
dramatically improved their innovation skills as a result. They
continually confirm that the journey is worth taking. We think
you’ll feel the same way once you’ve finished reading about and
mastering the skills of a disruptive innovator.
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100092 00a 001-014 INT r1 go.qxp 5/13/11 9:53 AM Page 14
PA R T O N E
Disruptive Innovation Starts with You
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The DNA of Disruptive Innovators
“I want to put a ding in the universe.”
—Steve Jobs, founder and CEO,
Apple Inc.
DO I KNOW HOW to generate innovative, evendisruptive, business ideas? Do I know how to find creative people or how to train people to think outside the
box? These questions stump most senior executives, who know
that the ability to innovate is the “secret sauce” of business success.
Unfortunately, most of us know very little about what makes one
person more creative than another. Perhaps for this reason, we
stand in awe of visionary entrepreneurs such as Apple’s Steve Jobs,
Amazon’s Jeff Bezos, and eBay’s Pierre Omidyar, and innovative
executives like P&G’s A. G. Lafley, Bain & Company’s Orit Gadiesh,
and eBay’s Meg Whitman. How do these people come up with
groundbreaking new ideas? If it were possible to discover the inner
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18 DISRUPTIVE INNOVATION STARTS WITH YOU
workings of the masters’ minds, what could the rest of us learn
about how innovation really happens?
Ideas for Innovation
Consider the case of Jobs, who was recently ranked the world’s
number-one best-performing CEO in a study published by
Harvard Business Review.1 You may recall Apple’s famous “Think
Different” ad campaign, whose slogan says it all. The campaign
featured innovators from different fields, including Albert Einstein,
Picasso, Richard Branson, and John Lennon, but Jobs’s face might
easily have been featured among the others. After all, everyone
knows that Jobs is an innovative guy, that he knows how to think
different. But the question is, just how does he do it? Indeed, how
does any innovator think different?
The common answer is that the ability to think creatively is ge-
netic. Most of us believe that some people, like Jobs, are simply
born with creative genes, while others are not. Innovators are sup-
posedly right brained, meaning that they are genetically endowed
with creative abilities. The rest of us are left brained—logical,
linear thinkers, with little or no ability to think creatively.
If you believe this, we’re going to tell you that you are largely
wrong. At least within the realm of business innovation, virtually
everyone has some capacity for creativity and innovative thinking.
Even you. So using the example of Jobs, let’s explore this ability to
think different. How did Jobs come up with some of his innovative
ideas in the past? And what does his journey tell us?
Innovative Idea #1: Personal Computers
Should Be Quiet and Small
One of the key innovations in the Apple II, the computer that
launched Apple, came from Jobs’s decision that it should be quiet.
His conviction resulted, in part, from all the time he’d spent
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19 The DNA of Disruptive Innovators
studying Zen and meditating.2 He found the noise of a computer
fan distracting. So Jobs was determined that the Apple II would
have no fan, which was a fairly radical notion at the time. Nobody
else had questioned the need for a fan because all computers
required a fan to prevent overheating. Getting rid of the fan
wouldn’t be possible without a different type of power supply that
generated less heat.
So Jobs went on the hunt for someone who could design a new
power supply. Through his network of contacts, he found Rod
Holt, a forty-something, chain-smoking socialist from the Atari
crowd.3 Pushed by Jobs, Holt abandoned the fifty-year-old con-
ventional linear unit technology and created a switching power
supply that revolutionized the way power was delivered to elec-
tronics products. Jobs’s pursuit of quiet and Holt’s ability to de-
liver an innovative power supply that didn’t need a fan made the
Apple II the quietest and smallest personal computer ever made
(a smaller computer was possible because it didn’t need extra space
for the fan).
Had Jobs never asked, “Why does a computer need a fan?” and
“How do we keep a computer cool without a fan?” the Apple com-
puter as we know it would not exist.
Innovative Idea #2: The Macintosh User Interface,
Operating System, and Mouse
The seed for the Macintosh, with its revolutionary operating
system, was planted when Jobs visited Xerox PARC in 1979. Xerox,
the copier company, created the Palo Alto Research Center
(PARC), a research lab charged with designing the office of the
future. Jobs wrangled a visit to PARC in exchange for offering
Xerox an opportunity to invest in Apple. Xerox didn’t know how
to capitalize on the exciting things going on at PARC, but Jobs did.
Jobs carefully observed the PARC computer screen filled with
icons, pull-down menus, and overlapping windows—all controlled
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20 DISRUPTIVE INNOVATION STARTS WITH YOU
by the click of a mouse. “What we saw was incomplete and flawed,”
Jobs said, “but the germ of the idea was there . . . within ten minutes
it was obvious to me that all computers would work like this.”4 He
spent the next five years at Apple leading the design team that would
produce the Macintosh computer, the first personal computer with
a graphical user interface (GUI) and mouse. Oh, and he saw some-
thing else during the PARC visit. He got his first taste of object-
oriented programming, which became the key to the OSX operating
system that Apple acquired from Jobs’s other start-up, NeXT Com-
puters. What if Jobs had never visited Xerox PARC to observe what
was going on there?
Innovative Idea #3: Desktop Publishing on the Mac
The Macintosh, with its LaserWriter printer, was the first computer
to bring desktop publishing to the masses. Jobs claims that the
“beautiful typography” available on the Macintosh would never
have been introduced if he hadn’t dropped in on a calligraphy class
at Reed College in Oregon. Says Jobs:
Reed College offered perhaps the best calligraphy instruc-
tion in the country. Throughout the campus every poster,
every label on every drawer, was beautifully hand-
calligraphed. Because I had dropped out and didn’t have
to take the normal classes, I decided to take a calligraphy
class to learn how to do this. I learned about serif and
san serif typefaces, about varying the amount of space
between different letter combinations, about what makes
great typography great. It was beautiful, historical, artisti-
cally subtle in a way that science can’t capture, and I
found it fascinating. None of this had even a hope of any
practical application in my life. But ten years later, when
we were designing the first Macintosh computer, it all
came back to me. And we designed it all into the Mac. It
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21 The DNA of Disruptive Innovators
was the first computer with beautiful typography. If I had
never dropped in on that single course in college, the Mac
would have never had multiple typefaces or proportion-
ally spaced fonts. And since Windows just copied the Mac,
it’s likely that no personal computer would have them.5
What if Jobs hadn’t decided to drop in on the calligraphy classes
when he had dropped out of college?
So what do we learn from Jobs’s ability to think different? Well,
first we see that his innovative ideas didn’t spring fully formed
from his head, as if they were a gift from the Idea Fairy. When we
examine the origins of these ideas, we typically find that the cata-
lyst was: (1) a question that challenged the status quo, (2) an ob-
servation of a technology, company, or customer, (3) an experience
or experiment where he was trying out something new, or (4) a
conversation with someone who alerted him to an important piece
of knowledge or opportunity. In fact, by carefully examining Jobs’s
behaviors and, specifically, how those behaviors brought in new di-
verse knowledge that triggered an innovative idea, we can trace his
innovative ideas to their source.
What is the moral of this story? We want to convince you that
creativity is not just a genetic endowment and not just a cognitive
skill. Rather, we’ve learned that creative ideas spring from behav-
ioral skills that you, too, can acquire to catalyze innovative ideas in
yourself and in others.
What Makes Innovators Different?
So what makes innovators different from the rest of us? Most of us
believe this question has been answered. It’s a genetic endowment.
Some people are right brained, which allows them to be more
intuitive and divergent thinkers. Either you have it or you don’t.
But does research really support this idea? Our research confirms
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22 DISRUPTIVE INNOVATION STARTS WITH YOU
others’ work that creativity skills are not simply genetic traits en-
dowed at birth, but that they can be developed. In fact, the most
comprehensive study confirming this was done by a group of re-
searchers, Merton Reznikoff, George Domino, Carolyn Bridges,
and Merton Honeymon, who studied creative abilities in 117 pairs
of identical and fraternal twins. Testing twins aged fifteen to
twenty-two, they found that only about 30 percent of the per-
formance of identical twins on a battery of ten creativity tests
could be attributed to genetics.6 In contrast, roughly 80 percent to
85 percent of the twins’ performance on general intelligence (IQ)
tests could be attributed to genetics.7 So general intelligence (at
least the way scientists measure it) is basically a genetic
endowment, but creativity is not. Nurture trumps nature as far as
creativity goes. Six other creativity studies of identical twins con-
firm the Reznikoff et al. result: roughly 25 percent to 40 percent of
what we do innovatively stems from genetics.8 That means that
roughly two-thirds of our innovation skills still come through
learning—from first understanding the skill, then practicing it,
and ultimately gaining confidence in our capacity to create.
This is one reason that individuals who grow up in societies
that promote community versus individualism and hierarchy over
merit—such as Japan, China, Korea, and many Arab nations—are
less likely to creatively challenge the status quo and turn out in-
novations (or win Nobel prizes). To be sure, many innovators in
our study seemed genetically gifted. But more importantly, they
often described how they acquired innovation skills from role
models who made it “safe” as well as exciting to discover new ways
of doing things.
If innovators can be made and not just born, how then do
they come up with great new ideas? Our research on roughly
five hundred innovators compared to roughly five thousand exec-
utives led us to identify five discovery skills that distinguish
innovators from typical executives (for detail on the research
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23 The DNA of Disruptive Innovators
methods, see appendix B). First and foremost, innovators count
on a cognitive skill that we call “associational thinking” or sim-
ply “associating.” Associating happens as the brain tries to syn-
thesize and make sense of novel inputs. It helps innovators
discover new directions by making connections across seem-
ingly unrelated questions, problems, or ideas. Innovative break-
throughs often happen at the intersection of diverse disciplines
and fields. Author Frans Johanssen described this phenomenon as
“the Medici effect,” referring to the creative explosion in Florence
when the Medici family brought together creators from a wide
range of disciplines—sculptors, scientist, poets, philosophers,
painters, and architects. As these individuals connected, they
created new ideas at the intersection of their respective fields,
thereby spawning the Renaissance, one of the most innovative eras
in history. Put simply, innovative thinkers connect fields, prob-
lems, or ideas that others find unrelated.
The other four discovery skills trigger associational thinking
by helping innovators increase their stock of building-block ideas
from which innovative ideas spring. Specifically, innovators engage
the following behavioral skills more frequently:
Questioning. Innovators are consummate questioners who
show a passion for inquiry. Their queries frequently challenge
the status quo, just as Jobs did when he asked, “Why does a
computer need a fan?” They love to ask, “If we tried this,
what would happen?” Innovators, like Jobs, ask questions
to understand how things really are today, why they are
that way, and how they might be changed or disrupted.
Collectively, their questions provoke new insights, connec-
tions, possibilities, and directions. We found that innovators
consistently demonstrate a high Q/A ratio, where questions
(Q) not only outnumber answers (A) in a typical conversa-
tion, but are valued at least as highly as good answers.
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Observing. Innovators are also intense observers. They care-
fully watch the world around them—including customers,
products, services, technologies, and companies—and the
observations help them gain insights into and ideas for new
ways of doing things. Jobs’s observation trip to Xerox PARC
provided the germ of insight that was the catalyst for both
the Macintosh’s innovative operating system and mouse, and
Apple’s current OSX operating system.
Networking. Innovators spend a lot of time and energy
finding and testing ideas through a diverse network of
individuals who vary wildly in their backgrounds and per-
spectives. Rather than simply doing social networking or net-
working for resources, they actively search for new ideas by
talking to people who may offer a radically different view of
things. For example, Jobs talked with an Apple Fellow named
Alan Kay, who told him to “go visit these crazy guys up in San
Rafael, California.” The crazy guys were Ed Catmull and Alvy
Ray, who headed up a small computer graphics operation
called Industrial Light & Magic (the group created special
effects for George Lucas’s movies). Fascinated by their opera-
tion, Jobs bought Industrial Light & Magic for $10 million,
renamed it Pixar, and eventually took it public for $1 billion.
Had he never chatted with Kay, he would never have wound
up purchasing Pixar, and the world might never have thrilled
to wonderful animated films like Toy Story,WALL-E, and Up.
Experimenting. Finally, innovators are constantly trying out
new experiences and piloting new ideas. Experimenters un-
ceasingly explore the world intellectually and experientially,
holding convictions at bay and testing hypotheses along the
way. They visit new places, try new things, seek new informa-
tion, and experiment to learn new things. Jobs, for example,
has tried new experiences all his life—from meditation and
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25 The DNA of Disruptive Innovators
living in an ashram in India to dropping in on a calligraphy
class at Reed College. All these varied experiences would later
trigger ideas for innovations at Apple Computer.
Collectively, these discovery skills—the cognitive skill of
associating and the behavioral skills of questioning, observing, net-
working, and experimenting—constitute what we call the innovator’s
DNA, or the code for generating innovative business ideas.
The Courage to Innovate
Why do innovators question, observe, network, and experiment
more than typical executives? As we examined what motivates
them, we discovered two common themes. First, they actively
desire to change the status quo. Second, they regularly take smart
risks to make that change happen. Consider the consistency of lan-
guage that innovators use to describe their motives. Jobs wants to
“put a ding in the universe.” Google cofounder Larry Page has said
he’s out to “change the world.” These innovators steer entirely clear
of a common cognitive trap called the status quo bias—the ten-
dency to prefer an existing state of affairs to alternative ones. Most
of us simply accept the status quo. We may even like routine and
prefer not to rock the boat. We adhere to the saying, “if it ain’t
broke, don’t fix it,” while not really questioning whether “it” is
“broke.” In contrast, innovators see many things as “broke.” And
they want to fix them.
How do innovators break the status quo? One way is to refuse
to be dictated by other people’s schedules. Just glance at an
innovative executive’s typical calendar and you will find a radically
different schedule compared to less inventive executives. We found
that innovative entrepreneurs (who are also CEOs) spend 50 percent
more time on discovery activities (questioning, observing, experi-
menting, and networking) than CEOs with no innovation track
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26 DISRUPTIVE INNOVATION STARTS WITH YOU
record. That translated into spending almost one more day each
week on discovery activities. They understand that fulfilling their
dreams to change the world means they’ve got to spend a signifi-
cant amount of time trying to discover how to change the world.
And having the courage to innovate means that they are actively
looking for opportunities to change the world.
Embracing a mission for change makes it much easier to take
smart risks, make mistakes, and most of all, learn quickly from
them. Most innovative entrepreneurs we studied felt that mistakes
are nothing to be ashamed of. In fact, they are an expected cost of
doing business. “If the people running Amazon.com don’t make
some significant mistakes,” Jeff Bezos told us, “then we won’t be
doing a good job for our shareholders because we won’t be swing-
ing for the fences.” In short, innovators rely on their “courage to
innovate”—an active bias against the status quo and an unflinch-
ing willingness to take smart risks—to transform ideas into
powerful impact.
In summary, the DNA of innovators—or the code for
generating innovative ideas—is expressed in the model shown in
figure 1-1. The key skill for generating innovative ideas is the cog-
nitive skill of associational thinking. The reason that some people
generate more associations than others is partly because their
brains are just wired that way. But a more critical reason is that
they more frequently engage in the behavioral skills of question-
ing, observing, networking, and experimenting. These are the cat-
alysts for associational thinking. Of course, the next question is,
why do some people engage these four skills more than others?
The answer is that they have the courage to innovate. They are
willing to embrace a mission for change and take risks to make
change happen. The bottom line is that to improve your ability to
generate innovative ideas, you need to practice associational
thinking and more frequently engage in questioning, observing,
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Courage to innovate
Behavioral skills
Cognitive skill to synthesize novel inputs
Innovative business
idea Networking
Experimenting
Observing
Questioning
Challenging the status quo Associational
thinking
Taking risks
F I G U R E 1 - 1
The innovator’s DNA model for generating innovative ideas
networking, and experimenting. That will likely only happen if
you can somehow cultivate the courage to innovate.
As innovators actively engage in their discovery skills over a life-
time, they build discovery habits, and they become defined by them.
They grow increasingly confident in their ability to discover what’s
next, and they believe deeply that generating creative insights is their
job. It is not something to delegate to someone else. As A. G. Lafley
declared, “innovation is the central job of every leader—business
unit managers, functional leaders, and the CEO.”9
The Innovator’s DNA
We’ve just told you that the ability to be innovative is not based
primarily on genetics. At the same time, we’re using the DNA
metaphor to describe the inner workings of innovators, which sug-
gests that it is. Bear with us for a moment. (And welcome to the
world of innovation, where the ability to synthesize two seemingly
opposing ideas is the type of associating that produces novel
27 The DNA of Disruptive Innovators
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28 DISRUPTIVE INNOVATION STARTS WITH YOU
insights.) Recent developments in the field of gene therapy show
that it is possible to modify and strengthen your physical DNA,
for example, to help ward off diseases.10 Likewise, it is metaphor-
ically possible to strengthen your personal innovator’s DNA. Let
us provide an illustration.
Imagine that you have an identical twin, endowed with
the same brains and natural talents that you have. You’re both
given one week to come up with a creative new business idea.
During that week, you come up with ideas alone, just thinking
in your room. By contrast, your twin (1) talks with ten people—
including an engineer, a musician, a stay-at-home dad, and a
designer—about the venture; (2) visits three innovative start-ups
to observe what they do; (3) samples five “new to the market”
products and takes them apart; (4) shows a prototype he’s built
to five people, and (5) asks “What if I tried this?” and “What
would make this not work?” at least ten times each day during
these networking, observing, and experimenting activities. Who
do you bet will come up with the more innovative (and usable)
idea? My guess is that you’d bet on your twin, and not because
he has better natural (genetic) creative abilities. Of course, the
anchor weight of genetics is still there, but it is not the dominant
predictor. People can learn to more capably come up with inno-
vative solutions to problems by acting in the way that your
twin did.
As figure 1-2 shows, innovative entrepreneurs rarely display
across-the-board strength in observing, experimenting, and net-
working, and actually don’t need to. All of the high-profile inno-
vative entrepreneurs in our study scored above the seventieth
percentile in associating and questioning. The innovators seemed
to hold these two discovery skills more universally. But the inno-
vators we studied didn’t need world-class strength in the other
behaviors. It certainly helped if they excelled at one of the four
skills and were strong in at least two. If you hope to be a better
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29 The DNA of Disruptive Innovators
Discovery Skill Strengths Differ for Disruptive Innovators
To understand that innovative entrepreneurs develop and use
different skills, look at figure 1-2. It shows the percentile rank
scores on each of the five discovery skills for four well-known
founders and innovators: Pierre Omidyar (eBay), Michael Dell
(Dell), Michael Lazaridis (Research In Motion), and Scott Cook
(Intuit). The percentile rank indicates the percentage of over
five thousand executives and innovators in our database who
scored lower on that particular skill. A particular skill is meas-
ured by the frequency and intensity with which these individ-
uals engage in activities that compose the skill.
As so
cia tin
g 0
10
20
30
40
50
60
70
80
90
100
P e
rc e
n ti
le r
a n
k
Qu es
tio nin
g
Ob se
rv ing
Ex pe
rim en
tin g
Ne tw
or kin
g
Mike Lazaridis Pierre Omidyar Scott Cook Michael Dell Noninnovators
F I G U R E 1 - 2
High-profile innovators’ discovery skills profile
As you can see, the pattern for each innovative entrepreneur is
different. For example, Omidyar is much more likely to acquire
his ideas through questioning (ninety-fifty percentile) and
(continued)
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30 DISRUPTIVE INNOVATION STARTS WITH YOU
innovator, you will need to figure out which of these skills you can
improve and which can be distinguishing skills to help you gener-
ate innovative ideas.
Delivery Skills: Why Most Senior Executives Don’t Think Different
We’ve spent the past eight years interviewing scores of senior
executives—mostly at large companies—asking them to describe
the most novel and valuable strategic insights that they had gen-
erated during their careers. Somewhat surprisingly, we found that
top executives rarely mentioned an innovative business idea that
they had personally generated. They were extremely intelligent and
talented individuals who were accomplished at delivering results,
but they didn’t have much direct, personal experience with gener-
ating innovative business ideas.
In contrast to innovators who seek to fundamentally change
existing business models, products, or processes, most senior
executives work hard to efficiently deliver the next thing that
should be done given the existing business model. That is, they
observing (eighty-seventh percentile), Dell through exper-
imenting (ninetieth percentile) and networking (ninety-eighth
percentile), Cook through observing (eighty-eighth percentile)
and questioning (eighty-third percentile), and Lazaridis through
questioning (ninety-sixth percentile) and networking (ninety-
eighth percentile). The point is that each of these innovative
entrepreneurs did not score high on all five of the discovery
skills. They each combined the discovery skills uniquely to
forge new insights. Just as each person’s physical DNA is
unique, an innovator’s DNA comprises a unique combination
of skills and behaviors.
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31 The DNA of Disruptive Innovators
work inside the box. They shine at converting a vision or goal into
the specific tasks to achieve the defined goal. They organize work
and conscientiously execute logical, detailed, data-driven plans of
action. In short, most executives excel at execution, including the
I’m Not Steve Jobs . . . Is This Relevant?
OK, so you’re not Steve Jobs. Or Jeff Bezos. Or any other fa-
mous business innovator. But that doesn’t mean you can’t learn
from these innovators. You can get better at innovating, even if
most of your innovations are somewhat incremental in nature.
We’ve seen it happen, and we’ve seen that it can make a dif-
ference. We’ve seen a pharmaceutical executive practice a
questioning technique (see chapter 3) each day to identify key
strategic issues facing his division. After three months, his boss
told him that he’d become the most effective strategic thinker
on his team. Within six months, he was promoted to a corporate
strategic planning job. “I just improved my ability to ask ques-
tions,” he told us. We’ve seen MBA students in our classes use
the observing, networking, and experimenting techniques to
generate entrepreneurial business ideas. One got the idea for
launching a company that uses bacteria to eat pollution from
networking with someone he met at a neighborhood barbeque.
Another observed that the best English speakers in Brazil were
people who watched American movies and television. So he
launched a company that sells software that helps people learn
English by watching movies. Many innovative ideas may seem
small, such as a new process for effectively screening job re-
cruits or a better way to build customer loyalty, but they are
valuable new ideas nonetheless. And if you come up with
enough of them, they will definitely help you advance in your
career. The point is this: you don’t have to be Steve Jobs to
generate innovative ideas for your business.
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32 DISRUPTIVE INNOVATION STARTS WITH YOU
following four delivery skills: analyzing, planning, detail-oriented
implementing, and disciplined executing. (We’ll say more about
these skills later in the chapter and in chapter 8, but for now we
need only note that they are critical for delivering results and
translating an innovative idea into reality.)
Many innovators realize that they are deficient in these critical
skills and, consequently, try to team up with others who possess
them. For example, eBay founder Omidyar quickly recognized the
need for execution skills, so he invited Jeff Skoll, a Stanford MBA,
and Meg Whitman, a Harvard MBA, to join him. “Jeff Skoll and I
had very complementary skills,” Omidyar told us. “I’d say I did
more of the creative work developing the product and solving
problems around the product, while Jeff was involved in the more
analytical and practical side of things. He was the one who would
listen to an idea of mine and then say, ‘Ok, let’s figure out how to
get this done.’” Skoll and Whitman professionalized the eBay Web
site, added fixed-price auctions, drove international expansion, de-
veloped new categories such as autos, and integrated important
capabilities such as PayPal.
Why do most senior executives excel in the delivery skills,
but are only above average in discovery skills? It is vital to un-
derstand that the skills critical to an organization’s success vary
systematically throughout the business life cycle. (See figure 1-4).
For example, in the start-up phase of an innovative venture, the
founders are obviously more discovery-driven and entrepre-
neurial. Discovery skills are crucial early in the business life cycle
because the company’s key task is to generate new business ideas
worth pursuing. Thus, discovery (exploration) skills are highly
valued at this stage and delivery (execution) skills are second-
ary. However, once innovative entrepreneurs come up with a
promising new business idea and then shape that idea into a
bona fide business opportunity, the company begins to grow and
then must pay attention to building the processes necessary to
scale the idea.
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33 The DNA of Disruptive Innovators
The Discovery and Delivery Skills Matrix: How Innovators Stack Up
To test the assertion that innovative executives have a different
set of skills than typical executives, we used our innovator’s DNA
assessment to measure the percentile rank of a sample of high-
profile innovative entrepreneurs (founder CEOs of companies
on BusinessWeek’s list of the top one hundred most innovative
companies) on both the five discovery skills (associating, ques-
tioning, observing, networking, experimenting) and the four de-
livery or execution skills: analyzing, planning, detail-oriented
implementing, and self-disciplined executing. We averaged
their percentile rank scores across the five discovery skills to
get an overall percentile rank, and then did the same thing
across the four delivery skills to get an overall percentile rank.
We refer to the overall percentile rank across the five discovery
skills as the “discovery quotient” or DQ. While intellectual
quotient (or IQ) tests are designed to measure general intelli-
gence and emotional quotient (or EQ) assessments measure
emotional intelligence (ability to identify, assess, and control the
emotions of ourselves and others), discovery quotient (DQ) is
designed to measure our ability to discover ideas for new ven-
tures, products, and processes.
Figure 1-3 shows that the high-profile innovative entrepre-
neurs scored in the eighty-eighth percentile on discovery skills,
but only scored in the fifty-sixth percentile on delivery skills. In
short, they were just average at execution. We then conducted
the same analysis for a sample of nonfounder CEOs (executives
who had never started a new business). We found that most
senior executives in large organizations were the mirror image
of innovative entrepreneurs: they scored around the eightieth
percentile on delivery skills, while scoring only above average on
(continued)
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34 DISRUPTIVE INNOVATION STARTS WITH YOU
Lo w
ba la nc
ed
Hi gh
ba la nc
ed
100
1007550250
75
50
25
D is
c o
ve ry
s k
ill s
(P er
ce n til
e sc
o re
)
Delivery skills (Percentile score)
Discovery- driven
Delivery- driven
Founder CEOs at innovative companies
Business unit managers
Nonfounder CEOs at average companies
Functional Managers
F I G U R E 1 - 3
Discovery-delivery skills matrix
discovery skills (sixty-second percentile). In short, they are se-
lected primarily for their execution skills. This focus on execution
is even more pronounced in business unit managers and func-
tional managers, who are worse at discovery than typical CEOs.
This data shows that innovative organizations are led by indi-
viduals with a very high DQ. It also shows that even within an
average organization, discovery skills tend to distinguish those
who make it to the highest levels of the organization. So if you
want to move up, you’d better learn how to innovate.
During the growth stage, the innovative entrepreneur may
well leave the company, either because she has no interest in scal-
ing the idea (which involves boring and routine work, at least to
her) or because she does not have the skills to manage effectively
in a large organization. Innovative entrepreneurs are often
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35 The DNA of Disruptive Innovators
described as poor managers because they lack the ability to fol-
low through on their new business ideas and are often irra-
tionally overconfident in them. Moreover, they are more likely to
make decisions based on hunches and personal biases rather
than data-driven analysis.11 Not surprisingly, the conventional
prescription for these problems is to replace the entrepreneurs
with professional managers—individuals with proven skills at
delivering results. At this point in the business life cycle, profes-
sional managers who are better equipped to scale the business
often replace the entrepreneur founders. When such replacement
occurs, however, key discovery skills walk away from the top man-
agement team.
Start-up stage
Growth stage
Mature stage
Decline stage
Organization imperative
Organization primarily rewards
• Develop and launch new business idea
Discovery skills
• Scale the new business idea • Build processes to execute consistently and systematically
Delivery skills
Delivery skills
Delivery skills still
dominate but discovery
skills increase in importance
• Exploit resources and capabilities generated during growth stage.
• Harvest, find, or develop other new business ideas
Delivery skills
Discovery skills
Discovery skills
Organization secondarily
rewards
F I G U R E 1 - 4
The business and executive skill life cycles
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36 DISRUPTIVE INNOVATION STARTS WITH YOU
With the founder entrepreneur out of the picture, the ensuing
growth and maturation stage of the business life cycle begins. In
these stages, managers generally make it to the top of the man-
agement pyramid through great execution. This may involve gen-
erating incremental (sustaining) innovations for existing
customers, but the focus is on execution, not building new busi-
nesses. Surprisingly few companies in this stage pay systematic at-
tention to the selection or promotion of people with strong
discovery skills. As this happens, the lack of discovery skills at the
top becomes even more glaring, but it is still not necessarily obvi-
ous. (Contrast these common practices with those of Amazon
founder Bezos, who systematically asks any new hire, including
senior executives, to “tell me about something that you have in-
vented.” Bezos wants to hire people with an inventive attitude—in
other words, people like himself.)
Eventually, for most organizations, the initial innovations that
created the business in the first place complete their life cycle.
Growth stalls as the business hits the downward inflection point
in the well-known S curve. These mature and declining organiza-
tions are typically dominated by executives with excellent delivery
skills. Meanwhile, investors demand new growth businesses, but
senior executive teams can’t seem to find them because the man-
agement ranks are dominated by folks with strong delivery skills.
With discovery skills largely absent from the top management
team, it becomes increasingly difficult to find new business op-
portunities to fuel new company growth. The company once again
starts to see the imperative for discovery skills.
In sharp contrast, when entrepreneur founders stay through
the growth stage, the company significantly outperforms its peers
in growth and profitability.12 An entrepreneurial founder is far
more likely to surround herself with executives who are good at
discovery, or who at least understand discovery. Could Apple have
built new businesses in music (iTunes and iPod) and phones
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37 The DNA of Disruptive Innovators
(iPhone) on top of an older computer business without the return
of Jobs? We doubt it.
The key point here is that large companies typically fail at dis-
ruptive innovation because the top management team is domi-
nated by individuals who have been selected for delivery skills, not
discovery skills. As a result, most executives at large organizations
don’t know how to think different. It isn’t something that they
learn within their company, and it certainly isn’t something they
are taught in business school. Business schools teach people how
to be deliverers, not discoverers.
For a moment, consider your company’s track record of re-
warding and promoting discovery skills. Does your company ac-
tively screen for people who have strong discovery skills? Does
your company regularly reward discovery skills through annual
performance assessments? If the answers are no, then it is likely
that a severe discovery skill deficit exists at the top ranks of man-
agement in your company.
You Can Learn to Think Different
In this chapter, we’ve tried to convince you that creativity is not a
just a genetic predisposition; it is an active endeavor. Apple’s slo-
gan “Think Different” is inspiring but incomplete. Innovators must
consistently act different to think different. We acknowledge that
genetics are at work within innovators, and that some have superior
natural ability at associational thinking. However, even if two indi-
viduals have the same genetic creative ability, one will be more suc-
cessful at creative problem solving if he or she more frequently engages
in the discovery skills we have identified. By understanding—and
engaging in—the five discovery skills, we believe that you can find
ways to more successfully develop the creative spark within your-
self and others. Read on as we describe how to master the five dis-
covery skills in order to become a more innovative thinker.
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38 DISRUPTIVE INNOVATION STARTS WITH YOU
Discovery and Delivery Skills Quiz: What’s Your Profile?
To get a quick snapshot of your discovery-delivery skills profile,
take the following self-assessment survey (1 = strongly dis-
agree; 2 = somewhat disagree; 3 = neither agree nor disagree;
4 = somewhat agree; 5 = strongly agree). Remember to answer
based on your actual behaviors, not what you would like to do.
1. Frequently, my ideas or perspectives diverge radically
from others’ perspectives.
2. I am very careful to avoid making any mistakes in my work.
3. I regularly ask questions that challenge the status quo.
4. I am extremely well organized at work.
5. New ideas often come to me when I am directly observ-
ing how people interact with products and services.
6. I must have everything finished “just right” when com-
pleting a work assignment.
7. I often find solutions to problems by drawing on solu-
tions or ideas developed in other industries, fields, or
disciplines.
8. I never jump into new projects and ventures and act
quickly without carefully thinking through all of the issues.
9. I frequently experiment to create new ways of doing
things.
10. I always follow through to complete a task, no matter
what the obstacles.
11. I regularly talk with a diverse set of people (e.g., from
different business functions, organizations, industries,
geographies, etc.) to find and refine new ideas.
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39 The DNA of Disruptive Innovators
12. I excel at breaking down a goal or plan into the micro
tasks required to achieve it.
13. I attend conferences (on my areas of expertise as well
as unrelated areas) to meet new people and understand
what issues are facing them.
14. I pay careful attention to details at work to ensure that
nothing is overlooked.
15. I actively seek to identify emerging trends by reading
books, articles, magazines, blogs, and so on.
16. I hold myself and others strictly accountable for getting
results.
17. I frequently ask “what if” questions that provoke explo-
ration of new possibilities and frontiers.
18. I consistently follow through on all commitments and
finish what I’ve started.
19. I regularly observe the activities of customers, suppliers,
or other organizations to get new ideas.
20. I consistently create detailed plans to get work done.
To score your survey:
Add your score on the odd-numbered items. You score
very high on discovery skills if your total score is 45 or above,
high on discovery if your score is 40–45, moderate to high on
discovery if your score is between 35 and 40, moderate to low
if you score 29–34; you score low on discovery if your score is
28 or less.
Add your score on the even-numbered items. You score
very high on delivery skills if your total score is 45 or above,
high on delivery if your score is 40–45, moderate to high on
delivery if your score is between 35 and 40, moderate to low
(continued)
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40 DISRUPTIVE INNOVATION STARTS WITH YOU
if you score 29–34; you score low on delivery if your score is
28 or less.
We have drawn this short survey from a more systematic
seventy-item assessment (either a self-assessment or a 360-
degree assessment) that we have developed to assess an in-
dividual’s discovery skills and delivery skills. You can do this
assessment through our Web site at http://www.Innovators
DNA.com. Should you decide to complete an assessment, you
will receive a development guide to walk you through your re-
sults and help you design a skill development plan. Your as-
sessment will provide you with your DQ and percentile data
for each discovery and delivery skill to compare your scores
with the over five thousand executives and innovators in our
dataset.
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2
Discovery Skill #1
Associating
“Creativity is connecting things.”
—Steve Jobs, founder and CEO,
Apple Inc.
INNOVATORS THINK DIFFERENTLY (to be grammaticallycorrect), but as Steve Jobs put it, they really just think different by connecting the unconnected. Einstein once called cre-
ative thinking “combinatorial play” and saw it as “the essential fea-
ture in productive thought.” Associating—or the ability to make
surprising connections across areas of knowledge, industries, even
geographies—is an often-taken-for-granted skill among the inno-
vators we studied. Innovators actively pursue diverse new informa-
tion and ideas through questioning, observing, networking, and
experimenting—the key catalysts for creative associations.
To illustrate how associations produce innovative business
ideas, consider how Marc Benioff came up with the idea for
Salesforce.com, now a $13 billion software company. Benioff ’s
41
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42 DISRUPTIVE INNOVATION STARTS WITH YOU
experience with technology and software began when, as a
fifteen-year-old, he built a small software company, Liberty
Software, writing computer games (like “How to Juggle”) on his
Commodore 64. As a computer science and entrepreneurship un-
dergraduate, Benioff worked summers at Apple during the build-
up and launch of the first Mac, learning firsthand what it meant to
work in a think-different world.
After graduation, Benioff joined Oracle, then a small start-up.
By the time Benioff was twenty-five, he was leading Oracle’s entire
direct-marketing division and was beginning to see several streams
of opportunity emerging on the Internet. “The nature of being suc-
cessful with software is you always have to be looking for the next
thing, so you have to condition your mind to think that way,”
Benioff told us. “I’ve seen a lot of different technological shifts over
the last twenty-five years, so as I was sitting at my desk at Oracle in
the late nineties and watching the emergence of Amazon.com and
eBay . . . it felt like something significant was on the horizon.”
Benioff decided it was time to think more deeply about the
changing technological landscape—and his own career. So he took
a sabbatical that started with a trip to India where he met a variety
of diverse people, including spiritual leader and humanitarian,
Mata Amritanandamayi (who helped strengthen his commitment
to doing well and doing good in business). Benioff ’s next stop on
this global journey was Hawaii, where he discussed various ideas
for new businesses with an assortment of entrepreneurs and
friends. While swimming with dolphins in the Pacific Ocean, the
fundamental epiphany for Salesforce.com surfaced. He reflected: “I
asked myself ‘Why aren’t all enterprise software applications built
like Amazon and eBay? Why are we still loading and upgrading soft-
ware the way that we have been doing all this time when we now
have the Internet?’ And that was a fundamental breakthrough for
me, asking those questions. And that’s the genesis of Salesforce. It’s
basically enterprise software meets Amazon.”
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43 Associating
Benioff ’s synthesis of novel inputs or association—“enterprise
software meets Amazon”—challenged the industry tradition of
selling software on CD-ROMs and engaging companies in lengthy,
customized (and expensive) installation processes, and instead fo-
cused on delivering software as a service over the Internet. That
way, the software would be available 24/7, and companies would
avoid all the costs and shutdowns associated with ongoing, large-
scale IT system installations and upgrades. Given his substantial
experience in sales and marketing at Oracle, Benioff felt that pro-
viding software services for managing a sales force and customer
relations carried huge potential for small and medium-sized busi-
nesses that couldn’t afford customized enterprise software. Thus,
Salesforce.com was born.
Benioff ’s vision emerged from years of significant software
industry experience combined with countless questions, observa-
tions, explorations, and conversations that ultimately helped him
bring together things that had never been connected before. He
borrowed elements of the Amazon business model and built a dif-
ferent one based on a software system that companies would pay
for as they used it, instead of paying for all of the software systems
before they used them (as most software providers did). It was truly
revolutionary as it launched an era of “cloud computing” that
seems obvious now, but was far from obvious then.
Ever the juggler with a mind hooked on “combinatorial play”
(or playing around with new associations), Benioff and his Sales-
force.com team have continued the innovation journey. He
explained that pre-Salesforce.com, his critical question was “Why
isn’t all enterprise software like Amazon?” but post-Salesforce.com,
a different question slowly took its place, “Why isn’t all enterprise
software (including Salesforce.com) like Facebook?” Benioff and his
team hotly pursued the answer and invented Chatter, a new social
software application that has been referred to as “Facebook for busi-
nesses.” Chatter takes the best of Facebook and Twitter and applies
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44 DISRUPTIVE INNOVATION STARTS WITH YOU
it to enterprise collaboration (think of it as “Facebook and Twitter
meet enterprise software,” just as “enterprise software met Amazon”
at Salesforce.com’s genesis).
Chatter uses new ways of sharing information such as feeds and
groups, so that without any effort, people can see what individu-
als and teams are focusing on, how projects are progressing,
and what deals are closing. It changes the way companies collabo-
rate on product development, customer acquisition, and content
creation by making it easy for everyone to see what everyone else
is doing. At companies using Chatter, e-mail in-boxes have shrunk
dramatically (by 43 percent at Salesforce.com) because the major-
ity of communications are now status updates and feeds in Chatter.
“Employees now follow accounts, and updates are automatically
broadcast to them in real-time via Chatter,” Benioff told us. “This
is the true power of Chatter—bringing to light the most impor-
tant people and ideas that move our companies forward. I call this
social intelligence, and it’s giving everyone access to the people, the
knowledge, and the insight they need to make a difference.”
Associating: What It Is
The great innovative entrepreneur Walt Disney once described his
role in the company he founded as creative catalyst. By that he
meant that while he himself didn’t actually do the drawings for the
wonderful animated films or build the giant Matterhorn replica
for Disneyland, he did put ideas together in ways that sparked cre-
ative insights throughout the company. One day, a little boy was
curious about Disney’s job, and Disney vividly recalled the con-
versation: “I was stumped one day when a little boy asked, ‘Do you
draw Mickey Mouse?’ I had to admit I do not draw any more.
‘Then you think up all the jokes and ideas?’ ‘No,’ I said, ‘I don’t do
that.’ Finally, he looked at me and said, ‘Mr. Disney, just what do
you do?’ ‘Well,’ I said, ‘I think of myself as a little bee. I go from
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45 Associating
one area of the studio to another and gather pollen and sort of
stimulate everybody.’ I guess that’s the job I do.”1 Not only did Dis-
ney spark others’ ideas, he sparked his own as well by putting him-
self at the intersection of others’ experiences. Over time, Disney’s
associational insights—including a string of industry firsts such
as joining animation with full-length movies and putting themes
into amusement parks—changed the face of entertainment.
Innovative leaders at well-known companies such as Apple,
Amazon, and Virgin do exactly the same thing. They cross-
pollinate ideas in their own heads and in others. They connect
wildly different ideas, objects, services, technologies, and disci-
plines to dish up new and unusual innovations. “Creativity is con-
necting things,” as Steve Jobs once put it. He continued, “When
you ask creative people how they did something, they feel a little
guilty because they didn’t really do it, they just saw something . . .
they were able to connect experiences they’ve had and synthesize
new things.”2 This is how innovators think different, or what we
call associating,3 a cognitive skill at the core of the innovator’s
DNA. In this chapter, we look more deeply into the workings of
associational thinking and offer some techniques for developing
this cognitive ability.
Associating: Where It Happens
Innovative ideas flourish at the intersection of diverse experience,
whether it be others’ or our own. Throughout history, great ideas
have emerged from these crossroads of culture and experience.
Much like the twelve major streets of traffic converging on the
accident-prone circular road surrounding the Arc de Triomphe in
Paris, the more diverse our crossroads of experience, the more
likely a serendipitous synthesis of the surprising will occur. Put
simply, innovators intentionally maneuver themselves into the
intersection, where diverse experiences flourish and foster the
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46 DISRUPTIVE INNOVATION STARTS WITH YOU
discovery of new insights. As we mentioned in chapter 1, Frans
Johansson coined the term “Medici effect”4 to describe the spark
that occurs in a geographic space or market space where a combi-
nation of novel ideas coalesce into something quite surprising.
Such Medici effects have occurred throughout history, ancient and
contemporary.
For example, historians often refer to the eighth to thirteenth
centuries of the Islamic world as the Islamic “renaissance” or
“golden age.” Centuries before the Italian Renaissance, Baghdad
attracted the best scholars from the Muslim world. Cairo, Damas-
cus, Tunis, and Cordoba were also influential intellectual hubs.
Islamic explorers traveled to the edges of the known world and
beyond. Mecca served not only as a religious center, but also as a
key intersection for multinational merchant traders coming from
the far western regions of the Mediterranean to the far eastern
reaches of India. This Islamic renaissance produced significant
innovations, many of which are relevant today, including the un-
derlying principles and ingredients of lipstick, suntan lotion, ther-
mometers, ethanol, underarm deodorant, tooth bleaching,
torpedoes, fireproof clothing, and charitable trusts.5
The Medici effect occurred in the Islamic and Italian renais-
sances, but it has also happened in modern times and in many
places around the world. For example, Silicon Valley in the 1960s
was anything but silicon. Yet, by the 1970s, all that had changed
and technology innovation flourished during its renaissance
decades of the 1970s, 1980s, and 1990s. Elsewhere in the world,
countries and communities are actively attempting to create their
own intersections of people with expertise in different fields to
spark creative new ideas. China, for example, has bet substantial
resources on its innovation future to the extent that the rest of
the world believes that China is on track to become the world’s
most innovative country by 2020. In our work with the creative
industries and social innovation sectors in China (like so many
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47 Associating
other sectors as well), we have found that they have dotted the land
with artistic and social innovation incubators where ideas see not
only the light of day, but the light of practice also.
The Medici effect also crops up in the many so-called “ideas
conferences” that are flourishing—conferences such as the World
Economic Forum Annual Meeting in Davos, Switzerland; the
Aspen Ideas Festival; and TED (Technology Entertainment and
Design) conferences, where diverse people join in a conscious
attempt to cross-pollinate ideas and perspectives. Let’s explore the
power of TED. People go to these conferences to rub elbows and
exchange ideas with extraordinary people—those who are well
known and those who aren’t. If you’ve never been to TED, take a
look at its Web site to get a glimpse of how it creates a Medici effect
year after year, and now in geography after geography (from
TEDxTelAviv to TEDxRamallah to TEDxYourTown). A few of
our personal TED favorites are Sir Ken Robinson questioning
the foundation of educational systems, Kaki King experiment-
ing far beyond what a guitar was originally intended to do, and
David Gallo observing the incredible surprises of the deep sea
(including the unexpected talents of squids). TED’s underlying
beauty springs from the intentional diversity of participants and
presentations. This diversity forms the foundation for innovators
to potentially connect the unconnected.
Innovators in our research not only frequented places like TED,
but literally constructed a TED in their heads through an
intentional depth and diversity of life experience, creating a
personal Medici effect. For them, TED-like conferences were icing
on a cake that they had already baked by actively questioning,
observing, networking, and experimenting throughout their lives.
This incredible foundation of deep and diverse experience fueled
their associational thinking far beyond that of noninnovators.
Look at PepsiCo chairman and CEO Indra Nooyi’s life to get a
glimpse of where her TED in the head comes from.
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48 DISRUPTIVE INNOVATION STARTS WITH YOU
Nooyi was born to a middle-class family in Madras (now
Chennai), where she often sat with her mother and sister “think-
ing big thoughts”; she played girls’ cricket avidly and was lead gui-
tarist in an all-girl rock band (it’s no surprise that she still performs
on stage at PepsiCo events). She finished a multidisciplinary un-
dergraduate degree in chemistry, physics, and math before getting
her MBA in Calcutta. Nooyi then worked in the textile industry
(Tootal) and consumer products industry (Johnson & Johnson)
before getting a master’s of public and private management at Yale.
After graduation, she shifted to the consulting industry (Boston
Consulting Group) before doing a strategic stint in the electrical
power industry (ABB), ultimately arriving at PepsiCo, where she
became its first woman CEO.
Nooyi’s diverse professional and personal experience convinced
her that people, and especially CEOs, must “be willing to think dis-
ruptively.” She did exactly that for the 2010 Super Bowl. Instead of
spending $20 million on two sixty-second television ad slots,
Nooyi took an entirely different approach, “Pepsi Refresh,” emerg-
ing from a question she constantly asks: “How can we do better by
doing better?” Pepsi Refresh invites people to submit ideas on how
to “refresh” their communities, making them a better place to live.
Each month, the Web site accepts a thousand ideas about arts and
culture, health, education, and so on. Online voting produces win-
ning ideas, with grants ranging from $5,000 to $250,000. In 2010
alone, PepsiCo allocated $1.3 million each month to Refresh proj-
ects based on over 45 million votes cast. Pepsi Refresh’s Facebook
numbers also topped 1 million by the end of 2010, and PepsiCo is
now rolling out the program globally.
Associating: How It Works
To better grasp how associating works and why some people might
excel at it more than others, it is important to understand how the
brain works. The brain doesn’t store information as a dictionary
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49 Associating
does, alphabetically with theater under T. Instead, while theater
will associate with T, it will also associate with all of the other
knowledge stored in the brain that the brain associates with it.
Some associations with theater will seem logical, such as Broadway,
showtime, or intermission, while others may be less obvious, such
as kissing, acting career, or anxiety (perhaps due to a botched the-
ater performance during high school). The more diverse knowl-
edge the brain possesses, the more connections it can make when
given fresh inputs of knowledge, and fresh inputs trigger the asso-
ciations that lead to novel ideas. Scott Cook, founder and CEO of
Intuit, describes these unexpected associations as “powerful and
essential supplements to data” when working through a problem.
Such analogies (or associations) are critical creative tools to help
him generate strategic insights. When the brain is actively absorb-
ing new knowledge, it is more likely to trigger connections between
ideas (thus creating a wider web of neural connections) as it toils
to synthesize novel inputs. Accordingly, the associating “muscle”
can also be developed through the active practice of questioning,
observing, networking, and experimenting.
In our research, every high-profile innovator excelled at asso-
ciating (scoring at the seventieth percentile or higher on the inno-
vator’s DNA assessment), with process inventors showing slightly
less associational skill than other inventors (yet still far more than
noninnovators). (See figure 2-1.)
Why were all innovators so much better at associating than
noninnovators? Our analysis found that the best predictor of
excellent associating skills was how often people engaged in the
other discovery skills—questioning, observing, networking, and
experimenting. For example, Benioff got the initial idea for Chat-
ter as he was asking, “Why isn’t all enterprise software like Face-
book and Twitter?” Research In Motion founder Lazaridis got the
idea for the BlackBerry at a conference as he listened to someone
talk about future trends in wireless data transfers. Starbucks
founder Schultz got the idea for Starbucks as he was observing
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50 DISRUPTIVE INNOVATION STARTS WITH YOU
F I G U R E 2 - 1
Comparison of associating skills for different types of innovators and noninnovators
Sample items:
1. Creatively solves challenging problems by drawing on diverse ideas or knowledge.
2. Often finds solutions to problems by drawing on solutions or ideas devel- oped in other industries, fields, or disciplines.
30th
40th
50th
60th
70th
80th
90th
Start-up entrepreneurs
Corporate entrepreneurs
Product innovators
P e
rc e
n ti
le
Process innovators
Noninnovators
expresso bars in Italy. Disruptive innovators shine best at associ-
ating when actively crossing all kinds of borders (geographic,
industry, company, profession, discipline, and so on) and engaging
the other innovator’s DNA skills.
Finding the right question, making compelling observations,
talking with diverse people, and experimenting with the world usu-
ally delivers productive, relevant associational insights. In contrast,
neglecting the other innovator’s DNA skills usually increases the
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51 Associating
randomness (and often irrelevance) of a new association or insight,
resulting in less impact on the marketplace. For an example simi-
lar to the identical twins scenario in chapter 1, consider two inno-
vators independently attempting to surface valuable, new
associations. The first person engages actively and regularly in a full
range of discovery skills. The second does not. Which is most likely
to get relevant, high-impact ideas? Obviously, the first, since she’s
been fully immersed in the world of real people facing real chal-
lenges while searching for a better solution. No surprise that her as-
sociational “ahas” are far more productive than her counterpart’s
relatively “random” connections, likely made from the safety and
distance of an office chair.
On the Hunt for New Associations
In our work with disruptive innovators, we found several things
that best described the dynamics behind their search for new
associations. Creating odd combinations, zooming in and out,
and Lego thinking allowed them to connect the dots across di-
verse experiences and ultimately deliver disruptive new business
ideas.
Creating odd combinations
Neil Simon’s successful Broadway play and subsequent TV
series, The Odd Couple, centered on what life was like when
two very different people—a prissy newsman and a sloppy sports-
writer—lived together as roommates. The friction between
opposite lifestyles often resulted in the most unexpected (and often
creative) outcomes. Similarly, innovators often try to put together
seemingly mismatched ideas to compose surprisingly successful
combinations. They create odd couples, triplets, or quadruplets
by consistently asking, “What if we combined this with that?” or
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52 DISRUPTIVE INNOVATION STARTS WITH YOU
“. . . this, this, and this with that?” They think different by fearlessly
uniting uncommon combinations of ideas.
For Lazaridis, connecting ideas across disciplines was some-
thing he learned relatively early in life:
When I was in high school, we had an advanced math
program and we had a shop program. And there was this
great divide between the two departments, and I was
in both. And I became, inadvertently, the ambassador
between the two disciplines, and saw how the mathemat-
ics we were learning in shop was actually more advanced
than some of the mathematics we were learning in
advanced math because we’re using trigonometry, we’re
using imaginary numbers, we’re using algebra, and even
calculus in very real, tangible ways. So I was then tasked
with bridging the gap and showing how math is used in
electronics and how electronics is used in math.
Lazaridis noted that a teacher alerted him to the link between
computers and wireless by telling him, “Don’t get too distracted
with computer technology because the person that puts wireless
and computers together is really coming up with something spe-
cial.” And so the BlackBerry was born.
Likewise, Google cofounder Larry Page created an odd combi-
nation by connecting two seemingly unrelated ideas—academic
citations with Web search—to launch Google. As a PhD student
at Stanford, Page knew that academic journals and publishing
companies rank scholars by the cumulative number of citations
each scholar gets each year. Page realized that Google could rank
Web sites in the same way that academic citations rank scholars;
Web sites with the most links (that were most frequently selected)
had more citations. This association allowed Page and cofounder
Sergey Brin to launch a search engine yielding far superior search
results.
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53 Associating
Sometimes the world’s most innovative leaders capture what
seem like fleeting associations among ideas and knowledge, mixing
and matching quite different concepts. In so doing, they produce
the occasional outlandish ideas that may be catalysts for innovative
business ideas. EBay founder Pierre Omidyar gave us a recent ex-
ample of how he came up with a wild idea. He had spoken with
consultants who were trying to solve the problem of how to get
produce quickly from the farm to consumers in Hawaii before it
spoils (the consultants explained that roughly one-third of the pro-
duce spoils). The first question Omidyar asked was, “What about
the post office? Doesn’t the post office go to everybody’s house six
times a week? Why don’t we just mail the head of lettuce?” He then
admitted: “It was probably an incredibly stupid idea and there are
probably a dozen reasons why it won’t work, but it’s an example of
how I put two things together that haven’t been put together before. I
understand the post office very well because eBay counts on ship-
ping companies for the business model to work. The post office is
an organization that visits every household six times a week! Do
you know any other organization that does that? So using those as-
sets in novel ways might be interesting.”
Not everyone would consider putting “fresh produce” and “post
office” together, but that’s the kind of thinking that increases the
probability of surfacing an innovative new business idea.
Zooming in and zooming out
Innovative entrepreneurs often exhibit the capacity to do two
things at once: they dive deep into the details to understand the
subtle nuances of a particular customer experience, and they fly
high to see how the details fit into the bigger picture. Synthesizing
these two views often results in surprising associations. Niklas
Zennström (cofounder of Skype) explained this process of zoom-
ing in and out based on his own experience: “You have to think
laterally. You know, seeing and combining certain things going on
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54 DISRUPTIVE INNOVATION STARTS WITH YOU
at the same time and understanding how seemingly unrelated
things could have something to do with each other. You need the
ability to grasp different things going on at the same time and then
to bring them together. For example, I can look at the bigger pic-
ture and also have a very good feel for the details. So I can go be-
tween high-level things to really, really small details. The movement
often makes for new associations.”
Steve Jobs has mastered zooming in and out to create excellent
and often industry-changing products. At one point, when de-
signing the original Mac computer, his team struggled to get the
right finish on the plastic. Jobs unblocked the logjam by going to
a department store and zooming in on the details of different plas-
tic appliances. He discovered a Cuisinart food processor that had
all the right plastic-case properties for producing an excellent case
for the first Mac. In other instances, he visited the company park-
ing lot to examine details of different cars to gain new insights
about current or future product design challenges. One time, his
parking lot excursion revealed a Mercedes-Benz trim detail that
helped resolve a metal case-design dilemma.
Jobs is equally adept at zooming out to detect unexpected
intersections across diverse industries. For example, as a result of
buying and then leading Pixar for over a decade, he acquired a per-
spective on the entire media industry that was quite different from
one he had gained earlier in the computer industry. This produced
a powerful intersection of ideas when he returned to Apple. Years
of personal negotiation with Disney executives about distribution
rights and income for Pixar movies gave Jobs the insight and
experience that later helped him create a workable solution to
Internet-based music distribution—a solution that escaped senior
executives at other computer and MP3 player companies. Jobs’s
Pixar experience provided the broad cross-industry perspective that
has fueled the invention of several game-changing ideas like iTunes,
iPod, iPhone, and most recently, the iPad.
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55 Associating
Lego thinking
If innovators have one thing in common, it is that they love to
collect ideas, like kids love to collect Legos. Nobel Prize winner
Linus Pauling advised that “the best way to get a good idea is to
get a lot of ideas.” Thomas Edison kept over thirty-five hundred
notebooks of ideas during the course of his lifetime and set regu-
lar “idea quotas” to keep the tap open. Billionaire Richard Branson
is an equally passionate recorder of ideas, wherever he goes and
with whomever he talks. Yet, absolute quantity of ideas does not al-
ways translate into highly disruptive ideas. Why? Because “you can-
not look in a new direction by looking harder in the same
direction,” says Edward de Bono, author of Lateral Thinking. In
other words, getting lots of ideas from lots of different sources cre-
ates the best of all innovation worlds. Innovators who frequently
engage in questioning, observing, networking, and experimenting
become far more capable at associating because they develop ex-
perience at understanding, storing, and recategorizing all this new
knowledge. This is important because the innovators we studied
rarely invented something entirely new; they simply recombined
the ideas they had collected in new ways, allowing them to offer
something new to the market. Questioning, observing, network-
ing, and experimenting helped innovators slowly build larger,
richer stocks of building-block ideas in their heads. The more
building blocks they acquired, the better they were able to com-
bine newly acquired knowledge to generate a novel idea.
To illustrate, think about a child playing with a set of Lego
blocks. The more different kinds of blocks the child uses to build
a structure, the more inventive she can become. But the most
innovative structures spring from the novel combination of a wide
variety of existing Legos, so as the child acquires different Lego sets
(for example, combining a Sponge Bob set with a Star Wars set),
she gets even better ideas for new structures. Similarly, the more
knowledge, experience, or ideas you add from wide-ranging fields
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56 DISRUPTIVE INNOVATION STARTS WITH YOU
to your total stock of ideas, the greater the variety of ideas you can
construct by combining these basic knowledge building blocks in
unique ways. (See figure 2-2.)
People with deep expertise in a particular field, who can com-
bine that knowledge with new concepts and ideas unfamiliar to
them, tend to be more creative. This is why innovation design firm
IDEO tries to recruit people who demonstrate a breadth of knowl-
edge in many fields and a depth in at least one area of expertise.
IDEO describes this person as “T-shaped” because the person
holds deep expertise in one knowledge area but actively acquires
knowledge broadly across different knowledge areas. A person with
F I G U R E 2 - 2
Why boosting your diverse idea stock increases innovation
Conceptually, as innovators increase the number of building-block ideas, they substantially increase the number of ways they might combine ideas to create something surprisingly new. Combining this with that creatively (building odd combinations) depends on how many unique this and that building blocks people have cached in their heads over time.a
N u
m b
e r
o f
w a
ys t
o r
e c
o m
b in
e b
u ild
in g
b lo
c k
id e
a s
Number of building block ideas
0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
20
40
60
80
100
120
140
160
180
200
a. Mathematically, as the number of different building-block ideas (N) in our heads grows linearly, the potential ways to recombine those ideas grows even faster, or geometrically (by N(N–1)/2).
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57 Associating
this knowledge profile typically generates innovative associations
in two ways: (1) by importing an idea from another field into his
area of deep expertise, or (2) by exporting an idea from his area of
deep expertise to one of the broad fields he is exploring where he
has shallow knowledge.
For example, a consultant with manufacturing expertise work-
ing at Bain & Company happened to visit with hospital adminis-
trators after the U.S. government implemented fixed-cost
reimbursements to reduce health care costs. The hospital needed
new ways to reduce costs, something it hadn’t focused on when
the government reimbursed for actual expenses plus a 10 percent
profit markup. During the discussion, the Bain consultant—with
deep expertise in the manufacturing sector—asked how the hos-
pital managed patient throughput, minimizing the “touches” to
the “product” (patient) and speeding its throughput through the
“plant” (hospital). These manufacturing-sourced ideas were com-
pletely foreign to the hospital, where processes focused on keeping
the patient longer to ensure quality care (and kept expenses and
profits high). These new ideas from an entirely different industry
delivered a dramatic redesign of hospital processes designed to get
the patient through the hospital (like a plant) as quickly as possi-
ble. Within five years, Bain was working with over fifty U.S. hos-
pitals applying these ideas to reduce costs.
A Safe Place for New Thoughts
After years of building a large stock of ideas through active
questioning, observing, networking, and experimenting, innova-
tors often make the most surprising associations. Sometimes an as-
sociation or idea sparked at the very moment they were engaged in
questioning, observing, networking or experimenting (as described
in chapters 3 through 6). Equally often, innovators uncovered new
ideas while in a relaxed state, without distractions, when they were
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58 DISRUPTIVE INNOVATION STARTS WITH YOU
not “trying” to solve a problem (researchers describe this as “defo-
cusing their attention”). In other words, it rarely happened during
a meeting when they were in a focused, convergent thinking mode
searching for a solution to a particular problem. Instead, Diane
Greene (cofounder of VMWare) told us that “the shower” is a great
place to relax and think to get new ideas (a place frequently pitched
by many innovators we interviewed, including David Neeleman
[founder of JetBlue and Azul] and Jeff Jones [founder of Campus
Pipeline and NxLight]). Innovators also unearth new ideas while
walking, driving, on vacation, or in the middle of the night (as Pep-
siCo CEO Nooyi does). Benioff got the key inspiration for Sales-
force.com when “swimming with the dolphins.” In addition to
hitting the shower, Greene gets some of her best new associations
when sailing solo (which she has done since childhood). In short,
Greene explained, “You get more creativity by giving yourself the
space for ideas to simmer. Ideas come from having a longer time
horizon about what you’re thinking about and a broader view of
where the idea might be going to go.” The point is that you can
sometimes spend too much time deliberately attacking a problem
when some creative ideas will only emerge after putting yourself in
a relaxed state with no distractions.6 If all else fails when trying to
figure out a problem, go to sleep. Yes, Harvard researchers have
found that sleep is a consistent antidote to tunnel vision toward a
problem. So when find yourself stuck in a thinking rut, give the
problem extra time to percolate by adding some sleep into the mix.
On average, that sleep will give you a 33 percent better chance of
connecting the unconnected and getting a great new idea.7
The best innovators generally knew their safe places and times
for generating new ideas. Do you? If not, look for places of transi-
tion or relaxation. Some folks find their best ideas early in the
morning; others late at night. Whatever works best for you, make
sure that you make the time to just meditate and think.
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59 Associating
Disruptive innovators force themselves to cross borders (techni-
cal, functional, geographical, social, disciplinary) as they engage in
the other discovery skills. If we do the same, placing ourselves in midst
of bustling intersections of diverse ideas and experiences, exciting as-
sociations will naturally happen. The discovery skills of questioning,
observing, networking, and experimenting will trigger surprising as-
sociations as we exercise them, over and over. Whether pursued out
of the office or in a conference room, great associations are more likely
to unfold when we create a safe place for them to happen. In time,
your capacity to craft creative solutions to problems will become pow-
erful, at work and beyond.
Tips for Developing Associating Skills
To strengthen your capacity to think different and weave together
unexpected connections across ideas, consider the following short-
and long-term exercises.8 Most take relatively little time, but when
done consistently, they can deliver positive results in generating
new ideas. We have found that these exercises can work for cre-
atively solving senior-level strategic problems as well as factory
floor–level production challenges.
Tip #1: Force new associations
Innovators sometimes practice “forced associating” or com-
bining things that we would never naturally combine. For exam-
ple, they might imagine (or force) the combination of features
in, say, a microwave oven with a dishwasher. This could deliver
an innovative product idea, such as a dishwasher that uses some
type of heating technology to clean and sanitize dishes that elim-
inates water completely. Or in the case of actual appliance compa-
nies, EdgeStar produced a countertop-size dishwasher, while
KitchenAid went for an in-sink approach. Both are the size of a
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60 DISRUPTIVE INNOVATION STARTS WITH YOU
microwave oven, use limited amounts of water, and wash far faster
than a full-size machine.
To practice forced associations, first consider a problem or chal-
lenge you or your company is facing. Then try the following exer-
cises to force an association that you normally wouldn’t make:
Pick up a product catalog and turn to the twenty-seventh
page. What does the first product that you see have to do
with the problem you are thinking about? Does the way it
solves a problem for a customer have anything to do with
your problem? For example, what if you run across an
iPad product in your random page flipping and your
work challenge is figuring out how to increase herbal tea
sales? Looking at an iPad might spur surprising syntheses,
such as creating a novel iPad application to capture the
interest of potential customers (or provide a means for
current customers to become repeat customers).
Or, open a completely random Wikipedia entry by
choosing a random article from the Wikipedia Web
menu. A random click might land on boomerang. Perhaps
your organization hopes for more appealing product
packaging. Bumping into the idea of a boomerang might
suggest packaging a customer can return or a self-
returning package after the product is used.
Now, back to the challenge you or your company is facing. Try
one of these forced association exercises, identify an unrelated ran-
dom item or idea, and take the time to reflect on what it has to do
with your problem. The point is to randomly find things to asso-
ciate with your problem and work your best to freely (even wildly)
make associations, lots of them (remember, lots of associations
can lead to great ideas). As you do so, table 2-1 might help organ-
ize your insights.
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61 Associating
TA B L E 2 - 1
Forcing new associations
Unsolved problem Unrelated random item or idea Potential associations
Tip #2: Take on the persona of a different company
Follow the lead of TBWA, which often holds a designated
“disruption day” to get new ideas.9 After defining a key strategic
question or challenge, TBWA people haul out large boxes full of
hats, shirts, and other things from some of the most innovative
companies in the world, like Apple and Virgin. They put on the
clothing and assume the persona of someone from that company
to look at their challenge from an entirely different perspective.
Alternatively, write down a list of companies (in related and
unrelated industries) on a stack of index cards (or randomly
go down the list of the Fortune 500 or Inc. 100 companies). Use the
card stacks to create random pairings of your company with an-
other. Then creatively brainstorm ideas on how the two could cre-
ate new value through partnership or merger. By combining the
strengths of both companies, you may surprise yourself with new
products, services, or process ideas.
Tip #3: Generate metaphors
Engage in activities that provoke an analogy or metaphor for
your company’s products or services (hopefully escaping from idea
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62 DISRUPTIVE INNOVATION STARTS WITH YOU
ruts), because each analogy holds the potential for seeing things
from an uncommon perspective. To illustrate, what if watching
TV were more like reading a magazine? (This is how TiVo has
changed TV watching; you can start and stop when you want, skip
over advertisements, and so on.) Or, what if your product or serv-
ice could incorporate the benefits of some of today’s hottest prod-
ucts like the Wii or iPhone? What might those new features or
benefits be? (See table 2-2.)
TA B L E 2 - 2
Generating metaphors
List of products (“what if” metaphor)
Possible new features/ benefits
Tip #4: Build your own curiosity box
Start a collection of odd, interesting things (e.g., a slinky,
model airplane, robot, and so on) and put them in a curiosity box
or bag (as people in the sixteenth and seventeenth centuries did
when they used curiosity cabinets to store interesting objects from
around the world). Then, you can pull out unique items randomly
when confronted with a problem or opportunity (and if you’re
really daring, display them on your office shelves). When traveling
(or even at home), visit local second-hand shops and flea markets
in a new city to pick up surprising treasures (ranging from a
Kuwaiti camel bell to an Australian didgeridoo) that might pro-
voke a new angle on an old problem.
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63 Associating
Interestingly, the global innovation design firm IDEO devotes
full-time employee effort to finding new things for its “Tech Box.”
IDEO designers rely on Tech Box items (each box has hundreds of
high-tech gadgets, clever toys, and a wide variety of items) when
brainstorming for new ideas, because odd, unusual things often
trigger new associations. It may sound silly, but seemingly silly
things can provoke the most random associations, literally forcing
us out of our habitual thinking patterns.
Tip #5: SCAMPER!
Try Alex Osborn and Bob Eberle’s acronym for insight, SCAM-
PER: substitute; combine; adapt; magnify, minimize, modify; put
to other uses; eliminate; reverse, rearrange. Use any or all of the
concepts to rethink the problem or opportunity you are address-
ing (this is particularly useful when thinking of redesigning a
product, service, or process). (Michael Michalko’s Thinkertoys is
a useful resource for more details about the SCAMPER method;
see table 2-3.)
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64 DISRUPTIVE INNOVATION STARTS WITH YOU
TA B L E 2 - 3
The Scamper method
Scamper challenge Invent a new type of wristwatch
Substitute Use natural wood or rocks instead of steel material.
Combine Create a space for easy, instant access to medications when the alarm goes off.
Adapt Use the wristwatch as a reflective mirror when lost.
Magnify, minimize, modify Make the wristwatch face large enough to be a cup holder.
Put to other uses Frame the watch as a work of art.
Eliminate Remove the internal workings of the watch and replace them with a sundial.
Reverse, rearrange Change the watch hands to go counter- clockwise.
Put the watch face on the inside of the wristband to make the back of the watch the focal point in terms of design and fashion.
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3
Discovery Skill #2
Questioning
“Question the unquestionable.”
—Ratan Tata, chairman, Tata Group
“ANY QUESTIONS?” MOST OF us have heardthat phrase hundreds, if not thousands of times. Sometimes it comes at the end of a presentation or meeting,
and most of us shuffle away because we don’t really think it is an
open invitation to question. But other times, you may have real
questions—about why things are the way they are and how they
might be different—but you don’t ask them. You need to. If dis-
ruptive innovators occupied the same room, they would fill the
empty space with thought-provoking questions. Why? Because
questioning is how they do their work. It is the creative catalyst for
the other discovery behaviors: observing, networking, and exper-
imenting. Innovators ask lots of questions to better understand
what is and what might be. They ignore safe questions and opt for
65
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66 DISRUPTIVE INNOVATION STARTS WITH YOU
crazy ones, challenging the status quo and often threatening the
powers that be with uncommon intensity and frequency.
Take Orit Gadiesh, the famously inquisitive and inventive
chairman of Bain & Company. As a child growing up in Israel, she
was fascinated by many things and “always asking a hundred ques-
tions.” Her parents also encouraged her to ask questions when
called on in class, and she did. So much so that her eighth grade
teacher wrote in her yearbook: “Orit, always ask those two ques-
tions, and even a third and a fourth question. Don’t ever stop being
curious.” When reading this teacher’s comment, Gadiesh realized
for the first time that “asking questions was the true way to go.”
Later in life, she relied on the same approach to cocreate client in-
sights at Bain, knowing that “asking clients lots of questions is key
to generating powerful solutions to problems.”
For example, in the early 1980s, Gadiesh was fresh out of grad-
uate school and new at consulting. She was assigned to help a steel-
manufacturing client cut its costs to stay competitive. During her
first visit to the plant, she was warned by the over-sixty-year-old
CEO that women were “bad luck in the industry.” Undaunted, she
pressed forward with the client, asking question after question about
why it was doing what it was doing. At the time, there were two ways
to make steel, the standard process of pouring it into ingots or,
alternatively, continuous casting (then, a new technology), where
you literally cast the steel continuously and cut it into slabs.
After reading about the continuous-casting process and sensing
its potential, Gadeish visited Japan to observe continuous casting first-
hand. She left the country convinced that the new process could cre-
ate significant value for her client. But the client’s executives and
salespeople kept telling her that they couldn’t do it because they had
three hundred fifty different products for customers and it was im-
possible to continuous cast that many products when you have to add
other materials to the steel simultaneously. “The client was stubborn,
completely convinced that they couldn’t make the change,” she told us.
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67 Questioning
Here’s where Gadiesh’s questioning skills best tackled the
client’s problem. She went to visit customers and started asking
questions, “Do you really need three hundred fifty products?”
“Why do you need all three hundred fifty products?” Their initial
autopilot answer was yes, but as she probed further with additional
questions, it became clear that customers didn’t fully grasp the cost
advantages that continuous casting offered due to its unique ca-
pacity to add other (lower-cost) materials during the steel-casting
process. Working with the client and customers, Gadiesh literally
went through each of the three hundred fifty products asking,
“Why do you have this? What is its core importance?” to fully grasp
why they made each thing they made.
Based on the rich information gleaned from asking a series of
simple questions about why each product existed, Gadiesh naturally
moved from understanding what was to exploring in depth what
might be. She moved deeper into disruptive territory by asking fun-
damental questions such as: “What if we shrink the existing product
line by 90 percent?” “What if we cast steel continuously with that
sharply reduced product line?” “How might we maximize the addi-
tion of cost-saving materials when casting the steel?” Before long,
the steel company executives realized that reducing the number of
products from three hundred fifty to thirty not only was possible
but was the most profitable course of action because it would give
them a competitive advantage in the product segments in which
they did compete. This allowed them to add other materials like alu-
minum (thus reducing costs) through a new continuous-casting
process, while still meeting most of their key customers’ needs. The
client (then a little over a billion-dollar enterprise) built a new pro-
duction facility and quickly raced ahead of U.S. competitors.
Gadiesh’s ability to generate new insights is largely based on
her ability to ask her way into what’s really going on and then push
the edge with constant, provocative questions about what might
be. At the core, she believes that “when you persist in asking
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68 DISRUPTIVE INNOVATION STARTS WITH YOU
questions throughout life—particularly challenging ones—it’s
central to who you are and how you lead.” In fact, she shared with
us that in a recent meeting with several heads of state and CEOs,
she was curious as to why they weren’t asking more fundamental
questions about key policy issues. One CEO confided to her:
“When you’re in the room, I don’t have to ask the fundamental
questions because I know they’re going to be asked.” Her deeply
rooted instinct to ask has helped her successfully guide Bain Con-
sulting for almost twenty years. It’s no wonder then that one of
Gadiesh’s key steel industry clients once gave her a hard hat en-
graved with the phrase “A little light will lead us,” referring not only
to her first name, Orit, which means “light,” but also to her light-
generating questions that helped transform their business.
What Is “Questioning”?
Questions hold the potential to cultivate creative insights. Einstein
knew this long ago as he often repeated the phrase, “If I only had the
right question . . . If I only had the right question . . .”1 No wonder he
finally concluded that “the formulation of a problem is often more
important than its solution” and that raising new questions to solve
a problem “requires creative imagination.” In The Practice of Man-
agement, Peter Drucker grasped the same power of provocative ques-
tions, observing that “the important and difficult job is never to find
the right answers, it is to find the right question. For there are few
things as useless—if not dangerous—as the right answer to the
wrong question.”2 Recent research by Mihaly Csikszentmihalyi con-
firmed these personal convictions by finding that Nobel laureates
were far better at achieving breakthroughs once they found the right
question to reframe their problem.3 Our research also found that dis-
ruptors rely on crafting the right questions to accomplish their work.
Questioning is a way of life for innovators, not a trendy intel-
lectual exercise. Our research found that not only do innovators
ask more questions than noninnovators, they also ask more
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69 Questioning
provocative ones. (Innovators who “strongly agreed” with survey
statements such as, “I often ask questions that challenge the status
quo,” produced twice as many new businesses than innovators who
simply “agreed.”) Among the different types of innovators we stud-
ied, product inventors showed the highest reliance on questioning
to deliver results, followed by start-up and corporate entrepreneurs
and, finally, process innovators. (See figure 3-1.)
By asking lots of questions, A. G. Lafley, for example, helped
change the game at Procter & Gamble (P&G). Lafley often began
conversations or meetings with: “Who is your target consumer here?
What does she want? What do you know about her? What kind of an
30th
40th
50th
60th
70th
80th
90th
Start-up entrepreneurs
Corporate entrepreneurs
Product innovators
P e
rc e
n ti
le
Process innovators
Noninnovators
F I G U R E 3 - 1
Comparison of questioning skills for different types of innovators and noninnovators
Sample items:
1. Asks insightful “what if” questions that provoke exploration of new possibilities and frontiers.
2. Often asks questions that challenge the status quo.
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70 DISRUPTIVE INNOVATION STARTS WITH YOU
experience does she really want? What does she think is missing
today?” Or when working within categories, Lafley often asked, “How
well do you understand the different segments of consumers—not
so much what we know about them demographically, but psycho-
graphically? What do we know about their biggest desires that
aren’t met today? What are they most unhappy about today?”
After searching for a deep understanding of what is, Lafley
shifted lines of inquiry to powerful what-if questions to help de-
liver customer-centric innovations. For example, if talking to some-
one about science and technology or a product need, he asked:
“What else is available in the world? Where else might we access
what we need? Who across P&G—thinking across our business
units or outside of P&G—could help us get what we need in the
time frame and cost structure that we want?” Most of all, Lafley was
constantly hunting for counterintuitive questions. Instead of ask-
ing, “How can we help consumers get floors and toilets clean?” he
would query, “How can we give consumers their Saturday mornings
back?” He found the latter question far more fruitful for surfacing
rich insights about what might be in order to develop new products
and services that consumers would want to “hire” to get their jobs
done at home. No wonder Lafley’s weekly question to himself is,
“What will I decide to be curious about Monday morning?”4
How to Ask Disruptive Questions
Innovators constantly question common wisdom. Aaron Garrity,
founder of XANGO (an innovative health and nutrition company),
put it simply, “I am questioning, always questioning, with a revolu-
tionary mind-set.” Innovators’ provocative questions push bound-
aries, assumptions, and borders. They leave few rocks unturned
when they cultivate the garden. During interviews with disruptive
innovators, we noticed not only a high frequency of questions but a
pattern as well. They started with a deep-sea-like exploration of what
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71 Questioning
currently is and then rocketed to the skies for an equally compelling
search for what might be. Focusing on what is, they asked lots of
who, what, when, where, and how questions (as world-class jour-
nalists or investigators do) to dig beneath the surface and truly
“know the place for the first time” (as poet T. S. Eliot observed).
They also invoke a series of what-caused questions to grasp the driv-
ers behind why things are the way they are. Collectively, these ques-
tions help describe the territory (physically, intellectually, and
emotionally) and provide a launching pad for the next line of
inquiry. To disrupt the territory, innovators puncture the status quo
with why, why-not, and what-if questions that uncover counterin-
tuitive, surprising solutions. Whether descriptive or disruptive,
innovators perpetually invoke powerful questions to help see be-
neath the surface of everyday action and discover what’s never been.
Describe the Territory
Innovators treat the world as a question mark, rarely working on
autopilot and constantly challenging the accuracy of their mental
maps about the territory (whether products, services, processes,
geographies, or business models). Suspended comfortably between
a faith in and doubt of their maps, the best innovators remember
that their views of the world are never the actual territory. Intu-
itively, they rely on a rich assortment of questions to develop a
deep understanding of how things really are, before probing in-
tensely into what they might be.
Tactic #1: Ask “what is?” questions
Disruptive innovators leverage a variety of what-is questions
to surface unexpected subtleties. For example, Pierre Omidyar’s
work as a software architect (before founding eBay) sharpened
his what-is questioning skills by focusing on user interfaces and
trying to make software less complicated. (His first start-up was
a pen-based computing application that attempted to make
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72 DISRUPTIVE INNOVATION STARTS WITH YOU
technology easier to use.) Using a blank-slate approach, Omidyar
habitually watches others (for example, clients, customers, or sup-
pliers) and wonders, “What are they really trying to do here?” He
then follows up with all kinds of who, what, when, where, and how
questions to dig beneath the surface.
Similarly, Dr. William Hunter, product inventor and start-up
founder of Canadian-based Angiotech Pharmaceuticals, was in-
trigued by nontraditional ways that traditional drugs could be
used. He ended up inventing the first surgical stent that was coated
with a drug to reduce scar tissue (which causes up to a 20 percent
failure rate compared to uncoated stents). His insight on coating
stents came by changing the question traditional stent producers
were asking, “How can we build a better stent?” to a more pro-
ductive one, “What does the body do to these stents and why do
they fail?” His relentless pursuit of the latter question ended up
delivering a blockbuster product in the early 2000s.
In hot pursuit of what is, innovators inquire deeply for answers
about what is happening right here and right now to gain under-
standing and empathy for others’ experience. IDEO (and other
successful design firms) employs diverse questions about the phys-
ical, intellectual, and emotional terrain to obtain a rich three-
dimensional view of how end users actually operate. Intuit’s Scott
Cook also does this by asking fundamental questions such as,
“Where is the real problem?”“What’s the person trying to achieve?”
“What’s most important?” and ultimately, “What’s the real pain
point?” Innovators like Cook know their questions work when
they reveal what is and build empathy for how it feels. Such em-
pathic understanding produces the deep understanding behind
better what-caused and what-if questions.
Tactic #2: Ask “what caused?” questions
The next step in understanding the way things are is to ask
causal questions to gain insights into why things are the way they
are. To illustrate, Mike Collins, founder and CEO of the Big Idea
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73 Questioning
Group (BIG) (a company that finds new product ideas through an
inventor network and then launches them), shared an example of
how inventors hunt down the real job to be done by understand-
ing better what is really going on in their world. One inventor had
pitched a fifteen-minute card game to Collins and his team for po-
tential development and distribution by BIG. Collins felt that the
game, as presented by the inventor, wouldn’t crack a tough family-
gaming market. But instead of turning the inventor away, Simon
Cowell–style, he paused and asked, “What caused you to develop
this game?” The inventor quickly replied, by answering a series of
implicit who, what, when, where, and how questions, that he had
three children (who?) and little time after work (when?) to spend
with them at home (where?). He wanted to have fun in the evening
with his children (what?), but there was no time for games like
Monopoly or Risk. He was in search of a fifteen-minute game that
would do the job of connecting him with his children for a quick
and enjoyable few minutes at the end of the day.
From Collins’s initial “what caused?” question, a series of an-
swers to implicit who, what, when, where questions emerged that
resulted in a successful line of “12 Minute Games” sold through
Target. These games did the job many families needed at the end
of a busy day or long week, and the insight to that job came by
asking questions that gave simple, but critical, insights into what
was really going on in the inventor’s life.
Disrupting the Territory
After describing the territory well enough to thoroughly under-
stand what is, innovators started their search for new, potentially
disruptive solutions. They switched gears from descriptive ques-
tions to disruptive ones, like why, why not, and what if.
Tactic #3: Ask “why?” and “why not?” questions
Innovators persistently leverage why and why-not questions
to acquire critical insights. Jeff Jones, founder of Campus Pipeline
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74 DISRUPTIVE INNOVATION STARTS WITH YOU
Are You Willing to Look Stupid?
So what stops you from asking questions? The two great in-
hibitors to questions are: (1) not wanting to look stupid, and (2)
not willing to be viewed as uncooperative or disagreeable. The
first problem starts when we’re in elementary school; we don’t
want to be seen as stupid by our friends or the teacher, and it
is far safer to stay quiet. So we learn not to ask disruptive ques-
tions. Unfortunately, for most of us, this pattern follows us into
adulthood. “I think a lot of people don’t ask questions because
they don’t want to look stupid,” one innovator told us. “So
everyone sits around playing along as if they know exactly
what is going on. I see this happen a lot—people go along be-
cause they don’t want to be the one to question the emperor’s
nakedness [as in the story ‘The Emperor’s New Clothes’].”
The second inhibitor is a concern about looking uncoop-
erative, or even disrespectful. EBay’s Omidyar admitted that
others sometimes see him as being disrespectful when he
questions their ideas or point of view. How can you overcome
these inhibitors? One innovator gave the following advice,
“I often preface my questions by saying ‘I like to be the guy
that asks a lot of dumb questions about why things are the
way they are.’” He says this helps him to detect whether it is
safe to ask basic questions (that could seem dumb) or to
question the way things are (without seeming uncooperative).
The challenge for all of us is that there is a basic element of
courage here, in being brave enough to be the one who says.
“Wait, I don’t get it. Why are we doing it like this?”
Actually, the more powerful question behind our initial
question, “Are you willing to look stupid?” really is, “Do you have
sufficient self-esteem to be humble when you ask questions?”
Over the years, we have found that great questioners have a
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75 Questioning
high level of self-esteem and are humble enough to learn from
anyone, even people who supposedly know less than they do.
If this happens, they have learned to live the sage advice of
Neil Postman and Charles Weingartner (early advocates of
inquiry-based living and learning) where “once you have
learned to ask questions—relevant and appropriate and sub-
stantial questions—you have learned how to learn and no one
can keep you from learning whatever you need to know.”a
a. Neil Postman and Charles Weingartner, Teaching as a Subversive Activity
(New York: Dell, 1969), 23.
(a Web platform that helps universities securely integrate cam-
pus communication and resources) and NxLight (an IT tool for
simplifying the management of complex intercompany transac-
tions by easily and securely exchanging documents), grasps this
fact well, concluding: “Once you discover that asking why in a
different way and not being content with what the answer is, it’s
interesting what happens. You just have to go a little bit deeper
asking questions one or two more times in a different way.” This
is exactly what disruptive innovators do to discover new business
ideas.
Consider the example of Edwin Land, cofounder of Polaroid.5
During a vacation with his family, Land took a picture of his three-
year-old daughter. She could not immediately see the picture he
had taken of her and wanted to know why. And, like most young
children, probably asked why more than once. Her simple ques-
tion pushed Land, an expert in photographic emulsions, to think
deeply about the possibilities of “instant” photography. Why
couldn’t she see the picture immediately? What would it take
for instant photography to be a reality? Within a few hours, the
scientist developed the basic insights that would eventually
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76 DISRUPTIVE INNOVATION STARTS WITH YOU
produce instant photographs, a product that would transform his
company and disrupt an entire industry. In effect, his child’s naive
question challenged industry assumptions and transformed Land’s
technical knowledge into a revolutionary product—the Polaroid
camera. This industry-changing camera delivered incredible im-
pact between 1946 and 1986, ultimately selling over 150 million
units and an even higher volume of expensive film packs for use in
the cameras.
Similarly, David Neeleman, founder of JetBlue and Azul air-
lines, says that one of his strengths “is an ability to look at a process
or a practice that has been in place for a long time and ask myself,
‘Why don’t they do it this other way?’ And sometimes I find my-
self thinking the answer is so obvious that I wonder, ‘Why has no
one else ever thought of this before?’” For example, Neeleman’s
first start-up was a charter airline called Morris Air. At the time,
airline tickets were treated like money; if you lost your ticket, it
was like losing cash. This created problems for travelers as they
dealt with the challenges of lost tickets and for airlines as they tried
to send tickets securely to travelers. One day, an employee was
complaining about a ticket problem, prompting Neeleman to ask,
“Why do we treat tickets like cash? Is there a better way?” This
question sparked an idea, “Why not give customers a code when
they buy a ticket that they could give us at the airport with their
identification?” This idea led to the creation of e-tickets, an idea
that eventually spread throughout the industry after Southwest
Airlines purchased Morris Air.
In his most recent venture, Azul, Neeleman asked his senior
team, “Why aren’t more Brazilians taking advantage of Azul’s low
fares?” Azul’s flights were cheaper than the competition, but his
question surfaced the real challenge—getting price-sensitive cus-
tomers to the airport. Then Neeleman asked, “How much does a
cab cost for our typical customer to get to the airport?” The answer
was “too much,” potentially 40 percent to 50 percent of the airline
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77 Questioning
ticket cost. So Neeleman searched for lower-cost bus or train al-
ternatives, but they were either nonexistent or too infrequent. This
prompted him to then ask, “Why not start our own free bus serv-
ice to get customers to the airports?” (to take advantage of Azul’s
inexpensive fares). Today, passengers book (mostly online) over
three thousand bus rides per day to the airport with Azul, the
fastest-growing airline in Brazil.
In Asia, Taiichi Ohno, a former engineer at Toyota who is
known as the chief architect of the Toyota Production System, put
a five-whys questioning process—a technique for asking “what
caused” questions—at the core of his innovative production sys-
tem. The five-whys process requires that when confronted with a
problem, one should ask why at least five times to unravel causal
chains and come up with innovative solutions. Many of the world’s
most innovative companies have adopted variations of the five-
whys process to push employees to ask why as they search for a bet-
ter understanding of what is and new responses to what might be.
Tactic #4: Ask “what if” questions
Meg Whitman of eBay has worked directly with a number of
innovative entrepreneurs and founders, including Omidyar
(eBay), Niklas Zennström and Janus Friis (Skype and Kazaa), and
Peter Thiel and Elon Musk (PayPal). When asked how these folks
differ from typical executives, Whitman replied, “My experience is
that they get a kick out of screwing up the status quo. They can’t
bear it. So they spend a tremendous amount of time thinking
about how to change the world. And as they think and brainstorm,
they like to ask, ‘If we did this, what would happen?’”
Omidyar is a perfect example. As a systems analyst, he designs
end-user interfaces from the ground up with no preconceived way
of doing things. To do this, Omidyar probes deeply by asking a
series of questions that work from a blank-slate perspective, such
as, “What would be the cleanest way to solve it?” He sees himself as
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78 DISRUPTIVE INNOVATION STARTS WITH YOU
“the devil’s advocate in the room saying things like, ‘What if it re-
ally didn’t work this way? Or what if we really did do the opposite
of this? What would happen then?’”
In sharp contrast to disruptive innovators, delivery-driven ex-
ecutives in our research were far less likely to ask what-if questions
that challenged their company’s strategy or business model. Data
from our 360-degree survey assessments of executives around the
world revealed that most managers do not regularly question the
status quo (though they often think they do). They prefer routine
to rocking the boat and adhere to the adage, “If it ain’t broke, don’t
fix it.” But innovators actively look for things that are “broke” and
activate a pattern of what-if questioning to surface new angles of
inquiry. One technique that innovators use when imagining the
future is to ask what-if questions that either impose constraints or
eliminate constraints.
Ask “what if” questions to impose constraints. Most of us con-
strain our thinking only when forced to deal with real-world lim-
itations, such as shrinking budgets or technology restrictions,
but innovative thinkers do the opposite. Google’s Marissa Mayer,
vice president of search products and user experience, says: “Cre-
ativity loves constraint. People often think of it in terms of artis-
tic work—unbridled, unguided effort that leads to beautiful
effect. If you look deeper, however, you’ll find that some of the
most inspiring art forms—haikus, sonatas, religious paintings—
are fraught with constraints. They’re beautiful because creativity
triumphed over the rules . . . Creativity, in fact, thrives best when
constrained.”6
Questions that artificially impose constraints can trigger un-
expected insight by forcing people to think around the constraint.
To initiate a creative discussion about growth opportunities at
one company in our study, an executive asked this question: “If we
were legally prohibited from selling our current products to our
current customers, how would we make money next year?” This
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79 Questioning
constraining question led to an insightful exploration of ways the
company could find and serve new customers.
Variations of the same question can provoke surprising ideas.
For example, you and your team might ask:
1. If the disposable income of our current customers (or our
budget) dropped by 50 percent, how would our product or
service have to change?
2. If air transportation was no longer possible, how would we
change the way we do business?
Asking questions that place constraints on solutions forces out-
of-the-box thinking because it ignites new associations. This is pre-
cisely what Apple did to come up with the iPod (“What if we
created an MP3 player that could fit in a shirt pocket but hold five
hundred to a thousand songs?”) and highly successful experience-
centered retail stores (“What if we used a regular-sized retail store
to sell a very small number of Apple-only products?”
Likewise, Hindustan Lever (Unilever’s business in India) won-
dered how it could reach millions of potential consumers in small
Indian villages where severe constraints existed: no retail distribu-
tion network, no advertising coverage, and poor roads and trans-
port. Collectively these constraints challenged its existing business
model and produced a fundamental question: “How might we
sell products in small villages without any access to traditional dis-
tribution networks, advertising, or infrastructure?” The answer
ultimately surfaced from direct-selling business models (from
companies like Avon). In close partnership with nongovernmen-
tal organizations, banks, and the government, Hindustan Lever
recruited women in self-help groups across rural India to become
direct-to-consumer sales distributors for its soaps and shampoos.
The company also provided substantial training for them to suc-
ceed as micro-entrepreneurs. (By 2009, the innovative solution in
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80 DISRUPTIVE INNOVATION STARTS WITH YOU
a highly constrained country context produced over forty-five
thousand women entrepreneurs selling Hindustan Lever products
to three million consumers in a hundred thousand villages.7
Ask “what if” questions to eliminate constraints. Great ques-
tions also eliminate the constraints that we can unnecessarily impose
on our thinking due to a focus on resource allocations, decisions, or
technology limitations. To counter this tendency, one innovative
CEO finds these questions key to eliminating unwanted sunk-cost
constraints: “What if you had not already hired this person, installed
this equipment, implemented this process, bought this business, or
pursued this strategy? Would you do it today?” Jack Welch often
posed the same kinds of questions during his two-decade tenure as
GE’s CEO. Questions like these quickly and effectively toss sunk
costs (financial and nonfinancial) right out the window.
Another approach to relaxing constraints surfaces in this ques-
tion: “What if X technology were available to every consumer?
How would it change consumer behavior?” With a slight twist on
this query, RIM’s Lazaridis likes to look five years ahead. He per-
sistently asks questions such as, “What CPUs will be available?
What LCD technology? What keyboard? Mouse?” Once he gets the
best answers possible to these questions, he then starts the more
predictable graphical and industrial design work on the next gen-
eration of BlackBerry products.
After returning to Apple in the mid-1990s, Steve Jobs relaxed
constraints by asking, “What would you do if money were no
object?” prompting the creation of new products or services.8 This
kind of question assumes that the pursuit of excellence at Apple
occurs independent of outside constraints, including customers’
current preferences or the cost of providing exactly what cus-
tomers might want. Now as a board member at Disney, Jobs
pushes the same message further, admonishing people to “dream
bigger” as they redesign Disney retail stores to now include one
sales area labeled, “WWTD: What Would Tinker Bell Do?”9
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81 Questioning
Questioning Dilemmas for Senior Leaders
When it comes to status quo–challenging questions, leaders
(particularly CEOs) face two key dilemmas. The first is that top ex-
ecutives are generally rewarded for generating better strategies
or new business models, but they are also punished if they pub-
licly question their firm’s own strategy or existing business model.
CEOs are expected to provide answers, not questions, to key ex-
ternal and internal stakeholders. One CEO told us, “If I openly
question our strategy or key initiatives, this could create a crisis
of confidence within the company. People don’t like that kind of
uncertainty.” Senior executives know, as researchers David Krantz
and Penelope Bacon do, that “to question an act, belief, or ex-
perience runs the risk of disrupting the activity.”a When this hap-
pens, financial markets worldwide are generally unforgiving and
punish such disruptions, at least in the short run.
The second dilemma for leaders is that it’s difficult for
people in the organization to ask the top boss questions that
challenge the status quo. After all, the CEO may have reached
his position by creating the status quo. So while CEOs may be
in the best position to ask and respond to questions, they
actually face major constraints in asking and receiving ques-
tions that challenge the status quo. As a result, it is no small
feat for a CEO to create a culture that fosters the kind of ques-
tioning that produces innovative outcomes, particularly new
businesses and business models.
Many innovative founders and CEOs address the first
dilemma by cultivating an informal network of people whom
they can question, and who will question them. For example,
an innovative CEO at a major multinational firm told us that he
(continued)
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82 DISRUPTIVE INNOVATION STARTS WITH YOU
has formed an informal, unofficial group of confidantes. “It’s a
fairly senior, fairly seasoned set of people who are comfort-
able throwing out ideas and then forgetting about them if
these hunches or speculation aren’t right,” he said. “I can ask
any question of these folks and they’ll give me a straight
answer.”
Tackling the second dilemma is a little trickier as the chal-
lenge can be culturally sensitive. In some country—and
company—cultures, you simply don’t question the boss. For
example, cross-cultural research suggests that eight in ten
Japanese would agree with the following statement about the
role of leaders: “It is important for a manager to have at hand
the precise answers to most of the questions his or her sub-
ordinates may raise about their work.”b The result is that
Japanese leaders are expected to deliver answers to their
people, not questions, particularly status quo–challenging
ones. But a company or country culture that fails to encourage
questioning sounds the death knell for disruptive innovation.
Regardless of the cultural context, CEOs hoping to generate
innovative ideas must make clear that leadership requires ask-
ing questions that challenge the way things are, even if such
practices were established by the CEO on the way to the top!
a. D. L. Krantz and P. Bacon, “On being a naïve questioner,” Human Development
20 (1977): 141–159. b. N. J. Adler, N. Campbell, and A. Laurent, “In search of appropriate method-
ology: From outside the People’s Republic of China looking in,” Journal of
International Business Studies 20 (1989): 61–74.
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83 Questioning
Questioning as a Potential Turbocharger
Questions are a critical catalyst to creative insights. Yet, questions
alone do not produce innovation. They are necessary, but insufficient.
In the absence of active observation, networking, or experimen-
tation, theoretical innovators become what sportswriters in the
United States might refer to as armchair quarterbacks. They ask
clever questions from the sidelines and may naively believe that
one or two magical questions will surface disruptive ideas, but they
rarely, if ever, play in the real-life game of innovation.
We found that innovators were more likely to successfully
launch innovative products, services, or businesses when they
combined an ongoing instinct to formulate and ask the right ques-
tions with other innovator’s DNA skills. In other words, leaders
who ask questions as they observe discover more than those who
don’t. Leaders who ask questions as they network for new ideas
discover more than those who don’t. Leaders who ask questions as
they experiment discover more than those who don’t. Ultimately,
questioning combined with the other discovery behaviors can
truly turbocharge your innovation results.
Changing our questions can change the world. The key is con-
stantly creating better questions to see that world through new eyes.
When this happens, we will find ourselves living the profound obser-
vation that Jonas Salk (discoverer of the first polio vaccine) made that
“you don’t invent the answers, you reveal the answers” by “finding
the right question.”
We hope our framework for surfacing the right questions can help
you along your innovation journey. Start by probing what is and then
pursuing what if, particularly what-if questions that impose or elim-
inate constraints. But remember the framework is not the end, but
the means. It is the first step to getting new ideas that might succeed,
not a surefire prescription for successful ones. The next three chap-
ters provide further insight into other concrete actions we can take to
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84 DISRUPTIVE INNOVATION STARTS WITH YOU
help improve the questions we ask and, in the end, reveal potentially
disruptive solutions to difficult problems.
Tips for Developing Questioning Skills
Innovators not only ask provocative questions, but constantly
work at asking better ones. For example, Michael Dell says that if
he had a favorite question to ask, everyone would anticipate it,
which wouldn’t make it very good. “Instead, I like to ask people
things that they don’t think that I’m going to ask them,” he told
us. “I kind of delight in coming up with questions that nobody has
the answer to quite yet.” To consistently craft better questions, here
are a few of our favorite tips.
Tip #1: Engage in QuestionStorming
A few years ago, we stumbled across an incredibly valuable
questioning tool. We were teaching a graduate business school class
and found ourselves stuck on a particular problem, unable to find
any further insight through a typical brainstorming process. One
of us suggested taking a time-out from the process and focusing
our collective energies on only asking questions about the prob-
lem, instead of trying to construct another set of solutions. Much
to our surprise, the questions-only approach dug much deeper
into the fundamental elements of the challenge and opened every-
one’s eyes to a new understanding of the problem.
Since that first questions-only exercise, we have worked with
individual executives and teams of executives over the years to
develop a process we now call QuestionStorming.10 We all know
about brainstorming, a process in which you get together as a team
and brainstorm solutions to a problem. QuestionStorming is
similar, but instead of focusing on solutions, you brainstorm ques-
tions about the problem.
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85 Questioning
Here’s how it works. First, as an individual or team, identify a
personal, work unit, or organizational problem or challenge to
solve. Then write down at least fifty questions about that problem
or challenge. (If you’re dealing with a work unit or organizational
problem, it is preferable to generate these questions with a team
and write all of the questions on a white board for everyone to
see.) We suggest a couple of extra rules when doing this as a team:
Generate only one question at a time. Have one person write the
questions down so that everyone can see and reflect on each ques-
tion being asked. No one can ask a new question until the last one
is completely written down. This helps the group build on prior
questions to generate better queries about the challenge. Prod each
other to ask a full range of what is, what caused, why and why not,
and what if questions during the exercise.
It’s important to follow some other rules. When capturing the
questions, discipline yourself or your team to simply ask the ques-
tion without offering a long preamble as a setup. Ruthlessly facilitate
the focus on questioning until you have at least fifty questions (in
other words, don’t tolerate answers; simply reinforce the importance
of only asking questions about the problem or opportunity). After
a possible stretch of initial silence (as your team might struggle to
formulate new questions about the issue), most teams engage in an
even deeper inquiry about the real root causes of the problem or
dimensions of an opportunity to see them in a new light. After list-
ing the questions, prioritize and discuss the most important or
intriguing ones in your search for better solutions. You may want to
assign an individual or team to attempt to answer the most impor-
tant questions (probably through observing, networking, or exper-
imenting) before having the group brainstorm solutions.
We have found that individuals who frequently engage in
personal QuestionStorming about challenges facing their work
unit, organization, industry, customers, suppliers, and so on are
more likely to be viewed as creative, innovative, or strategic
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86 DISRUPTIVE INNOVATION STARTS WITH YOU
thinkers. One executive in a large pharmaceutical company started
writing down questions for fifteen to twenty minutes each morn-
ing before work. Three months later, his boss told him that he had
become the best strategic thinker in his business unit. Six months
later, he was promoted. Practice does make perfect, or at least bet-
ter, when it comes to questioning. So if your “questioning muscles
have atrophied,” as Ahmet Bozer (Eurasia and Africa Group pres-
ident at Coca-Cola) recognized after a recent QuestionStorming
workshop with his senior team, “it’s time to start exercising those
muscles.”
Tip #2: Cultivate question thinking
When identifying problems or challenges, we often describe
them as statements. In fact, we often ask groups of executives to
identify their top-three challenges. As they wrestle with the task
and identify these challenges, they typically frame them as state-
ments. We then give the group an additional five to ten minutes to
reformulate their top-three challenges into their top-three ques-
tions (about leading innovation effectively, for example). We have
found that actively translating statements into questions not only
helps sharpen problem statements, but also evokes more personal
responsibility for the problems and moves them to take more ac-
tive next steps in the pursuit of answers.
Tip #3: Track your Q/A ratio
Disruptive innovators we interviewed consistently displayed a
high Q/A ratio, where questions (Q) not only outnumbered an-
swers (A) in a typical interaction, but good questions generated
greater value than good answers. To check your current Q/A ratio,
observe and assess your questioning and answering patterns
in a variety of contexts. For example, in the last work meeting
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87 Questioning
you attended or directed, what percent of your comments were
questions? Keep a record of your Q/A ratio (percent of comments
made that fall into each category) during meetings you attend in
the coming week. When reviewing self-observations, you might
ask what was your personal Q/A ratio? How many questions did
you ask? Work to increase your Q/A ratio by reflecting on what
questions were asked and then asking yourself, “What are the ques-
tions that aren’t obvious or are not being asked?”
Tip #4: Keep a question-centered notebook
To generate an even richer repository of questions, take time to
capture your questions regularly. Richard Branson does this in
notebooks “full of questions.” Review the questions periodically to
see how many and what kinds of questions you’re consistently ask-
ing (or not asking). Table 3-1 can help you see what types of ques-
tions you might consider as you observe, network, and experiment
to generate new ideas.
TA B L E 3 - 1
Disruptive innovator’s question check-up
Describe the territory Disrupt the territory
Innovator’s DNA skills
What is? Who? What? When? Where? How?
What caused?
Why? Why not?
What if? How might?
Observing
Networking
Experimenting
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88 DISRUPTIVE INNOVATION STARTS WITH YOU
As you keep your notebook, take a moment to reflect on the
following:
• What are your questioning patterns? What kinds of ques-
tions do you focus on?
• What questions yield unexpected insights into why things
are the way they are?
• What questions surface fundamental assumptions and
challenge the status quo?
• What questions generate strong emotional responses
(a great indicator of challenging the way things are)?
• What questions guide you best into disruptive territory?
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4
Discovery Skill #3
Observing
“Observation is the big game changer
in our company.”
—Scott Cook, founder, Intuit
MOST INNOVATORS ARE intense observers.They carefully watch the world around them, and as they observe how things work, they often become sensitized
to what doesn’t work. They may also observe that people in a dif-
ferent environment have found a different—often superior—way
to solve a problem. As they engage in these types of observations,
they begin to connect common threads across unconnected data,
which may provoke uncommon business ideas. Such observations
often engage multiple senses and are frequently prompted by
compelling questions.
Consider, for example, how Ratan Tata, chairman of India’s
Tata Group, gained a powerful insight that inspired the world’s
cheapest car, the Tata Nano. Throughout Tata’s life, he had seen
89
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90 DISRUPTIVE INNOVATION STARTS WITH YOU
thousands of families riding scooters in India. On one very rainy
day in Mumbai, India, in 2003, however, he noticed a lower-
middle-class man riding a scooter with an older child standing in
the front, behind the handlebars. The man’s wife sat sidesaddle on
the back with another child on her lap. All four were soaked to the
bone as they hurried home. Tata saw with his eyes and listened
with his heart to notice what he had previously failed to notice.
He asked himself, “Why can’t this family own a car and avoid the
rain?” Or, put another way, he thought about a job that needed
doing (in this case, the job was to create safe, affordable trans-
portation for a family that could not afford to buy a car, but could
buy a scooter).
This singular observation sparked several provocative ques-
tions about the possibility of creating an affordable “people’s car.”
“The two-wheeler observation [with the family of four piled on
the scooter] got me thinking that we needed to create a safer form
of transport,” Tata recalls. “My first doodle was to rebuild cars
around the scooter, so that those using them could be safer if it
fell. Could there be a four-wheel vehicle made of scooter parts?”
Tata gathered a small group of engineers to design a low-cost
vehicle with four wheels. The initial design had two soft doors with
vinyl windows, a cloth roof, and a metal bar as a safety measure.
But after seeing the initial designs, Tata and his group concluded
that the market wouldn’t want a “half car.”
After several subsequent years of observation and experimen-
tation by the Nano product development team, Tata’s dream be-
came a reality in 2009. Priced at $2,200, Nano was launched as the
world’s cheapest car. It generated two hundred thousand orders in
the first few months after its launch, and its numerous innovations
(including thirty-four patent applications) made it India’s Car of
the Year in 2010. Designed with a rear-mounted engine, the Nano
can be assembled from kits at dealerships, much like motorcycles
are in the United States. This approach may disrupt the entire
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91 Observing
automobile distribution system in India. And it all started one
rainy day in Mumbai when Tata was actively observing on his ride
home, rather than simply focusing on his destination.
Tata experienced what some people have referred to as vuja de.
Déjà vu, of course, refers to a strong sense that you have seen or
experienced something before, even if you haven’t. Vuja de is the
opposite—a sense of seeing something for the first time, even if you
have actually seen it many times before.1 Applying the principle of
vuja de, Tata was able to “see” what had always been there before but
had gone unnoticed or at least had not inspired anyone to act on it.
But Tata’s initial observation—that many lower to middle-
income Indians would benefit from being able to purchase an
affordable car—is only the part of the story. Let’s examine how
Ratan Tata used customer observations to help Tata sell those
$2,200 Nanos. As mentioned, he got the idea for the Nano by
watching Indian families ride scooters in the rain. He knew that
the rural villages of India were a large market for scooters, so he
wanted to learn how Tata could sell the Nano in those villages to
replace the scooters. So he sent a team out to observe how Indians
in the rural areas purchased scooters. The team made some inter-
esting observations that led to a very different way to sell cars in the
villages.
First, the team observed that people did their major shopping
on Sundays at farmers’ markets or flea markets. There were no per-
manent scooter or car dealerships. Scooter dealers arrived in a big
truck filled with scooters and just stuck them in rows on their
allocated piece of ground at the market. People would buy a
scooter, get a license, learn how to operate it, and then drive it
home that same day. So the Tata team brought in forty Nanos and
put them in the open-air market. They quickly found that cus-
tomers didn’t just walk up, buy a car, and drive it home. First, just
as in urban areas, many customers needed financing, so Tata had
to offer financing. But in order for people to drive away in a Nano,
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92 DISRUPTIVE INNOVATION STARTS WITH YOU
the team learned that the customer needed to have insurance avail-
able on the spot. So Tata had to offer insurance. Even more
importantly, the team learned that most customers didn’t have a
driver’s license, so Tata had to offer a driver’s education class—and
a way to get a license—right there at the market. So Tata ended up
providing all these services in sequence so that within two to four
hours a customer could pick out a car, have it insured and
financed, receive training on how to operate it, get a driver’s
license, and finally register the car. Intense observation was the
only way Tata could see how to fully meet the needs of a rural In-
dian who wanted to buy and drive a car.
A Framework for Observing: Look for the “Job” and a Better Way to Do It
IDEO’s Tom Kelley, author of The Art of Innovation, has written
that “the Anthropologist’s role is the single biggest source of in-
novation at IDEO.”2 Why does he believe this? Anthropologists
have developed techniques to study humans in their natural en-
vironments and learn from their behavior. Pretending that you
are an anthropologist can be especially powerful when you watch
someone in a particular circumstance trying to “do a job,” to use
Clayton Christensen’s terminology in The Innovator’s Solution.
Christensen has argued that customers—people and companies—
have “jobs” that arise regularly and need to get done. When cus-
tomers become aware of a job that they need to get done,
they look around for a product or service that they can “hire.”
When people have a job to do, they set out to hire something
or someone to do the job as effectively, conveniently, and inex-
pensively as possible. Observing someone in a particular circum-
stance can lead to insights about a job to be done—and a better
way to do it.
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93 Observing
Tata’s experience with the Nano illustrates this idea. Ratan Tata’s
initial observation of the Indian family on a scooter in the rain led
him to realize that the scooter wasn’t doing a very good job at trans-
porting the family in a safe or dry manner. They needed a vehicle like
a car that would provide more protection. This led to years of ex-
perimenting to create an affordable car that would be within reach of
these middle-class families. But just being able to build an affordable
car wasn’t enough. To truly put Indian customers in the driver’s seat,
Tata needed to provide a set of complementary services that were
critical to a customer’s ability to buy a car, finance it, insure it, learn
to operate it safely, and then drive it home. Tata’s success was borne
of two types of observations: one about the job to be done (transport
families safely in a vehicle they could afford) and one about how to
actually put a middle-class Indian in the driver’s seat (take the cars to
the village markets and provide the necessary services so the cus-
tomer could operate the vehicle within a single day).
Understanding the Job to Be Done
Every job has a functional, a social, and an emotional dimen-
sion, and the relative importance of these elements varies from
job to job. For example, “I need to feel like I belong to an elite,
exclusive group” is a job for which consumers hire luxury-brand
products such as Gucci and Versace. In this case, the func-
tional dimension of the job isn’t nearly as important as its so-
cial and emotional dimensions. In contrast, the jobs for which
they might hire a delivery truck are dominated by functional re-
quirements. Understanding the functional, social, and emo-
tional dimensions of a job to be done can be quite complex,
but may be key to an innovative solution.
(continued)
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94 DISRUPTIVE INNOVATION STARTS WITH YOU
For example, we hire schools to educate young people in
our society and often criticize them for not doing the job well.
The question we typically ask is, “Why aren’t schools perform-
ing as well as they should?” Perhaps a key reason we’re
dissatisfied with the state of public K–12 education is that we’ve
been asking the wrong question. If we asked instead, “Why
aren’t students learning?” we might discover things that others
do not yet perceive. A key reason why so many students
languish unmotivated in school or don’t come to class at all is
that education isn’t a job that they are trying to do. They mainly
want to feel successful and to have fun with friends, meeting
important social and emotional needs each day. No wonder
some students drop out of school to hang out in gangs or
cruise in cars with friends, since these activities often do the
job better than school.
By understanding well the particular social and emotional
needs of high school students (the jobs these students want
done every day), the MET school, a charter school in Provi-
dence, Rhode Island, designed a project-based curriculum
where students work together each day on various projects
(containing elements of the Montessori method which provides
“hands on” interactive learning experiences). This approach
gives students an opportunity to have fun with friends while
feeling a sense of accomplishment because they can see how
their efforts move a project toward completion. They hardly re-
alize they are developing new skills as they complete their
tasks on the projects. By better meeting the students’ social
and emotional needs, the school motivates students to partic-
ipate and learn. This illustrates how the jobs-to-be-done frame-
work applies as much to services as to products and how
important it is to look beyond the functional job to be done.
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95 Observing
In similar fashion, Scott Cook founded Intuit, maker of the
popular financial software Quicken and QuickBooks, based on two
key observations. The first was a simple observation within his
home. He hit on the idea for Quicken by watching his wife work
on their finances and hearing her complain about how frustrating
and time consuming it was. “She’s got a good mind for math and
is quite organized, so she handles the bills for us,” Cook said. “But
she frequently complained that it was a waste of time and book-
keeping was a hassle. So it was that observation combined with an
understanding of what personal computers could do well and not
do well that started Intuit.”
What, we asked Cook, did he mean by separating out what
computers “could do well and not do well”? His answer told us
something about his observation skills and how he hit on a better
way to do the job of managing personal finances. In 1981, he began
watching what Apple was doing with its Lisa computer. “I got a
buddy of mine who worked at Apple to show me the Apple Lisa
before its launch,” he recalled. “The Lisa wasn’t trying to do finan-
cial software at all, but that graphical user interface [the mouse
and drop-down menus] was amazing.” Following the meeting, he
drove to the nearest restaurant and sat down with a pad of paper.
He wrote out the various insights that he’d gained from watching
the concept of the graphical user interface.
Cook’s observation convinced him that not only could the Lisa
perform repetitious financial functions, but that its easy-to-use
mouse and drop-down menus would allow the average person to
use a computer. He was completely intrigued by the concept of
making the items on a computer screen “work just like their real-
world counterparts.” (For example, a Quicken electronic check
looks just like a paper check.) By building a software program that
acted a lot like what people do in their daily lives, Intuit grabbed
over 50 percent of market share the year after it was introduced.
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96 DISRUPTIVE INNOVATION STARTS WITH YOU
Like Cook, we have found that observing is a key discovery skill
for most innovators who tend to generate business insights from
one of two types of observations:
1. Watching people in different circumstances who are trying
to do a job and gaining insight about what job they really
want to get done.
2. Observing people, processes, companies, or technologies
and seeing a solution that can be applied (perhaps with
some modification) in a different context.
Mike Collins (founder and CEO of the Big Idea Group) claims that
successful product innovators always have their observation skills
turned on. “Observation isn’t just a one-‘aha’ day. Innovators are
observing the world around them and asking questions all the
time. It’s part of who they are. For other people, it is an untapped
skill.” Collins knows what he is talking about. As founder of BIG,
a company that uses the American Idol (or Britain’s Got Talent)
business model to screen the best ideas of inventors and then take
them to market, Collins has worked with over a thousand inven-
tors who are part of the BIG network. We found that product
innovators boast the best observing skills among innovators, fol-
lowed by start-up and corporate entrepreneurs, and finally process
innovators. Innovators score at around the seventy-fifth percentile
for observing, while noninnovators score at around the forty-
eighth percentile. (See figure 4-1.)
How does someone develop the observing skill if it is currently
untapped? To discover what innovators do, we asked them, “What
makes someone a good observer? How can someone get better
at observing?” We have found that observers are more successful at
figuring out jobs to be done and better ways to do them when they:
(1) actively watch customers to see what products they hire to do
what jobs, (2) learn to look for surprises or anomalies, and (3) find
opportunities to observe in a new environment.
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97 Observing
F I G U R E 4 - 1
Comparison of observing skills for different types of innovators and noninnovators
Sample items:
1. Gets new business ideas by directly observing how people interact with products and services.
2. Regularly observes the activities of customers, suppliers, or other companies to get new ideas.
30th
40th
50th
60th
70th
80th
90th
Start-up entrepreneurs
Corporate entrepreneurs
Product innovators
P e
rc e
n ti
le
Process innovators
Noninnovators
Actively Watch Customers—and Look for Workarounds
Perhaps the most obvious way to get business insights through ob-
serving is to actively watch people as they hire products to do jobs
and then see what insights you can gain about the job to be done.
For example, Gary Crocker, founder of the medical device firm
Research Medical Inc. (acquired by Baxter International), got the
idea for some “plumbing” devices that could help surgeons
perform heart bypass surgery after observing them do what was
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98 DISRUPTIVE INNOVATION STARTS WITH YOU
very new surgery at the time. He noticed the cardiovascular mon-
itoring catheters that were threaded into the heart to measure
blood pressure, but he also noticed that there weren’t any good
“plumber tools,” to manage the flow of blood. “There weren’t re-
ally big catheters that would take all the blood out of the body and
take it into the oxygenator when your lungs and heart are shut
down during surgery,” Crocker said. “There wasn’t a well-structured
plumbing line. So I thought I could create a product like that.
That’s a nice little niche.”
So Crocker eventually left Baxter to start a company that cre-
ated a variety of specialized devices to control the flow of blood
during cardiac surgery. One device, Visuflo with Light Source, ad-
dressed the challenges of operating on bleeding sites in beating-
heart surgery by blowing a stream of filtered, humidified air onto
the suture site to remove unwanted blood flow that compromised
the surgeon’s visibility. The device also enhanced visibility by
providing an ancillary light source that could be directed into the
surgical opening. Without these devices, surgeons would come up
with their own ways to get more light into a surgical opening
(for example, have a nurse shine a separate light into the opening)
or their own techniques to remove unwanted blood flow (for
example, trying different suction devices to remove blood). The
insights for Crocker’s innovative devices came only after carefully
observing the challenges that surgeons faced as they performed
cardiac surgery and the workarounds they developed to solve those
problems.
The term workaround originated in the IT world where
programmers had to “work around” a particular problem in the
system. The concept applies equally well to other domains. A
workaround is an incomplete or partial solution to a particular
job to be done. When you notice a workaround, pay attention, as
it might provide clues for how to create an entirely new product,
service, or business to do the job.
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99 Observing
For example, OpenTable.com is a more comprehensive solution
to the workarounds that we typically use when trying to have a great
dining experience (the job to be done). The key elements include
finding a restaurant that offers the desired quality of food and at-
mosphere, reserving a table at a convenient time without a wait, and
getting a reasonable price for the meal. Finding the right restaurant
often involves asking for referrals or reading restaurant reviews. After
finding the right restaurant, you then call to make a reservation. If
the restaurant doesn’t take reservations or has no reservation avail-
able, then you start the process again. You might even simply go to
the restaurant early—or possibly send someone to wait in line for
you—in order to ensure you get a table or to minimize waiting time.
If you are price sensitive, you might look for coupons online or in the
newspaper to get a better price for your dining experience. All these
activities take time and still don’t ensure a great dining experience.
Chuck Templeton, founder of OpenTable.com, witnessed these
workarounds firsthand in 1998 when his wife spent 3.5 hours
trying—without any luck—to get reservations at a desirable
restaurant when his in-laws visited them in Chicago. So Temple-
ton launched an online app that is essentially your own restaurant
concierge service: it allows customers to quickly and easily find a
restaurant they might like (by providing insightful reviews and
customer ratings), get a reservation at a convenient time (by al-
lowing customers to see table availability and book their own
reservation), and even have access to discounted meals (by giving
points for meal discounts). Restaurants pay OpenTable $199 per
month for the reservation service (to essentially rent a computer
terminal and Internet connection) and a $1 fee for every diner who
lands at their restaurant through the system. By doing a better job
of helping customers have a great dining experience, OpenTable
now dominates the dining reservation process in most large U.S.
cities and in many others abroad (with over eleven thousand
restaurants in its system worldwide).
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100 DISRUPTIVE INNOVATION STARTS WITH YOU
While watching people trying to do a job to gain insights for
new product or service offerings seems straightforward, most com-
pany managers spend little time in this simple, commonsense
approach. But when companies uncover the hidden needs of the
customer through observation (whether it be serendipitous obser-
vation, live-in immersion, or video observation), they gain insights
that can prove extremely valuable. IDEO’s Kelley reports that when
designing a new kids’ toothbrush for Oral-B, IDEO went out in the
field to watch kids brush their teeth. What it noticed was that kids’
toothbrushes were just smaller versions of adult toothbrushes,
which proved to be a challenge for them to hold and maneuver be-
cause they lacked the dexterity of their parents. This led to an in-
novative design: big, fat, squishy toothbrushes that were much
easier for kids to hold and use. The result? Oral-B had the best-
selling kids’ toothbrushes in the world for the next eighteen months.
Ten Questions to Ask While Observing Customers
Here are ten questions you should ask while observing
customers to better understand the job they want done and
how you can offer a product or service that will help them do
it better.
1. How do customers become aware of a need for your
product or service? Is there a way to make it easier or
more convenient for them to find your offering?
2. What do customers really use your product or service
for? What job is the customer hiring your product or
service to do?
3. What does the customer ultimately consider as the most
important features when selecting a final product or
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101 Observing
service? (If the customer has a hundred points to allo-
cate across all the features he considers important, how
would he allocate them?)
4. How do consumers order and purchase your product? Is
there a way you can make it easier, more convenient, or
less costly?
5. How do you deliver your product or service? Can you do
it faster, cheaper, in a completely different way?
6. How do customers pay for your product or service? Is
there a way to make it easier or more convenient?
7. What frustrations do your customers have when trying to
use your product? Do they use your product in ways you
didn’t expect?
8. What do consumers need help with when they use the
product?
9. Do customers do things that hurt the longevity or relia-
bility of your product or service?
10. How do customers repair, service, or dispose of your
product? Are there opportunities to make this easier or
more convenient (or teach the customer how to use the
product so it requires less maintenance or to do self-
maintenance)?
Look for Surprises
At Intuit, Cook asks his marketing and software engineers to ob-
serve customers in their homes as they load and attempt to use
Quicken and QuickBooks software. As they watch customers use
the product, he asks them “to savor the surprises”—the things that
seem unusual or the times when people don’t behave as they are
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102 DISRUPTIVE INNOVATION STARTS WITH YOU
supposed to. For example, Cook tells them: “When you see some-
thing unexpected, you need to ask, ‘Why did you do that? Well,
that doesn’t make sense. I never expected that.’” Customers often
have to find workarounds—meaning they may use the product in
unintended ways—and these surprising workarounds often pro-
vide clues as to why the current product or service is an incom-
plete solution. Cook claims that you have to consciously be looking
for surprises—the unexpected—because they are typically lost as
our minds conform what we see to fit our preexisting beliefs. To
battle that tendency, Cook says that “at Intuit we teach our people
to ask these two questions as they observe: What is surprising?
What is different from what you expected? That’s where true learn-
ing and innovation starts.”
The Value of Anomalies in Scientific as Well as Commercial Innovation
Many years ago, Thomas Kuhn, in his landmark book on the
history of science, The Structure of Scientific Revolutions, es-
sentially argued that scientific breakthroughs happen—and
new and improved theories emerge—when a researcher ob-
serves the world well enough to identify and explain an anom-
aly.a The discovery of an anomaly—a surprise—gives scientists
the opportunity to revisit a particular theory in an attempt to
better understand it. This often leads to a modification or im-
provement of the theory by understanding and explaining the
anomaly. For example, in research on the impacts of techno-
logical innovation on the fortunes of firms, early studies con-
cluded that established firms, on average, do well when faced
with incremental innovation, but stumble when confronted with
radical change. But there were anomalies to this general
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conclusion. Some established firms successfully implemented
radical technology change.
To account for these surprises, Michael Tushman and
Philip Anderson (1986) offered a unique, new categorization:
competency-enhancing versus competency-destroying tech-
nological changes.b This resolved many anomalies, yet sub-
sequent researchers continued to uncover new ones that
the Tushman-Anderson scheme could not explain. Rebecca
Henderson and Kim Clark’s (1990) categories of modular vs.
architectural innovations; Clayton Christensen’s (1997) cate-
gories of sustaining versus disruptive technologies; and Clark
Gilbert’s (2005) threat-versus-opportunity framing each sur-
faced and resolved anomalies that prior scholars’ work could
not account for. Understanding and explaining the anomalies
yielded original insights for the researchers.
Kuhn’s bottom line: scientific researchers who seek to re-
veal and resolve anomalies tend to advance their fields more
productively than those seeking to avoid them. Thus, observ-
ing anomalies in scientific endeavors is as valuable as ob-
serving surprises in commercial endeavors is. Identifying
surprises or anomalies—what isn’t what you expected—may
be the key to unlock the door to your innovation.
103 Observing
a. Thomas S. Kuhn, The Structure of Scientific Revolutions (Chicago: University
of Chicago Press, 1962).
b. Michael L. Tushman and Philip Anderson “Technological Discontinuities and
Organizational Environments,” Administrative Science Quarterly, 31, (1986):
439–465.
Rebecca Henderson and Kim Clark, “Architectural Innovation,” Administrative
Science Quarterly, vol. 35, no. 1 (1990): 9–30.
Clayton Christensen, The Innovator’s Dilemma (Boston: Harvard Business
School Press, 1997).
Clark Gilbert “Unbundling the structure of inertia. Resource versus routine rigid-
ity,” Academy of Management Journal, vol. 48, no. 5 (2005): 741–763.
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104 DISRUPTIVE INNOVATION STARTS WITH YOU
Noticing the unnoticed calls for a peripheral vision, where in-
novators habitually surface new ideas by noticing things at the
edge of experience (or as an IDEO employee explained, “look for
people on the extremes”). For example, Corey Wride founded
Media Mouth Inc.—a company providing software that helps you
learn to speak a new language by watching movies—after making
what seemed to him a surprising observation during an extended
trip to Brazil. Wride was conducting training sessions to prepare
Brazilians for U.S. graduate school entrance exams like the GMAT.
During these trips, he encountered a large number of Brazilians
who were eager to practice their English on him to prepare for the
TOEFL test. When he found people who were particularly good
English speakers, he would often ask them how they learned the
language. (He expected those with the best English skills to be in-
dividuals who regularly attended one of the many English-learning
schools in Brazil. In fact, many of the better speakers did attend
these schools, but he later learned that they were not the best
speakers of English.)
One evening, he met Julia Trentini, a young woman in her twen-
ties who spoke better English than anyone he had met. He asked her
how she had learned English so well. To his surprise, he learned that
she had not attended any English school. Instead, she learned by
watching American television shows and movies, and then prac-
ticed by imitating the phrases and pronunciation of the actors. She
watched shows like Friends just for fun and was later surprised to
find that she could understand and talk to a group of Americans
that she met on the streets of São Paulo. She hadn’t formally stud-
ied English at all. Her newfound ability was a happy accident mo-
tivated by entertainment. Wride later observed that, like Trentini,
other Brazilians with the best English skills also spent significant
time watching and imitating American movies. (He learned
that most Brazilians prefer to watch American movies in English
even when Portuguese audio tracks are available. They prefer the
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105 Observing
authenticity of the actors’ real voices.) This led to another question:
why don’t more Brazilians learn English by watching movies? The
answer was that the actors spoke too fast, or used idioms or words
that the Brazilians didn’t know or understand.
So Wride, a software engineer by training, devised an ingen-
ious program that would allow a Portuguese speaker to watch
virtually any movie in English on her computer and then do four
things: (1) slow down the speech of the speaker; (2) select words
and hear them pronounced or defined, (3) identify idioms and
their meaning in her native language, and (4) insert her own pro-
nunciation into the mouth of the actor so she can hear whether
she sounds the same as the actor (hence, the Web site name,
MovieMouth.com). Wride’s insight for his business emerged by
observing that Brazilians who were supposed to be the best English
speakers (those attending the best English training programs) were
not the best speakers.
How else can you look for surprises? Leon Segal (an innova-
tion psychologist and former IDEO employee) rightly noted that
“innovation begins with an eye,” but it certainly doesn’t have to
end there. It’s critical to remember that observations frequently
involve more than the eyes. Learning research repeatedly under-
scores the power of multisensory experience when it comes to see-
ing something new and making sense of the experience. The more
senses we engage as we experience the world, the more we see and
remember. As a result, looking for surprises can actually be listen-
ing, tasting, touching, and smelling something surprising as well.
You may have never heard of Trimpin, but he’s an accomplished
musical innovator who has spent a lifetime asking the question,
“How can we depart from the traditional orchestra?” He keeps his
ears wide open in a constant hunt for new sounds. He says that “as
soon as I see something, I hear it.”3 Trimpin sees the sounds of trol-
ley cable sparks, earthquake-driven tympanis, and other surprising
auditory phenomena to create award-winning innovations in the
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106 DISRUPTIVE INNOVATION STARTS WITH YOU
music world. Other innovators also engage a wide range of senses
to uncover new business ideas. For example, Howard Schultz
started down the path to founding Starbucks when first confronted
with the intoxicating smell of Italian espresso bars, and Joe Mor-
ton, cofounder of XANGO, got the initial idea for a new health
drink in part by tasting mangosteen fruit for the first time in
Malaysia (more about this in chapter 5). In sum, remember to en-
gage all your senses as you search the world for surprises.
Change the Environment
Think back to the first time you made a trip to a new country. Or
reflect on the first few days that you started working for a new
company. Do you remember noticing what was different from
what you had seen or experienced before? When entering a new
environment, we are far more likely to carefully observe what is
going on around us because we automatically seek to understand
what is new and different. People who put themselves in new en-
vironments and then intensely observe what is happening unearth
new ideas.
For example, Starbucks founder Schultz engaged his sensory
organs—his eyes, ears, nose, and mouth—when he hit on the idea
for his coffee stores. Walking to a trade show in Milan, Italy, Schultz
randomly observed what happened in a number of Italian espresso
bars. He could tell that the customers were regulars and that the
espresso bar “offered comfort, community, and a sense of extended
family.” As Schultz continued visiting Italian espresso bars, he had
a revelation. “This is so powerful! I thought. What we had to do
was unlock the romance and mystery of coffee, firsthand, in cof-
fee bars. It was like an epiphany. It seemed so obvious,” recalled
Schultz. “If we could recreate in America the authentic Italian cof-
fee bar culture, it might resonate with other Americans the way it
did with me.”4
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107 Observing
Schultz stayed in Milan for about a week, visiting espresso bars
just to observe. He then visited Verona where, losing himself in the
streets of the city, he tasted café latte for the first time (he observed
a customer order a café latte and, having never before heard of the
drink, imitated the customer to see what it was). “Of all the coffee
experts I had met, none had ever mentioned this drink. No one in
America knows about this, I thought. I’ve got to take it back with
me,” he recalls.
How many executives are willing, on a whim, to just take a
week getting lost every day in an exploratory journey to observe
something of interest and to see where the journey takes them?
Without a willingness to actively observe in a new environment,
Schultz would never have come up with the ideas that led to Star-
bucks’s innovative coffee-retailing experience.
Not surprisingly, our research found that innovators were more
likely to visit new environments, including traveling to new coun-
tries, visiting different companies, attending unusual conferences,
or just visiting museums or other interesting places. A. G. Lafley,
for example, told us what he learned from his regional assignment
in Asia long before becoming CEO of P&G:
Every time I traveled to China, I always went to stores to
watch people purchasing our products. Then I went into
homes. I always went in the evening because the woman
almost always works outside the home. My routine was
stores, homes, then the office. It gave me a current snap-
shot of what was going on. Of course, you can’t generalize
from a single qualitative experience, but over five years of
doing this regularly, those experiences add up, combined
with reading whatever you have access to, as well as the
“harder” data. You develop a feel. You become more of an
anthropologist because you can’t understand the lan-
guage. Your power is observation, your listening skills;
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108 DISRUPTIVE INNOVATION STARTS WITH YOU
your ability to read nonverbal cues gets a lot better. Your
ability to observe increases. There are so many subtle
things to read, understand, react to in a foreign country.
After returning to the U.S. P&G headquarters, he noticed how easy
it was to “get lazy because everyone speaks English—you know
what they’re going to say and do next.”
Innovators don’t have to go to foreign countries for an im-
mersion experience in a new environment. There is much to be
learned by exploring exhibits, museums, zoos, aquariums, and na-
ture. At Daimler, Dieter Gürtler, one of the company’s top engi-
neers, directed a team that focused on building a new aerodynamic
concept car. To generate new ideas, he took the team members to
a local museum of natural history to watch fish for a day. They
were in search of insights that could break the automobile indus-
try’s assumptions about aerodynamics and found a surprising so-
lution in the boxfish. Through direct observation of the fish, as
well as conversation with the fish experts, his team worked on
mimicking the size and skeletal structure of the boxfish. Ulti-
mately, they produced a concept car that delivered unexpected re-
ductions in weight as well as significant reductions in air drag. As
Gürtler put it, “By looking at nature, you come up with ideas you
could never have thought of on your own.”5
Of course, it isn’t always possible to put yourself in a new en-
vironment. Fortunately, a rich source for new ideas often resides
right around us in the familiar world of people and places that we
think we know well. The problem is that we sometimes miss the
obvious new idea in the most obvious of places because we take
things for granted and, as a result, we miss opportunities for in-
novation. As book and New York Times writer Peter Leschak has
lamented, “All of us are watchers—of television, of time clocks, of
traffic on the freeway—but few are observers. Everyone is looking,
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109 Observing
not many are seeing.”6 Acting on autopilot in everyday life auto-
matically starves the brain’s creative capacity.
Observation has the power to transform companies and indus-
tries. As Cook told us, “Basic observation is the big game changer in
our company.” Effective observation requires putting yourself in new
environments. It involves watching customers to see what products
and services they hire to help them do their jobs. It involves looking
for workarounds—partial or incomplete solutions—that customers
use to do those jobs. And it involves looking for surprises or anom-
alies that might provide surprising insights. As observers identify
workarounds and anomalies, and dig deep to understand them, they
increase their odds of uncovering an innovative solution to the prob-
lems they observe. We encourage you to develop and hone your ob-
servation skills and, in so doing, discover how they can be a game
changer for you and your company.
Tips for Developing Observation Skills
Tip #1: Observe customers
Hone and sharpen your observing skills by scheduling regular
observation excursions to carefully watch how certain customers
experience your product or service. (This could be done in fifteen-
to thirty-minute increments). Observe real people in real-life sit-
uations. Try to grasp what they like and hate. Search for things that
make life easier or more difficult for them. What job are they try-
ing to get done? Which of their functional, social, or emotional
needs is your product or service not meeting? What is surprising
about their behavior and different than expected? Ask the ten
questions we suggested earlier in the chapter. In short, become an
anthropologist and intensely observe a customer or a potential
customer to experience an entire product or service life cycle.
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110 DISRUPTIVE INNOVATION STARTS WITH YOU
Tip #2: Observe companies
Pick a company to observe and follow. Maybe it is a company
you admire such as Apple, Google, or Virgin. It could be a start-up
with an innovative business model or disruptive technology. Or it
could be a particularly tough, innovative competitor. Treat the
company as you would a business school case. Find out everything
you can about what the company does and how it does it. If pos-
sible, figure out a way to schedule a visit to the company and
examine firsthand its strategy, operations, and products to look
for cross-pollination opportunities. As you learn new things about
it, ask: “Are there any ideas that could be transferred, with some
adaptation, to our company or industry? How is this strategy, tac-
tic, or activity relevant to my job, my company, my life? Are there
ideas here for a new who, what, or how in my industry?”
Tip #3: Observe whatever strikes your fancy
Set aside ten minutes each day to simply observe something in-
tensively. Take careful notes about your observations. Then try to
figure out how what you are seeing might lead to a new strategy,
product, service, or production process. When you are out and
about watching the world, jot down your key observations and
thoughts on a notepad, and review your notes later, after a little
time has passed. Keep a small camera (still or video) with you to
take pictures of interesting things. The camera can remind you to
observe and note what is going on around you. (Amazon’s Bezos
confided that he often takes pictures of “really bad innovations”
to get ideas for things that might be done better.)
Tip #4: Observe with all your senses
As you observe customers, companies, or whatever, actively
engage more than one sense (see, smell, hear, touch, taste). One
structured way to do this is through Dialogue in the Dark (a prac-
tice developed by Andreas Heinecke) and Dialogue in Silence
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111 Observing
(a practice developed by Heinecke and his wife Orna Cohen). In
these tours by visually or hearing-impaired guides, guests experi-
ence darkened or silent environments (ranging from permanent
exhibitions to restaurants located throughout the world) and enter
a completely different world of either darkness or silence. A less
structured approach to engaging your senses is to simply and in-
tentionally become aware of your wider range of senses. For ex-
ample, pay attention to what you smell next time you’re visiting
with customers (as Schultz did in Italy) or eat your next dinner in
slow motion, slowly savoring every bite and focusing only on the
taste, texture, and smell of the food. Or notice how a product really
feels as you touch it (when either using it or trying to understand
how it works). As you learn how to observe, pay close attention to
any creative insights the experience might trigger. Be sure to cap-
ture observations (sights, smells, sounds, touches, and tastes) in
your idea journal and explore where the insights might lead you.
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5
Discovery Skill #4
Networking
“What a person does on his own, without being
stimulated by the thoughts and experiences of
others, is even in the best of cases rather paltry
and monotonous.”
—Albert Einstein
THINKING OUTSIDE THE box often requires link-ing the ideas in your area of knowledge with those of others who play in different boxes, who are outside your
sphere. Innovators gain a radically different perspective when they
devote time and energy to finding and testing ideas through a net-
work of diverse individuals. Unlike typical delivery-driven execu-
tives who network to access resources, sell themselves or their
companies, or boost their careers, innovators go out of their way
to meet people with different backgrounds and perspectives to ex-
tend their own knowledge.
113
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114 DISRUPTIVE INNOVATION STARTS WITH YOU
Consider what happened when Michael Lazaridis, founder of
a small technology company called Research In Motion (RIM), at-
tended a 1987 trade show in search of new ideas. At the time,
Lazaridis’s fledgling company had one project: a contract from
General Motors to provide technology that would allow large LED
display signs on GM’s assembly lines to scroll messages and up-
dates to workers. Lazaridis knew his fledgling company needed
more than just one contract and one kind of technology, so he set
out to see what new ideas he could uncover.
During the trade show, a speaker from a company called
DoCoMo described a wireless data system that it had designed for
Coca-Cola. The technology allowed vending machines to wire-
lessly signal when they needed refilling. (This was early on in the
life of personal computers and before people owned cell phones,
so sending data wirelessly to a machine was cutting-edge tech-
nology.) “That’s when it hit me . . . I remembered what my teacher
had said in high school,” recalls Lazaridis. “‘Don’t get too caught up
with computers, because it’s going to be the person that puts wire-
less technology and computers together that’s going to make a big
difference.’”
At this moment, Lazardis thought of creating an interactive
pager, a product allowing people to wirelessly send data and in-
formation to each other. So RIM sold the rights to the LED display
sign product to Corman Technologies and focused its full atten-
tion on the wireless technologies necessary to create interactive
pagers—the precursor to RIM’s blockbuster BlackBerry smart-
phone. “I realized that’s what I wanted to do,” Lazardis told us, “and
since then, that’s all we’ve done. Frankly we’ve never looked back.”
Lazaridis’s experience illustrates the value of talking and inter-
acting with diverse people who can provide unique knowledge and
a fresh perspective. What if Lazaridis had never attended the trade
show and heard the speaker? Or what if he had not talked with his
teacher, who told him to look for ways to put wireless technology
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115 Networking
and computers together? People who think outside the box often
talk to people who play in a different box to get new ideas. Lazardis
continues to use idea networking to design future versions of the
BlackBerry, talking to all sorts of people to understand technol-
ogy trends and get new ideas.
What Idea Networkers Do
Some of you may be thinking: “I’m a good networker. But I’m not
particularly innovative.” That may well be true. But it’s probably
because you are like most successful executives who are what we
call resource networkers, rather than idea networkers. Most exec-
utives network to sell themselves, to sell their companies, or to
build relationships with people who possess desired resources. In
contrast, innovators are less likely to network for resources or ca-
reer progression; rather, they actively tap into new ideas and in-
sights by talking with people who have diverse ideas and
perspectives. (See figure 5-1.) Our research on innovators revealed
that start-up entrepreneurs and corporate entrepreneurs are
Discovery-driven executives Delivery-driven executives
— Learn new, surprising things — Gain new perspectives — Test ideas “in process”
• Why they network: Ideas
— Access resources — Sell themselves or their company — Further careers
• Why they network: Resources
— People who are like them — People with substantial resources, power, position, influence, etc.
• Whom they target:
— People who are not like them — Experts and nonexperts with very different backgrounds and perspectives
• Whom they target:
F I G U R E 5 - 1
Networking differences between discovery- and delivery-driven executives
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116 DISRUPTIVE INNOVATION STARTS WITH YOU
F I G U R E 5 - 2
Comparison of idea networking skills for different types of innovators and noninnovators
P e
rc e
n ti
le
70th
60th
50th
40th
30th
80th
90th
Start-up entrepreneurs
Corporate entrepreneurs
Product innovators
Process innovators
Noninnovators
slightly better at idea networking than product inventors are, and
quite a bit better than process inventors and noninnovators. If you
want to launch an innovative new venture, networking is a critical
skill, not only for generating new ideas but also for mobilizing the
resources to launch new ventures. Overall, innovators score at
around the seventy-seventh percentile, whereas noninnovators
score around the forty-seventh percentile. (See figure 5-2.)
The basic principle of idea networking—as opposed to re-
source networking—is to build a bridge into a different area of
knowledge by interacting with someone with whom you, or people
within your primary social networks, typically do not interact.
EBay’s Pierre Omidyar told us that he looks for insights in unex-
pected directions and from people who aren’t experts (as well as
experts). “I value ideas from unusual places,” he said. “The cliché
would be, rather than talking to the CEO, I would want to talk to
someone in the mailroom, something like that. I really look for
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117 Networking
people that have diverse backgrounds, diverse ways of thinking
about things; what I try to do is just be exposed to some different
styles of thinking. And I get input from these different directions
just in a very open-ended way, not in a directed way.”
To this end, Omidyar and others like him make a conscious
effort to meet people with different education backgrounds; who
hail from different countries, industries, and business functions;
and who are of different ages, ethnic backgrounds, and so forth.
For example, Marc Benioff (Salesforce.com) told us about an in-
teresting conversation he had with the State Oracle of Tibet, the
official medium who, Benioff said, “was appointed by the Dalai
Lama and is basically in charge of innovation for the Tibetan gov-
ernment.” Few of Benioff ’s associates in the software industry have
had the opportunity to get a different perspective from the State
Oracle of Tibet. Innovators intuitively seem to understand that
new ideas are often triggered through conversations with individ-
uals who live in a different network of contacts.
University of Chicago sociologist Ron Burt has referred to this
type of networking as bridging a “structural hole” or “gap” between
different social networks. Burt studied 673 managers in a large U.S.
electronics firm and found that those managers who had broader
networks of contacts—contacts who were not connected to other
managers in the organization—were consistently rated as gener-
ating more highly valued ideas.1 “People with connections across
structural holes [gaps in social networks] have early access to
diverse, often contradictory, information and interpretations,
which gives them a competitive advantage in seeing and develop-
ing good ideas,” writes Burt. “People connected to groups beyond
their own can expect to find themselves delivering valuable ideas,
seeming to be gifted with creativity. This is not creativity born of
genius; it is creativity as an import-export business. An idea mun-
dane in one group can be a valuable insight in another.” Burt also
found that these “highly valued ideas” pay big dividends: managers
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118 DISRUPTIVE INNOVATION STARTS WITH YOU
Joe’s network in health and nutrition
Joe Morton
David
David’s network in the medical
industry
Mahathir
Mahathir’s network in Malaysia
Different country
Different industry
Innovative entrepreneur
F I G U R E 5 - 3
Bridging gaps in social networks to get new ideas
with broad networks received more positive performance evalua-
tions, had significantly higher salaries, and received more frequent
promotions.
To illustrate how building bridges into different social networks
can generate innovative new ideas, consider how Joe Morton, an
entrepreneur in the health and nutrition industry, got a billion-
dollar idea during a trip to Malaysia. (See figure 5-3.)
The figure shows Morton’s direct connections to numerous in-
dividuals within the health and nutrition industry (depicted by
line connections to circles). Morton also spent almost a year living
in Malaysia, where he learned about health and nutrition prod-
ucts Malaysians use from folks like Mahathir. (Mahathir represents
many people Morton spoke with.) “I had a number of Malaysians
tell me about these two local fruits—durian, the king of fruit,
which supposedly heated the body up, and mangosteen, the queen
of fruit, which cooled the body down and brought it into balance,”
Morton told us. “I thought durian smelled horrible, even though
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119 Networking
Southeast Asians love it. But the mangosteen was delicious. Locals
said the husk offered numerous health benefits, including the abil-
ity to boost energy, reduce inflammations, and settle an upset
stomach.”
Even though Morton had significant experience in the health
and nutrition industry, he was not aware of any products in the
field using either durian or mangosteen. So he contacted his
brother David, who was getting his PhD at the University of Utah
medical school, to see if any scientific research had examined
health benefits associated with durian or mangosteen. David
searched for medical industry research studies about the fruits’
health benefits.
Through David, Morton learned that while there were no med-
ical studies on durian, there were numerous studies that indicated
positive health benefits associated with xanthones, polyphenolic
compounds found in abundance in mangosteen. These benefits
included anti-inflammatory properties, as Mahathir and other
Malaysians had suggested. Morton then used this information and
his network of contacts in the health and nutrition industry (in-
cluding cofounders Aaron Garrity and another brother, Gordon
Morton) to found XANGO (pronounced “Zango”) in 2002, a
company that sells XANGO (mangosteen) juice. With a unique
new product and an innovative network marketing approach, it
took XANGO only six years to become a $1 billion company.
Morton would never have come up with the idea for mango-
steen juice if he hadn’t talked to Mahathir and other locals in
Malaysia. Morton bridged a gap between two networks: his health
and nutrition network of contacts in the United States and a net-
work of locals in Malaysia who had knowledge of homeopathic
herbs and fruits used there. The result: a very successful new prod-
uct idea.
Like Morton, many innovators claim that by visiting, or prefer-
ably living, in a foreign country, they spawned a new idea by talking
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120 DISRUPTIVE INNOVATION STARTS WITH YOU
to a local. When we are in an environment (different country, com-
pany, industry, ethnic group, and so on) that is very different from
our own, we are more likely to interact with people who are in dif-
ferent social networks. Being in a new environment allows us to
ask dumb questions about how and why things work.
This type of networking often produces serendipity. In roughly
half the cases we studied where new ideas came through network-
ing, the lucky entrepreneur essentially stumbled onto the idea. We
saw this happen with Chris Johnson, cofounder of Terra Nova
Biosystems, a company that uses a type of bacteria to eat contam-
inants in soil, thereby allowing companies to clean up soil in an
environmentally friendly way. While attending a July 4th neigh-
borhood barbeque, Johnson met someone who told him about a
microbial solution to pollution problems. He contacted the mi-
crobiologist who had developed the microbial solution and learned
more about how bacteria could be used to eat pollutants. Johnson
and his cofounders eventually developed a proprietary process that
ensures fast, cost-competitive remediation of a wide range of
contaminants in an ecologically safe manner. Johnson’s purpose in
attending the barbeque was to socialize, not look for new business
ideas—and certainly not to learn about pollution-eating bacteria!
But like many innovators, he takes advantage of every opportunity
to talk to new people to see what he can learn. This habit produces
the novel idea now and again through serendipity. But effective
idea networkers also plan to find new ideas by regularly tapping
outside experts for ideas, by attending networking events, and by
building a personal network of creative confidants.
Tap Outside Experts
We found that purposeful networking was often effective when
innovators attempted to reach out to experts in a different
field of knowledge. To illustrate, consider the case of Norton,
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121 Networking
Massachusetts-based CPS Technologies, one of the most innova-
tive companies in the advanced materials industry. CPS has devel-
oped highly advanced and innovative ceramic composites, a class
of materials superior to conventional ones in a number of ways, in-
cluding improved thermal conductivity, increased stiffness, and
lighter weight. Kent Bowen, founding scientist at CPS, made net-
working a priority when he hung the following credo in every
office of his start-up:
The insights required to solve many of our most challeng-
ing problems come from outside our industry and scien-
tific field. We must aggressively and proudly incorporate
into our work findings and advances which were not in-
vented here.
One of Bowen’s favorite questions when facing a technical chal-
lenge is, “Who else has faced or solved a problem like this before?”
He actively looks for people in other fields and disciplines to un-
derstand what they do and what they know that might be relevant
to his company’s issues. As a result, scientists from CPS have solved
numerous complex problems by talking with people in other fields.
For example, CPS’s ceramic composites are made from uni-
form, submicron materials (aluminum oxide and silicon carbide)
that are combined in slurries (an example of a slurry is a mixture
like water and cement that eventually makes concrete). Dispers-
ing these submicron materials in a uniform way is critical to mak-
ing strong, defect-free ceramic products, but the chemistry for
doing this had vexed some of the world’s best colloid scientists.
After Bowen discovered that photographic film manufacturers dis-
persed huge volumes of microscopic silver halide particles in very
uniform films, CPS contacted a senior polymer chemist from
Polaroid, the photographic film manufacturer. The chemist brought
new knowledge that helped CPS solve the problem within a few
weeks, thereby making the composite much stronger.
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122 DISRUPTIVE INNOVATION STARTS WITH YOU
The CPS team solved another serious quality problem by talk-
ing to “sperm-freezing” specialists. CPS scientists observed that as
their ceramic slurries were injected into molds and began freez-
ing, ice crystals formed. These ice crystals were a serious problem
because cracks in the composites would originate in the crystals,
like cracks in concrete. In a scientific journal report, a CPS engi-
neer discovered that biologists who do artificial inseminations rou-
tinely faced the same problem. Experts in sperm-freezing
technology knew how to prevent ice crystal growth in cells during
freezing. So CPS contacted them, learned their technique, and
incorporated it into its manufacturing process. Collectively, these
innovations were a stunning success, allowing CPS to produce
some of the strongest and lightest ceramic composites ever made.
Bowen’s practice of actively seeking out people in other industries
and disciplines has been critical to generating innovative ideas.
Despite all the positives of networking with experts in other
fields, Intuit’s Scott Cook cautions that sometimes talking to experts
isn’t the best way to generate innovations. “Some problems and new
business ideas are such a paradigm shift that talking to people rein-
forces the current paradigm,” cautions Cook. “Some paradigm shifts
are, I find, better initiated by watching customers or watching
things happen in the marketplace as opposed to talking to experts.”
The point is that while getting new ideas and perspectives from
experts can lead to innovative ideas, experts are also indoctrinated
with a particular perspective that may be incorrect. So remember
to ask counterintuitive questions that challenge the so-called ex-
perts. Then listen carefully, with a healthy dose of skepticism.
Attend Idea Networking Events
In chapter 1, we noted that Frans Johansson has described cross-
discipline connections as the Medici effect, referring to the explo-
sion of creativity during the Italian Renaissance. Richard Saul
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123 Networking
Wurman, the retired founder of the Technology, Entertainment
and Design (TED) conferences, plays the same role as a modern-
day Medici, creating a forum where experts in various fields can
share cutting-edge ideas. In 1984, Wurman noticed the conver-
gence of technology, entertainment, and design, and created an
idea accelerator, where smart people from diverse backgrounds
talked about the new projects they were working on. At the annual
conference, the speakers and the audience members engage in the
annual collision of ideas to create even better ones. TED confer-
ences have evolved into a provocative forum for generating pow-
erful new ideas, as smart individuals with diverse backgrounds
connect in a common mind-set to change the world (as Bill Gates
put it, “The combined IQ of the attendees is incredible”2).
Innovators are likely to frequent idea conferences such as TED,
Davos (or other World Economic Forum events), and the Aspen
Ideas Festival. Many innovators we interviewed are regular faces
at these events (for example, Jeff Bezos regularly attends TED).
Such conferences draw together entrepreneurs, academics, politi-
cians, adventurers, scientists, artists, and thinkers from all over the
world, who come to present their newest ideas, passions, and proj-
ects. Attending a conference that is designed for the exchange and
debate of ideas from a variety of fields is likely to create a collision
of concepts that can turbocharge your associating skill.
A conference on a topic outside your direct industry and field
of expertise can also spark new ideas. One European transporta-
tion industry executive we interviewed happened to live next to a
conference center in a large city. Even though he walked by the
center each day on his way to work, he never ventured in. One day,
he noticed a sign for a conference in a completely different indus-
try: beekeeping. For some reason, this theme caught his attention
and he wandered in. Much to his surprise, the experience proved
invaluable as he applied an idea from beekeeping to come up with
an innovative solution to one of his current work challenges. After
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124 DISRUPTIVE INNOVATION STARTS WITH YOU
that, he frequently dropped in on other conferences out of his field
just to learn something entirely new.
David Neeleman, founder of both JetBlue and Azul airlines,
detected and developed key ideas for JetBlue, such as satellite
TV technology at every seat, at-home reservationists, and the
hundred-seat JetBlue Embraer jet, through networking at confer-
ences and elsewhere. Says Neeleman: “I always had this gnaw-
ing thought in my mind that ‘I’ve got to do something in the
seat-back pocket of each plane seat.’ So I talked to a lot of people
at a lot of companies about different entertainment options. Then
one day, in the early days of JetBlue, I talked to someone who
said, ‘Look at this brochure on a company that can do live televi-
sion on airplanes,’ and I said, ‘That’s it. That’s exactly what we want
to do.’”
Not only did Neeleman follow up on the suggestion, he bought
LiveTV, the company with the technology to provide satellite TV
on airplanes. By purchasing the only company with such technol-
ogy, he prevented competitors from offering satellite television to
their passengers, thereby creating a competitive advantage for Jet-
Blue. Until recently, any competitor who wanted to offer satellite
TV to passengers had to purchase it from JetBlue.
When Neeleman was attending a small airline industry con-
ference, someone alerted him to the capabilities of Embraer, an
emerging, small plane manufacturer in Brazil. Neeleman imme-
diately scheduled a trip to Brazil to visit Embraer and explore
opportunities for JetBlue. During the visit, Neeleman saw the pos-
sibility of serving midsize cities with a new hundred-seat Embraer
jet, one designed specifically for JetBlue. By offering satellite TV
and large comfortable seats, the hundred-seat JetBlue plane would
be far more desirable to passengers than the fifty-seat regional jets,
and more economical than the larger Boeing and Airbus jets. As
part of the deal, JetBlue purchased the Brazilian aircraft maker’s
hundred-seat plane-manufacturing capacity for two years. Later,
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125 Networking
the airline signed a contract with Embraer that prevented it from
selling the jet at a price lower than JetBlue had paid.
In addition to attending conferences, some innovators create
networking opportunities within their companies. For example,
Richard Branson created an idea networking process when found-
ing Virgin Music. He bought an old castle and transformed it into
a conversation hub for diverse people from the entertainment in-
dustry, including musicians, artists, producers, filmmakers, and
otherwise. Branson understands that creating networking oppor-
tunities within Virgin produces conversations between people that
just might trigger innovative ideas.
Form a Personal Networking Group
We found that many innovators build a small network of people
who are their “go to” folks when they want to find or test new
ideas. For example, innovative entrepreneurs Jeff Jones (founder of
Campus Pipeline and NxLight) and Eliot Jacobsen (RocketFuel
Ventures) described how they liked to get together to jam (to use
a music or jazz metaphor) to get new ideas. “I have a few people
I like to get together with when I’m in need of a boost to my cre-
ative juices,” Jones told us. “Eliot Jacobsen is one of my friends that
I love to talk to because we just energize each other and build on
each others’ ideas.” Jacobsen agreed, saying, “Jeff Jones is one of
those people I like to talk to on a regular basis because we just con-
nect in a creative way.”
In similar fashion, we found that many innovators have a small
group of creative confidants that they converse with whenever they
need some fresh ideas—or someone to challenge their current
ideas. Usually this network is relatively small (e.g., fewer than five
people), but some innovators have actively created larger networks.
One innovative executive told us that over the years he has culti-
vated a kitchen cabinet of twenty to thirty people from different
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126 DISRUPTIVE INNOVATION STARTS WITH YOU
industries who are his innovation advisers. At least once a year, he
picks up the phone and asks his kitchen cabinet, “What’s keeping
you up at night?” He says, “Most of them either run companies or
are involved in industries in a fairly senior way and they have very
specific things to talk about . . . From these diverse conversations
I try to piece together trends or directions. There are moments
when the pieces just come together and new ideas form with amaz-
ing clarity.”
As important as networking is, many senior executives face
unique challenges when trying to talk candidly with others about
new ideas. After all, intellectual property is at stake, and senior ex-
ecutives often have difficulty challenging the status quo in their
organizations because they often created it. “As a CEO, there are
few places where you can really publicly talk about fundamental
concerns,” one innovative CEO told us. “As a result, I’ve created an
unofficial group. It’s fairly senior, fairly seasoned people who are
comfortable throwing out ideas and then forgetting about them if
these hunches or speculations aren’t right. One thing about being
a CEO is that you’ve got to be very careful about what you say in
public and whom you involve in these conversations. That’s why
networking for ideas, for me at least, is unofficial.” For this reason,
it’s important to form a trusted network of confidants, since the
issues under discussion are of critical and sensitive strategic value.
Building a trusted and diverse idea network is often best accom-
plished throughout your career, because forming relationships
with a diverse set of people takes time and experience. However, if
done well, a small personal network of creative confidants can pay
significant dividends.
Effective idea networking helps innovators create new processes,
products, services, and even business models that deliver positive
results. When multiple conversations abound in these networks,
a new idea frequently emerges from the insights and refinements
gained. Michael Dell put it this way: “I often have a hard time
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127 Networking
explaining how we innovate at Dell because we do it quite collabo-
ratively, building on each other. Someone will say, ‘Hey, what about
this, how about that?’ And by the time you’re done, it’s impossible to
say, ‘That’s so-and-so’s idea,’ because you’ve got twenty-seven fin-
gerprints all over the thing.” In the end, idea ownership matters far
less than development through the idea networking process.
Networking Sidebar: How Well Do You Take Rejection?
OK, so you’ve already heard about the importance of net-
working. But if you are like most people, you probably still don’t
have any sort of a plan to do it on a regular basis. Meeting
new people is easier said than done. So what stops you? To be
brutally honest, it may be a lack of confidence that prevents
you from reaching out to people you don’t know. You might get
rejected. In fact you will get rejected, sometimes when making
the pitch for a meeting or conversation, and sometimes after
making the pitch. So what can you do to minimize the proba-
bility of rejection when making the pitch? Tell the person you
want to engage that “I’m interested in your ideas. I’m interested
in your perspective.” This taps into his or her desire to help or
be viewed as an expert. Most people derive satisfaction from
being asked for their opinion and ideas. It’s important to make
sure they know you are only interested in their ideas, not their
resources.
Once you get the opportunity to exchange ideas with
someone, and if you want to keep the door open to future con-
versations, you have one goal: be interesting. What makes
someone interesting? Two things seem to help. First, breadth
of experience matters in a big way. If you’ve traveled widely
(continued)
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128 DISRUPTIVE INNOVATION STARTS WITH YOU
(China, Australia, Italy), experienced widely (Broadway shows,
scuba diving), read widely (novels, history, different sub-
jects), or networked widely (“Yes, I know so and so; we met
when . . .”), then you increase your chances of being interest-
ing to someone. Second, make sure you perfect your elevator
speech on the topic you want ideas about. If you can tell
interesting stories about the problem or challenge you are try-
ing to solve, that will spark an interest. Being able to tell short,
interesting stories on a variety of topics increases your inter-
esting quotient. Of course, it doesn’t hurt to be funny or witty,
but that really takes some practice.
Networking is most likely to spark innovative ideas when you ini-
tiate conversations with folks in different social networks. This means
talking to people from different business functions, companies, in-
dustries, countries, ethnic groups, socioeconomic groups, age groups
(eighteen-year-olds and eighty-year-olds), political groups, and reli-
gions. Diversity of network breeds diversity of ideas. Attending idea
conferences such as TED can be a way to jump-start the diversity of
your network. Moreover, when facing a particular problem, ask your-
self, “Who else has faced a problem like this before?” and try to talk
to those folks.
Tips for Developing Idea Networking Skills
We recommend the following activities to help you practice and
strengthen your idea networking skills.
Tip #1: Expand the diversity of your network
List the top-ten people you would typically talk with if you
were trying to get or refine a new idea. Go ahead. Make the list right
now. How many of those people have a background or perspective
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129 Networking
that is likely to be very different from yours? For example, how
many are teenagers, or how many are older than seventy-five? How
many were born and grew up in a different country? How many
are from a very different socioeconomic group than yours? If your
current idea network either isn’t very large or isn’t very diverse, ex-
pand your idea pool by identifying and visiting with people who
are the most different from you along some or all of the dimen-
sions shown in table 5-1.
Tip #2: Start a “mealtime networking” plan
Plan to have a meal with someone from a different background
at least once each week. Jacobsen, of RocketFuel Ventures, tries to
schedule breakfast, lunch, or dinner with someone new every
week. “I also frequently meet with people I know who are creative
and who I’ve found are helpful in offering a different perspective,”
he says. “Networking is important to my success in coming up with
new business ideas, and mealtime is for networking.” For ideas on
mealtime networking, see Keith Ferrazzi’s book Never Eat Alone.
Tip #3: Plan to attend at least two conferences in the
next year
Select one conference that is on a topic related to your area of
expertise and one conference on a topic that isn’t. Make an effort
to meet new people and get to know what problems and issues
they are facing; ask for their ideas and perspectives on problems
and issues you are wrestling with.
Tip #4: Start a creative community
Identify a few founding members who you believe are open to
discussing new ideas and who you think will stimulate your cre-
ative thinking. Decide on a creative place to meet where you can
exchange ideas and develop new ones. Meet regularly (at least
monthly) to discuss trends and new ideas.
100092 05 113-132 r1 go.qxp 5/13/11 9:59 AM Page 129
T A
B L
E 5
- 1
D iv
e rs
if y
yo u
r id
e a
n e
tw o
rk Id
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d ia
lo g
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it h p
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p le
m o
st d
iff e re
n t
fr o
m y
o u .
N a
m e
C o
u n
tr y
o f
o ri
g in
In d
u st
ry G
e n
d e
r P
ro fe
ss io
n O
rg a
n iz
a ti
o n
le
ve l
A g
e ( a
t le
a s t
2 0 y
e a
rs
o ld
e r
o r
yo u
n g
e r)
P o
lit ic
a l
vi e
w s
S o
c io
e c
o n
o m
ic st
a tu
s
1 .
2 .
3 .
4 .
5 .
6 .
7 .
8 .
9 .
1 0 .
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131 Networking
Tip #5: Invite an outsider
Bring in a smart person with a different background (some-
one from a different function, profession, company, industry,
country, age, ethnic group, socioeconomic group) to have lunch
with you and your team once each week. Ask the person about
your innovation challenges and get his or her perspective on your
ideas. Or hold an open house for ideas, inviting two to four peo-
ple from a variety of perspectives, including nonexperts who are
new to a situation, to present their ideas and viewpoints.
Tip #6: Cross-train with experts
Find experts in different functions, industries, or geographic
regions, and sit in on their training sessions and meetings to ex-
perience their work and world. (For example, marketing managers
from Google and P&G traded jobs for a month to gain rich in-
sights into each other’s worlds as well as new ways to challenge
fundamental assumptions in the other industry.)
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6
Discovery Skill #5
Experimenting
“I haven’t failed . . . I’ve just found 10,000 ways
that do not work.”
—Thomas Edison
WHEN MOST PEOPLE hear the word experiment,they think of scientists in white coats running experiments in a lab, or of great inventors like Thomas Edison.
Like Edison, business innovators actively try out new ideas by cre-
ating prototypes and launching pilot tests. But unlike scientists,
they don’t work in laboratories; the world is their laboratory. And
beyond just creating prototypes, they try out new experiences
and take apart products and processes in search of new data that
may spark an innovative new idea. Good experimenters under-
stand that although questioning, observing, and networking pro-
vide data about the past (what was) and the present (what is),
experimenting is best suited for generating data on what might
133
100092 06 133-154 r1 rr 5/13/11 10:01 AM Page 133
work in the future. In other words, it’s the best way to answer our
“what-if ” questions as we search for new solutions. Often, the only
way to get the necessary data to move forward is to run the exper-
iment. George Box, former president of the American Statistical
Association, reinforces the power of experimentation in framing
the future by noticing that, “the only way to know how a complex
system will behave—after you modify it—is to modify it and see
how it behaves.” This is precisely what experimentation does for
disruptive innovators. It provides key data on how well their ideas
work in practice and helps them shape revolutionary business
models piece by piece.
Experimenting with new business opportunities was, in fact,
part of what Amazon.com founder Jeff Bezos did at D.E. Shaw, a
Wall Street investment firm. In May 1994, Bezos was exploring the
still-immature Internet in his thirty-ninth-floor office in midtown
Manhattan. As Bezos was browsing, he came across a Web site that
claimed to measure growth in Internet usage. Bezos couldn’t be-
lieve his eyes. According to this site, the Internet was growing at a
rate of 2,300 percent a year. “It was a wake-up call,” he says. “You
have to keep in mind that human beings aren’t good at under-
standing exponential growth. It’s just not something we see in our
everyday life.” What kind of business opportunity might this new-
fangled thing called the Internet represent?
Bezos began asking a series of questions: What would people
buy remotely? What do they prefer to purchase by mail order
rather than in a store? After researching the top-twenty mail-order
products, Bezos decided that people would buy standard products
via the Web—ones that people knew exactly what they were get-
ting. Bezos didn’t see books on the top-twenty list, which was a
surprise because books seemed to meet the criteria of a standard
product. After a bit of research, he discovered that there are so
many books in print that it’s impossible for one book catalog to
134 DISRUPTIVE INNOVATION STARTS WITH YOU
100092 06 133-154 r1 rr 5/13/11 10:01 AM Page 134
contain information about them all. Such a catalogue would be far
too large and expensive to mail. As Bezos saw it, the Internet was
the ideal vehicle for offering such a catalog. He felt he had enough
data to run the experiment to see if books could be successfully
sold over the Internet.
Within the year, Bezos launched Amazon.com and dubbed it
“Earth’s Biggest Bookstore.” Using book wholesaler Ingram to
warehouse and ship books, Amazon offered the largest selection
of books anywhere, without having made any investment in stores,
warehouses, or inventory. But Bezos had bigger dreams than
simply selling books. Even before Amazon became profitable,
Bezos saw an opportunity for the company to become an online
discount retailer, selling a full line of products from toys to TVs. So
he made an incredibly risky bet. He decided to build a number of
850,000-square-foot warehouses around the country. The ware-
houses originally ran at 10 percent capacity. On the announce-
ment, Amazon’s stock tanked; analysts could not understand why
the company was abandoning the original “no bricks and mortar”
business model.
Today, of course, Amazon is positioned as the leading online
discount store, with multiple product lines and efficient ware-
house and fulfillment capabilities. More than anything else, Ama-
zon is now a distribution company and virtual mall open to other
vendor’s products, a far cry from Bezos’s original business idea.
But Bezos isn’t done experimenting with business models. In
2007, Amazon launched the electronic reader Kindle, an experi-
ment that has successfully changed the company again. In addi-
tion to being a retailer of other companies’ products, Amazon
became the maker of a hot new electronic device (cornering
90 percent of the market until iPad’s launch in 2010). Now Bezos
is reinventing Amazon with its cloud computing services
(Amazon EC2). Amazon rents data storage and computing power
135 Experimenting
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136 DISRUPTIVE INNOVATION STARTS WITH YOU
to businesses at extremely low prices by leveraging its huge
investment in servers and computing equipment to run its on-
line retailing business. By one estimate, 25 percent of small
to medium-sized companies in Silicon Valley are now using
Amazon’s cloud computing services.
Where did Bezos’s penchant for experimenting come from?
Some of it clearly has its basis in genetics. His tinkering began early
when, fed up with sleeping in his crib, he tried to take it apart
with a screwdriver. As a twelve-year-old, Bezos desperately wanted
a new device called the Infinity Cube, a set of small motorized
mirrors that reflected off one another, so that it was like looking
into infinity. Bezos was fascinated by this gadget, but it was very
expensive. So he bought some mirrors and other parts, and, with-
out any instructions to follow, he constructed his own version
of the Infinity Cube. Beyond his natural inclinations to experi-
ment, Bezos credits the annual summers on his grandparent’s
ranch for giving him time to hone and develop his experiment-
ing skill. “I really gained confidence in my creative ability by
helping my grandfather fix things on his ranch,” he told us. “He
often didn’t have the money to fix things, so we’d have to impro-
vise. One time I helped him fix a Caterpillar tractor using nothing
but a three-foot-high stack of mail-order manuals. You learn that
when one way doesn’t work, you have to regroup and try another
approach.”
Bezos’s experience has taught him that experimenting is so crit-
ical to innovation that he has tried to institutionalize it at Ama-
zon. “Experiments are key to innovation because they rarely turn
out as you expect, and you learn so much,” Bezos told us. “I en-
courage our employees to go down blind alleys and experiment.
We’ve tried to reduce the cost of doing experiments so that we can
do more of them. If you can increase the number of experiments
you try from a hundred to a thousand, you dramatically increase
the number of innovations you produce.”
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137 Experimenting
F I G U R E 6 - 1
Comparison of experimenting skills for different types of innovators and noninnovators
Sample items:
1. Has a history of taking things apart to see how they work. 2. Frequently experiments to create new ways of doing things.
P e
rc e
n ti
le
70th
60th
50th
40th
30th
80th
90th
Start-up entrepreneurs
Corporate entrepreneurs
Product innovators
Process innovators
Noninnovators
Three Ways to Experiment
We found that innovators who start new businesses and those who
invent new products are the best experimenters. (See figure 6-1.)
This is not surprising, since start-up entrepreneurs and product
innovators tend to launch something new to the market starting
from ground zero (they also score much higher on risk taking).
Of all the discovery skills, we found that experimenting was the
best differentiator of innovators versus noninnovators, with non-
innovators scoring in only the thirty-ninth percentile on experi-
mentation. So if you want to find someone with a penchant for
creativity and innovation, evaluating his or her experimenting
skills is a great place to start.
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138 DISRUPTIVE INNOVATION STARTS WITH YOU
Try out new experiences
Examples • Live in a different country • Work in multiple industries • Develop a new skill
Useful for generating new business ideas
Take apart products, processes, and ideas
Examples • Disassemble a product • Visually map out a process • Deconstruct an idea
Test ideas through pilots and prototypes
Examples • Build a prototype • Pilot a new process • Launch a new venture on the market
Experimenting
Useful for generating new business ideas
Useful for generating and testing new
business ideas to see what works
F I G U R E 6 - 2
Three ways that innovators experiment
Most innovators in our study engaged in at least one of three
forms of experimentation. (See figure 6-2.) The first is trying out
new experiences through exploration, as Steve Jobs did when he
stayed at an ashram in India or dropped in on calligraphy classes
at Reed College. The second is taking things apart—either physi-
cally or intellectually, as Michael Dell did when, at age sixteen, he
disassembled a personal computer (more about this later). The
third is testing an idea through pilots and prototypes, as Black-
Berry inventor Michael Lazaridis did when trying to construct a
Star Trek-like force field in high school with wire, electricity, and
chemicals. We found that innovators often generated their best
ideas when engaged in one of the three different experimenting
approaches.
We typically associate the word experimenting with the last of
the three approaches. The classic laboratory approach to experi-
mentation is to test an idea by creating a prototype to see if it
will work, just as Edison did so often that he once famously said,
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139 Experimenting
“I haven’t failed . . . I’ve just found 10,000 ways that do not work.”
But we found that a much broader interpretation of experiment-
ing better reflects how innovators cultivate new ideas. For exam-
ple, when simply trying out a new experience, you have no explicit
intention to test an idea. It’s simply an exploratory journey to see
what you can learn. The same can be said for taking things apart,
either physically or intellectually. When Dell disassembled his first
personal computer, he wasn’t looking to create a new computer or
company; he just wanted to see how it worked. Experimenting can
also involve launching a pilot or prototype, and then modifying it
as you go along. Bezos’s online bookstore didn’t stay where it was
after its initial success; it morphed into an online discount retailer,
selling a full line of products from toys to consumer electronics.
Virgin started out as a record company, but Richard Branson ex-
perimented with all types of new businesses, from Virgin Records
to Virgin Atlantic to the starry-eyed Virgin Galactic, which plans
to carry megarich customers into space. And Apple hasn’t stayed
solely a computer company, launching successful products in
music (iPod), phones (iPhone), and books (iPad), as well as un-
successful ones in PDAs (Newton) and digital cameras (Apple
QuickTake). The argument that innovators are experimenters is
certainly not new; everyone knows that. But what isn’t well un-
derstood is the different ways that they experiment to ignite new
ideas.
Try Out New Experiences
Many executives view trying out new experiences as a waste of time
if the experience is not directly linked to a desired learning out-
come. Delivery-driven executives focus on efficiently solving the
problem at hand. So if an activity doesn’t have a clear connection
to a current deliverable, then they view it as a waste of time. By
contrast, discovery-driven executives grasp the idea that trying out
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140 DISRUPTIVE INNOVATION STARTS WITH YOU
new experiences means engaging in interactive learning experi-
ences that may not have any obvious practical application. Indeed,
from net present value logic (e.g., the size of the investment made
discounted by the time horizon), the return on time invested when
using any discovery skill produces a payback that is not only further
into the future but also less likely to ever materialize. Jobs never
expected that spending time in calligraphy classes would have any
practical application or payback. But the calligraphy experience
turned out to be a major differentiator for the first Macintosh
computer by allowing it to produce documents with beautiful
typography.
Innovators understand that diversity of experience allows you
to engage in divergent thinking, as you draw on a broader set of
ideas when associating. “Of course, it was impossible to connect
the dots looking forward when I was in college,” Jobs says. “But it
was very clear looking backward ten years later. So you have
to trust that the dots will somehow connect in your future . . .
believing that the dots will somehow connect down the road will
give you the confidence to follow your heart even when it leads off
the well-worn path. And that may make all of the difference.”1 Try-
ing out new experiences may prove worthless from a financial
standpoint, but it also might make all the difference when search-
ing for disruptive ideas.
Take, for instance, the example of Kristen Murdock, an entre-
preneur who literally figured out how to turn cow pies (manure)
into money. Murdock has done this by offering an interesting,
if rather disgusting, new product that’s caught interest inside
and outside the United States: Cow-Pie Clocks. Not surprisingly,
Murdock didn’t just wake up one day and say, “I think I’ll take
a bunch of desert-baked cow pies, cover them with glaze, insert a
clock in them, and sell them to people who want a truly unique
clock.” Rather, while watching her sons ride motorcycles in the
desert areas of southern Utah, she stepped over some “interesting
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141 Experimenting
looking old petrified cow pies. So I picked one up, smelled it, and
it didn’t smell bad; it was really baked,” she said. “I started collect-
ing them and brought them home and put them in the garage. It
kind of freaked my kids out.” She had no idea what she would do
with them; she just thought they were interesting.
Within a few days, some of them started to disintegrate. So to
keep them intact, she applied a glaze and liked what she saw. They
were like shiny, petrified pieces of wood, and she thought they were
pretty due to the color variations or the interesting rocks embed-
ded in them. Then one night while lying in bed, she hit on the idea
to insert a clock into the petrified cow pie and give it away as a gag
gift. So she started inserting clocks into the cow pies and giving
them to girlfriends with funny sayings, like: “You Dung Good,” or
“For all you do, this crap for you.” “None of my girlfriends liked
them,” she says. “They hated them . . . they thought it was so sick.”
Her big break came after she gave a clock to a relative, who was a
friend of entertainer Donny Osmond. Murdock said Osmond
called her wanting a clock for himself, so she made one for him.
A few weeks later, her relative called and said, “Turn on Donny and
Marie,” Osmond’s daily talk show. There, Murdock saw Osmond
showing off her clock to a nationwide audience. The calls started
to flood in. She quickly set up an Internet business. Each cow-pie
clock comes with a display stand and a saying attached such as,
“Happy Birthday, You Old Poop.” Murdock will provide whatever
saying the customer wants. She has lists of suggestions to choose
from, with more coming in continually from customers and
friends.
But she didn’t stop there. She kept all of the funny sayings peo-
ple sent her and created a cow-pie greeting card line. She hired a
graphic designer to create a signature cow and cow pie and sold a
line of cow-pie greeting cards to Hallmark. The business has been
extremely profitable because she gets paid a royalty for the ideas
and cow-pie brand, but she doesn’t have to actually print the cards.
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142 DISRUPTIVE INNOVATION STARTS WITH YOU
As in Jobs’s experience with calligraphy, Murdock had no way of
knowing that collecting cow pies could lead to any practical ap-
plication in her life. It all started because she was curious enough
to collect a few cow pies while wandering in the desert. Murdock
jokingly sums up her success saying, “I’m an entre-manure.”
Innovators like Bezos and Murdock seem to intuitively under-
stand the value that can come from trying out new experiences in
new environments. Our research on innovators revealed that one
of the most powerful experiments innovators can try out is living
and working in different cultures. The more countries someone
lives in, the more likely he or she is to leverage that experience to
deliver innovative products, processes, or businesses. Individuals
who live in a foreign country for at least three months are 35 per-
cent more likely to start an innovative venture or invent a product
(each additional country brings additional benefit, though there
are diminishing returns after living in two countries). Moreover, if
managers try out even one international assignment before be-
coming CEO, their companies deliver stronger financial results
than companies run by CEOs without such experience, roughly
7 percent higher market performance on average.2 And part of that
performance premium comes from the innovation capability that
a CEO has acquired by living overseas.
P&G’s A. G. Lafley, for example, spent time as a student
studying history in France; later on, he ran retail operations on
U.S. military bases in Japan. He eventually returned to Japan as
head of P&G’s Asia operations before becoming CEO. His diverse
international experience served him well as the leader of one of
the oldest and most innovative companies in the world. Similarly,
innovator Reed Hastings’s experience working for the Peace Corps
in Swaziland continues to influence his innovative strategy and
leadership (as founder and CEO) of highly successful Netflix.
In similar fashion, the more industries or companies someone
works in, the more likely he or she is to be an innovator. Each
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143 Experimenting
additional industry offers an even bigger boost to innovation than
living in a foreign country. Working in different company envi-
ronments helps you develop deep experience with a variety of peo-
ple, processes, and products. You also learn various ways to solve
problems, since each company and industry tends to have distinc-
tive approaches. P&G (led by Lafley) and Google (led by founders
Larry Page and Sergey Brin) understand the value of seeing how
things work in diverse company environments, which is why these
companies orchestrated a three-month swap of employees to
see how a very different, but highly successful company operates
(more on this in chapter 9). These types of experiences boost a
person’s capacity to look at a problem from a variety of angles and
perspectives.
Finally, taking the opportunity to learn new skills in different
arenas—as Jobs did when learning calligraphy—can boost your
innovation capability. For example, Nate Alder (inventor of the
Klymit vest) decided to pick up scuba diving during a trip to
Brazil. During the scuba certification, he learned about argon gas
as an insulator to keep dry suits warm. He thought, “Hey, that’s a
cool idea. I wonder if I could put argon gas in a snowboard jacket
to keep me warm?” (Alder was a snowboard instructor at the
time.) This experience was the catalyst for the creation of the
Klymit vest (insulated with argon gas) and a variety of other prod-
ucts using argon gas. As described in chapter 2, innovators tend to
be T-shaped in terms of their expertise, with deep knowledge in at
least one area and some expertise in a wide variety of knowledge
areas. Developing new skills in new areas is a great way to build
diversity of knowledge in your head.
In summary, living in a different country, working in a differ-
ent industry, and learning a new skill are three ways to try out new
experiences and boost your creativity. Experimenters seek these
types of experiences because they expand the diversity of their
knowledge and increase their capacity to innovate.
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144 DISRUPTIVE INNOVATION STARTS WITH YOU
Take Apart Products, Processes, and Ideas
In 1980, Michael Dell looked forward with great anticipation to
his sixteenth birthday. However, he was most excited because his
parents had finally agreed to let him purchase his own computer—
an Apple II. On the day the computer arrived, Dell was so anxious
to get his hands on it that he made his dad drive him down to the
UPS office to pick it up. What he did next both shocked and
dismayed his parents, but it also proved to be instrumental in his
discovery of the “direct from Dell” business model. “After we
pulled into my driveway,” Dell recalled, “I jumped out of the car,
carried the precious cargo to my room, and the first thing I did
was take my new computer apart. My parents were infuriated. An
Apple cost a lot of money in those days and they thought I had de-
molished it. But I just wanted to see how it worked.” Dell’s desire
to understand what made his Apple II tick led to a variety of ex-
periments designed to make his computer work better and faster.
He bought a variety of components and add-ons to enhance his
personal computer, like more memory, disk drives, faster modems,
and bigger monitors. He soon learned how to make some money
from his “hobby.” “I would enhance a PC the way another guy
would soup up a car. Then I would sell it for a profit and do it
again,” says Dell. “I was soon going to distributors and buying PC
components in bulk to reduce the costs. I remember my mother
complained that my room looked like a mechanic’s shop.”
Dell soon gained enough familiarity with the cost of PC com-
ponents that he acquired an important insight. At the time, an IBM
PC sold in a store for around $2,500 to $3,000. But the exact same
components could be purchased for $600 or $700, and IBM didn’t
own the technology. Dell told us that this raised a critical question
in his mind: “Why does it cost five times more to buy a PC in the
store than the parts cost?” He realized that he could buy the latest
components, assemble them in the exact configuration a customer
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145 Experimenting
wanted, and deliver it for far less than the retail price in a store.
Thus, the “direct from Dell” business model was born.
Like Dell, many innovators hit on an innovative idea while tak-
ing something apart—a product, a process, a company, a technol-
ogy. For example, Google’s Page is also a tinkerer who likes to
deconstruct things. Page’s brother gave him a set of screwdrivers
when he was nine years old, which he used to completely take apart
every power tool his family had in the house. In similar fashion,
Page tinkered with various ideas related to efficiently searching the
Web, eventually hitting on the page-ranking idea that searched the
Web in a way that was very different from the other search engines
at the time. Another experimenter, Albert Einstein, took apart
Newton’s theory of time and space intellectually, rather than phys-
ically, to come up with his innovative theory of relativity. Einstein
is reported to have generated his insights “based purely on thought
experiments—performed in his head rather than in a lab.”3
In summary, experimenters love to deconstruct—products,
processes, ideas—to understand how they work. In the process of
taking things apart, they also ask questions about why things work
the way they do. This often triggers new ideas for how things might
work better.
Test New Ideas Through Pilots and Prototypes
Max Levchin, cofounder of PayPal, majored in computer science
during college, where he developed an intense interest in security
and encryption technology. In the summer of 1998, Levchin
moved to Silicon Valley to pursue his dream of starting a company
offering security software. One hot summer day, he decided to
drop in on an encryption technology lecture at Stanford Univer-
sity to see if he could spawn any ideas to further his dream. Only
six people attended the lecture, so it wasn’t hard to start up a
conversation with Peter Thiel, a hedge fund manager who was
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146 DISRUPTIVE INNOVATION STARTS WITH YOU
interested in using encryption technology to secure financial trans-
actions. The two immediately hit it off and decided to start a
company based on security software for handheld devices like the
Palm Pilot.
The initial idea was to turn the Palm Pilot into a wallet, in
which users could secure private information like credit card num-
bers or passwords. They launched the product with great antici-
pation but soon learned that the market was quite small, limited
to those few users of Palm Pilots who cared about securing private
information. So they decided to try out a different business idea:
provide software that would allow a Palm Pilot to store money that
could be beamed from one Palm Pilot to another.
So Levchin and Thiel developed software that could beam
money from one Palm Pilot to another. This business idea caught
the attention of some leading venture capital companies in Silicon
Valley, leading to PayPal’s first round of financing at Buck’s restau-
rant, a favorite restaurant for many venture capitalists. PayPal’s in-
vestors showed up with $4.5 million preloaded on a Palm Pilot
that they beamed to Levchin and Thiel’s Palm Pilot. PayPal seemed
to be on its way.
PayPal’s initial growth was rapid, but the market leveled off
rather quickly because it was limited to the roughly 3 million
handheld (PDA) users in the United States. It didn’t take long be-
fore Levchin and Thiel realized another problem with the business
model. “The initial idea of beaming money between Palm Pilots
was basically a bad idea,” Thiel told us. “I mean, if you have to meet
face to face to exchange money, which you had to with the Palm
Pilot idea, you could just hand the other guy a check. But in the
course of building out this idea, we made midcourse changes that
were really interesting.” These midcourse changes were prompted
in part by customers who wanted to sync their Palm Pilots to their
computers and send money through the Internet to someone else
with a computer and Palm Pilot. “We came up with the idea of
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147 Experimenting
attaching money to an e-mail,” Thiel recalled. “Since there were
120 million e-mail users in the United States, this made it much
more viral. You didn’t have to meet face to face.”
Today, PayPal is the world’s largest processor of e-mail pay-
ments, but this never would have happened if its founders hadn’t
been willing to constantly experiment and launch earlier versions
of the product. Just as the security wallet experiment was a “fail-
ure,” the original Palm Pilot experiment also fell on its face. But
these critical experiments generated the data necessary for PayPal’s
ultimate success.
The PayPal experience is not atypical for innovative entrepre-
neurs. They realize the importance of experimenting with proto-
types and pilots to see what they can learn. Because of their bias
for action, they tend to launch products or businesses as quickly
as possible, almost as an experiment, to see what the market’s
response will be. They like to throw new product, process, and
business ideas against the wall to see what will stick. PayPal’s
experiments were essentially launched as products to the market,
and they generated important data when the products failed to
gain traction.
While some innovators seem prone to quickly launch their pro-
totypes directly to the market, others more carefully test and com-
pare competing prototypes to see what works best. Jennifer Hyman
and Jennifer Fleiss did this before launching Rent the Runway, a
Netflix-type business model for renting designer dresses. During
a trip home to New York City, Hyman noticed her sister, Becky—
an accessories buyer at Bloomingdale’s—struggling over what to
wear for an upcoming wedding. Her sister wanted something stun-
ning, but even though she had a decent salary, every designer dress
was too expensive and out of reach. As Hyman watched her sister
agonize over what to do, she wondered, “If the Beckys of this
world can’t wear a designer dress, what hope is there for the rest
of us?” She also thought that designers had a problem as well. “If
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148 DISRUPTIVE INNOVATION STARTS WITH YOU
designers can’t get their pieces into the hands of young, fashionable
women,” she thought, “they are going to have a difficult time build-
ing their brands.” Hyman’s simple observation of a common ritual
(finding a dress for a special occasion) in a familiar place (home)
with a familiar person (her sister) produced an uncommon in-
sight. Why not modify the Netflix business model and apply it to
high-end fashion? Instead of purchasing designer dresses, women
could rent the designer dresses online for that special occasion, for
only one-tenth the cost.
So Hyman and Fleiss set up some experiments to test their
idea. They bought a hundred dresses from designers like Diane
von Furstenberg, Calvin Klein, and Halston and ran three experi-
ments. The first was on the Harvard University campus; they
rented dresses to Harvard undergrads, letting young women try
on the dresses first. The pilot was an unqualified success. Women
not only rented the dresses but returned them in good condition.
This experiment demonstrated that there was a market for renting
dresses and that renters would return them in good shape. But
would women rent dresses they couldn’t try on? To answer that
question, they set up another experiment, this time on the Yale
campus, allowing women to see the dresses before renting, but not
allowing them to try them on. Although fewer women rented, the
pilot proved successful. Finally, they took photos of dresses and
ran a test in New York City where women rented a dress only from
PDF photos and descriptions of how they fit. This experiment
would tell them whether they could truly use a Netflix model of
renting over the Web, or whether they must open stores where
women could see and try on dresses. The final experiment showed
that roughly 5 percent of women looking for special occasion
dresses were willing to try the service, enough to demonstrate the
viability of renting over the Web. And that’s how Rent the Runway
launched. It has proved very successful, with over six hundred
thousand members and roughly fifty thousand clients trying the
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149 Experimenting
service in the first year. Trying different experiments was critical to
designing a successful business model. As Hyman told us, “Our
revenue growth is amazing. This is a dream come true.”
As we studied innovators and their experiments, one thing we
noticed was that the amount of experimenting required to gain
new insights is almost the inverse of the amount of prior ques-
tioning, observing, and networking they had done. In other words,
if you haven’t done much questioning, observing, or networking
(or haven’t done them well), then you will have to run more
experiments to gain the insights required to move forward. For
example, Rent the Runway’s experiments were able to be care-
fully crafted to generate the right data because of years of obser-
vations that Hyman, in particular, had made of the needs of young
women attending special events. (Hyman had worked for years
at Starwood Hotels where she launched programs to meet the
needs of wedding parties and honeymooners; she also worked at
WeddingChannel.com and IMG, one of the world’s top firms for
female models.) As a result, she had a deep knowledge of the needs
of fashion-oriented young women, special events, and designers
and designer clothing. This allowed her and Fleiss to design better
experiments to test their ideas.
The bottom line is that if you ask salient questions, observe salient
situations, and talk to more diverse people, you will likely need to run
fewer experiments. And the experiments you do run will be better
designed to generate the data you need to take the next step. Ran-
dom experimentation occurs when you know very little from your
questions, observations, and networking conversations.
In the end, we’ve learned that even when you’ve effectively
questioned, observed, and networked, persistent experimentation
is likely to be important for generating disruptive insights. Virtu-
ally every disruptive business that we studied evolved over time—
through a series of experiments—into a business model that changed
an industry. Some experiments were accidental. For example, Herb
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150 DISRUPTIVE INNOVATION STARTS WITH YOU
Kelleher of Southwest Airlines told us that the original low-cost
airline entrant stumbled onto its quick-turnaround capability
when financial pressures forced the company to service its routes
with three planes instead of the four it had originally planned to
use. It had to either cancel flights or figure out a way to fly a four-
plane schedule with three planes. This led management to develop
a new set of practices for turning the plane around as quickly as
possible, eventually leading to a fifteen-minute plane turnaround.
This innovation completely changed Southwest’s strategy and
business model, as well as its bottom line.
Similarly, IKEA never intended to have knockdown kit furni-
ture (disassembled furniture in flat parcel boxes) as a central feature
of its low-cost furniture retailing model. A serendipitous experi-
ment early on in the company’s history yielded an important in-
sight. After completing a photo shoot for a furniture catalog,
a marketing manager found not all the furniture fit back into the
trucks. When a photographer suggested that they take the legs off
the table and then slide the table into the truck, the lights went on:
Ikea could knock down almost all its furniture to reduce shipping
costs and make the customer the final assembler. This small ex-
periment was critical to IKEA’s business model as a global furni-
ture retailer.
Innovators engage in three types of experimenting to generate
data and spark new insights: trying out new experiences, taking
things apart, and testing ideas by creating prototypes and pilots.
Although questioning, observing, and networking are excellent for
providing data about the past and present, experimenting is the best
technique for generating data on what might work in the future. In
other words, it’s the best way to answer what-if questions. Innovators
also understand that by asking salient questions, observing salient
situations, and talking to the right people, you will likely need to run
fewer experiments. This reduces the cost and time associated with ex-
perimenting. Finally, innovators understand—and accept—that the
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151 Experimenting
majority of their experiments will not turn out as planned (and in-
deed may turn out to be a colossal waste of time), but they know that
experimenting is often the only way to generate the data required to
ultimately achieve success.
Tips for Developing Experimenting Skills
To strengthen your experimenting skills, you will need to con-
sciously approach your work and life with a hypothesis-testing
mind-set. We recommend the following activities to practice and
strengthen your experimenting skills.
Tip #1: Cross physical borders
Visit (or even better, live in) a new country or some other new
environment, such as a different functional area within your com-
pany or a new company in a different industry. Acquire a passport
mind-set to break free of common routines. Explore the world by
engaging in new activities. Join new social or professional activi-
ties beyond your normal sphere, attend a lecture by someone
whose work you’re unfamiliar with, or visit an unusual museum
exhibit. When you try out these new activities, ask yourself ques-
tions to help produce new insights from the experience, such as: “If
my work team were here, what could we learn from this experi-
ence that would lead us to do something new? If I were going to
replicate one thing (product, process, and so on) from this envi-
ronment in my everyday environment, what would it be?” Work to
cross one border at least once every month.
Tip #2: Cross intellectual borders
Take out a new annual subscription to a newspaper, newsletter,
or magazine from an entirely different context (or to help save
trees, intentionally and regularly search the Web for country, in-
dustry, or profession information about areas distant from your
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152 DISRUPTIVE INNOVATION STARTS WITH YOU
own). If you live in the United States or France, consider reading
a publication from China, India, Russia, or Brazil. If you work in
the oil and gas industry, read a publication from the hospitality
industry. If you are trained in marketing, read a publication re-
lated to engineering or operations.
Tip #3: Develop a new skill
To gain new perspectives, create a plan to develop some new
skills or acquire new knowledge. Look for opportunities in your
community to take classes in acting or photography, or get some
basic training in mechanics, electronics, or home building. Try out
new physical activities like yoga, gymnastics, snowboarding, scuba
diving, or even sky diving (if you are brave enough). Check out
the menu of courses at your local university and sign up for classes
that sound interesting to you, ranging from history to chemistry to
calligraphy. Or closer to home, identify another function in your
company, whether it be marketing, operations, or finance, and see
if you can learn how that function works in your company.
Tip #4: Disassemble a product
Look through your house for something that no longer works,
or go to a junkyard or flea market to buy a few things that you can
easily take apart. (This is especially fun to do with your kids.)
Search for something that you’ve always been interested in but
have never taken the time to explore. Set aside a block of time to
take the objects apart piece by piece and search for new insights
into how they were designed, engineered, and produced. Draw or
write about your observations in a journal or notebook.
Tip #5: Build prototypes
Identify something that you would like to improve. What would
it look like if you changed it? Build a prototype of your new, im-
proved invention from random materials in your house or office,
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153 Experimenting
or go on a shopping spree to obtain odd things that might work
well in the prototype. Play-Doh (the children’s modeling clay) is a
great medium for creating prototypes. If you are feeling adven-
turous and want to splurge, you may even want to buy a three-
dimensional printer that produces objects on demand (according
to your design).
Tip #6: Regularly pilot new ideas
Gordon Moore, the cofounder of Intel, once recalled that,
“most of what I learned as an entrepreneur was by trial and error.”
Engage in frequent pilot tests (small-scale experiments) to try out
new ideas and to see what you learn from doing something differ-
ently than you’ve done before. You, too, can become an experi-
menter when you embrace learning through trial and error, but
you must have the courage to fail and learn from your failures.
Make up your mind to plan and carry out a pilot test of an idea you
have at work during the next month.
Tip #7: Go trend spotting
Actively seek to identify emerging trends by reading books,
articles, magazines, Web links, blogs, and other sources that specif-
ically focus on identifying new trends. Read material written by
individuals you believe excel at identifying trends and seeing what’s
next. Try reading the work of Kevin Kelly (executive editor of Wired
and author of New Rules for the New Economy), Chris Anderson
(editor in chief of Wired and author of The Long Tail and Free), or
another author who is looking into the future. Then think about
how these trends might lead to an interesting experiment with
regard to a new product or service. Figure out a way to creatively
conduct that experiment.
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PA R T T W O
The DNA of Disruptive Organizations and Teams
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157
7
The DNA of the World’s Most Innovative Companies
“Fast-growth companies must keep innovating.
Companies are like sharks. If they stop moving,
they die.”
—Marc Benioff, founder and CEO,
Salesforce.com
IN THIS BOOK’S first six chapters, we described howinnovative people think differently and act differ- ently to generate creative ideas for new products, services,
processes, and businesses. Now we shift our attention to answer-
ing the question: how do companies comprising many people build
the code for innovation? Without a doubt, executives worldwide
face this critical question as they try to build innovation capabili-
ties within their companies to generate growth opportunities. Be-
fore addressing this question, though, let’s look at two other
equally important ones. First, which companies are truly the most
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TA B L E 7 - 1
BusinessWeek list of most innovative companies (2005–2009)
Business Week rank*
Company name
Innovation premium rank
Company name
5-year innovation premium
1 Apple 1 Amazon 57%
2 Google 2 Apple 52%
3 Microsoft 3 Google 49%
4 Toyota 4 Procter & Gamble 35%
5 General Electric
5 Starbucks 35%
6 Procter & Gamble
6 Microsoft 29%
7 IBM 7 Nintendo 26%
8 Nokia 8 Reasearch In Motion 20%
9 Sony 9 Cisco Systems 19%
10 3M 10 Hewlett-Packard 19%
11 Amazon 11 3M 18%
12 Samsung 12 General Electric 10%
13 BMW 13 IBM 8%
14 Honda 14 Southwest 7%
15 Research In Motion
15 eBay 7%
16 Hewlett- Packard
16 Target 7%
17 Nintendo 17 Walmart 5%
158 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
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innovative and should serve as models of innovation? Second, does
having an innovation capability (and a reputation for innovation)
turbocharge a company’s market value?
In 2005, BusinessWeek began creating a list of the world’s one
hundred most innovative companies. It based this list on a Boston
Consulting Group survey of executives who voted on the compa-
nies. (See table 7-1 for the BusinessWeek top twenty-five innovative
companies from 2005 through 2009.) A quick look at the list shows
Apple at number one and Google at number two. OK, intuitively
that sounds right. But based on the methodology, the list is largely
a popularity contest based on past performance. Do General Elec-
tric, Sony, BMW, and Toyota really deserve to be on the list of most
innovative companies today?
To answer these questions, we decided to develop our own list
of innovative companies based on expectations of future innova-
tions. We thought the best way to do this would be to see whether
159 The DNA of the World’s Most Innovative Companies
Business Week rank*
Company name
Innovation premium rank
Company name
5-year innovation premium
18 Starbucks 18 Intel 4%
19 Target 19 Dell 4%
20 Intel 20 Nokia –16%
21 Dell 21 BMW –26%
22 Cisco 22 Toyota –26%
23 eBay 23 Honda –27%
24 Walmart 24 Sony –28%
25 Southwest 25 Samsung –29%
*5-year average rank; excludes private companies: Virgin at 16 and Tata at 25.
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160 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
investors—voting with their wallets and purses—could give us
insight into which companies they believe are most likely to pro-
duce new products, services, or markets.
We teamed up with HOLT (a division of Credit Suisse that had
done a similar analysis for The Innovator’s Solution) to develop a
methodology for determining what percentage of a firm’s market
value could be attributed to its existing products, services, and
markets. If the firm’s market value was higher than the cash flows
attributed to its existing businesses, then the company shows an
innovation premium. This is the proportion of a company’s mar-
ket value that cannot be accounted for from cash flows of its cur-
rent products and businesses in its current markets. Investors give
this premium because they expect companies to come up with
profitable new products or markets (for details on how to calculate
the premium, see the endnote).1 It is a premium that every execu-
tive and every company would like to have.
So how does the BusinessWeek top twenty-five stack up using
our methodology? Our analysis reveals a different ranking order.
(See our ranking in table 7-1 based on the average innovation
premium over five years.)2 Our research puts Amazon at number
one (with a premium of 57 percent), Apple at number two (a pre-
mium of 52 percent), and Google at number three (a premium of
49 percent)—results that are reasonably similar to the BusinessWeek
list. But take a look at the bottom five. Samsung (–29 percent), Sony
(–28 percent), Honda (–27 percent), Toyota (–26 percent), and
BMW (–26 percent) generate cash flows from existing businesses
that are actually higher than their current market value. In other
words, investors are not anticipating growth from new innovative
products or services and, worse, they’re expecting that these firms’
existing businesses will likely shrink or have profit levels drop.
As we analyzed these results in greater detail, we realized that
investors not only cared about whether companies could produce
innovations, but also cared about whether they could generate
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161 The DNA of the World’s Most Innovative Companies
profits from new products and services. For example, Sony (num-
ber nine on the BusinessWeek list) and Samsung (number twelve
on the list) have historically produced innovations in the consumer
electronics industry, but recently investors haven’t seen large prof-
its from them and don’t expect to in the future. However, com-
petitor Nintendo (number seventeen on the BusinessWeek list) has
an innovation premium of 26 percent, which means Nintendo not
only has done a better job of generating profits from past innova-
tions (such as the Wii), but is expected to do so in the future, giv-
ing it a much higher ranking on our list. Automakers BMW, Toyota,
and Honda rank low on our list not because they won’t innovate
going forward, but because they will face severe challenges gener-
ating any profits from their innovations. Not only will these com-
panies continue to fight emerging existing competitors (such as
Korea’s Hyundai and China’s Chery), but a slew of brand-new com-
petitors coming into the market, including battery-powered car-
makers Tesla and Coda.
Given the differences described, we decided to generate our
own list of most innovative companies based on their innova-
tion premium. (See table 7-2.) We focused on large public com-
panies (more than $10 billion in market value), since the
BusinessWeek list likewise focused on large companies. Our rank-
ing revealed that, looking into the future, Salesforce.com is
ranked number one (Benioff ’s disruptive cloud computing com-
pany, featured in chapter 2), followed by Intuitive Surgical (mak-
ers of the da Vinci system of surgical robots, which we will
describe later). These companies are right up there with Amazon,
Apple, and Google, which ranked three, five, and six, respectively.
Do Salesforce.com and Intuitive Surgical deserve to be at the top
of the list? Investors seem to think so. Salesforce.com not only has
led the charge with cloud computing but has also introduced the
AppExchange—which Forbes called the “iTunes of Business Soft-
ware” and which won awards from the Software & Information
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162 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
TA B L E 7 - 2
The world’s most innovative companies (ranked by innovation premium)
Innovation premium rank Company name
Industry/key businesses
5-year innovation premium
1 Salesforce.com Cloud computing software for businesses (e.g, CRM)
73%
2 Intuitive Surgical Da Vinci system robots for robotic-assisted surgeries
64%
3 Amazon.com Online discount retailer, Kindle, cloud computing
57%
4 Celgene Corp. Pharmaceuticals 55%
5 Apple Computers, software, music devices, phones, etc.
52%
6 Google Software, primarily for information retrieval (e.g., search)
49%
7 Hindustan Lever/Unilever Heavy Electricals
Household products 47%
8 Reckitt Benckiser Group
Household products 44%
9 Monsanto Co. Seeds, genetically modified seeds, crop protection
44%
10 Bharat Heavy Electricals
Electrical equipment 44%
11 Vestas Wind Systems
Electrical equipment 43%
12 Alstom SA Electrical equipment 42%
13 CSL Limited Biotechnology 40%
14 Beiersdorf AG Personal products 38%
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163 The DNA of the World’s Most Innovative Companies
Innovation premium rank Company name
Industry/key businesses
5-year innovation premium
15 Synthes Incorporated
Health care equipment and supplies
38%
16 Activision Blizzard Inc.
Online and console game publisher
37%
17 Alcon Incorporated
Health care equipment and supplies
37%
18 Procter & Gamble Consumer products (e.g., Downy, Gillette, Pringles, Dawn)
36%
19 NIDEC Corporation
Electronic equipment, instru- ments, and components
36%
20 Colgate-Palmolive Consumer products (e.g., Colgate toothpaste, Palmolive soap)
35%
21 Starbucks Restaurant and retail coffee- houses
35%
22 Ecolab Inc. Hygiene chemicals, food safety, pest control
34%
23 Keyence Corporation
Electronic equipment, instruments, and components
34%
24 Essilor International Societe Anonyme
Health care equipment and supplies
34%
25 Hershey Co. Chocolate, candy manufacturer 32%
Source: HOLT and The Innovator’s DNA LLC.
Industry Association, SD Times, and others. The AppExchange
offers more than a thousand applications for businesses in much
the same way that the iPhone offers a multitude of applications for
consumers. Moreover, Salesforce.com recently unveiled Chatter, a
new social software application seen as “Facebook for businesses.”
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164 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Chatter takes the best of Facebook and Twitter and applies it to
enterprise collaboration (as we describe in chapter 2).
Intuitive Surgical (number two) is an equally impressive inno-
vator, having introduced robotic-assisted surgery to the world. For
many surgeries—like prostate surgery—Intuitive’s da Vinci sys-
tem has become the modus operandi in most operating rooms.
But someday it could also play a major role in military surgical
units. A surgeon in London could use it to operate on an injured
soldier in any of the world’s military hot spots. The $1.5 million
da Vinci system allows surgeons to operate using three-dimensional
visualization and four robotic arms that work with a precision that
most surgeons cannot duplicate. This results in smaller incisions,
fewer mistakes, shorter recoveries, and reduced hospitalization
costs.
India’s Hindustan Lever (number seven) not only has been a
consumer products innovator but, as described in chapter 3, has
also used an innovative network-marketing approach to sell its
products through thousands of underprivileged rural women
throughout India. This has allowed Hindustan Lever to sell in over
135,000 villages and become the most trusted Indian brand—used
by two out of three Indians. The U.K.’s Reckitt Benckiser Group
(number eight) has been an innovation powerhouse with roughly
40 percent of revenue in recent years coming from innovations
launched in the prior three years. Many ideas come through net-
working with outsiders via its IdeaLink Web site where it lists
jobs that need to be done and requests solutions. The company is
currently hunting for “methods for detection of parasites and
other parasite eggs” among other things. Denmark’s Vestas Wind
Systems (number eleven) recently won the “Innovation Cup” as
the country’s most innovative company. It is the world’s leading
supplier of wind power solutions and has spawned a number of
innovations, including floating foundations for wind power sta-
tions at water depths of over thirty meters.
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165 The DNA of the World’s Most Innovative Companies
We believe our list better identifies the current and future
innovators and is consistent with A. G. Lafley and Ram Charan’s
argument that: “An innovation is the conversion of a new idea
into revenues and profits . . . In fact, there is no correlation between
the number of corporate patents earned and financial success.
A gee-whiz product that does not deliver value to the customer
and provide financial benefit to the company is not an innovation.
Innovation is not complete until it shows up in the financial
results.”3
If you agree with this statement, you probably prefer our rank-
ing to BusinessWeek’s.
The DNA—People, Processes, and Philosophies—of Innovative Companies
Drawing on a sample of companies that lead both lists, we dove
deeply into the practices of some of the world’s most innovative
companies. We relied on both lists as models of innovation and
emphasized those that appear in each (e.g., Amazon, Apple,
Google, P&G) and those on the innovation premium list that may
not be as well known globally for innovation (e.g., Salesforce.com;
Intuitive Surgical; Hindustan Lever; Reckitt Benckiser).
We started by asking innovative founders at some of these
firms, like Amazon’s Bezos or Salesforce.com’s Benioff: What
makes your firm so innovative? What happens inside your firm
that results in innovative new products, services, processes, or
businesses? The first insight to emerge from these interviews is
that founder innovators typically imprint their organizations with
their own innovator’s DNA. To illustrate, Bezos described how he
surrounds himself with people at Amazon who are inventive. He
asks all job candidates: “Tell me about something that you have
invented.” He adds, “Their invention could be on a small scale—
say, a new product feature or a process that improves the customer
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166 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
experience, or even a new way to load the dishwasher. But I want
to know that they will try new things.” When the CEO asks all job
candidates whether they’ve ever invented anything, it sends a pow-
erful signal that invention is expected and valued. “I also look for
people who believe they can change the world,” Bezos told us. “If
you believe the world can change, then it’s not a stretch to believe
you can be a part of it.”
He also talked about the importance of experimentation
processes (as we described in chapter 6), stating that, “I encourage
our employees to experiment. In fact, we have a group called Web
Lab that is charged with constantly experimenting with the user
interface on the Web site to figure out improvements for the
customer experience.” Finally, he discussed the importance of
culture, saying that most company’s big errors are “acts of omis-
sion” instead of acts of “commission.” “It’s the opposite of sticking
to your knitting. It’s when you shouldn’t have stuck to your
knitting and you did,” says Bezos. So he encourages people at
Amazon to ask “why not?” when considering whether to launch
something new. “It’s very fun to have a culture where people are
willing to take these leaps. It’s the opposite of the ‘institutional no.’
It’s the institutional yes. People at Amazon say, ‘We’re going to
figure out how to do this.’”
To sum up: Bezos looks for people with an inventive attitude
like his. He personally experiments as a way to generate innovative
ideas, so he’s created processes at Amazon that encourage and
support experimenting by others. And he asks why not and is will-
ing to take leaps (as he did leaving D.E. Shaw to start Amazon; he
certainly did not “stick to his knitting” when he made that career
decision). Not surprisingly, this philosophy has become part of the
culture at Amazon in which others are also expected to ask why
not and take leaps.
Our observations at Amazon and other highly innovative
companies confirm insights about the genesis of organizational
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167 The DNA of the World’s Most Innovative Companies
culture made by MIT’s Edgar Schein in his classic work Orga-
nizational Culture and Leadership. Schein argues that organiza-
tional culture arises during the early stages of an organization
when it faces particular problems or must accomplish particular
tasks. For example, the challenge might be: “How do we develop a
new product?” or “How do we deal with this customer’s com-
plaint?” In each instance, organization members responsible for
resolving the problem sit down and decide on a method for re-
solving it. If the method works successfully, the organization likely
uses it again and again when faced with similar problems and it
becomes part of the organization’s culture (a taken-for-granted
way for how the organization addresses certain problems). If it
does not work well, the organization’s leaders will devise a differ-
ent method for solving the problem and continue to search until
a method successfully solves it. As any particular method for solv-
ing a problem is profitably used over and over, it becomes part of
the culture. Not surprisingly, Schein observes that a company
founder has a significant influence on the methods chosen to solve
the organization’s early challenges. Ultimately, if the founder’s
methods for reaching solutions work reliably and successfully, they
come to be taken for granted for accomplishing particular tasks in
the company. It is through the repeated, successful application of
the founder’s initial solutions that they become embedded in the
organization’s culture.
The point, of course, is that the DNA of innovative organiza-
tions likely reflects the founder’s DNA. As we talked to innovative
founders about creating innovative organizations and teams,
they repeatedly discussed the value of populating the organization
with people who are like them (in other words, innovative),
processes that encourage the innovative skills they depended on
(e.g., questioning, observing, networking, experimenting), and
philosophies (a culture that encourages everyone to innovate
and take smart risks). Our observations of other companies on
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168 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
our most innovative list revealed the same thing. This led us to
develop a set of working hypotheses about the DNA of innovative
organizations that we put into a 3P framework of innovative
organizations.
People
First, we found that innovative companies were often led by
founder entrepreneurs, leaders who excelled at discovery and who
were not bashful about leading the innovation charge. In fact, key
leaders of these companies showed a higher discovery quotient
than leaders of less innovative companies (more on this in chapter 8).
We also found that highly innovative companies had stronger dis-
covery skills in all management levels and each functional area of
the organization. They also monitored and managed the appro-
priate mix of decision makers’ discovery and delivery skills
throughout the innovation process (from ideation to implemen-
tation). Finally, they often had created a senior-level position fo-
cused on innovation, which is what Lafley did when he hired
Claudia Kotchka as vice president for design, innovation, and
strategy. Put simply, these companies were filled on average with
far more people who excelled at the five discovery skills described
in chapters 2 through 6, and they were wiser than less innovative
companies about the strategic use of discovery-driven people.
Processes
Just as inventive people systematically engage their questioning,
observing, networking, and experimenting skills to spark new
ideas, we discovered that innovative organizations systematically
develop processes to encourage these same skills in employees.
Most innovative companies construct a culture that reflects the
leader’s personality and behaviors. For example, Jobs loves to ask
“what if ” and “why” questions and so do Apple employees. Lafley
has devoted hundreds of hours to observing customers, just as
anthropologists observe tribes, and has put specific processes in
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169 The DNA of the World’s Most Innovative Companies
place for observing customers at P&G. Benioff is a great networker,
and at Salesforce.com he introduced Chatter and other networking
processes to help employees network both inside and outside the
company for unusual ideas. As an exceptional experimenter him-
self, Bezos has tried to institutionalize experimentation processes
at Amazon that allow employees to go down blind alleys in pursuit
of new products or processes. By creating organizational processes
that mirror their individual discovery behaviors, these leaders have
built their personal innovator’s DNA into their organizations.
Philosophies
These organizational discovery processes are supported by four
guiding philosophies that imbue employees with the courage to
try out new ideas: (1) innovation is everyone’s job, (2) disruptive
innovation is part of our innovation portfolio, (3) deploy lots of
small, properly organized innovation project teams, and (4) take
smart risks in the pursuit of innovation. Together, these philoso-
phies reflect the courage-to-innovate attitudes of innovative
leaders. They believe innovation is their job, so they constantly
challenge the status quo and aren’t afraid to take risks to make
change happen. To illustrate, the most innovative companies don’t
relegate R&D to one unit. Instead, virtually everyone, including
the top management team, is expected to come up with new ideas,
which results in a democratization of innovation efforts. The no-
tion that everyone should innovate and challenge the status quo is
supported by a risk-taking philosophy, such as IDEO’s “fail soon to
succeed sooner.” The remarkable companies we studied not only
show a tolerance for failure; they see failure as impossible to avoid
and a natural part of the innovation process. Moreover, since they
believe that everyone can be creative, they work hard to keep units
small so that each employee feels empowered and responsible for
innovating (Amazon’s Bezos employs a “Two Pizza Team” rule,
meaning that teams should be small enough—six to ten people—
to be adequately fed by two pizzas).
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170 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
F I G U R E 7 - 1
People, processes, and philosophies in the world’s most innovative companies
People
• Senior executive(s) lead the innovative charge and excel at discovery (discovery quotient >75%). • Monitor and maintain an adequate proportion of high- discovery-quotient people in every management level, functional area, and decision-making stage of the innovation process.
• Processes explicitly encourage employees to associate, question, observe, network, and experiment. • Processes are designed to hire, train, reward, and promote discovery- driven people
• Philosophy 1: Innovation is everyone’s job—not just R&Ds. • Philosophy 2: Disruption is part of our innovation portfolio. • Philosophy 3: Deploy small, properly organized innovation project teams. • Philosophy 4: Take smart risks in pursuit of innovation.
Processes Philosophies
In sum, our interviews and observations revealed that innova-
tive companies build the code for innovation right into the orga-
nization’s people, processes, and guiding philosophies (the 3P
framework that comprises the DNA of innovative organizations.)
(See figure 7-1.)
Of course, the devil is in the details in making the 3P frame-
work real to employees. Many organizations say that they have in-
novative people and that they encourage innovation through the
company’s processes and guiding philosophies. But they can be
clueless about how to embed them deeply into the organization’s
culture. In this chapter, we have identified some of the world’s
most innovative companies and provided a framework to help you
see how creative organizations do it.
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171 The DNA of the World’s Most Innovative Companies
How Innovative Is Your Organization or Team?
To get a quick snapshot of your organization or team’s inno-
vation profile, take the following short survey (1 = strongly dis-
agree; 2 = somewhat disagree; 3 = neither agree or disagree;
4 = somewhat agree; 5 = strongly agree). Remember to answer
based on the people, processes, and philosophies that
actually exist within your organization or team, not what you
would like them to be.
People
1. Our organization or team has leaders with a well-known
track record for generating innovative ideas for new
processes, products, services, or businesses.
2. Our organization or team actively screens for creativity
and innovation skills in the hiring process.
3. Evaluating an employee’s creativity or innovation skills is
an important part of the performance appraisal process
within our team or organization.
Processes
4. Our organization or team frequently engages in brain-
storming to generate wild or very different ideas by
drawing analogies from other products, companies, or
industries.
5. Our organization or team encourages team members to
ask questions that challenge the status quo or conven-
tional ways of doing things.
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172 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
6. Our organization or team cultivates new ideas by giving
people frequent opportunities to observe the activities
of customers, competitors, or suppliers.
7. Our organization or team has instituted formal processes
to network outside the company to find new ideas for
processes or products.
8. Our organization or team has adopted processes to
allow for frequent experiments (or pilots) of new ideas in
search of new innovations.
Philosophies
9. Our organization or team expects everyone to offer cre-
ative ideas for how the company should change prod-
ucts, processes, and so on.
10. People in our organization or team are not afraid to take
risks and fail because top management supports and
rewards risk taking.
To score your survey:
Add up your total score for all ten questions. Your team or or-
ganization scores very high on the innovator’s DNA if the total
score is 45 or above; high if the score is 40–45; moderate to
high if the score is between 35 and 40; moderate to low if the
score is 30–34; low if the score is below 30. The short survey
is drawn from a more systematic organization or team as-
sessment available from the authors; for more information, see
http://www.InnovatorsDNA.com.
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173 The DNA of the World’s Most Innovative Companies
As we mentioned at the beginning of this chapter, chapters 2
through 6 focused primarily on how individual innovators do their
work. In this chapter, we’ve suggested that the innovator’s DNA
has some clear organizational analogs and applications. We think
there are equally compelling applications to teams at work (where
the principles apply as they do with individuals and organiza-
tions). We believe this because the boundaries between what an
organization is and what a team is are becoming increasingly
blurred in our fast-paced world where organizations like Vodafone
start entirely new business units with twelve people. Is that an or-
ganization or a team? We see it as a classic case of both, since an or-
ganization is a collection of teams, and the innovator’s DNA works
well in each. In the three chapters that follow, we describe in detail
how innovative organizations and teams build the code for inno-
vation into their people, processes, and philosophies.
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100092 07 155-174 r1 rr 5/13/11 10:02 AM Page 174
8
Putting the Innovator’s DNA into Practice
People
“Innovation distinguishes between a leader
and a follower.”
—Steve Jobs
EVERY DAY, your executive actions may be themost powerful signal to your organization and team that innovation truly matters. Our interviews with dozens of
senior executives of large organizations revealed that in most cases,
they did not feel personally responsible for coming up with innova-
tions. They only felt responsible for “facilitating the process” to
make sure someone in the company was doing so. But in the
world’s most innovative companies, senior executives like Jeff
Bezos (Amazon), Marc Benioff (Salesforce.com), and A. G. Lafley
(Procter & Gamble) didn’t just delegate innovation; their own
hands were deep in the innovation process.
175
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176 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
As we showed in chapter 1, leaders of highly innovative com-
panies scored around the eighty-eighth percentile in discovery skills
(an overall discovery quotient of 88 percent), but only around the
fifty-sixth percentile in delivery skills. When asked about their lower
delivery-skill scores, innovative executives typically responded that
they didn’t have the time or didn’t want to spend the time on exe-
cution tasks. Their focus was innovation, so they actively engaged
in questioning, observing, networking, and experimenting, which
had a powerful imprinting effect on their organization and team.
Because innovators excelled at the innovator’s DNA skills, they val-
ued them in others, so much so that others within the organization
felt that reaching top executive positions required personal inno-
vation capability. This expectation helped foster an innovation
focus throughout the company.
By contrast, a sampling of top executives without a personal
innovation track record revealed that, on average, they scored at
Lo w
ba la nc
ed
Hi gh
ba la nc
ed
100
1007550250
75
50
25
D is
c o
ve ry
s k
ill s
(P er
ce n til
e sc
o re
)
Delivery skills (Percentile score)
Discovery- driven
Delivery- driven
Founder CEOs at innovative companies
Nonfounder CEOs at average companies
F I G U R E 8 - 1
Discovery-delivery skills matrix
100092 08 175-192 r1 rr 5/13/11 10:02 AM Page 176
177 People
P e
rc e
n t
g ro
w th
Steve Jobs’s tenure
1980–1985
Jobs’s tenure
1999–2005
Apple without Jobs
1985–1998
Jobs’s tenure
2005–2010
–60.00%
–40.00%
–20.00%
0.00%
20.00%
40.00%
60.00%
37%
2%
52%
31%
F I G U R E 8 - 2
Innovation premium for Apple Inc.
around the sixty-eighth percentile in discovery skills, but roughly
the eightieth percentile in delivery skills. (See figure 8-1.) They were
clearly above average in discovery, but it wasn’t their distinctive
competence. Basically they were delivery-driven executives who had
moved up the management pyramid by executing and delivering
results. Since they were role models for advancement, others
marching up the management ladder were selected for a similar
skill set. As a result, the entire management team of less innovative
organizations displayed a lower discovery quotient.
Apple’s performance under Jobs, compared to other leaders,
powerfully illustrates this concept. (See figure 8-2.) From 1980 to
1985 during Jobs’s initial tenure at Apple, the company’s innovation
premium was 37 percent. However, during the 1985–1998 period
without Jobs, Apple’s innovation premium dropped to an average
of –30 percent. Apple quit innovating and investors lost confidence
in Apple’s ability to innovate and grow. When Jobs returned and
restructured his senior management team with more discovery-
driven capacity, Apple started to innovate again. It took a few years
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178 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Why Innovative Leaders Make a Difference
In chapter 1, we described how Jobs got key ideas for the Mac-
intosh computer (mouse and GUI interface) during his pivotal
visit to Xerox PARC. He recalled “being shown a rudimentary
graphical user interface. It was incomplete, some of it wasn’t
even right, but the germ of the idea was there. Within ten min-
utes, it was so obvious that every computer would work this way
someday.”a Jobs was so impressed that he took his entire pro-
gramming team on a tour of PARC and returned to Apple laser-
focused on developing a personal computer that incorporated
and improved on the technologies they saw at PARC. Jobs
assembled a team of brilliant engineers, gave them the needed
resources, and infused the Macintosh team with a vision of what
was possible. That’s what an innovative leader does.
In stark contrast, the executive team at Xerox lacked the dis-
covery skills necessary to exploit technologies developed in their
own company. As PARC scientist Larry Tesler observed, “After an
hour looking at demos, they [Jobs and Apple programmers]
understood our technology and what it meant more than any
Xerox executive understood after years of showing it to them.”b
Jobs agreed with Tesler, saying, “Basically they were copier
heads that just had no clue about a computer or what it could do.
And so they just grabbed defeat from the greatest victory in the
computer industry. Xerox could have owned the entire computer
industry today.”c No wonder Tesler left PARC and joined Apple.
Innovators want to work with and for other innovators. Moreover,
companies with innovative leaders are much more likely to de-
vote the resources required to pursue potentially revolutionary
ideas.
a. “1994 Rolling Stone Interview of Steve Jobs,” http://holykaw.alltop.com/ 1994-rolling-stone-interview-of-steve-jobs
b. Robert X. Cringely, Triumph of the Nerds, PBS documentary, New York, 1996. c. Ibid.
100092 08 175-192 r1 rr 5/13/11 10:02 AM Page 178
179 People
P e
rc e
n t
g ro
w th
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
15.00%
20.00%
10.00%
5.00%
0.00% P&G prior to A. G. Lafley 1984–2000
Lafley tenure
2001–2009
23%
35%
F I G U R E 8 - 3
Innovation premium for Procter & Gamble
to get back on track, but between 2005 and 2009, Apple’s innovation
premium jumped to 52 percent.
In similar fashion, P&G performed well as an innovative com-
pany before Lafley became CEO in 2000, as evidenced by the
23 percent average innovation premium from 1985 to 2000. How-
ever, Lafley’s innovation focus boosted P&G’s innovation capabil-
ity and delivered a 35 percent innovation premium, on average,
during his 2001 to 2009 tenure. (See figure 8-3.)
Lafley, and other innovative leaders we studied, very con-
sciously set the example by modeling innovation behaviors to help
make them matter to others. “Lafley always gets out in market-
places and wants consumer interactions,” says Gil Cloyd, a mem-
ber of his top management team and former chief technology
officer. “He’s genuinely curious about it. This becomes important
because it’s not just role modeling of something you’d like, but it’s
an infectious curiosity to discover how we can provide an ever
more delightful experience for our consumers, improving lives in
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180 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
yet another way.” By simply watching Lafley’s everyday actions and
noticing how much time he personally spent generating new ideas,
his team (and organization) “got it” about innovation. Lafley also
demonstrated that innovation is just not an individual game but,
in the end, a powerful team effort. “You remember the times when
nobody knew what to do and you came through with something
that people didn’t think you could come through with or when
you create something that people didn’t think could be created,”
Lafley observed. “When this happens in our company, it’s never
one person. It’s always a group . . . Getting everybody in the same
boat, rolling in the same direction, that is really what’s fun. Espe-
cially when you win.”
These innovation premium data on CEO impacts at Apple and
P&G reflect a key finding in our research that if top executives
want innovation, they need to stop pointing their fingers at some-
one else and take a hard look at themselves. They must lead the
innovation charge by understanding how innovation works, im-
proving their own discovery skills, and sharpening their ability to
foster others’ innovation. Moreover, they must actively populate
their team and organization with enough high-discovery-quotient
individuals to truly make innovation a team game.
Building a Team and Organization with Complementary Skills
While ensuring that your organization is populated with folks who
are good at the five discovery skills is important, we don’t want to
leave the impression that discovery-driven people are all that matters
in a team or organization. The fastest way for an organization to die
is to stop executing. Discovery-driven leaders need the delivery-
driven skills of people who excel at execution. Not only do effective
leaders of innovative teams understand their own constellation of
discovery and delivery skills, they actively balance their weaknesses
with other people’s strengths.
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181 People
Complementary Discovery Skills Can Boost Innovation
We accidently discovered something about the composition of
highly innovative teams after Ross Smith, director of Windows
Core Security at Microsoft, and Dan Bean, a member of the
Microsoft Defect Prevention (DP) team, called us to discuss team
innovation. Smith was managing roughly seventy teams (ranging
from four to eight people) working on various issues related to
Window’s security. He had observed that one of those teams, the
six-person DP team, had been the most innovative for the past
five years. The team had pioneered a number of innovations, but
perhaps the most valuable were clever “productivity games” for
enticing users to give feedback on key Microsoft products.
For instance, the DP team members created whimsical
games that presented each of the Windows dialogues in a dif-
ferent language for native speakers. To get feedback, they sent
the game to the thousands of Microsoft employees who spoke
a language other than English, from Chinese to Slovakian. When
playing the game, users received a colored electronic pen for
highlighting language errors and dragging them to a “no good”
bucket (for which they gained extra points). They could also type
in comments when dragging errors to the bucket. “These pro-
ductivity games had huge impact,” Smith told us. “We saved mil-
lions of dollars and improved quality to a level that we’ve never
seen before.”
Smith wanted to better understand why this particular team
showed greater innovation results than some other teams
staffed with equally talented software engineers. One answer,
Smith believed, was that the DP team had developed a high
level of mutual trust through active, focused effort. Another
important ingredient—first noticed by team member Bean—was
(continued)
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182 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
that team members seemed to possess complementary dis-
covery skills. We tested and confirmed Bean’s hypothesis with
our 360-degree innovator’s DNA assessment.
Specifically, we found that each team member excelled at a
different discovery skill. Smith excelled at associating, Bob Mus-
son at questioning, Bean at questioning and observing, Joshua
Williams at networking, and Harry Emil at experimenting. Thus,
the team displayed a collective discovery aptitude that was ex-
tremely high, thanks to team members’ complementary discov-
ery skills. In short, the team achieved higher synergies in
discovery because team members brought different novel in-
puts to the team through different discovery skills. “All I know,”
says Bean, “is that the discussions we have in this team are the
most creative and stimulating I have run into at Microsoft. And
that makes it really fun to work in the team.” It also didn’t hurt that
team leader Smith, according to team members, is someone who
“trusts his people,” “encourages folks to come up with new ideas
and take risks,” “values independent thinkers,” “encourages and
inspires new ideas,” and “evangelizes the work of others and has
a tendency to downplay his own contribution.” In short, Smith has
done exactly what a good leader does to create a safe space for
others to innovate (more on this in chapter 9).
Beyond Microsoft, we noticed similar patterns in other highly
innovative teams. When complementary discovery skills exist,
the rich skill diversity increases the team’s overall ability to inno-
vate. Thus, the team’s capacity to generate new ideas consis-
tently outstrips the ability of either any individual team member
or another team when team members excel at the same dis-
covery skill (e.g., networking is the primary source of new ideas
for all team members). Moreover, when different team members
shine at different discovery skills, they can learn more from each
other, creating further innovation synergies.
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183 People
For example, during the highly successful 1990 to 2005 run at
Dell Computer, Michael Dell engaged in a frequent tug of war
between discovery and delivery with then president Kevin Rollins.
Dell recalled:
I gave Kevin a Curious George stuffed animal. The Curious
George is for Kevin to ask questions, to be a little more
inquisitive. Kevin responded by giving me a toy bulldozer
driven by a little girl with a huge smile on her face. Some-
times I’ll get really excited about an idea and I’ll just start
driving it. Kevin put the bulldozer on my desk, and it’s a
signal to me to say “Wait a second, I need to push it a little
more and think through it for some others and kind of
slow down on this great idea that I’m working on.” We
don’t use them that much, but they’re subtle little jokes
between us.
Rollins acknowledged that Dell and he played different roles,
telling us, “Michael simply owns more of the entrepreneurial juice
stuff. He has an idea a day, an hour. In big companies, you can’t do
an idea a day. I’m the governor of the innovation engine.”
Similarly, eBay’s Pierre Omidyar was aware that he was strong at
discovery but weak at execution. Identifying this need for stronger
execution skills on his team, he invited Jeff Skoll, a Stanford MBA,
to join him. “Jeff and I had very complementary skills,” Omidyar
told us. “I’d say I did more of the creative work developing the prod-
uct and solving problems around the product, while Jeff was in-
volved in the more analytical and practical side of things. He was
the one who would listen to an idea of mine and then say, ‘OK, let’s
figure out how to get this done.’” Omidyar grasped the power of
complementary skills when building a top management team at
eBay.
The takeaway from these stories is that successful innovation as
a team requires the ability to generate novel ideas and the ability to
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184 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
execute those ideas on the team. Both skills sets are necessary. Smart
leaders know this and consciously think about team composition,
making sure the team is balanced enough in terms of discovery and
delivery skills. Figure 8-4 shows discovery and delivery skills tem-
porarily “in balance” on a team. But remember that perfect balance
is not necessarily the perfect solution.
Sometimes discovery skills should weigh more heavily on a
team or throughout an organization (particularly during the
founding stage of an organization or if the team is charged with
product development, marketing, or other business development
tasks). At other times, delivery skills are relatively more important,
and those skills should be given greater weight on the team (during
growth or the mature stage of a business, or in functional areas re-
lated to operations and finance). In figure 8-5, we show the average
desirable team profile for different types of high-performing teams
in organizations (assuming each team averages about the seventi-
eth percentile across both skill sets).
People in product development and marketing teams should
score, on average, higher on discovery than delivery skills (though
having some team members who excel at execution might work
best). In contrast, people on finance and operations teams should
F I G U R E 8 - 4
Balancing discovery and delivery skills in a team or company
Discovery-driven
• Associating
• Questioning
• Observing
• Idea networking
• Experimenting
Delivery-driven
• Analyzing
• Planning
• Self-disciplined
• Detail-oriented implementing
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185 People
Lo w
ba la nc
ed
Hi gh
ba la nc
ed
100
1007550250
75
50
25
D is
c o
ve ry
s k
ill s
(P er
ce n til
e sc
o re
)
Delivery skills (Percentile score)
Discovery- driven
Delivery- driven
Product development
Operations
Business development
Finance
Marketing
F I G U R E 8 - 5
Desired skills composition in different types of teams
score, on average, higher on delivery than discovery skills (again,
it’s not a bad idea to have a few folks strong at discovery in the
mix). The trick is first knowing who has what skills and then fig-
uring out how to combine complementary strengths within a team
to generate ideas with impact.
The relative importance of discovery and delivery skills on a
particular team also varies with the team’s particular role in the
innovation funnel (or innovation cycle). For example, at BIG, a
company that uses the business model of the American Idol TV
show to find inventors and bring their products to market, CEO
Mike Collins wants a different mix of discovery and delivery skills
at each stage of the innovation funnel.
Stage one at BIG is “idea generation,” when his organization
actively looks for innovative ideas from inventors around the
world. His company engages in “big idea hunts” through road
shows in different cities, Internet and newsletter solicitations, and
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186 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
connections with professional inventor groups. Over time, BIG has
developed a network of professional inventors that it taps not only
for their own product ideas, but also for BIG’s clients. BIG makes
money from taking inventor’s ideas to market and by using its
inventor network to come up with new product ideas for specific
clients wanting new product ideas from outside their companies.
In effect, companies outsource new product development to BIG
just as they outsource innovative product designs to IDEO.
During stage two, called “winnowing,” Collins invites (and
pays) individuals with strong discovery skills to participate on a
panel to listen to inventors’ ideas and evaluate whether a new prod-
uct idea shows market potential. Over time, he’s learned that the
panel works best when it includes people with strong discovery
skills, because they see beyond the initial idea in search of ways
to improve it. “On one occasion, we were evaluating ideas for new
toys, and we asked a senior merchandising executive from a major
toy retailer to participate on the panel,” Collins told us. “But he was
useless because all he could do was analyze why an idea wouldn’t
work. He was all about execution, and at the idea stage, you need
people who can find creative ways to make an idea work.” Collins’s
experience suggests that the first two stages of the innovation fun-
nel need people very strong at discovery, but these skills become
less critical in stages three and four.
Stage three is the “refinement” stage when the idea is tested to
see whether it works in the marketplace. Designers and engineers
collaborate to help design and build product prototypes. Marketers
assess whether a sizable market exists for the product. Manufac-
turing specialists (often in China) analyze the product’s cost at dif-
ferent unit volumes. These tasks require stellar execution skills first
and foremost. However, even at this stage, Collins and others with
strong discovery skills serve a critical role in searching for innova-
tive adaptations to the product, making it even more desirable to
customers.
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187 People
Stage four is the “capture value” stage when the product launches
to the market. While this stage centers mostly on delivery in terms
of manufacturing, marketing, distributing, and selling the product,
discovery skills can still generate value as BIG searches for innova-
tive ways to manufacture, market (brand), distribute, and sell (price)
the product. “You can find ways to innovate at any stage of the
innovation process,” says Collins. In fact, BIG is quite innovative in
this final stage of the innovation funnel, using a wider variety of dis-
tribution channels for its inventor-produced pipeline of products
than a typical company.
To illustrate, BIG’s early search for new product ideas was in the
product category of toys. Once BIG had gone through the first three
stages of sourcing and developing a new toy idea, it then would face
the question: what is the best way to capture value from this prod-
uct (e.g., manufacture, market, sell)? Some new toy products fit well
with Toys “R” Us, the retailer you would normally think about as
the best way to distribute new toys. In these cases, BIG might source
production from China and let Toys “R” Us take it from there. How-
ever, rather than just rely on Toys “R” Us or Walmart (the big-box
toy retailers in the U.S.), BIG found that some new toy ideas were
better suited for the Learning Company, Basic Fun, the National
Geographic catalog, QVC, Brookstone (toys for adults), or numer-
ous other channels. It also licensed toy ideas to Hasbro, Mattel, or
other toy manufacturers that were better positioned to take a par-
ticular toy to market due to their particular resources and processes.
In short, BIG was far more innovative in the final stage of the
innovation funnel compared to a toy company like Mattel, which
basically took all its toys to big-box retailers like Toys “R” Us or Wal-
mart. The point is that, while you might need more discovery skills
at the early stages of the innovation process, you should deploy (or
at least sprinkle) people with strong discovery skills throughout
every team in the organization—and at every stage of the innova-
tion funnel.
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188 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
The Value of Complementary Human, Technical, and Business Expertise
Making sure that innovative teams possess complementary discovery
and delivery skills matters, but making teams multidisciplinary—
comprised of individuals with deep expertise in different disciplines—
also matters in company innovation. To illustrate, consider how
IDEO, the hottest innovation design firm in the world (it has won
twice as many Industrial Design Excellence Awards as any other
firm) staffs innovation design teams. These are teams explicitly
charged with creating an innovative product design or new service
concept.
In general, IDEO works to create multidisciplinary teams com-
prised of individuals who are T-shaped in terms of expertise: deep in
one area of expertise with shallow expertise in multiple areas of
knowledge (as described in chapter 2). Of course, as a design firm, all
IDEO teams have a team member with significant design expertise.
However, IDEO teams also search for individuals with expertise that
falls in one of three domains: “human factors” expertise (to deter-
mine the desirability of an innovative idea), “technical factors” ex-
pertise (to assess the technical feasibility of an innovative idea), and
“business factors” expertise (to evaluate the business viability and
profitability of an innovative idea).
First, IDEO includes a human-factors expert on the team, some-
one with a background in one of the behavioral sciences such as
anthropology or cognitive psychology. This person provides insight
into the desirability of a new product (or service) from the user’s
perspective. The human-factors person orchestrates in-depth obser-
vations of customers to understand the job to be done and to acquire
deep user empathy. For example, when designing a product or serv-
ice for people in wheelchairs, the human-factors person might make
sure that people on the team spend one day experiencing the world
as someone in a wheelchair would. By gaining insight and empathy
into the user experience, the human-factors person brings insight
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189 People
A Lack of Business Innovation May Stifle Technology Innovation
A few years ago, Clayton Christensen received a visit from a few
technology executives at 3M who expressed frustration that in-
novations weren’t getting to market because of a lack of inno-
vation on the business side. 3M has long been known for
innovation, and Christensen knew the company well as a result
of several onsite visits to grasp how innovation works there. Dur-
ing his visits, he found that 3M’s research and development arm
applied the innovation principles described in this book. It hired
people with deep and varied expertise, connected discovery-
driven people with varied technology expertise, and had philoso-
phies that encouraged innovative behavior.
So what was the problem the 3M team brought to Chris-
tensen? They showed him a gift bag that was unlike anything he
had ever seen. If you looked at the bag straight on, it was a
beautiful purple color. If you looked at it at a different angle, it
was pink. Inside it was bright white. By using technologies that
allowed polymers to absorb or repel wavelengths, the team cre-
ated a gift bag that could literally change colors. This seemed
remarkable, but the team was far from elated. “The corporation
doesn’t want to take it to market,” they said. “The market’s not big
enough.”
From Christensen’s view, this was an amazing gift bag. The
market for these types of bags must be huge. Indeed, the world
market for gift bags and boxes is in the billions, but profit mar-
gins in the gift-bag segment are only 30 percent, he was told.
3M’s typical profit margins are 55 percent, and the treasury didn’t
typically fund product launches with lower margins. This led to
the question, what if the team just raised the price on the bags
to reach the target margin of 55 percent? The response was
(continued)
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190 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
into the desirability of an innovative new design. This perspective is
particularly important in early stages of designing a new product or
service.
The technical-factors person brings deep expertise in various
technologies that the team might employ in the design of a new
product or service. This person likely comes from an engineering
or science background. This expertise is important in order for the
team to grasp what technologies are feasible for use in a particular
new product or service design. Technical expertise is particularly
critical after the team has clearly identified the user’s needs (the
job to be done) and then is searching for and deciding on tech-
nologies to provide the optimal solution.
that if the price increased, the market would shrink so much (to
a small niche) that it wouldn’t be big enough for 3M to pursue.
The challenge was finding a way to profitably take this
innovative product to market. But 3M didn’t pursue innovation
on the business side as much as it did on the technology side.
It had created rules about launching products and didn’t
expect innovation on the business side of how it decided to
fund or not fund the launch of a new product.
We’ve observed this challenge elsewhere. Companies rele-
gate innovation to the R&D unit where people should innovate,
but those on the business side should just execute and skip the
same innovation challenge. The result (in 3M and other compa-
nies) is that a lack of business innovation can easily stifle tech-
nology innovation. Not surprisingly, this can deflate folks in the
R&D side of the business. Moreover, the company can miss dis-
ruptive opportunities that it wouldn’t miss if it could only inno-
vative a bit more in how it manufactures, distributes, markets,
prices, or allocates resources to a product.
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191 People
Finally, the business-factors person brings the expertise necessary
to figure out whether an innovative new product or service design
will prove viable in the market. This person likely has a business back-
ground, such as a master’s degree in business administration (MBA)
with expertise in operations, marketing, or finance. Naturally, this
expertise becomes more relevant in the later stages of the innovation
process when a team must determine the optimal way to manufac-
ture, distribute, promote, and price the product for profitability.
By staffing teams with complementary expertise, IDEO can
better look at problems from a variety of angles and discover a new
product or service that is desirable, feasible, and viable. No wonder
it generates so many successful innovations.
Like IDEO, Apple spurs innovation by filling its ranks with peo-
ple who possess various different types of expertise. “Part of what
made the Macintosh great was that the people working on it were
musicians, and poets, and artists, and zoologists, and historians, who
also happened to be the best computer scientists,” says Jobs. “The
reason Apple is able to create products like the iPad is because we al-
ways try to be at the intersection of technology and liberal arts, to be
able to get the best of both.”1 The key point is that innovative com-
panies select a mix of people who possess not only complementary
discovery and delivery skills, but also different expertise and diver-
sity of backgrounds to look at problems through multiple lenses.
In summary, the most innovative companies in the world have lead-
ers who understand innovation at a deeply personal level. They lead
the innovation charge with a high discovery quotient and regularly
contribute innovative ideas to the company. As one executive with
a delivery-driven boss complained to us, “you can’t be all about
execution and expect people to be innovative. It just doesn’t work
that way.” Innovative companies find novel ways to hire discovery-
driven people who have a track record of innovation and a strong
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192 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
desire to change the world. Having a larger number of discovery-
driven people lays the foundation for strong innovation synergies
as discovery- and delivery-driven folks interact well enough to learn
from and support each other. Innovative teams (and companies)
perform best when discoverers honestly appreciate the pivotal role
of those with strong execution skills (and vice versa), especially in
teams staffed with folks possessing complementary skills. Finally,
innovative companies hire and staff teams with people who possess
different types of expertise (preferably with a T-shaped profile) so
that the team or organization can view and solve problems from
very wide angles.
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9
Putting the Innovator’s DNA into Practice
Processes
“We don’t care if you give us a toothbrush, a tractor,
a space shuttle, a chair; we want to figure out how
to innovate by applying our process.”
—David Kelley, founder, IDEO
OUR RESEARCH ON THE WORLD’S most inno-vative companies reveals that the DNA of innovative organizations mirrors the DNA of innovative individu-
als. Just as inventive people systematically engage in questioning,
observing, networking, and experimenting to trigger new ideas, in-
novative organizations develop processes that encourage these same
skills in employees. They also rely on systematic processes to find
people with strong discovery skills who thrive in environments that
embrace their use of those skills. As described in chapter 7, organi-
zational processes reflect a response to recurring tasks that when
193
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194 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
used frequently become taken-for-granted recipes to solve
particular problems. However, for processes to help organizations
generate innovations (e.g., new process, product, service, or busi-
ness ideas) systematically, they must be widely understood and em-
ployed throughout an organization (not just by an innovative
founder or a small number of highly innovative people). In this
chapter, we first discuss how innovative organizations find people
who excel at discovery, and then we examine the processes that en-
courage—even require—employees to question, observe, network,
and experiment.
How Innovative Organizations Find Discovery-Driven People
Leaders of highly innovative organizations understand the critical
need to attract creative people if the company hopes to build a
cadre of innovators at all levels. “In most things in life, the dynamic
range between average quality and the best quality is, at most, two-
to-one.” Steve Jobs discerned. “But, in the field that I was inter-
ested in—originally hardware design—I noticed that the dynamic
range between what an average person could accomplish and what
the best person could accomplish was 50 or 100 to 1. Given that,
you’re well advised to go after the cream of the cream. That’s what
we’ve done. A small team of A+ players can run circles around a
giant team of B and C players. That’s what I’ve tried to do.” So how
do highly innovative companies find employees that rate A+ for
innovation? They look specifically for people who:
1. Show a track record that demonstrates strong discovery
skills (for example, they have invented something).
2. Possess deep expertise in at least one knowledge area and
show breadth in a few others (for example, the T-shaped
knowledge profile of innovators we discussed in chapter 2).
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3. Display a passion to change the world and make a
difference.
Clearly, if companies want innovative ideas from employees, they
should screen for innovation potential in the hiring process. Most
companies rarely do it but highly innovative ones do. They explic-
itly screen candidates for creativity and innovation skills as part of
the new-hire process. For example, at Virgin (number sixteen on the
BusinessWeek list), Richard Branson has made innovation one of six
key characteristics the company evaluates when screening new em-
ployees. To get hired at Virgin, you must demonstrate a “passion for
new ideas,” you must “make your creativity apparent,” and you must
show “a track record of thinking different.” Virgin describes its
people as “easy to spot. They act in unusual ways, as it’s the only way
they know how. But it’s not forced—it’s natural. They are honest,
cheeky, questioning, amusing, disruptive, intelligent, and restless.”
By looking for people who are cheeky, questioning, amusing, dis-
ruptive, intelligent, and restless—and show a track record of think-
ing different—Virgin increases the probability of having a crew of
innovators at every level.
Google (number two on the BusinessWeek list; number six on
our list) has developed a variety of innovative techniques to find
job candidates both bright and curious. To illustrate, Google came
up with a Google Labs Aptitude Test (GLAT), a twenty-one-ques-
tion test that is a somewhat tongue-in-cheek way of screening for
new employees. Some questions focus on evaluating quantitative
ability (one question: “How many different ways can you color an
icosahedron with one of three colors on each face?” Hint: the an-
swer is 58,130,055). Others are designed to test for creativity and
a sense of humor: “In your opinion, what is the most beautiful
math equation ever derived?” Another says: “This space left inten-
tionally blank. Please fill it with something that improves on
emptiness.” People who lack the patience for such frivolity do not
195 Processes
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apply. People who both understand the question and find it amus-
ing and challenging are exactly the kind of people Google wants
to hire.
Another innovative technique for finding qualified and creative
job candidates is Google Code Jam. Launched in 2003, Google
Code Jam is a timed problem-solving contest (tournament) where
all participants compete online to solve the same problems under
the same time constraints. The prize for winning? $10,000 and a
job offer from Google. In fact, in Google’s Code Jam 2006, it
awarded jobs to the top twenty finalists. Of course, being a top-
twenty finalist is no small feat, considering twenty-one thousand
people from all over the world competed in the contest. Through
use of the tournament, Google effectively screens twenty-one thou-
sand worldwide applicants for jobs in a matter of days with a for-
mat that is almost entirely automated. The fact that winners of
Code Jam have come from Russia, Poland, and China shows that
Google is attracting global talent (entrants for Code Jam 2010 came
from 125 countries). While the early qualifying rounds largely test
an individual’s speed in solving computer programming problems,
the final challenge phase, conducted with the a hundred finalists at
Google’s headquarters, asks the participant to demonstrate more
innovative thinking; each contestant attempts to crack the pro-
gramming code of the other participants. This process has been
very successful at helping Google find highly talented programmers
who are passionate about programming and about wanting to work
for Google.
A consistent theme within the most innovative companies was
hunting for people who had invented something, held deep expert-
ise in a particular knowledge area, and demonstrated a passion to
change the world through excellent products and services. Amazon
sends a powerful signal to any potential new hire that it expects and
values invention by questioning them about something they have
invented. IDEO (frequently in Business Week’s top 25 most inno-
196 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
100092 09 193-214 r1 rr 5/13/11 6:56 PM Page 196
vative, but not on our list because it is a private company) looks for
people with deep expertise, whether in psychology, anthropology,
design, engineering, or whatever, in part because it demonstrates
that they are passionate about something. Apple looks for A+ talent
by explicitly looking for people with a demonstrated track record of
excellence. “We wanted entrepreneurs . . . high energy contributors
who defined their previous role in terms of what they contributed
and not what their titles were,” said Sharon Aby, a former recruiter at
Apple. “The main quality: expectation of excellence . . . As recruiters,
we didn’t settle. I fought with some managers who wanted to fill a
role quickly to get a project moving, but if it took six months to find
the best, they’d have to wait. We looked for people who were excited
to create new things. Our motto was, ‘Surprise me.’ ”1
Processes That Mirror the Discovery Skills of Disruptive Innovators
Highly innovative companies have a culture that reflects the leader’s
personality and behaviors. In other words, innovative leaders often
imprint personal behaviors as processes within the company. Here
are some examples of how innovative leaders institutionalize
processes to encourage questioning, observing, networking, and
experimenting throughout their organizations.
Discovery Process #1: Questioning
By now, virtually anyone working in a manufacturing environment
has heard of lean manufacturing or, as it is known in the automo-
bile industry, the Toyota Production System (TPS). The now-
famous system was a leapfrog innovation over the mass-production
techniques pioneered by Henry Ford. While Toyota (number four
on the BusinessWeek list) certainly stumbled on quality in 2009,
the original innovation propelled Toyota to become the global
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198 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Processes Can Turn “B” Players into “A” Players (and Vice Versa)
Jobs says Apple always goes for A+ players. Great advice—but
doesn’t every company try to do this? What if you can’t attract A+
players though? And even if you can get them, does this ensure
that they will perform? An intriguing study by Harvard’s Boris
Groysberg, Ashish Nanda, and Nitin Nohria provides some inter-
esting answers to these questions.a They studied the perform-
ance of stock analysts over time, particularly “star” performers
who moved to a different company. Star stock analysts were
identified by rankings provided by Institutional Investor (rankings
based on criteria such as earnings estimates, stock selection,
and written reports). Analysts with higher rankings delivered more
accurate stock forecasts, and their reports produced bigger
stock price impacts. The same star analysts who moved to an in-
vestment firm with less effective processes and resources
though, experienced an immediate decline in performance that
persisted for at least five years. Star analysts who moved be-
tween two firms with equivalent processes and resources also
exhibited a performance drop, but only for two years. Thus, a
firm’s resources and processes play an important role in star
analysts’ performance. The researchers found that some firms,
like Sanford Bernstein, were far more successful at growing stars
because of key processes established to train, mentor, and sup-
port analysts. These findings are consistent with a study of 2,086
mutual fund managers that reported that 30 percent of a mutual
fund’s performance could be attributed to the individual and
70 percent was due to the manager’s institution.
Most of us possess an instinctive faith in talent and genius,
but it isn’t just people who make organizations perform better.
The organization—its processes and philosophies—can also
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make people perform better. Companies can turn B people
into A performers—or worse, A people into B performers—
depending on its innovation processes and resources.
199 Processes
automotive leader in both revenues and profits for decades. Taiichi
Ohno, a former engineer at Toyota who is known as chief architect
of TPS, put a five-whys questioning process at the core of his
innovative production system. Many of the world’s most innova-
tive companies have adopted variations of the process.
The five-whys process requires that when confronted with a
problem, ask yourself why at least five times to unravel causal
chains and spark ideas for innovative solutions. To illustrate, in
2004, Bezos was visiting an Amazon fulfillment center with his
leadership team. During the visit, he heard about a safety incident
when an associate had seriously damaged his finger on a conveyor
belt. When Bezos learned of the incident, he walked to the white-
board and began to ask five whys to get at the problem’s root
cause:
Question 1: Why did the associate damage his thumb?
Answer: Because his thumb got caught in the conveyor.
Question 2: Why did his thumb get caught in the conveyor?
Answer: Because he was chasing his bag, which was on a
running conveyor.
Question 3: Why was his bag on the conveyor and why was
he chasing it?
Answer: Because he placed his bag on the conveyor, but it
then turned on by surprise.
a. Boris Groysberg, Ashish Nanda, and Nitin Nohria, “The Risky Business of
Hiring Stars,” Harvard Business Review (May 2004).
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Question 4: Why was his bag on the conveyor?
Answer: Because he used the conveyor as a table for his bag.
Question 5: Why did he use the conveyor as a table for
his bag?
Answer: Because there wasn’t any place near his
workstation to put a bag or other personal items.
Bezos and his team determined that the likely root cause of the
associate’s damaged thumb was needing a place to put his bag but
not having one around he used the conveyor as a table. To eliminate
further safety incidences, the team provided portable, lightweight
tables at the appropriate stations and additional safety training to
alert associates about the dangers of conveyor belt work. While this
innovation was minor, one Amazon member, Pete Abilla, said it was
a transforming experience “that I carry with me to this day.” Abilla
went on to describe several things that he learned.
1. “Bezos cared enough about an hourly associate and his
family to spend time discussing his situation.
2. He properly facilitated the five-why exercise to arrive at a
root cause: he did not blame people or groups (no finger
pointing allowed).
3. He involved a large group of stakeholders, demonstrated
by example, and arrived at a root cause (solution).
4. He is the founder and CEO, yet he engaged in the dirt and
sweat of his employees’ situation.”
“In that simple moment, he taught all of us to focus on root
causes,” says Abilla. “He demonstrated by example the importance
of questioning.”2 If Bezos were the only one to use the five-whys
method, then it wouldn’t be a process at Amazon that consistently
contributes to innovations. Instead, Amazon teaches the five-whys
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questioning process in training programs, and employees frequently
rely on it when problem solving.
Our observations of Apple (number one on the BusinessWeek
list; number five on our list) suggest that while it isn’t formalized,
you could almost say the company uses a five what-ifs process as it
brainstorms ways to wow customers. The iPad might never have
been created had it not been for Jobs and his leadership team ask-
ing effective what-if questions. If they had asked, “How can we
build a better e-book reader for the iPhone?” the innovative iPad
might never have been created. Instead, Jobs reportedly asked,
“Why isn’t there a middle category of device, in between a laptop
and a smart phone? What if we build one?”3 The what-if question
sparked a discussion about a middle category that would have to be
far better than either a smartphone or laptop in doing some key
tasks like browsing the Web, enjoying or sharing photographs, and
reading e-books. Consistently asking what-if questions is a key part
of the culture at highly innovative companies.
Discovery Process #2: Observing
One company that turned keen observations into gold is medical
robot maker Intuitive Surgical (number two on our list). Fred
Moll, a surgeon turned entrepreneur, used his firsthand observa-
tions as a surgeon to develop robots that can perform surgery. Moll
licensed some technology from SRI, a company that had worked
on a Pentagon-funded project to bring the operating room to the
battlefield without putting surgeons in harm’s way. The key was to
ensure that robots could precisely mimic what surgeons wanted
robots to do.
To refine the da Vinci robot prototype, Moll and Robert Young
(an electrical engineer and founder of Acuson, a maker of ultrasound
devices) mounted forty sensors along the joints of the flexible “mas-
ter” joysticks. The sensors register the surgeon’s hand movements,
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which are conveyed as digitized information to a computer and
recalculated as wrist, shoulder, and elbow positions thirteen hundred
times a second. Those movements are transmitted electromechani-
cally to robotic arms and then to the “slave” handles that manipulate
the surgical instruments. Moll’s intent was for the robots to be pre-
cise, but he knew that surgeons lack perfect hand control. So the
computer filters out hand tremors, making the da Vinci robot
extremely precise. Even more important, Intuitive Surgical’s product
developers continue to observe surgeons to create new da Vinci
system tools, allowing medical robots to assist in doing more and
different types of surgeries.
Keyence Corporation (number twenty-three on our list), a
Japanese company that specializes in factory automation devices
such as electronic sensors, makes sure that 25 percent of the de-
vices it sells every year are new products and more advanced than
anything rivals can offer. New product ideas surface mostly from
the hands-on experience of seven thousand salespeople who
proactively head to the production floors of some fifty thousand
customers. Salespeople are required to spend hours observing cus-
tomer manufacturing lines to gain insights into their problems. By
watching the production lines of instant noodle makers, Keyence
learned that noodle quality was compromised because they were
manufactured at variable thicknesses. So Keyence developed laser
sensors that could measure noodles to 1/100th of a millimeter.
Instant noodle makers now depend on these sensors to keep noodle
thickness consistent. Each year, thousands of observations like
these by salespeople lead to hundreds of new factory automation
devices for customers.
Beyond observing customers, our leading innovators also find
ways to observe other companies’ practices to spark new ideas. For
example, in 2008, Google and P&G (number six on the BusinessWeek
list; number eighteen on our list) did an employee swap to spur in-
novation, despite the fact (or perhaps because of the fact) that the
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companies are quite different (P&G is a consumer products giant
that spends $9 billion on advertising each year but very little online,
whereas Google is an online search giant that makes most of its
money through online advertising). Roughly two-dozen human
resource and marketing employees spent weeks sitting in on each
other’s training programs and meetings where business plans got
hammered out. The initiative allowed for up-close observation of
each other’s practices—with some interesting results.
For example, when Google observers watched P&G launch an
ambitious new promotion for its Pampers line (using actress Salma
Hayek), they were stunned to learn that Pampers hadn’t invited any
“mommy bloggers”—women who run popular Web sites about
child-rearing—to attend the press conference. “Where are the blog-
gers?” Google staffers asked in disbelief. In response, Pampers invited
more than a dozen mommy bloggers to visit P&G’s baby division,
where they toured the facilities, met diaper executives, and got a
primer on diaper design. The bloggers claimed to have drawn
anywhere from a hundred thousand to 6 million visitors to their
Web sites.
Another result of the swap was an online campaign inviting
people to make spoof videos of P&G’s “Talking Stain” TV ad and
post them to YouTube. The original ad for Tide to Go stain-
removing pens, aired during a Super Bowl, shows a job candidate
being drowned out by a talking stain on his shirt that babbles non-
sense every time he tries to speak during the interview. Spoof cam-
paigns can be risky because people might post something rude
about your product or not participate at all. But with guidance
from Google, P&G provided prospective spoofers a tool kit of of-
ficial logos. In the end, 227 spoofs turned up, and a few were good
enough to air on TV. The campaign was so successful that Tide
plans to use more consumer-generated content in the future.
IDEO’s David Kelley best summed up the importance of
observing processes: “Asking questions of people who were there,
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who should know, often isn’t good enough. It doesn’t matter how
smart they are, how well they know the product or opportunity. It
doesn’t matter how many astute questions you ask. If you’re not in
the jungle, you’re not going to know the tiger.”
Discovery Process #3: Idea Networking
Not surprisingly, innovative companies, like innovative people, are
also great idea networkers. They develop formal and informal net-
working processes to facilitate knowledge exchanges both outside
and inside the company.
Internal Networking
Most companies have processes for sharing ideas among employ-
ees, but innovative companies take it to the next level. One popular
internal networking process at innovative companies comes from
the American Idol model for finding new ideas. Basically, this process
involves challenging employees to generate and submit innovative
ideas, which a panel of judges screens and selects. For example,
Google holds an “Innovator’s Challenge” four times each year. In
this competition, employees submit ideas for top management re-
view; winning ideas receive the resources necessary to maintain mo-
mentum. Google also has a process for sharing new ideas internally
that facilitates networking. Marissa Mayer, director of consumer
products and a champion of innovation at Google, holds regular
brainstorming sessions during which engineers have ten minutes to
pitch new ideas. Mayer and a group of a hundred others discuss the
idea. These sessions try to build on the initial idea with at least one
new complementary idea per minute.4 They have an established
process for deciding which projects are refined enough to present
to the company founders (though they do not reveal the process).
Innovation at Google is very democratic; it lets market forces de-
termine which ideas move forward and which don’t. Once projects
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and ideas post to an internal electronic idea board, individuals
throughout the company rate the ideas and provide feedback.
Employees can also choose to spend 20 percent of their time work-
ing on projects of their own choosing. Google executives believe that
the market forces inside the company are strong enough to reward
good ideas and punish bad ones, much as the “real” market would if
the ideas were actually developed and launched. Google also facili-
tates internal networking through free food. Google Cafe provides
tasty, healthy, free lunches and dinners (prepared by the Grateful
Dead’s former chef Charlie Ayers) to employees. “The free food at
Google serves an important function beyond giving employees access
to good, healthy food,” Gagan Saksena, a former software engineer at
Google, told us. “It’s totally possible for you to be sitting by someone
who has been working in an area that you were not interested in. And
then suddenly a discussion with that person may trigger some new
ideas for both of you.”
External Networking
Over the last few years, companies have increasingly looked out-
side their own walls for new ideas. The term open market innova-
tion has been used to describe this phenomenon. When Lafley
became CEO in 2000, he established a goal of increasing the per-
centage of P&G’s new product ideas through external sources from
10 percent to 50 percent. By 2006, 45 percent of new product
ideas came from external sources, and P&G had reduced its R&D
from 4.8 percent of sales to 3.4 percent of sales, while launching
hundreds of products based on externally sourced ideas. The com-
pany experienced this growth in external idea generation through
its Connect + Develop (C&D) initiative. Through C&D processes,
P&G teams work with independent researchers, other companies,
and sometimes even competitors to generate ideas.
P&G employs a number of different processes to gather ideas
from these external sources. For example, the company uses
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NineSigma and InnoCentive, third-party matchmakers that link
companies like P&G with outside technology. These companies
help P&G prepare technical briefs describing problems it is trying
to solve and then anonymously sends these briefs to thousands
of researchers around the world. The process brings P&G into
contact with people providing solutions on a contract basis. C&D
has helped P&G develop many new products such as Swiffer
WetJet, Olay Daily Facials, Crest Whitestrips, Iams Dental Defense,
Mr. Clean AutoDry, and Max Factor Lipfinity.
Consumer products giant Reckitt Benckiser (RB) (number
eight on our list) has seen similar results using its IdeaLink Web
site where it lists its “most wanted” jobs that need to be done and
requests solutions. For example, RB launched Finish Quantum, a
new dishwasher detergent designed to provide maximum clean
and shine. The driving force behind Quantum’s “clean and shine”
performance is three highly active chemical agents that are nor-
mally incompatible. The challenge was to combine them in a sin-
gle product but hold them apart. Working closely with external
experts, RB developed an innovative polymer system and process-
ing technique to create a dissolvable shell with three chambers that
separate each agent until it’s needed.
Beyond networking for solutions to particular technical prob-
lems, RB also networks with entrepreneurs to help launch entirely
new products using RB brands. RB does this by actively licensing
its brands to entrepreneurs or companies with access to sales chan-
nels or product competencies that RB believes will add value to
the equity of its brands. If an entrepreneur has a good new prod-
uct idea, RB promises to complete the evaluation process and give
a decision on licensing within three months. Through processes
like these, RB’s innovation pipeline is so full that a new product
launches or a product formula changes every eight hours. No won-
der CNBC named CEO Bart Becht the European business leader
of the year in 2009.
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Discovery Process #4: Experimenting
Companies with high innovation premiums also institutionalize
experimentation. For example, Monsanto’s (number nine on our
list) premium results from creating genetically engineered seeds
that make crops drought resistant and immune to herbicides and
insects. It’s even working on making a lettuce with the crunch of
iceberg and the nutrients of romaine, and heart-healthy soybeans
with omega-3 (fish) oil. Its biotech crops come out of the same
genetic engineering revolution that produced companies like
Genentech and Amgen.
How does Monsanto do it? One secret is innovative software
that allows for digital experimentation with seed genetics. Monsanto
uses software, which it calls the “molecular breeding platform,” to
accelerate plant production to bring higher yields and herbicide
resistance. This custom software—with the help of robotics and
data visualization capabilities—tracks terabytes of information about
plants down to the genotypes of individual seeds. Instead of spend-
ing years in planning and trial and error, Monsanto can use these
digital planting experiments to predict good and bad crops and
quickly get the information to researchers. Experimentation has been
key to producing innovative seeds that have captured 90 percent of
the U.S. soybean crop and 80 percent of corn and cotton crops.
Like Monsanto, Beiersdorf Group (number fourteen on our
list), maker of Eucerin and a host of other skin-care products,
invests considerable resources in experimenting with new
products—and has done so since 1911 when it first launched Nivea
facial creme. Beiersdorf develops most products at its Hamburg
research center, the largest and most advanced of its kind in
Germany (and perhaps the world). The research center’s work is
symbolized by the unusual architecture of the auditorium—
known by resident researchers as the “philosopher’s stone”—that
is modeled on the structure of a skin cell.
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The Hamburg research center incorporates a test center where
it tries out the effectiveness and tolerance of new skin products on
some six thousand volunteers every year. The test center contains
dozens of bathrooms and examination rooms with technology
that can measure even the smallest changes in skin-cell structure.
This facility enables testers to use products under real-life condi-
tions, and Beiersdorf researchers to carefully monitor and docu-
ment the effectiveness of various products. In one case, Beiersdorf
discovered that testers weren’t getting the necessary UV protection
from sunscreen because they weren’t applying it properly and, in
most cases, they applied far too little. By experimenting with cus-
tomers using sunscreen (and by using an innovative method by
which the amount of UV protection on the skin is made visible
and can be measured), Beiersdorf researchers made adjustments in
consumer education and the products themselves to help cus-
tomers achieve optimal protection.
Of course, customer experiments happen only after Beiersdorf
runs its own experiments. It tests each raw material and each com-
bination of substances—including full cosmetic formulas—using
special methods to ensure that they pose no health threat and are
compatible with skin. It does this by testing cell cultures, as op-
posed to animal testing (typical in other companies). Beiersdorf ’s
experimenting processes help it launch between 150 to 200 new
products and apply for 120 to 150 new patents each year.
Amazon’s Bezos also imprinted his penchant for experiment-
ing on his company. “You need to do as many experiments per unit
of time as possible,” says Bezos. “Innovation is part and parcel with
going down blind alleys. You can’t have one without the other. But
every once in a while, you go down an alley and it opens up into
this huge, broad avenue . . . it makes all the blind alleys worth-
while.” One way Amazon conducts small experiments is by offer-
ing a pilot product or service to half of its customers and compares
their response to the other half. In similar fashion, Google has
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institutionalized experiments by using “beta” labels to release
products early and often for public trials, allowing Google to
quickly get direct customer feedback. It pursues innovation by
having hundreds of small teams pursue—and pilot—new projects
simultaneously. No wonder Google creates so many innovative
new product and service offerings.
Combining Discovery Processes to Produce Innovations
Although we can deploy innovators’ DNA skills as separate processes
to spark new ideas within teams or organizations, we can also use
them in a connected way as a system. Innovation design firm IDEO
does just that in teams. Kelley attributes IDEO’s success at innovat-
ing to its team processes. “We’re experts on the process of how you
design stuff,” Kelley says. “We don’t care if you give us a toothbrush,
a tractor, a space shuttle, a chair; we want to figure out how to inno-
vate by applying our process.”5 So what processes does IDEO rely on
to innovate? IDEO teams start with a questioning process, move to
observing and networking processes to gather data about their initial
questions, and conclude with an experimenting process where in-
novative ideas emerge and evolve through rapid prototyping. In 1999
the late-night news show Nightline highlighted how IDEO used these
processes to completely redesign a shopping cart in five furious days.
Today, IDEO takes the same approach in its quest for more innova-
tive products and services with a variety of clients. For example, the
processes formed the core of IDEO’s recent work with Zyliss, a maker
of kitchen products, to completely redesign its kitchen gadget line,
from cheese graters to pizza cutters to mandolines (slicers).
Process #1: Questioning
The IDEO project team began its quest for an innovative cheese
grater (or pizza cutter, or mandoline) by asking a series of diverse
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questions to better understand the problems associated with using
traditional cheese graters. What are the problems with cheese
graters? What don’t people like about existing cheese graters? How
important is safety? What other things do people want to grate
with a cheese grater? Who are the “extreme users” of cheese graters
(highly skilled and highly unskilled users) and how do their needs
differ? As far as kitchen gadgets go, extreme users are cooks and
chefs (those using kitchen gadgets for hours each day) as well as
first-time or rare users of kitchen gadgets, such as college students,
children, or the elderly.
While IDEO teams didn’t use our QuestionStorming method
per se (see chapter 3), the team’s initial process looked very simi-
lar and centered on asking questions to better understand what to
look for as they shifted to the data-gathering phase of observing
and networking. As the team members asked questions, they wrote
them on small sticky notes to easily rearrange and prioritize them.
Matt Adams, a project leader at IDEO, told us, “By having the right
questions, it becomes clearer how you might go about answering
those questions.” Then IDEO teams gained a much better sense of
“what to ask, how to ask it, and what kinds of people to ask” as
they moved to the next processes, observing and networking.
Process #2: Observing
This phase involved sending the IDEO design team members out
into the field where they observed and documented customer
experience firsthand. “Our process is to go in and try to really
understand the people that you are designing for,” says Kelley. “We
try and look for a latent customer need, a need that’s not been seen
before or expressed in some way.”6 So the Zyliss team spent hours
and hours observing various product users, particularly extreme
users, in Germany, France, and the United States, trying to intuit
what they were thinking and feeling. They took photos and videos
of customers using kitchen gadgets to document what they noticed.
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Through observations, the team captured many problems
with using traditional kitchen gadgets. For example, they saw that
traditional cheese graters easily clogged, were hard to clean, and
often required considerable dexterity for safe use. They noticed
that the mandoline, a slicer well beloved by advanced cooks,
presented severe safety hazards due to extremely sharp blades
being exposed. They looked for ways to optimize ergonomics
(ease of use), cleanability, and functionality. For example, they
carefully observed hand and arm movements to make subtle
adjustments in handle shape or tool angle for tremendous
ergonomic benefit.
Process #3: Networking
As IDEO team members observed, they also talked to as many prod-
uct users as they could about kitchen gadgets they were using. In
particular, they visited with users while they were operating a par-
ticular kitchen gadget, because this is when users are most likely to
offer ideas or insights about things they like and hate about it. They
especially like to talk to “experts” (e.g., full-time professional chefs
or highly competent home cooks). They are the most demanding
and difficult-to-please users and often have great product improve-
ment suggestions.
Through unscripted conversations, IDEO team members
gained critical insights for designing novel kitchen gadgets. They
tried to gain deep empathy to the point that they could champion
a particular user, such as a chef. They tried to understand what
she loves, what her challenges are, and what’s really important to
her, so they could share that person’s story later with other team
members. Peter Killman, a project leader at IDEO, says that dur-
ing the observing and networking phase, IDEO teams “go out to
the four corners of the earth and come back with the golden keys
of innovation.”7 Those keys, observation and idea networking, help
unlock the doors to innovative ideas.
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Process #4: Brainstorming Solutions
and Associating—the Deep Dive
The next phase involved bringing all the insights acquired through
observation and interviews back to a brainstorming session that
IDEO calls a “Deep Dive.” During the Deep Dive brainstorming
session, everyone openly shared all the acquired knowledge during
the data-collection phase (called “downloading”). It’s basically a
storytelling session with lots of details about individual lives, in
which team members capture insights, observations, quotes, and
details, and share photos, videos, and notes.
The team leader facilitated the discussion, but there are no real
titles or hierarchy at IDEO. Status comes from creating the best
ideas, and everyone gets an equal opportunity to talk. After they
shared ideas, the team members brainstormed design solutions to
the problems they’ve witnessed. To actively support associational
thinking during the brainstorming phase, IDEO maintains a Tech
Box at every office (full of a fantastic range of odd, unrelated things
from model airplanes to Slinkies). They spread the items out in
front of the team to stimulate associational thinking as they brain-
storm innovative product designs.
Process #5: Prototyping (Experimenting)
The final phase was “rapid prototyping,” in which designers built
working models of the best kitchen gadget ideas that emerged
from the brainstorming session. Kelley describes the value of a
prototype as follows: “You know the expression ‘a picture is worth
a thousand words.’ Well, if a picture is worth a thousand words,
then a prototype is worth about a million words . . . Prototyping
is really a way of getting the iterative nature of this design going
through feedback from others. If you build a prototype, other
people will help you.”8
IDEO took its kitchen gadget prototypes to a variety of different
product users—from chefs to college students to children—for
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feedback. For example, the new cheese grater design has a large
drum to grate cheese as it rolls and can grate more cheese (or choco-
late or nuts) with less cranking. An optimized, clog-resistant tooth
pattern provides maximum grating with minimal resistance for
older users and people with small hands. The foldable and oppos-
able hand crank makes for efficient drawer storage and for easy use
by right- and left-handed users. These innovations are refined with
each new prototype because IDEO “builds to think and thinks to
build,” as Matt Adams put it. Taking the prototype out for a test drive
is the fastest way to get great feedback on new product ideas.
Systematically using an iterative process of questioning,
observing, networking, and prototyping, IDEO successfully gen-
erates one new innovative design after another. IDEO’s processes
encourage, support, and expect innovation from everyone on the
team. It’s no surprise then that John Foster, head of talent and
organization at IDEO, believes that “leadership is a group out-
come,” especially innovative leadership.
Our research shows that the DNA of innovative organizations mir-
rors the DNA of innovative individuals. Just as inventive people sys-
tematically engage in questioning, observing, networking, and
experimenting behaviors to spark new ideas, innovative organiza-
tions and teams systematically develop processes that encourage and
develop these same skills in employees. Moreover, as the IDEO ex-
ample demonstrated, they systematically combine these processes
into an overall process for generating novel solutions to problems.
By creating organizational processes that mirror their individual
discovery behaviors, innovative leaders can build their personal
innovator’s DNA into their organizations.
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10
Putting the Innovator’s DNA into Practice
Philosophies
“Innovation is deeply ingrained in all of the nooks
and crannies of our culture.”
—Jeff Bezos
WHAT FOUNDATIONAL PHILOSOPHIES permeatethe world’s most innovative companies? To tackle this question, we first explored the inner world of their en-
trepreneurial founders and senior executive teams. We asked about
the philosophies and beliefs that kept their personal innovator’s
DNA skills in perpetual motion. The most frequent answer was,
“I don’t know. It’s just the way I am.” They simply took it for
granted that innovation was their job, not someone else’s. It was a
core part of who they were. They devoted significant time and en-
ergy to hunting down new ideas. They pursued a range of inno-
vative results, from incremental to disruptive, and didn’t see
themselves as taking extreme risks in the process.
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216 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Not surprisingly, the same innovators worked equally hard to
infuse a parallel set of taken-for-granted philosophies deep into
every nook and cranny of their company’s culture (just as Bezos
did at Amazon). They recognized that a culture is most powerful
when widely shared and deeply held. So how did they do this? They
knew that their own innovation example was an important first
step to building a highly innovative company. They also realized it
was impossible to personally lead or participate in every team and
that they would have limited direct contact with most employees
(especially as their companies grew). As such, they worked hard to
instill a deep, companywide commitment to innovation. Not only
did their companies pay attention to picking innovative people
and putting innovative processes into place, they also lived by a set
of key innovation philosophies.
Here’s what innovative entrepreneurs and executives told us
about their innovation philosophies. We heard that innovation is
everyone’s job. We learned that disruptive innovation is part of
their company’s innovation portfolio. We found out that having
lots of small project teams, properly organized, is central to the way
their companies took innovative ideas to market. Finally, we real-
ized that they do take more risks than other companies in the pur-
suit of innovation, but they take actions that mitigate those risks,
thereby turning them into “smart risks.” These four philosophies
permeate the world’s most innovative companies and are not only
expressed through words but punctuated powerfully through re-
inforcing actions.
Philosophy #1: Innovation Is Everyone’s Job, Not Just R&D’s
Innovation is obviously R&D’s job. We’ve never seen any com-
pany question this. However, we have witnessed significant debate
in companies around the world about whether innovation is
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217 Philosophies
everyone’s job. In one organization, we watched the chairman and
CEO pitted against each other on this issue. The chairman was
convinced that everyone should innovate, while the CEO took the
opposite stance, believing that only R&D or consumer marketing
should spend energy on innovation. While this debate raged at
the top, the company launched a new initiative to focus everyone
on spending some of their workweek discovering new products,
services, and processes. It was no surprise that few employees
jumped at the chance to innovate until they saw senior-level exec-
utives settle their debate.
In rejecting the limiting belief that innovation is R&D’s job
alone, leaders of highly innovative companies—such as Jobs,
Bezos, and Benioff—work hard to instill “innovation is everyone’s
job” as a guiding organizational philosophy. When Jobs returned
to Apple after a twelve-year hiatus, he launched the “Think
Different” advertising campaign. The ad paid tribute to a wide
range of innovators saying, “Here’s to the crazy ones. The misfits.
The rebels. The trouble makers . . . the ones who see things differ-
ently. They’re not fond of rules. And they have no respect for
the status quo . . . they change things. They push the human race
forward.”
The Emmy award–winning Think Different campaign was
hailed as one of the most innovative of all time, largely because
it inspired people. What most people don’t realize, though, is
that the campaign targeted Apple employees as much as its cus-
tomers. “The whole purpose of the ‘Think Different’ campaign
was that people had forgotten what Apple stood for, including the
employees,” said Jobs. “We thought long and hard about how you
tell somebody what you stand for, what your values are, and it
occurred to us that if you don’t know somebody very well, you
can ask them, ‘Who are your heroes?’ You can learn a lot about
people by hearing who their heroes are. So we said, ‘Okay, we’ll tell
them who our heroes are.’ ” To reestablish Apple’s innovativeness,
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218 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Jobs knew that every employee needed this message: “Our heroes
are innovators. We stand for innovation. If you want to work at
Apple, we expect you to be an innovator who wants to change the
world.”1
The Think Different campaign is just one of many things Jobs
has done to send the message to Apple employees that innovation
is their job. He once urged the original Macintosh development
team to innovate by saying, “Let’s make a dent in the universe. We’ll
make it so important that it will make a dent in the universe.”2
More recently, he encouraged Disney employees to “dream bigger”
(as the largest single shareholder of The Walt Disney Company
stock, Jobs has a vested interest in Disney being innovative). These
bold statements send a clear message to employees: we expect each
of you to innovate.
Of course, bold actions must follow bold statements to rein-
force the message. P&G’s Lafley pursued the “we innovate” phi-
losophy when he remarked, “The P&G of five or six years ago
depended on eight thousand scientists and engineers for the vast
majority of innovation. The P&G we’re trying to unleash today
asks all hundred thousand-plus of us to be innovators.” To rein-
force his commitment to organizationwide innovation, he actively
solicited ideas from throughout the company, and if the concept
showed promise, he put it into development. For example, Lafley
backed a successful hair-care product line for women of color be-
cause a few African American employees explained to him that ex-
isting products didn’t work well and “we can do better.” P&G did
better, launching a successful new line, Pantene Pro-V Relaxed &
Natural. Lafley’s actions set the tone for a we-innovate philosophy
to take hold. Yet, key leaders’ personal actions alone are not
enough. We saw that highly innovative companies, compared to
typical companies, reinforce this philosophy by giving people more
time and resources to innovate.
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219 Philosophies
Creating a Safe Space for Others to Innovate
Establishing an “innovation is everyone’s job” philosophy re-
quires creating a safe space for others to take on the status
quo. Researchers call this “psychological safety,” in which team
members willingly express opinions, take risks, run experi-
ments, and acknowledge mistakes without punishment. “If you
foster an environment in which people’s ideas can be heard,”
says Azul and JetBlue founder David Neeleman, “things natu-
rally come up.”
Many leaders think they encourage others to develop and
use their discovery skills, but in reality colleagues often don’t
see it that way. On average, team leaders in our research
thought they were significantly better at encouraging discov-
ery activities in others than did their managers, peers, or direct
reports. (This sounds a bit like the “better-than-average” effect
where over 70 percent of us see ourselves as above average
in leadership ability and only 2 percent view ourselves as
below average. Clearly, this data shows room for improvement.
See figure 10-1.)
How do leaders build a safe space for others to innovate?
The most important first step to creating a safe space is to
encourage questions. At Southwest Airlines, Kelleher creates
a safe space by soliciting challenging questions from direct re-
ports, as well as others. “I just watch, I listen,” he says. “And I want
them to ask me tough questions.” Another innovative leader en-
couraged everybody, even veterans, to ask why on a daily basis,
because “they stop using their minds; they’ve moved into this
execution mode and stop asking questions.”
(continued)
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220 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Another key to encouraging others’ innovation efforts is to
cheer them on when they use their discovery skills. One sen-
ior executive excelled at generating new ideas, but expressed
intense frustration with team members failing to do the same.
An innovator’s DNA 360-degree assessment helped her better
grasp what was going on. The data revealed that she had not
created a safe space to innovate. Compared to all other as-
sessors, she consistently rated her team members far lower
than anyone else (her evaluation put her direct reports at the
thirty-fifth percentile on their discovery skills, while her direct
reports ranked each other—with confirming evidence from
other peers in the company—at around the sixty-fifth percentile).
Why did she do this? Two explanations surfaced during a
team-building workshop we conducted. First, she liked her
ideas more than others’ and often devalued their creative ideas.
Second, even though she talked about the importance of
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F I G U R E 1 0 - 1
Leading innovation: perceptions of self vs. others
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 220
221 Philosophies
Give People Time to Innovate
As we mentioned in chapter 1, founder CEOs on our list of most
innovative companies spent almost 50 percent more time on dis-
covery behaviors than did CEOs of typical companies. Innovative
leaders know innovation doesn’t just happen, but requires a sig-
nificant time commitment. Consequently, they do what other
companies do not: budget more human and financial resources to
innovation activities. For example, Google reinforces the “innova-
tion is everyone’s job” philosophy with its 20 percent project rule,
when it encourages engineers to spend up to 20 percent of their
time (the equivalent of one day a week) working on pet projects
they choose. Even Brin, Page, and Schmidt try to adhere to the
20 percent rule. Management does not specify how to use time,
creativity, she praised and rewarded delivery skills with her every-
day actions. This attention to successful execution, combined
with her dismissing others’ new ideas, led some team mem-
bers to change their behavior when around her. They were in-
novative elsewhere, but flicked the switch off in her presence.
This leader’s challenge is not uncommon. Dan Ariely’s
research in The Upside of Irrationality shows a simple cogni-
tive bias that causes all people to do this all the time. Ideas
that are “not invented here” are always suspect because
people tend to discount or ignore evidence from sources they
don’t know or trust, which is especially true if the idea contra-
dicts an existing belief or something they already favor. This
bias creates a real leadership challenge that innovative lead-
ers conquer by demonstrating an authentic commitment
to hearing and supporting others’ ideas. Collectively, these
actions help establish a widely shared and deeply held belief
that innovation is everyone’s job.
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 221
222 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
but projects must receive a green light, and employees must ac-
count for their time. Moreover, since projects are reported and
documented, they wind up on an intracompany idea-sharing
forum for companywide input and vetting, which leads to collab-
oration. Others within Google who learn about the idea may con-
tribute a portion of their 20 percent time to help nurture an idea.
Several highly successful projects have come from 20 percent
projects—including Gmail, Google News, AdSense (contextual ads
that generate advertising revenues), and Orkut (a popular social
networking site in Brazil). Roughly half of Google’s new product
launches in recent years emerged from 20 percent time projects.
The 20 percent project rule visibly symbolizes that management
believes everyone can and should innovate.
Like Google, 3M has long been known for a similar 15 percent
rule, and at P&G, some employees said they were encouraged to
devote 75 percent of their time working “in the system” (e.g., exe-
cuting tasks) and 25 percent working “on the system” (e.g., dis-
covering new and better ways to execute). Other companies, such
as Apple and Amazon, give no explicit time allocation, but regu-
larly ask employees to run experiments and work on innovation
projects. Alternatively, Atlassian Labs (an innovative Australian-
based company that makes software development and collabora-
tion tools) employs a unique variation of the 20 percent innovation
time rule. It conducts an annual “FedEx” day when all software de-
velopers devote twenty-four hours nonstop to generating new
product ideas. Developers work intensely to build a viable “FedEx
Shipment Order” that sufficiently details a new idea for others to
review. Twenty-four hours later, Atlassian holds a “FedEx Deliv-
ery” day when developers rapidly prototype and then demonstrate
new software ideas for others in the company. This annual inno-
vation effort has proved highly successful, as developers experi-
ence more fun and growth in their work and ultimately help
product managers fill in product holes with new options.
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 222
223 Philosophies
Consider where your company stands on this innovation phi-
losophy. One acid test that we’ve used to see whether an organiza-
tion has successfully ingrained this innovation philosophy into its
culture is to walk in and ask a random group of a hundred em-
ployees (selected from the top to the bottom and across every func-
tion or geography) these questions:
1. Does your organization expect you to innovate in your job?
2. Is innovation an explicit part of your performance reviews?
In highly innovative organizations, 70 percent or more of the
employees respond with a resounding yes. Innovating is an obvi-
ous, taken-for-granted component of their everyday work.
Establishing an “Innovation Is Everyone’s Job” Philosophy
Our exploration of the world’s most innovative companies sug-
gests that the “innovation is everyone’s job” philosophy gains
greater organizational traction and visibility when:
1. Top leaders actively innovate, and everyone sees or
hears about it.
2. All employees receive real time and real resources to
come up with innovative ideas.
3. Innovation is an explicit, consistent element of individual
performance reviews.
4. Companies allocate at least 25 percent of human and
financial resources to platform or breakthrough innova-
tion projects.
5. Companies incorporate innovation, creativity, and
curiosity into their core values, in word and deed.
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224 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Philosophy #2: Disruptive Innovation Is Part of Our Innovation Portfolio
Beyond encouraging all employees to spend time on innovation
tasks, highly innovative companies also allocate a greater percent-
age of both human and financial resources to innovation projects.
They spend more dollars on R&D and initiate more innovation
projects compared to similar sized companies in the same indus-
tries. Such concrete investments signal an organization’s real com-
mitment to innovation.
Of course, most organizations invest in R&D to pursue new
products or services. However, we would describe over 90 percent
of their innovation projects as “derivative,” producing very incre-
mental improvements to existing products (e.g., next-generation
products or services) based on established technologies that are
well known to the company (and usually its customers).3 For ex-
ample, Sony’s introduction of the game console PS3—which out-
performs the PS2 by providing superior graphics, a Blu-ray player,
and Internet connection—is a derivative project. Sony has added
features to an existing product to make it more appealing. But it
has failed to create a new platform of products, thereby pulling in
a whole new segment of customers, or an entirely new market.
In contrast, companies design disruptive innovation projects
to establish entirely new markets by offering a unique value propo-
sition through more radical technologies. (Technologies become
more radical by incorporating entirely new components—compared
to established products—and offering new linkages among com-
ponents within a new product architecture.) Sony’s Walkman was
disruptive because it opened up a fundamentally new market by
offering a music device that was far more portable than any other
music device. The Walkman was based on new miniaturized com-
ponents and new linkages (interfaces) between those components.
Apple took a similar leap forward with iPod and iTunes that,
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 224
225 Philosophies
compared to Walkman, were based on very different components
and product architecture to open up portable music to a far larger
customer group. Over 95 percent of iPod buyers had never used an
Apple computer and over 80 percent had never used a portable
music device. That is opening up an entirely new market. The
iPhone is also disruptive, not so much because the technologies
employed were so different (though some were), but because it
had a very different architecture (one button, touch screen) and
because of the “App store,” which allowed the device to do so many
more jobs than a typical cell phone. Amazon’s Kindle e-reader and
cloud computing services represent similar disruptive innovations
by opening up completely new markets.
Finally, sandwiched between derivative and disruptive innova-
tions are what Steve Wheelwright and Kim Clark refer to as “plat-
form” innovation projects (see figure 10-2; note that Wheelwright
F I G U R E 1 0 - 2
Aggregate project planning: a framework for prioritizing a company’s innovation projects
Impact on market
Derivative
Platform
Breakthrough
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Replace current products
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Reach new customers
Create new market
Steven C. Wheelright and Kim B. Clark, “Creating Project Plans to Focus Product Development,” Harvard Business Review, March–April 1992, 10–82.
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 225
226 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
and Clark use the term “breakthrough” projects to refer to what we
have called “disruptive” projects).4 We see Apple’s MacBook Air lap-
top as a platform innovation project because it’s different enough
to be viewed as a new product category but fails to open an entirely
new market as the iPod did, since most MacBook Air users are al-
ready users of small laptops or other Apple computers. Moreover,
the technologies behind MacBook Air are a bit less radical than
for breakthrough products like the iPod and iTunes. (Of course,
we can always debate the degree to which any given product is based
on radical technologies [new components, new linkages among
components] or whether it opens up a new market by offering a
value proposition markedly different from other products.)
For us, the framework in figure 10-2 illustrates how innovative
companies consciously allocate a significantly greater proportion of
people and resources to platform and breakthrough (disruptive) in-
novation projects. For example, Google uses a 70-20-10 rule for
allocating engineering efforts, including the 20 percent project
time granted to technical staff. Google devotes 70 percent of engi-
neering time to expanding and developing derivative products
within the core business, that is, Web search and paid listings;
20 percent to projects designed to “extend the core,” such as Gmail
or Google Docs; and 10 percent to build “fundamentally new busi-
nesses,” such as the Nexus One phone (its first device), a new col-
laborative tool called Wave, free Wi-Fi service in San Francisco, or
Google Editions (its own e-book store). From our perspective, the
70-20-10 prioritization maps well with Wheelwright and Clark’s
“derivative,” “platform,” and “breakthrough” innovation project
categories. Google’s prioritization demonstrates a willingness to
invest in platform and breakthrough innovation projects. “We will
not shy away from high-risk, high-reward projects because of
short-term earnings pressure,” wrote Page in a letter to sharehold-
ers at Google’s IPO. “For example, we would fund projects that
have a 10 percent chance of earning a billion dollars over the long
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 226
227 Philosophies
term. Do not be surprised if we place smaller bets in areas that
seem very speculative or even strange.”5
Similarly, Apple and Amazon allocate significant resources to
platform and breakthrough innovation projects (though they
don’t appear to follow any specific resource-allocation guidelines).
As far as we can tell, Apple was the only computer manufacturer to
allocate real resources to pursue a music business, a phone busi-
ness, and a digital camera business (the Apple QuickTake, which
failed). These businesses were certainly not direct computer de-
rivatives. As an online retailer, Amazon has devoted significant re-
sources to create an e-reader product, the Kindle—which cleared
the way for a new product category—and more recently, a cloud
computing service. These products unlocked entirely new markets
for Amazon, but rarely without deep resistance. Bezos explained,
“Every new business we’ve engaged in has initially been seen as a
distraction by people externally, and sometimes internally. They’ll
say, ‘Why are you expanding outside of media products? Why are
you entering the marketplace business with third-party sellers?’
We’re getting these questions right now with our new web infra-
structure services: ‘Why take on these new web developer serv-
ices?’”6 Yet, Bezos and Amazon press forward in their habitual
pursuit of breakthrough business ideas.
To summarize, innovative companies invest more absolute
time and resources in platform and breakthrough innovation proj-
ects. The acid test of whether an organization has adopted a phi-
losophy of pursuing more than just derivative innovation projects
is to ask: what percentage of your innovation projects is devoted to
platform or breakthrough innovations? If this percentage is small,
less than 5 percent, the company is unlikely to be very innovative
and certainly wouldn’t be seen that way by investors. If this per-
centage is at least 25 percent, the company shows tangible signs of
buying into Jobs’s advice to “dream bigger” by actively pursuing
more disruptive innovations.
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228 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Philosophy #3: Deploy Small, Properly Organized Innovation Project Teams
Every new product or service idea needs a vehicle to take it from
inception to the marketplace. A small project team (e.g., break-
through, platform, or derivative) is the vehicle in most innovative
companies. Smart leaders know that the way to empower individ-
uals to innovate is to organize them into very small work units
with big goals where individual and team performance is visible.
Amazon employs a “Two Pizza Team” philosophy, meaning that
teams should be small enough (six to ten people) to be adequately
fed by two pizzas. By keeping teams small, Amazon can work on a
larger number of projects, thereby allowing its teams to go down
more blind alleys searching for new products or services.
In similar fashion, Google engineers typically work in teams
of only three to six people. Chairman Schmidt explains the inten-
tion: “We try to keep it small. You just don’t get productivity out
of large groups.”7 The result is an empowered, flexible organization
with small teams pursuing hundreds of projects, an approach that
Schmidt claims “let[s] a thousand flowers bloom.”8 With hundreds
of small team projects developing new ideas, it is little wonder that
Google can create so many new product offerings.
Providing the right structure and right mix of skills for these
project teams is also critical. Many organizations fail with innova-
tion projects, especially breakthrough ones, because they fail to
understand a basic organizing principle: the more radical the in-
novation, the more autonomy the project team will require from
the organization’s existing functions and structure. To illustrate, a
company’s least radical projects are “derivative,” meaning that they
typically involve incremental improvements to components or fea-
tures. For example, Sony designers and engineers who are very
familiar with the PS3’s components and architecture will likely
develop the next generation of its PS3 game console (we’ll call it
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 228
229 Philosophies
the PS4). Most likely they will modify or improve existing com-
ponents, for example, improved graphics, more storage, more con-
venient online gaming. Maybe they’ll add a new component, for
example, the ability to digitally record TV shows as a DVR/TiVo
does. The best type of team for this sort of derivative innovation
project is a functional team in which engineers who specialize in
each type of component work to innovate at the component level.
Alternatively, they might use a lightweight team that primarily
comes from the game console group but includes a light alloca-
tion of engineering resources from other functional areas within
Sony.
But imagine that Sony wants to develop an iPad-like device that
possesses features that leapfrog iPad (let’s call it the sPad). If Sony
attempts to develop the new sPad device within the PS3 engineer-
ing group, the new device will likely reflect the knowledge and
technology of an existing Sony game console. The same would be
true if the Sony computer engineering group or the Sony TV
group developed the device. To get something more radical, Sony
would be better off pulling folks from each of these areas (and per-
haps elsewhere) into a heavyweight team or autonomous business
unit. A heavyweight team enables members to transcend the
boundaries of their functional organizations. Heavyweight teams
are co-located and led by a manager with significant clout. Mem-
bers bring functional expertise to the team, but their primary loy-
alty and innovation mind-set must move beyond the limited
interests of their functional group. For that reason, they become
part of a real team (and not just a group of people who happen to
meet together), possessed by a compelling collective responsibility
to figure out a better way—new processes, new knowledge—to
meet the project’s goals.
In some cases, the innovation project differs so radically from
a company’s existing offerings that it requires an entirely different
business model (e.g., to serve different customers using different
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 229
230 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
technologies). Then it makes sense to create a fully autonomous
business unit to pursue the breakthrough innovation opportunity.
For example, when Amazon decided to pursue and then launch a
cloud computing service business, it created an autonomous busi-
ness unit because the new opportunity demanded an entirely dif-
ferent business model from its online discount retailing business.
The bottom line? Allocating resources to lots of platform or
breakthrough innovation projects will not pay off if project teams
don’t have the right level of autonomy to do their work. The more
radical the innovation project, the more autonomy and the more
diversity the project team requires. Remember, disruptive innova-
tion demands a team staffed with folks displaying a broad diver-
sity of knowledge in order to generate more radical ideas.
Philosophy #4: Take “Smart” Risks in Pursuit of Innovation
Most companies push platform and breakthrough innovation
projects off the table as strategic priorities because derivative proj-
ects leverage existing competencies more effectively. They view the
success of derivative projects as more certain and less risky. To
counter this dysfunctional resource-allocation dynamic, highly in-
novative companies exploit a fourth innovation philosophy to
soundly back up the first three: “Take smart risks in the pursuit of
innovation.”
Breakthrough innovations require risk taking to make them
happen. Long ago, Edwin Land, inventor of the Polaroid technol-
ogy and camera, noticed that the most essential part of creativity
is “not being afraid to fail.” For innovators—and innovative com-
panies alike—mistakes are nothing to be ashamed of. They are an
expected cost of doing business. “You do enough new things and
you’re going to bet wrong,” says Bezos. “But if the people running
Amazon don’t make some significant mistakes, then we won’t be
100092 10 215-234 r1 rr 5/13/11 10:03 AM Page 230
231 Philosophies
doing a good job for our shareholders because we won’t be swing-
ing for the fences.”
IDEO’s slogan “fail often to succeed sooner” frames a funda-
mental philosophy behind its success as the world’s leading inno-
vation design firm. It posts the phrase companywide to remind
employees that if they aren’t failing, they aren’t innovating (see
chapters 8 and 9 for more about IDEO’s people and processes).
Virgin’s Branson also acknowledges the “ability to fail” as a core
value. “It is impossible to run a business without taking risks,” he
says. “The very idea of entrepreneurship . . . conjures up the fright-
ening prospect of taking risks and failing.”9
How Smart Is Your Company or Project Team about Risk Taking?
To judge your organization’s propensity to take risks and learn
from failure, reflect on the following questions:
• Does your organization encourage people to take risks
in order to learn from them?
• Does your organization reward people for learning from
failures? Or is punishment its default response?
• Can you name at least one successful innovation when
your company celebrated learning from at least one
failure to make the innovation ultimately work?
• Has your company built a higher-than-average discovery
quotient in its people to ensure against the inherent
risks of disruptive innovation?
• Do your company’s top managers understand that
they need to take risks and fail frequently in order to
innovate?
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232 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
Of course, innovative companies like IDEO and Virgin aren’t
trying to fail. They just know that when a company tries out lots of
new ideas, some won’t work. That’s the very nature of pushing the
envelope. But they’re smart enough to recognize the difference be-
tween good and bad failures. Good failures at Google have two
defining characteristics: (1) you know why you failed and have
gained knowledge relevant to the next project; and (2) good fail-
ures happen fast enough and aren’t big enough to compromise
your brand. As Google’s leaders have acknowledged, “we’re going
to try things, and some things aren’t going to work. That’s okay. If
it doesn’t work, we’ll move on.”10
Apple echoes the same philosophy. “One of the hallmarks of
the [Apple] team, I think, is this sense of looking to be wrong,”
says Jonathan Ive, principal designer of the iMac and senior vice
president of industrial design. “It’s the inquisitiveness, the sense of
exploration. It’s about being excited to be wrong because then you
have discovered something new.”11 By embracing failure as a vehi-
cle for learning, innovative companies embolden their employees to
try new things. Companies would do well to embrace, as a com-
pany slogan, the innovation philosophy of creativity researcher
and author Sir Ken Robinson: “If you’re not prepared to be wrong,
you’ll never come up with anything original.”12
But we emphasize that the innovative companies we studied
were wrong less often. Why? Because they took smarter risks by
hiring and developing discovery-driven people and institution-
alizing processes that support people’s questioning, observing, net-
working, experimenting, and associating (as we recommended in
chapters 8 and 9). Imagine that your company wants to invest in a
new disruptive innovation project. What if you could assemble a
dream team of innovators to pursue the project, including Jobs
(Apple), Bezos (Amazon), Benioff (Salesforce.com), Kelley (IDEO),
Lazaridis (RIM), Lafley (P&G), and Gadeish (Bain & Company)?
Would you invest in their innovation project? Our guess is yes.
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233 Philosophies
Somehow pursuing disruptive innovations with this type of team
feels less risky (than doing it with a more common delivery-driven
management team) because these folks boast strong discovery
skills and understand the behaviors (and processes) required for
generating a successful disruption. No wonder the risk seems more
calculated with them. The actual risk is low because putting the right
people and innovation processes into place increases the proba-
bility of success (and decreases the probability of taking disastrous
steps).
The financially successful innovators in our study demonstrated
a higher discovery quotient (stronger discovery skills) than less
successful ones. We see the same equation at work in the world’s
most innovative companies. Innovation failure (in a financial
sense) often results because companies fail to consistently engage
all discovery skills. They likely don’t ask all the right questions,
don’t do all of the necessary observations, don’t talk to enough di-
verse people, or don’t run the right experiments to reduce the in-
herent risks of innovating. Quite the reverse is true for our dream
team filled with innovators who know from experience that fully
leveraging their innovator’s DNA actually reduces the likelihood of
failure. Similarly, making sure that your organization pays careful
attention to putting the right people, processes, and philosophies in
place takes out an insurance policy that tones down the risks as-
sociated with innovation.
Highly innovative companies live by a set of key innovation philoso-
phies that instill a deep, companywide commitment to innovation.
First, these companies make clear that innovation is everyone’s job.
Second, they make sure that disruptive innovation is an important
part of the company’s innovation portfolio. Third, they create lots of
small project teams and endow them with the right people, struc-
ture, and resources to power new ideas to market. Finally, they
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234 THE DNA OF DISRUPTIVE ORGANIZATIONS AND TEAMS
knowingly take risks in the pursuit of innovation. But they mitigate
the inherent risks associated with innovation by deploying the right
people and processes in their teams and by providing the right struc-
ture so that teams have proper autonomy levels. Ultimately, inno-
vative companies rely on these philosophies to create a culture that
not only ignites new ideas, but takes them to market. When this
happens, people work in a company culture that helps them answer
the following four questions with a hearty yes:
Philosophy #1: In your company, is innovation everyone’s
job?
Philosophy #2: Is disruption part of your company’s inno-
vation portfolio?
Philosophy #3: Are small project teams central to taking
innovative ideas to market?
Philosophy #4: Does your company take smart risks in the
pursuit of innovation?
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Conclusion
Act Different, Think Different, Make a Difference
“Care about something enough to
do something about it.”
—Richard Branson, founder, Virgin Inc.
BY THE END of our eight-year research project onsome of the most innovative people and com- panies in the world, we came to believe that if individuals, teams,
and organizations want to think different, they must act different.
Now that you’ve nearly finished The Innovator’s DNA, we wonder
where you stand. Do you believe that if you act different, you can
think different? That if your organization acts different, it can think
different as well? We hope so, because the innovator’s journey, in-
dividually or collectively, can often feel like a road “less traveled.”
235
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Yet, the road is worth taking because it just might make “all the
difference” in your life and the lives of many others.
Mastering the five discovery skills of disruptive innovators and
demonstrating the courage to innovate are what we’ve tried to
share in this book. Doing so requires practice, personally, profes-
sionally, and organizationally (for a road map of how to master
the five discovery skills, and even how to build them in the next
generation, see appendix C). Consistent practice produces mas-
tery, and mastery makes for new habits or, in organizations, new
capabilities. By developing heavy-duty discovery skills, we really
are different. We act different, think different, and by doing so we
can make a concrete difference.
Of course, there are a variety of ways to leverage your discov-
ery skills to make a difference. Ideally, you will uncover a big, dis-
ruptive idea, initiating meaningful change in many lives. Certainly,
Bezos, Jobs, Benioff, and other innovative entrepreneurs have had
an immense impact on the world. Their organizations employ
hundreds of thousands of people, and their products influence—
and most would say improve—the lives of hundreds of millions.
No wonder many of these business innovators moved from dis-
rupting industries to seeking an even greater impact by aiming
their attention and resources (including innovator’s DNA skills)
at some of the toughest world challenges, such as poverty, educa-
tion, and disease.
Take a look at Salesforce.com, where Benioff built a company
to not only disrupt the entire enterprise software industry, but also
to make a difference wherever it operates. He did this through a
1-1-1 philosophy where 1 percent of all employees’ time, 1 percent
of all its products, and 1 percent of all its equity go toward
improving communities and promoting compassionate capital-
ism. As Benioff puts it, he’s in the “business of changing the world.”
His approach relies on hundreds of thousands of employee hours
and millions of dollars to tackle problems ranging from sanitation
236 CONCLUSION
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to homelessness. Benioff is not alone in taking on tough issues.
Bill and Melinda Gates, Richard Branson, and many others do the
same in their own shape and form.
On a smaller scale but a highly similar focus, we have also
worked with social innovators around the world who rely on
innovator’s DNA skills to create profound solutions to some of
society’s most difficult problems. For example, Andreas Heinecke
founded a for-profit social enterprise, Dialogue in the Dark, when
working as a newspaper journalist in Germany. Heinecke’s boss
had brought a blind coworker to his desk and asked him to teach
the person how to become a journalist. Heinecke had no idea how
to approach the situation, but quickly threw himself into the task
of figuring out how to make it work, in part because he had less
than perfect hearing. Heinecke not only helped his blind colleague
to become a journalist but, in the process, used his innovator’s
DNA skills to found Dialogue in the Dark, which hires blind ex-
perts to take sighted visitors into a world of complete darkness for
one to three hours. (Our assessment showed Heinecke as excep-
tional at idea networking and questioning.) Heineke observed that
to better understand and appreciate blind people, you must expe-
rience the world as they do.
To date, over 6 million visitors in thirty different countries have
experienced the exhibitions where people learn to navigate
through parks and across streets, and to eat in completely dark
spaces. Dialogue in the Dark also conducts very successful leader-
ship development sessions at companies and conferences, includ-
ing the World Economic Forum Davos events. (We regularly
collaborate with Heinecke to produce “Innovator’s DNA in the
Dark” experiences that deliver a unique and profound learning
context for cultivating the innovator’s DNA skills with companies
like the leading logistics firm in the Middle East, Aramex, to the
world’s leading art business, Christie’s.) Dialogue in the Dark
is now one of the largest worldwide employers of blind people
237 Conclusion
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(hiring and training over six thousand so far). All this was trig-
gered because Heinecke decided to focus his persistent questions
and conversations on a search for new ways to create jobs for the
blind and to overcome barriers in all walks of life.
In the end, most of us will likely make a difference through
many minor (derivative) innovations. An idea with impact might
be a new process for hiring that helps your company find more
talented people (such as Google’s Code Jam tournament described
in chapter 9). It might be a new approach to marketing your com-
pany’s products (such as P&G’s new use of bloggers and customer-
generated content described in chapter 9). Or it might be building
a business model based on the premise that for every pair of shoes
sold, the company will give away one pair, as Blake Mycoskie did
when he founded TOMS Shoes (after traveling to Argentina in
2006 and seeing so many children with foot diseases because they
lacked shoes).
Clearly, the process of creative discovery can be difficult, but
the rewards far outstrip the challenges. Being a creator is exciting,
and to author or coauthor an idea that leads to a new product,
service, process, or business energizes. Being an innovator is psy-
chologically and emotionally gratifying in a way that money
simply isn’t, even though the financial rewards of successful inno-
vation can be significant. Mark Ruiz, co-founder of MicroVentures
and finalist for the Entrepreneur of the Year Philippines 2010
award, admitted the same when he told us, “even though I’m an
entrepreneur, what drives me is not really the money. What really
drives me is a deep sense of mission and purpose. I just see prob-
lems that are screaming for new and innovative solutions.” Ruiz
works nonstop to build new venture after new venture to take on
these problems in his home country, the Philippines.
Ruiz and all the other disruptive innovators we encountered
while working on this book take seriously the questions, “If not
you, who?” “If not now, when?” They do not sit still. They are
238 CONCLUSION
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physically active, always asking questions, observing, networking,
and experimenting. Others can actually “see” their discovery skills
at work because their innovation work is far from sedentary. Judi
Sandrock, CEO of the Branson Centre for Entrepreneurship, told
us that she lives by the question, “How do I do this now?” and
works tirelessly to help emerging entrepreneurs in South Africa do
the same. In his path-breaking research on risk and uncertainty,
economist Frank Knight saw innovative entrepreneurs as a class
of individuals with the “disposition to act” in spite of the uncertain
context in which they operated. We heard this over and over from
various innovators, including Virgin’s Branson who lives by, “Screw
it, Let’s do it,” and Skype’s Zennström, who made the following
analogy between action and entrepreneurial success:
Say that you have one of those reality shows on TV and
you drop a bunch of people in the middle of a desert
island. The winner is the person who gets to the shore the
quickest. Some people try to analyze where they are, which
direction to go. Some of them say, “Let’s climb up a tree or
a rock or hillside and maybe we can see further and figure
out what is the best direction to go.” They will spend time
planning and analyzing how to find the best direction to
go. But some other people will just look around, follow
their intuition, and start running in a direction.
If there are a lot of people that have been dropped
on the island, I can almost guarantee that whoever starts
climbing up the tree to start analyzing where he is and
which direction to go will not win the competition. Why?
Because there are a few other maniacs who will follow
their intuition and just start running. They’re much more
likely to get to shore quicker. The point is: if you have a
good gut feeling for which general direction to go, then
you should just run as fast as you can.
239 Conclusion
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Zennström’s challenge: act and figure it out as you go. That
way, you get valuable feedback by acting, and you get even better
feedback by fully engaging your innovator’s DNA skills along the
way. But act now or it may be too late. Windows of opportunity
exist for capturing the full value from any innovative business idea.
No wonder successful innovators move fast to implement an idea
before its window closes.
In the end, innovation is an investment—in yourself, in others,
and if you’re a senior manager or emerging entrepreneur, in your
company. Whether you’re working at the top of an organization or
as a technical specialist at the bottom, eBay’s Whitman advises
everyone “to have the courage to plant acorns before you need oak
trees.” Innovation is all about planting acorns (ideas) with less than
complete confidence that each will grow into something meaning-
ful. The alternative, however, is little or no growth when no acorns
emerge as trees. By understanding and reinforcing the DNA of in-
dividual innovators within innovative teams and organizations, you
can find ways to more successfully develop not just growth saplings
but the real oak trees of future growth. As you continue your in-
novation journey, let your life speak2 the final line from Apple’s
Think Different campaign: “The people who are crazy enough to
think they can change the world are the ones who do.” So just do it.
Do it now!
240 CONCLUSION
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Appendix A
Sample of Innovators
Interviewed
241
Interviewees
Name Company Innovative aspect of company*
Nate Alder Klymit Among the first to offer Klymit Kinetic vests and jackets insulated with noble (argon) gases.
Marc Benioff Salesforce.com Among the first to offer online/on-demand CRM/Salesforce Automation Software.
Jeff Bezos Amazon.com Among the first online book retailers; developed online fulfillment capabilities.
Mike Collins Big Idea Group Intermediary between product inventors and innovative product-buying companies/distribution channels.
Scott Cook Intuit Among the first to offer personal finance and tax software Quicken and TurboTax.
Gary Crocker Research Medical Inc.
Introduced disposable medical products for beating-heart surgeries to reduce excessive blood loss and visualization visibility problems for surgeons.
(continued)
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242 APPENDIX A
Name Company Innovative aspect of company*
Michael Dell and Kevin Rollins
Dell Computer Developed direct-to-customer sales model in PCs, allowing for mass customization.
Orit Gadeish Bain & Co. Bill Bain founded Bain & Company, but Gadeish is known to have initiated innova- tive ideas in numerous client engagements.
Aaron Garrity and Joe Morton
XANGO Among the first to offer juice and other nutritional products using mangosteen and a network marketing approach.
Diane Greene VMWware Among the first to offer virtualization software technology allowing virtual servers and desktops to host multiple operating systems and multiple applications locally and in remote locations.
Andreas Heinecke
Dialogue in the Dark
A social enterprise that hires blind experts to take “sighted” novices visitors into a world of complete darkness for various training and educational purposes.
Jennifer Hyman and Jenny Jennifer Fleiss
Rent the Runway
Among the first to offer designer dresses for rent over the Internet.
Eliot Jacobsen Freeport.com; Lumiport
Among the first to launch a free ISP with unique reach to local retailer community; helped launch Lumiport, a topical light for acne treatment.
Josh James and John Pestana
Omniture Among the first to develop and deploy Web analytics software.
Jeff Jones NxLight; Campus Pipeline
Among the first to offer a digital offering to campus allowing users to access data remotely.
A. G. Lafley Former CEO, Procter & Gamble
Initiated major organizational process changes at P&G to focus the company on innovation, including the “Connect and Develop” process that has been a major source of new product introductions.
Mike Michael Lazaridis
Research In Motion
Developed “BlackBerry,” a handheld wireless communication device that has frequently been first with new technologies.
Kristen Murdock Cow Pie Clocks and greeting cards
Invented the “Cow-Pie Clock,” a clock embedded in a glazed cow pie with a funny saying attached (e.g., “Happy birthday, you old poop”).
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243 Appendix A
Name Company Innovative aspect of company*
David Neeleman Morris Air; JetBlue; Azul
Pioneered ticketless air travel at Morris Air, Live TV at Jet Blue, and free bus travel to the airport at Azul Airlines in Brazil.
Pierre Omidyar; Meg Whitman
eBay Launched online auction site facilitating person-to-person auctions.
Ratan Tata Tata Group Chairman
Ratan’s father founded Tata, but Ratan initiated the Tata Nano project, which led to the Tata Group’s launching of the world’s cheapest car.
Peter Thiel PayPal Among the first to offer financial services over the Internet. With Max Levchin, developed software that essentially attached money to an e-mail.
Corey Wride Movie Mouth Movie Mouth is building an interactive, Web-subscription application that has an embedded media player accessing copyrighted media, such as DVDs and CDs, on the local machine, and remote content from the Web.
Niklas Zennströom
Skype Used “supernode” technology to place calls via the Internet and deployed a unique viral marketing approach.
*We use the wording “among the first” to launch a product or service offering because we have not verified that the company was indeed the first to offer the product or service. However, the innovators we interviewed claimed that this was their original idea and they were not simply imitating another company’s offering.
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Appendix B
The Innovator’s DNA
Research Methods
Our research project consisted of two phases: (1) an inductive
study of innovators compared with noninnovators, and (2) a large
sample study comparison of roughly eighty innovators and
roughly four hundred noninnovator executives (we later expanded
this to a larger sample). We conducted exploratory interviews with
a sample of roughly thirty innovative entrepreneurs and a similar
number of senior executives in larger organizations (see a sub-
sample of innovators we interviewed in appendix A). The goal of
our interviews with innovators was to understand when and how
they personally came up with creative ideas on which they built
new innovative businesses. We asked questions such as:
1. What was the most valuable strategic insight or novel busi-
ness idea that you generated during your business career?
Please describe the details of the idea. (For example, how
was the idea novel and how did you come up with it?)
2. In your opinion, do you have any particular skills that are
important to helping you generate novel business ideas?
245
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246 APPENDIX B
How did those skills influence your ability to generate
strategic insights or novel business ideas?
To get an outside perspective, whenever possible we also inter-
viewed senior executives who were well acquainted with the inno-
vative entrepreneur. For example, we interviewed Dell CEO Kevin
Rollins about Michael Dell and former eBay CEO Meg Whitman
about eBay founder Pierre Omidyar, Skype founder Niklas
Zennström, and PayPal founder Peter Thiel.
Through the interviews, we identified four behavioral patterns—
questioning, observing, networking, and experimenting—that were
more pronounced in innovators and which seemed to trigger asso-
ciational thinking. These four behavioral skills and one cognitive
skill comprise the five discovery skills that we discuss in the book.
We then developed a set of survey items to measure the fre-
quency and intensity with which a person engaged in questioning
(six survey items), observing (four survey items), experimenting
(five survey items), and idea networking (four survey items). Re-
sponse options ranged from 1 or strongly disagree to 7 or strongly
agree. We also conducted an exploratory and confirmatory factor
analysis (EFA) to uncover the underlying factor structure of the
nineteen items measuring the behaviors.
We then conducted a negative binomial regression to test the
relationship between the four discovery behaviors and starting in-
novative ventures. The results showed that observing, networking,
and experimenting were significantly correlated with starting an
innovative new business (and questioning was significant when
combined with one of the other three behaviors). The four be-
havioral patterns were also significantly correlated with each
other—with correlations typically greater than 0.50—suggesting
that an individual who engages in one of the behaviors is more
likely to engage in some level of the other behaviors. Results were
stronger when each of the behaviors was used in combination with
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247 Appendix B
another behavior. Full details of the initial study can be found in:
Jeffrey H. Dyer, Hal B. Gregersen, and Clayton M. Christensen,
“Entrepreneur Behaviors, Opportunity Recognition, and the Ori-
gins of Innovative Ventures,” Strategic Entrepreneurship Journal 2
(2008): 317–338.
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Appendix C
Developing
Discovery Skills
Years ago, Arnold Glasow, an entrepreneur and humorist, con-
cluded that “improvement begins with I.” We couldn’t agree more.
The focus of this appendix is to suggest how you might personally
improve your discovery skills—associating, questioning, observ-
ing, networking, and experimenting.
Developing Your Discovery Skills
To develop your skills, we provided a number of practical tips in
chapters 2 through 6. To decide which tips make the most sense to
follow, we suggest that you take five steps: (1) review priorities to
see where you spend your time, (2) assess your discovery skills sys-
tematically, (3) identify a compelling innovation challenge that
matters, (4) practice your discovery skills ruthlessly, and (5) get a
coach to support your ongoing development efforts. When com-
bined, these steps can help you—and your team—build the rele-
vant innovation skills required to make a bigger, better impact at
249
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250 APPENDIX C
work and beyond. (If you also want to build your team’s discovery
skills, take the steps outlined , but focus your development work on
your team.)
Step 1: Review priorities
Consider how you typically spend your time at work. We sug-
gest dividing your core tasks into three broad categories: discovery,
delivery, and development. Discovery focuses on innovation and
includes actively engaging the five discovery skills in search of new
products, services, processes, and/or business models. Delivery is
all about producing results, analyzing, planning, executing, and
implementing strategies. Finally, development centers on building
your capabilities and those of others (primarily direct reports, if
you are a manager). This task includes selecting the right people
for your team and training them well in the innovator’s DNA skills.
Now, look at your calendar for a typical workweek. What
percent of your time do you personally spend on each task—
discovery, delivery, and development? You may want to answer this
question by filling out the chart in table C-1, using the following
simple process. First, make your best guess about how you cur-
rently spend your time (the “today” column). Second, record your
best judgment about where you think you should be spending your
time (“tomorrow”), given your team’s purpose and your com-
pany’s strategy. Third, calculate the difference or “gap” between
today and tomorrow for each category.
Next, focus primarily on the gap. Is it large? Negative? Positive?
Or neutral? If the gap is zero, you’re spending the time and energy
that you think you should on discovery. However, a negative gap
reflects a need to devote more time to discovery activities to
improve your ability as a discovery-driven leader.
Innovative CEOs and founder entrepreneurs spend roughly
50 percent more of their typical week on discovery activities than
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251 Appendix C
noninnovative CEOs and entrepreneurs do. So if you aren’t devot-
ing at least 30 percent of your time to discovery, you probably aren’t
leading the innovation charge. Creative problem solving takes time,
so increase the amount you spend on discovery to have a bigger im-
pact on innovation.
Step 2: Assess your discovery skills
After reflecting on your time spent (discovery versus deliv-
ery), get a more refined, specific sense of your discovery and de-
livery skill strengths and weaknesses. You can gain an idea of your
performance on these skills through the brief self-assessment in
chapter 1. You can also visit http://www.InnovatorsDNA.com to
take a more comprehensive online self-assessment or a 360-
degree online assessment (which provides feedback from your
manager, peers, and direct reports) to capture a better sense
of your strengths and weaknesses.1 These assessments can
prove valuable in helping you answer: “What is my everyday
discovery versus delivery orientation? In which discovery skills
am I strongest? Which ones do I want to develop? In which
delivery skills am I strongest? Which delivery skills do I need to
develop?”
TA B L E C - 1
Tracking your time spent
Leadership task Today Tomorrow Gap
Discovery
Delivery
Development
Total 100% 100%
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252 APPENDIX C
Step 3: Identify a compelling innovation challenge
After assessing your strengths and weaknesses in discovery and
delivery, the next step is to find a specific, current innovation chal-
lenge or opportunity so that you can practice your discovery
skills. This challenge might range from creating a new product or
service, reducing employee turnover, or coming up with new
processes that reduce costs by 5 percent in your business unit.
With your innovation challenge clearly in mind, develop a plan to
practice some of the discovery skills as you search for creative
solutions.
Step 4: Practice your discovery skills
We propose that you work on your questioning skills first, since
innovation often starts with a compelling question and innovative
teams have a culture that supports questioning. Write down at least
twenty-five questions about your innovation challenge and con-
duct a QuestionStorming activity (or other questioning tips) with
your team, as outlined at the end of chapter 3. A personal habit of
asking questions helps create a safe space for other team members
to also ask questions.
After strengthening your capacity to question, identify your
strongest skill among observing, networking, and experimenting
and seek to practice it as you tackle your innovation challenge
(unless it’s so strong that more practice provides diminishing
returns; in that case, working on a weaker discovery skill may be a
better development option). Again, refer to each of the chapters
about these skills (chapters 4 through 6) for suggestions about
improving them. Involve your team as much as possible in what-
ever discovery skill you are working on (observing, networking,
or experimenting) as you search for a solution to your challenge.
Finally, engage in frequent brainstorming sessions (alone and
with your team) to practice associating (see chapter 2 for tips on
associating).
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253 Appendix C
Step 5: Get a coach
Innovation is habit forming or, rather, innovation requires
forming new habits regarding the five discovery skills. Our friend
Stephen Covey, author of The 7 Habits of Highly Effective People,
might call this book The Innovator’s DNA: The Five Habits of Highly
Creative People. How can you increase the probability that if you
try out the new skills suggested, you will turn them into new habits?
One place to start is asking someone to serve as your creative men-
tor or coach—someone who can motivate and coach you while you
work on developing new behavioral patterns. Personal change is
difficult, and asking someone you respect to help with the change
effort is an important step (getting one person engaged in the
change process will bump up your success rate 15 percent to 20 per-
cent). The coach can be a boss, peer, professor, classmate, or even
someone you live with (you might practice these skills with other
family members as you attempt to creatively solve problems at
home). But whomever you pick, make sure he or she is someone
you can trust to give you honest feedback and suggestions. A cre-
ative mentor and coach can make a big difference in helping im-
prove your creativity skills.
Master the Five Skills of Disruptive Innovators
Mastery of any skill comes by practicing specific elements of that
skill. For example, world-class athletes, musicians, or managers
break down a skill into very specific parts of their “game.” Then
they practice these minute elements relentlessly. For a golfer, it
might mean short putts on the green, over and over for days until
she masters one small element of the swing. Concert pianists do
the same with a small part of a musical piece. Practice over the
course of weeks, months, and years ultimately provides mastery of
not only one skill, but a set of skills.
The disruptive innovators in our research did precisely this, ei-
ther consciously or unconsciously. They practiced skills relentlessly,
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254 APPENDIX C
on almost anyone or anything they interacted with. The mystery of
innovation is far less mysterious when people practice the innova-
tor’s DNA skills regularly so the skills become new habits. This takes
time and self-discipline. So start with realistic expectations and ac-
tively allocate time to improving your discovery skills. Most of all,
remember that your personal development efforts send a serious
signal to your team and organization about how high innovation
ranks in your priorities and how important it might become to
theirs.
Developing Discovery Skills in the Next Generation
The most important innovation work any of us might do is within
the four walls of our home, the boundaries of our neighborhood,
or the classrooms of our local schools. Why? Almost all the dis-
ruptive innovators we interviewed mentioned at least one adult in
their lives who paid personal attention to their innovation skills
and helped nurture them as they grew into adulthood. That’s why
we think it’s so important for adults to honor and amplify young
people’s discovery skills worldwide.
Consider Steve Jobs’s life. Early on, his father set aside part of
his workbench for Jobs to experiment on mechanical things.
Later, Jobs’s neighbor, Larry Lang, taught him (and other inter-
ested neighborhood kids) a lot about electronics by building
Heathkits together (products like transistor radios that were pur-
chased in do-it-yourself kits). In retrospect, Jobs realized that
building Heathkits with a neighbor and exploring things on his
father’s workbench ultimately gave him an understanding of
what lurked inside a finished product. More importantly, Jobs
acquired the sense that “things were not mysteries” and, as a re-
sult, he also gained “a tremendous level of self-confidence” about
mechanical and electronic things.
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255 Appendix C
Jobs was not the only fortunate one when it came to developing
the next generation of disruptive innovators. Jeff Bezos’s grandpar-
ents played an equally powerful role in fostering his experimentation
skills during the summers on their Texas farm. Richard Branson’s
mother supported his curiosity to carry on a family legacy of
discovering new terrain. Orit Gadiesh’s parents and schoolteachers
not only tolerated her questions, but valued them. In short, disrup-
tive innovators had one or more adults play a key role in keeping
their natural innovator’s DNA alive beyond childhood. You can play
that same important role with a future generation of innovators.
Developing Discovery Skills in Homes and Neighborhoods
What better place to start building the five skills of disruptive
innovators than in our homes and neighborhoods? If you take on
this challenge to “send the elevator down,” as entrepreneur (and
founder of Ariadne Capital) Julie Meyer put it, and bring up a new
generation of disruptive innovators, here are a few concrete, help-
ful tips.
Associating Skills
1. One game you can play, particularly when traveling in the
car, is called, “What’s the connection?” Two people each
think of a random word. A third person is the player. Once
they decide on random words, each of the first two people
announces his or her word. The third person must then
create a logical connection between the two words, but try
to be creative in doing so. For example, the words pickle
and stitches might be connected with: “We make sour faces
when getting stitches at the hospital and when we bite into
a sour pickle.” Similarly, the board game TriBond (distrib-
uted by Mattel) gives you three word clues and asks you to
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256 APPENDIX C
figure out what they have in common. (You can also try
out the game at http://www.TriBond.com, where there’s a
new combination of three words to connect every day.)
2. Search for books that foster associational thinking. One
of our favorites is Not a Box. The main character, a rabbit,
tries to convince readers that boxes are not boxes. Instead,
boxes might be anything, if we let our imaginations run
wild (ranging from a race car to a spaceship). After one of
us read Not a Box to a three-year-old grandchild, he dis-
covered him sitting in a box later that day. It was not a
box, but a pirate ship! If you enjoy reading creative books
with children, a few others are: Harold and the Purple
Crayon (by Crockett Johnson,), Ish (by Peter Reynolds),
The Anti-Coloring Book (by Susan Striker and Edward
Kimmel).
Questioning Skills
1. When most children come home from school, parents
often ask: “How was your day?” or “Did you learn anything
interesting today?” The second question is better than
the first (in terms of insights gained), but what if you
regularly asked your child (or neighbor’s child): “What
questions did you ask today?” “What questions did other
children ask today? “What questions didn’t you have time
to ask today?” Then listen; really, really listen. You may
be surprised by what you discover. (You may also want to
take a moment to watch What Is That?, a short video by
MovieTeller films about how a father’s and son’s questions
powerfully affect each of them).
2. Whenever you face a family, school, or community prob-
lem or challenge that needs a solution, try using a modified
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257 Appendix C
version of our QuestionStorming approach with young
people. Kids don’t have the patience to brainstorm fifty
questions, but they usually have the patience to brainstorm
ten questions. For example, suppose you have a problem
with your child not doing chores or homework. Asking just
ten questions together about the “problem” can often yield
interesting insights. For example, you might ask, “Why isn’t
science interesting to you?” “What can I do to be helpful?”
Your child might ask, “Why do I need to know science?”
“Why is science so important to you?” This process of
asking questions about a problem can often trigger ideas
or insights that will lead to novel solutions.
Observing Skills
1. Give children a chance to see you at work. You never know
what surprises they might have by joining you for a day.
Pay attention to what they notice as they enter your world;
become a fly on the wall and watch the world through their
eyes as they try on the likely new, adult world of work. For
Jon Huntsman Jr., going to his father’s workplace when he
was eleven years old altered the course of his life. He was
visiting his father, who worked as a special adviser to
President Nixon, at the White House. While there, he met
Henry Kissinger, who was on his way to a secret meeting in
China. When young Jon asked Kissinger where he was
going, Kissinger replied, “China.” Until then in Jon’s life,
China had not been a real place with real people. But hear-
ing that one word from someone who was actually going to
China sparked a lifelong interest. Huntsman later studied
Asian history and Asian languages in school. In total, he
spent fifteen years learning Mandarin and spoke it fluently
as the U.S. Ambassador to China.
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258 APPENDIX C
2. Take frequent walks in old places and new ones. Take a
child on a walk and look at the experience through her
eyes. What does she see? Hear? Taste? Touch? Smell? You
may be surprised at what you’ve never noticed before.
Watch carefully for what surprises her; it just might sur-
prise you as well. When traveling or living in new places,
do the same, especially in moments of transition (just ar-
riving or just leaving) when we sometimes see things that
otherwise remain invisible. Keep a journal together that
captures your observations. How to Be an Explorer of the
World (by Keri Smith) is a great guide for adults and chil-
dren who are interested in making better observations of
the world.
Networking Skills
1. You can start building networking skills with young people
by occasionally bringing a work (or even family) problem
to them and asking for their opinion. Explain that prob-
lems are best solved when you get a variety of people look-
ing at them from multiple perspectives. If they express
interest in the problem, you might even invite them to join
you as you bring the same problem to someone else with a
different background. This becomes a powerful example of
the importance of networking for ideas and demonstrates
a process for doing it.
2. Occasionally, whenever you face a family, school, or com-
munity problem or challenge, think about inviting a focus
group of three or four people with different backgrounds
to give their perspectives on how to best solve the prob-
lem. This could involve a dinner invitation or drinks and
refreshments to accompany the discussion.
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259 Appendix C
3. If you have young people in your home, do some idea net-
working together by socializing with a diversity of people.
For example, pick a person from a different country, dif-
ferent ethnic group, different religion, different age, or
unusual occupation and invite him or her to a meal with
your family. Explore together how other people live and
see the world.
Experimenting Skills
1. Conduct experiments at home or in your neighborhood
and discuss them with children. For example, Bill Dyer
(a sociologist and father of Jeff Dyer) placed an ironed
white shirt on the floor of the central walkway in his
home. He watched for two days as his children carefully
stepped around it, as no one bothered to pick it up. He
then discussed with his children why they didn’t think to
pick up the shirt and, more broadly, what they viewed as
their responsibilities around the house. On another occa-
sion, he swapped a teenage son for a neighbor family’s
teenage son for a week. After the week, the two families got
together to discuss what each boy, and each family, learned
from the experience.
2. Take a young person to a junkyard or flea market to find
something to take apart. Pick something for yourself at the
same time. Take the items home and dismantle them
together to see what new insights emerge about how and
why things work. One father and son did this with an old
airplane engine. The experience sparked a future aviation
career, as the young boy grew up to become a pilot.
3. Engage young people in prototyping efforts. Select a prod-
uct you’d like to improve (or imagine a new one) and
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260 APPENDIX C
design and construct a crude prototype together. Children
love the chance to create something new, particularly if
Play-Doh is involved; you never know what new feature
of the prototype they might discover.
4. Take your child on a trip to a foreign country (or even a
“foreign” part of your hometown) with the explicit goal of
experimenting with everything new. Try out new foods,
customs, and local products and services. If possible, live
in a home to experience life as a local. Try out as many
new interactive experiences as possible.
Final Call for Action
What is our final call for action? Adopt a young innovator! Find at
least one child (your own, a relative’s, or a neighbor’s) and help
that young person appreciate and strengthen his innovation skills.
Every child deserves at least one adult who values her innovation
skills, at least one adult who listens to her honest questions. As Dr.
Seuss knew so well, “Unless someone like you cares a whole awful
lot, nothing is going to get better. It’s not.” If we don’t collectively
nurture the next generation of disruptive innovators, who will?
There are far too many children in need for any adult to slack off
when it comes to nurturing the next generation. If we collectively
do this task well, many young people will grow up acting different,
thinking different, and, in the end, making a difference in a world
bursting with complex, challenging problems. Naively perhaps,
we believe in the power of one, that one adult honoring one child’s
innovation skills can make all the difference in building a new gen-
eration of disruptive innovators. That is our hope.
100092 99d 249-260 r1 rr 5/13/11 10:07 AM Page 260
Notes
Introduction 1. IBM, “Capitalizing on Complexity: Insights from the Global
Chief Executive Officer Study,” May 18, 2010. 2. Jeffrey H. Dyer, Hal B. Gregersen, and Clayton Christensen,
“Entrepreneur Behaviors, Opportunity Recognition, and the Origins of Innovative Ventures,” Strategic Entrepreneurship Journal 2 (2008): 317–338.
3. Todd Kashdan, Curious?: Discover the Missing Ingredient to a Fulfilling Life (New York: Harper Collins, 2009).
Chapter 1 1. M. T. Hansen, H. Ibarra, and U. Peyer, “The Best Performing
CEOs in the World,” Harvard Business Review, January–February 2010. 2. J. Young and W. Simon, iCon: Steve Jobs, The Second Greatest Act
in the History of Business (Hoboken, NJ: John Wiley & Sons, 2005), 37. 3. Ibid., 38. 4. Ann Brashares, Steve Jobs: Thinks Different (New York: Twenty-
first Century Books, 2001). 5. Steve Jobs, commencement address, Stanford University, 2005. 6. Marvin Reznikoff, George Domino, Carolyn Bridges, and Merton
Honeyman, “Creative Abilities in Identical and Fraternal Twins,” Behavior Genetics 3, no. 4(1973): 365–377. For example, the researchers gave them the Remote Associations Test (RAT), where they would present twins with three words and ask them to find a fourth word linking the three; they also gave them the Alternative Uses Test, where they would ask the subjects to brainstorm as many alternative uses for a common object—like a brick—and code how many total and diver- gent responses the subjects provide.
261
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7. See K. McCartney and M. Harris, “Growing Up and Growing Apart: A Developmental Meta-Analysis of Twin Studies,” Psychological Bulletin 107, no. 2 (1990): 226–237.
8. Other studies that have found that nurture trumps nature as far as creativity goes include: F. Barron, Artists in the Making (New York: Seminar Press, 1972); S. G. Vandenberg, ed., Progress in Human Behavior Genetics (Baltimore: Johns Hopkins Press, 1968); R. C. Nichols, “Twin Studies of Ability, Personality and Interest,” Homo 29 (1978), 158–173; N. G. Waller, T. J. Bouchard, D. T. Lykken, A. Tellegen, and D. Blacker, “Creativity, Heritability, and Familiality: Which Word Does Not Belong?” Psychological Inquiry 4 (1993): 235–237; N. G. Waller, T. J. Bouchard Jr., D. T. Lykken, A. Tellegen, and D. Blacker, “Why Creativity Does Not Run in Families: A Study of Twins Reared Apart,” unpublished manuscript, 1992. For a summary of research in this area, see R. K. Sawyer, Explaining Creativity: The Science of Human Innovation, 2nd ed. (New York: Oxford University Press, forthcoming).
9. A. G. Lafley and Ram Charan, The Game Changer (New York: Crown Business, 2008).
10. Indeed, the goal of “gene therapy” is to insert new genes into an in- dividual’s cells to replace a genetic defect with a properly functioning gene.
11. L. W. Busenitz and J. B. Barney, “Differences between Entre- preneurs and Managers in Large Organizations: Biases and Heuristics in Strategic Decision-Making,” Journal of Business Venturing 12 (1997): 9–30.
12. R. C. Anderson and D. M. Reeb, “Founding Family Ownership and Firm Performance: Evidence from the S&P 500,” The Journal of Finance, 58, no. 3 (June 2003): 1301–1327. This study found that compa- nies led by the CEO founder were 29 percent more profitable (net income to assets) and had 21 percent higher market valuations. These results cannot be attributed to the fact that founder-led companies are smaller and more likely to grow (they controlled for size and age) or are in more attractive industries (they controlled for industry). The authors conclude that “founders bring unique, value-adding skills to the firm that result in superior accounting performance and market valuations” (p. 1317).
Chapter 2 1. Walt Disney Company, 1965 Annual Report. 2. Gary Wolf, “Steve Jobs: The Next Insanely Great Thing,” Wired,
wired.com/wired/archive/4.02jobs_pr.html (accessed November 10, 2009).
262 NOTES
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3. We prefer the term associational thinking to pattern recognition because the latter term seems to suggest that there is an identifiable pattern innovative entrepreneurs recognize. As innovators described how they discovered or recognized ideas for innovative new ventures, it seemed to us that while they connected disparate ideas together, they often did not necessarily recognize a pattern, or even recognize that it would be a viable business opportunity. They often discovered that things fit together through trial and error and adaptation.
4. While Frans Johansson coined the term “The Medici Effect” for his bestselling book, we prefer a less time and place bound version of the term. Hence, we use the “Innovation Effect” when referring to places past, present, and future where a powerful convergence of different ideas generate substantial innovative results. Historically these were geo- graphic spaces that promoted intersections between people with differ- ent backgrounds and knowledge. Today these can be geographic places or virtual market spaces that are designed to foster connections between people with different knowledge.
5. In short, the Medici effect was not limited to the Medici family or the renaissance period in Florence, Italy. Instead, the Medici effect was simply a specific example of the common experience within sci- ence and elsewhere that innovations often result at the intersection of disciplines.
6. Mihaly Csikszentmihalyi, Creativity (New York: Harper Perennial 1996).
7. “Leslie Berlin, “We’ll Fill This Space, but First a Nap,” New York Times, September 28, 2008.
8. If you want books chock-full of ideas about how to connect ideas more creatively, pick up either of Michael Michalko’s books, Cracking Creativity or Thinkertoys. They’re exceptional.
9. Bill Taylor, “Trading Places: A Smart Way to Change Your Mind,” Harvard Business Review Blog, March 1, 2010.
Chapter 3 1. Quinn Spitzer and Ron Evans, Heads You Win: How the Best Com-
panies Think (New York: Simon and Schuster, 1997), 41. 2. Peter Drucker, The Practice of Management (New York: Wiley,
1954), 352–353. 3. Mihaly Csikszentmihalyi, Creativity (New York: Harper Perennial
1996).
263 Notes
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4. Karen Dillon, “Peter Drucker and A.G. Lafley want you to be curious,” October 8, 2010, http://blogs.hbr.org/hbr/hbreditors/2010/10/ what_will_you_be_curious_about.html.
5. Land not only created the Polaroid camera, but held 532 other patents for a variety of scientific and commercial purposes (a patent output second only to Thomas Edison).
6. Marissa Ann Mayer, “Turning Limitations into Innovations,” BusinessWeek, Feburary 1, 2006, http://www.businessweek.com/innovate/ content/jan2006/id20060131_531820.htm.
7. Rekha Balu, “Strategic Innovation: Hindustan Lever Ltd.,” FAST Company, May 31, 2001, http://www.fastcompany.com/magazine/47/ hindustan.html.
8. Alan Deutschman, “The once and future Steve Jobs,” October 11, 2000, http://www.salon.com/technology/books/2000/10/11/jobs_excerpt.
9. Brooks Barnes, “Disney’s Retail Plan Is a Theme Park in Its Stores,” New York Times, October 13, 2009.
10. Since our serendipitous discovery of QuestionStorming, we have since learned that others also stumbled across similar practices (e.g., Jon Roland, Questorming (http://www.pynthan.com/vri/questorm.htm); or Marilee Goldberg, The Art of the Question (New York: Wiley, 1997).
Chapter 4 1. Bob Sutton, a professor at Stanford, has used this expression, but
Tom Kelley of IDEO says he’s also heard that it originated with the comic George Carlin.
2. Tom Kelley, The Art of Innovation (New York: Doubleday, 2005), 16. 3. http://www.wired.com/magazine/tag/trimpin/, November 12, 2009. 4. Howard Shultz and Dori Jones Yang, Pour Your Heart Into It: How
Starbucks Built a Company One Cup at a Time (New York: Hyperion, 1997), 51–52
5. Ethan Waters, “Cars, Minus the Fins,” Fortune, July 9, 2007, B-1. 6. See http://www.nytimes.com/1991/01/27/books/notes-from-a-
more-real-world.html?src=pm.
Chapter 5 1. Ron Burt, “Structural Holes and Good Ideas,” American Journal of
Sociology 110, no. 2 (September 2004): 349–399. 2. See http://www.ted.com/pages/view/id/47.
264 NOTES
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Chapter 6 1. Steve Jobs, Stanford Commencement Speech, June 12, 2005. 2. M. Carpenter, G. Sanders, and H. Gregersen, “Bundling Human
Capital: The Impact of International Assignment Experience on CEO Pay and Multinational Firm Performance,” Academy of Management Journal 44, no. 3 (2001): 493–512.
3. Walter Isaacson, Einstein (New York: Simon and Schuster, 2007), 2.
Chapter 7 1. How the innovation premium is calculated: Step 1: In assessing a company’s current valuation, HOLT deter-
mines the next two years of cash generation from existing businesses for each firm based on the consensus estimate of earnings and revenues by analysts. The consensus estimate of earnings and revenues is based on the median of the combined estimates of carefully screened analysts cov- ering a public company as selected by Institutional Brokers Estimate System [I/B/E/S]). Benchmarks for historical periods (as are used in the innovation premium) use actual reported profitability and reinvestment rates as the starting point for the cash flow forecasts.
Step 2: HOLT then projects future free cash flows over the next 38 years from existing businesses based on fade algorithms developed from an analysis of historical cash flows from over 45,000 firms and more than 500,000 data points. The concept of fade embodies the common- sense notion that competition is the one enduring constant in free mar- kets (à la Schumpeter’s “creative destruction”) and that technological change and changing market dynamics all militate against the persist- ence of excessively high returns (this is consistent with prior research that consistently shows a “regression to the mean” effect with regard to firm profitability).
The fade algorithm for a given company is based on the following:
a. The forward two-year consensus estimate of ROI level. Firms with higher levels of profitability and ROI maintain higher returns into the future. However, the historical experience of most firms shows a “regression to the mean” effect, meaning that high ROIs will gradually fade toward the average ROI of firms in the economy. The higher the current level of profit, the faster the expected de- cline. (Firms will tend to maintain their rank order; however, the spread between the top and bottom performers tends to narrow.)
265 Notes
100092 99e 261-268 r1 rr 5/13/11 10:07 AM Page 265
b. Historical ROI volatility (over the previous five years). The greater the volatility of ROI historically, the faster the firm’s ROI tends to fade toward the average of all firms going forward. Firms with consistent and stable ROI are more likely to maintain a consistent ROI into the future.
c. A company’s reinvestment rate. The faster a company’s recent growth and the greater the amount of cash it has reinvested, the faster the firm’s ROI will fade toward the mean profitability of firms in the economy. It’s hard enough for a management team to maintain high levels of financial performance; doing this while also growing rapidly is even more difficult.
Step 3: The difference between the company’s total enterprise value (market value of equity plus total debt) and this value of existing business constitutes the innovation premium, expressed as a percentage of the enterprise value.
While HOLT’s fade algorithm is based specifically on the historical and future projected performance of the given firm, it may appear to re- flect sector identification or industry position. To the extent that firms in an industry or sector share the characteristics of ROI level, variability, and reinvestment, the pattern of fade will also be similar. There is also an ap- parent correlation between a company’s fade expectations and its position in the industry, since most industry leaders have higher and more stable rates of ROI and, having been through their growth phase in achieving their leadership position, no longer need to grow at above-average rates.
We require at least 10 years of financial data for a given firm in order to be considered on our list of most innovative companies. We also use a “research and development” screen requiring that companies make some investment in R&D. Also, to control for size differences, we include only those with a market value greater than $10 billion. In very rare cases when a company derived more than 80 percent of their revenues from a single high economic growth market (e.g., India, China), we assumed a small portion of the company’s innovation premium [5 percent of the difference in growth] was derived from domestic market growth rather than entering new products, services, or markets. Accordingly, we made a slight downward adjusted to the firm’s innovation premium, but this only made a minor change in a firm’s ranking and did not move any companies on, or off, the list. The innovation premium shown in the ta- bles in this chapter reflect a weight average innovation premium over five years with the weighting as follows: most recent year (30%), years 2–4 (20%), year 5 (10%).
266 NOTES
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2. Our ranking must exclude private companies like Virgin (#16 on the BusinessWeek list) and Tata (#25) because they do not have publicly traded stock and report financial results.
3. A. G. Lafley and R. Charan, Game Changer (New York: Random House, 2008), 21.
Chapter 8 1. As quoted in Carmine Gallo, The Innovation Secrets of Steve Jobs
(New York: McGraw-Hill, 2011).
Chapter 9 1. Carmine Gallo, The Innovation Secrets of Steve Jobs (New York:
McGraw-Hill, 2011), 31. 2. http://www.shmula.com/987/jeff-bezos-5-why-exercise-root-
cause-analysis-cause-and-effect-ishikawa-lean-thinking-six-sigma. 3. Gallo, The Innovation Secrets of Steve Jobs, 96. 4. Google’s Culture of Innovation, Innoblog, November 14, 2005,
http://www.innosight.com/blog/index.php?/archives/36-Googles- Culture-of-Innovation.html.
5. Nightline, “Deep Dive” video, February 9, 1999. 6. David Kelley interview at Stanford University’s business and
design school, August 21, 2006, http://sites.google.com/site/wyndowe/ iinnovateepisode3:davidkelley,founderofideo.
7. Nightline, “Deep Dive” video. 8. David Kelley interview, August 21, 2006.
Chapter 10 1. Steven Levy, The Perfect Thing: How the iPod Shuffles Commerce,
Culture, and Coolness (New York: Simon & Schuster, 2006), 118. 2. Jeffrey S. Young, Steve Jobs: The Journey Is the Reward (Glenview:
IL: Scott Foresman and Company, 1988), 176. 3. The categorization of innovation projects as “derivative,” “plat-
form,” or “breakthrough” comes from the Aggregate Project Planning framework introduced by Steven C. Wheelwright and Kim B. Clark. See: “Using Aggregate Planning to Link Strategy, Innovation, and the Resource Allocation Process,” HBS N9-301-431 (Boston: Harvard Busi- ness School Publishing, 2000).
267 Notes
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4. The concept of aggregate project planning was first introduced in Steven C. Wheelwright and Kim B. Clark, “Creating Project Plans to Focus Product Development,” Harvard Business Review, March–April 1992, 10-82.
5. Larry Page and Sergey Brin, “Letter from the Founders: ‘An Owner’s Manual’ for Google Shareholders,” Google Inc., Form S-1 Reg- istration, April 29, 2004, 1, via Thomson Research/Investext, http:// research.thomsonib.com.
6. “The Institutional Yes. An interview with Jeff Bezos,” Harvard Business Review, October 2007.
7. David Vise and Mark Malseed, The Google Story (New York: Dela- corte Press, 2005), 256.
8. John Battelle, The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture (New York: Penguin Group, 2005), 141.
9. See http://www.virgin.com/aboutvirgin/allaboutvirgin/richard replies/default.asp.
10. Keith Hammonds, “How Google Grows . . . and Grows . . . and Grows,” FastCompany.com, http://www.fastcompany.com/online/69/ google.html, March 2003.
11. Jonathan Ive, “Lessons On Designing Innovation,” interview, Radical Craft Conference, Art Center College of Design, Pasadena, CA, March 25, 2006.
12. Ken Robinson with Lou Aronica, The Element (New York: Penguin, 2009), 15.
Appendix C 1. These online assessments also provide a development guide with
your customized assessment report to help you understand your strengths and potential areas of improvement with regard to your discovery skills and delivery (execution) skills. The development guide also helps you build a skill development plan to leverage your strengths and improve on any major weaknesses that could derail your career.
268 NOTES
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Abilla, Pete, 200 Aby, Sharon, 197 action, importance of, 239–240 Activision Blizzard Inc., 163 Acuson, 201 Adams, Matt, 213 Alder, Nate, 143, 241 Alstom, 7 Alstom SA, 162 Amazon. See also Bezos, Jeff
autonomous business units of, 230
experimentation at, 7, 134–136, 208
hiring processes, 196 innovation premium, 160, 162 Kindle, 135, 225, 227 leadership of, 165–166 mistakes at, 26 project teams, 228 resources devoted to innova-
tion at, 227 Amritanandamayi, Mata, 42 analogies, as idea generators,
61–62 analyzing, as delivery skill, 32 Anderson, Chris, 153 Anderson, Philip, 103 Angiotech Pharmaceuticals, 72 anomalies, 102–103
“anthropologists,” role of, in innovation, 92
AppExchange, 161, 163 Apple, 1, 4, 7. See also Jobs, Steve
business creation at, 36–37 disruptive innovation by,
224–225 experimentation at, 139 expertise at, 191 hiring practices at, 197 innovation at, 18–21, 177, 179 innovation philosophy at,
218–219 innovation premium, 10, 160,
162, 179 leadership of, 177, 179 Lisa computer, 95 product creation at, 80 questioning process at, 201 resources devoted to
innovation at, 227 risk taking at, 232 “Think Different” ad campaign,
18, 37, 218–219, 240 Apple II, 18–19 architectural innovations, 103 Ariely, Dan, 221 Aspen Ideas Festival, 47, 123 associating, as discovery skill, 3,
23, 27–28, 41–64
269
Index
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associating, as discovery skill (continued)
comparison of skills in, 50 defined, 44–45 diverse experiences and, 45–48 at innovative companies, 212 innovative ideas and, 41–44 process of, 48–51 tips for developing skills in,
59–64, 255–256 where it happens, 45–48
associations forcing new, 59–61 places for new, 57–59 search for new, 51–57 unexpected, 49
Atlassian Labs, 222 autonomous business units,
229–230 Azul, 76–77, 124
Bacon, Penelope, 81 Bain & Company, 57, 66 Bean, Dan, 181–182 Becht, Bart, 206 behavior
associating, as discovery skill, 23 creativity and, 3, 21, 37, 235 experimenting, as discovery
skill, 24–25 networking, as discovery
skill, 24 observing, as discovery skill, 24 questioning, as discovery
skill, 23 Beiersdorf AG, 162, 207–208 Benioff, Marc, 2, 10, 241
idea creation by, 41–44 idea generation by, 49, 58
innovation by, 175 networking by, 117, 169 social problems addressed by,
236–237 Bezos, Jeff, 2, 5, 7, 8, 17, 123, 241
on company culture, 215 expansion by, 227 experimenting by, 134–136,
139, 169, 208 five-whys process and, 199–201 hiring process of, 36 on innovation at Amazon,
165–166 innovation by, 175 on mistakes, 26, 230–231 questioning by, 199–201
Bharat Heavy Electricals, 162 Big Idea Group (BIG), 72–73, 96,
185–187 big picture, 53–54 BlackBerry, 49, 52, 80, 114–115 BMW, 160, 161 Bowen, Kent, 121–122 Box, George, 134 brain, storage of knowledge
in, 48–49 brainstorming, 84–86, 212 Branson, Richard, 2, 55, 87, 125,
139, 195, 231, 235, 239 breakthrough ideas, 3 Brin, Sergey, 52 building-block ideas, 55–57 Burt, Ron, 117 business innovation, 189–190.
See also innovation business life cycles, skills needed
throughout, 32–37 business schools, 37 BusinessWeek, 4, 7, 33,
158–159, 160
270 INDEX
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Campus Pipeline, 73, 75 Catmull, Ed, 24 Celgene Corp., 162 Chatter, 43–44, 49, 163–164, 169 chief executive officers (CEOs)
personal networking groups of, 125–128
questioning dilemmas for, 81–82 children, developing discovery
skills in, 254–260 China, innovation in, 46–47 Christensen, Clayton, 1–2, 8, 92,
103, 189–190 Clark, Kim, 103, 225–226 cloud computing, 43, 135–136,
161, 227, 230 Cloyd, Gil, 179 coach, for developing discovery
skills, 253 Cohen, Orna, 111 Colgate-Palmolive Co., 163 Collins, Mike, 72–73, 96,
185–187, 241 combinations, odd, 51–53 combinatorial play, 43 companies. See also innovative
companies assessing level of innovation
of, 171–172 experience in multiple, 142–143 observing, 110, 202–203
company cultures, 82, 167, 215–234
competency-destroying changes, 103
competency-enhancing changes, 103
competitive advantage, from innovation, 1
complementary skills, 180–191
conferences, 129 Connect + Develop (C&D)
initiative, 205–206 constraints
eliminating, 80 imposing, 78–80
Cook, Scott, 7, 10, 49, 89, 241 discovery skills of, 29–30 on experts, 122 observing by, 95–96,
101–102, 109 questioning by, 72
corporate entrepreneurs, 5 associating skills of, 50 experimenting skills of, 137 networking by, 115–116 observing skills of, 97 questioning skills of, 69
counterintuitive questions, 70 courage to innovate, 25–27 Cow-Pie Clocks, 140–141 CPS Technologies, 121–122 creative communities, 129 creative thinking, 41 creativity, 1
behaviors and, 3, 21, 37, 235 capacity for, 18 constraints and, 78–80 development of, 21–22 as genetic trait, 18, 21–22,
27–28, 37 as making connections, 45 questioning as catalyst for, 83–84
Crocker, Gary, 97–98, 241 Csikszentmihalyi, Mihaly, 68 CSL Limited, 162 cultures
differences among, 82 experience of different, 142 organizational, 167, 215–234
271 Index
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curiosity, 11 curiosity boxes, 62–63 customers, observing, 97–101,
109, 202
Daimler, 108 data-driven analysis, 35 da Vinci system, 164, 201–202 Davos conference, 47, 123 de Bono, Edward, 55 decline stage, of business life
cycle, 35, 36 deconstruction, 144–145, 152 defocusing attention, 57–58 delivery-driven executives, 115,
139, 176–177 delivery skills, 30–37, 176–177
as complementary to discovery skills, 180–191
profile quiz, 38–40 Dell, Michael, 10, 242
on complementary skills, 183 discovery skills of, 29–30 experimenting by, 138, 139,
144–145 on innovation at Dell, 126–127
Dell Computer, 144–145, 183 derivative innovation, 224,
228–229, 238 desktop publishing, 20–21 detail-oriented implementing, 32 details, synthesizing with bigger
picture, 53–54 Dialogue in Silence, 110–111 Dialogue in the Dark, 110–111,
237–238 disciplined executing, 32 discovery-driven people. See also
innovators finding, 194–197
networking by, 115 new experiences and, 139–140
discovery quotient (DQ), 33–34 discovery skills, 3, 7, 23–25,
176–177 acquisition of, 22 assessing your, 251 associating, 23, 28, 41–64 in business life cycle, 32–37 in children, developing,
254–260 combining, 209–213 complementary, 180–191 developing, 249–260 experimenting, 24–25, 133–153 improving your, 31 innovative ideas and, 22–23, 37 of innovators, 33–34 need for, 11 networking, 24, 113–131 observing, 24, 89–111 practicing, 236, 252 profile quiz, 38–40 questioning, 23, 28, 65–88 return on, 140 strengths in, 28–30 success and, 9 time spent on, 25–27
Disney, 80, 218 Disney, Walt, 44 disposition to act, 239–240 disruptive innovation
experimentation and, 133–134 failure of large companies to
create, 37 new experiences and, 139–143 resources devoted to, 224–227 risk taking and, 230–233 skills needed for successful,
243–254 disruptive questions, 70–80
272 INDEX
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disruptive technologies, 1–2, 103 divergent thinking, 140 diverse experiences, 45–48,
139–143 diverse ideas, combining, 55–57 Drucker, Peter, 68
eBay, 1, 32 Eberle, Bob, 63 Ecolab Inc., 163 Edison, Thomas, 55, 133, 138–139 education, and jobs-to-be-done
framework, 94 Einstein, Albert, 41, 68, 113, 145 Embraer, 124–125 emotional quotient (EQ), 33 employees
finding innovative, 194–197 performance of, 198–199 swapping, 202–203
entrepreneurs characteristics of, 5 corporate, 5 founder, 33–37, 168, 250–251 start-up, 5
environment being in different, 119–120,
142–143, 151 changing the, 106–108
Essilor International Societe Anonyme, 163
execution skills, 31–32, 33–37 experiences, new, 139–143 experimenting, 3, 24–25,
133–153 at innovative companies, 166,
207–209, 212–213 new experiences, 139–143 with pilots and prototypes,
145–151
through deconstruction, 144–145
tips for developing skills in, 151–153, 259–260
ways of, 137–139 experimenting skills, comparison
of, 137 expertise, 56–57, 143, 190–191 experts
cross-training with, 131 outside, 120–122, 131
exploration, 138 external networking, 205–206
failure, 9–10, 230–232 Ferrazi, Keith, 129 Finish Quantum, 206 five-whys process, 77, 199–201 Fleiss, Jennifer, 147–149, 242 forced associations, 59–61 foreign countries, 119–120,
142, 151 Foster, John, 213 founder entrepreneurs, 33–37,
168, 250–251 functional teams, 229
Gadiesh, Orit, 2, 17, 66–68, 242 Gallo, David, 47 Garrity, Aaron, 70, 119, 242 Gates, Bill, 123 gene therapy, 28 genetics, of creativity, 18, 21–22,
27–28, 37 Gilbert, Clark, 103 Google, 4, 7, 25, 145
20 percent projects, 221–222 associating at, 52 employee swap by, 143, 202–203
273 Index
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Google (continued) experimentation at, 208–209 hiring processes, 195–196 innovation philosophy of,
221–222 innovation premium, 160, 162 internal networking at,
204–205 project teams, 228 resources devoted to
innovation at, 226–227 risk taking at, 232
Google Code Jam, 196 Google Labs Aptitude Test
(GLAT), 195–196 graphical user interface (GUI),
20, 95 Greene, Diane, 58, 242 growth and innovation premium.
See innovation premium growth stage, of business life
cycle, 33–35, 36 Groysberg, Boris, 198 Gürtler, Dieter, 108
Hastings, Reed, 142 heavyweight teams, 229 Heinecke, Andreas, 110–111,
237–238, 242 Henderson, Rebecca, 103 Hershey Co., 163 Hindustan Lever, 7, 79–80,
162, 164 hiring process, 194–197 HOLT, 4, 6, 160 Holt, Rod, 19 Honda, 160, 161 humbility, in willingness to ask
questions, 74–75
Hunter, William, 72 Hyman, Jennifer, 147–149, 242
idea networking, 115–120, 122–131, 204–206
ideas bias against new, 221 collecting, 55–57 cultivation of new, 139 mismatched, 51–53 recombining, 55–57 safe places for new, 57–59 serendipity and, 120 testing new, 153
ideas conferences, 47, 122–125, 129 IDEO
innovative processes at, 209–213
observing at, 92, 100, 203–204 people at, 188, 190–191,
196–197 questioning at, 72 recruitment at, 56–57 risk taking at, 169, 231–232 Tech Box, 63
IKEA, 150 individualism, 22 Industrial Light & Magic, 24 industries, experience in multiple,
142–143 information, accessing new,
151–152 innovation. See also disruptive
innovation assessing ‘organization’s level
of, 171–172 business, 189–190 courage for, 25–27 derivative, 224, 228–229, 238
274 INDEX
100092 99f 269-282 r0 ma 5/13/11 10:08 AM Page 274
encouraging, 219–220 as ‘everyone’s job, 216–223 need for, 1, 11, 17 open market, 205 platform, 225–226 questioning as catalyst for, 83–84 risk taking and, 230–233 role of anomalies in, 102–103 team, 181–182 technology, 189–190 time for, 221–223
innovation challenge, 252 innovation premium, 6–7,
159–165, 179–180 innovation skills. See discovery
skills innovative companies, 157–173
based on innovation premium, 159–165
BusinessWeek list of, 158–159, 160
characteristics of, 7–8 complementary skills at,
180–191 experimenting process at,
207–209 leadership of, 191–192,
215–216 networking process at,
204–206 observing process at, 201–204 people at, 165–168, 170,
175–192 philosophies of, 166–170,
215–234 processes at, 166–170, 193–213 questioning in, 197–201 ratings of, 4, 6–7 recruitment at, 194–197 risk taking in, 230–233
innovative ideas associational thinking and,
23, 41–64 behavior and, 21 generation of, 3, 17–21, 26–27 improving ability to
generate, 31 safe places for, 57–59, 219–221
innovative leaders, 7, 175–192, 197 innovators
associating skills in, 23, 49–51 behaviors and thought patterns
of, 2–4, 21–25 characteristics of, 18, 238–239 delivery skills and, 32–37 discovery skills in, 22–25,
28–30, 33–34 experimenting by, 133–153 as managers, 33–34 motivations of, 25 networking by, 113–131 observing by, 89–111 process, 5 product, 5 questioning by, 65–88 research on, 2–4, 8, 10–11 schedules of, 25–26 serial, 10 types of, 5–6
innovator’s DNA, 3, 25 intellectual quotient (IQ), 22, 33 intelligence, 22 internal networking, 204–205 international experiences,
142, 151 Intuit, 7, 49, 95–96, 101–102 Intuitive Surgical, 7, 161, 162,
164, 201–202 iPad, 54, 201 iPhone, 54, 225
275 Index
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iPod, 1, 54, 79, 224–225 Islamic renaissance, 46 iTunes, 54, 224–225 Ive, Jonathan, 232
Jacobsen, Eliot, 125, 129, 242 James, Josh, 242 JetBlue, 76, 124–125 Jobs, Steve, 2, 17
on creativity, 41, 45 early life of, 254–255 experimenting by, 138, 140 on expertise, 191 founding of Apple by, 18–21 on innovation, 175 innovation by, 24–25 innovative ideas of, 18–21 leadership of, 177–179 observing by, 24 on people, 194 product creation by, 54 questioning by, 80, 168 “Think Different” ad campaign
and, 218–219 jobs-to-be-done framework,
92–97 Johansson, Frans, 23, 46, 122 Johnson, Chris, 120 Jones, Jeff, 58, 73, 75, 125, 242
Kay, Alan, 24 Kelleher, Herb, 149–150, 219 Kelley, Tom, 92, 100, 203–204,
209 Kelly, Kevin, 153 Keyence Corporation, 163, 202 Kindle, 135, 225, 227 King, Kaki, 47 Klymit vest, 143
Knight, Frank, 239 knowledge
acquiring new, 152 breadth of, 56–57, 143 storage of, in brain, 48–49
Kotchla, Claudia, 168 Krantz, David, 81 Kuhn, Thomas, 102–103
Lafley, A. G., 2, 5, 10, 17, 27, 242 innovation by, 175,
179–180, 205 innovation philosophy of, 218 leadership of, 179–180 observing by, 107–108,
168–169 overseas experiences of, 142 questioning by, 69–70
Land, Edwin, 75–76, 230 Lazaridis, Mike, 2, 8, 49, 242
connecting ideas by, 52 discovery skills of, 29–30 experimenting by, 138 networking by, 114–115 questioning by, 80
leadership innovative, 7–8, 175–192, 197,
215–216 questioning ability and, 81–82
Legos, 55–56 Leschak, Peter, 108–109 Levchin, Max, 145–147 lightweight teams, 229 Lisa computer, 95 LiveTV, 124
MacBook Air, 226 Macintosh, 19–20 managers, 35–36, 78, 117–118
276 INDEX
100092 99f 269-282 r0 ma 5/13/11 10:08 AM Page 276
mature stage, of business life cycle, 35, 36
Mayer, Marissa, 78, 204 mealtime networking, 129 Media Mouth Inc., 104–105 Medici effect, 23, 46, 47, 122–123 mental maps, 71 mentor, as coach for developing
innovation skills, 253 metaphors, as used to develop
associating skills, 61–62 MET school, 94 Michalko, Michael, 63 Microsoft, 181–182 MicroVentures, 238 mistakes, 26, 230–231 modular innovations, 103 Moll, Fred, 201–202 Monsanto Co., 7, 162, 207 Morris Air, 76 Morton, Gordon, 119 Morton, Joe, 106, 118–119, 242 MovieMouth.com, 105 multidisciplinary teams, 188,
190–191 multisensory experience,
105–106, 110–111 Murdock, Kristen, 140–142, 242
Nanda, Ashish, 198 Neeleman, David, 10, 58, 76–77,
124–125, 219, 243 Netflix, 142 net present value logic, 140 networking, 3, 24, 113–131
comparison of skills in, 116 diversity and, 128–129 external, 205–206 idea, 115–120, 122–131,
204–206
at innovative companies, 211 internal, 204–205 mealtime, 129 with outside experts, 120–122 personal networking groups,
125–128 rejection and, 127–128 resource, 115, 116 tips for developing skills in,
128–131, 258–259 NIDEC Corporation, 163 Nintendo, 161 Nohria, Nitin, 198 noninnovators
associating skills of, 50 experimenting skills of, 137 networking by, 116 observing skills of, 96, 97 questioning skills of, 69
Nooyi, Indra, 47–48, 58 notebooks, question-centered,
87–88 NxLight, 75
object-oriented programming, 20 observations, types of, 96 observing, 3, 24, 89–111
companies, 110, 202–203 comparison of skills in, 97 customers, 97–101, 109, 202 framework for, 92–97 at innovative companies,
201–204, 210–211 with multiple senses, 110–111 in new environment, 106–108 questions to ask while,
100–101 tips for developing skills in,
109–111, 257–258 unexpected events, 101–106
277 Index
100092 99f 269-282 r0 ma 5/13/11 10:08 AM Page 277
odd combinations, as catalysts for innovation, 51–53
Ohno, Taiichi, 77, 199 Omidyar, Pierre, 2, 5, 8, 17, 243
discovery skills of, 29–30 idea generation by, 53 networking by, 116–117 partnerships of, 32, 183 questioning by, 71–72, 74,
77–78 open market innovation, 205 OpenTable.com, 99 Oracle, 42 Oral-B, 100 organizational culture, 82, 167,
215–234 organizations, skills needed for
successful, 32–37 Osborn, Alex, 63 OSX operating system, 20 outside-the-box thinking, 11, 79,
113–115 overseas experiences, 142, 151
Page, Larry, 25, 52, 145, 226 Palo Alto Research Center
(PARC), 19–20, 178 Pauling, Linus, 55 PayPal, 145–147 people
finding discovery-driven, 194–197
at innovative companies, 165–168, 170, 175–192
PepsiCo, 47–48 Pepsi Refresh, 48 peripheral vision, 104 personal networking groups,
125–128 personas, assuming, 61
Pestana, John, 242 philosophies
on disruptive innovation, 224–227
innovation as ‘everyone’s job, 216–223
at innovative companies, 166–170, 215–234
on project teams, 228–230 on risk taking, 230–233
pilots, as part of experimenting, 138, 145–151, 153
Pixar, 24, 54 planning, 32 platform innovations, 225–226 Polaroid, 75–76, 230 Postman, Neil, 75 priorities, reviewing your, 250–251 problem solving, 236–237 processes
employee performance and, 198–199
at innovative companies, 166–170, 193–213
process innovators, 5 associating skills of, 50 experimenting skills of, 137 networking by, 116 observing skills of, 97 questioning skills of, 69
Procter & Gamble, 5, 7, 10, 107–108, 142, 143, 163
Connect + Develop (C&D) initiative, 205–206
employee swap by, 202–203 external networking at,
205–206 innovation philosophy at, 218 innovation premium for,
179–180 questioning at, 69–70
278 INDEX
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product innovators, 5 associating skills of, 50 experimenting skills of, 137 networking by, 116 observing skills of, 96, 97 questioning skills of, 69
products, disassembling, 144–145, 152
project planning, 225 project teams, 228–230 prototypes, 138–139, 145–153,
212–213 PS3, 224, 228–229
Q/A ratio, 86–87 question-centered notebooks,
87–88 questioning, 3, 23, 28, 65–88
as catalyst for creative insights, 23, 83–84
comparison of skills in, 69 defined, 23, 68–70 dilemmas, 81–82 five-whys process, 199–201 at innovative companies,
197–201, 209–210 tips for developing skills in,
84–88, 256–257 questions
to ask, while observing customers, 100–101
counterintuitive, 70 disruptive, 70–80 encouraging, 219 inhibitors to asking, 74–75 power of, 68 translating statements into, 86 what-caused, 71, 72–73 what-if, 70, 77–80, 83,
168, 201
what-is, 71–72 why, 168 why-not, 166
QuestionStorming, 84–86 QuickBooks, 101–102 Quicken, 95–96, 101–102
Ray, Alvy, 24 Reckitt Benckiser Group (RB),
162, 164, 206 rejection, in networking, 127–128 Renaissance, 23 Rent the Runway, 147–149 research and development
(R&D), 217–218, 224 Research In Motion (RIM), 49,
114–115 Research Medical Inc., 97–98 research methods, 245–247 resource networking, 115, 116 risk taking, 25, 26, 216, 230–233 Robinson, Ken, 47, 232 Rollins, Kevin, 183, 242 Ruiz, Mark, 238
safe space, for innovative ideas, 57–59, 219–221
Saksena, Gagan, 205 Salesforce.com, 7, 41–44,
161–164, 169, 236–237 Samsung, 160, 161 Sandrock, Judi, 239 SCAMPER method, 63–64 Schein, Edgar, 167 schools, and jobs-to-be-done
framework, 94 Schultz, Howard, 2, 49–50,
106–107 science, anomalies in, 102–103
279 Index
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Segal, Leon, 105–106 self-esteem, 74–75 senior executives
delivery skills of, 30–37 personal networking groups of,
125–128 questioning dilemmas for,
81–82 senses, engaging your, 110–111 serendipity, 120 serial innovators, 10 Silicon Valley, 46 skills
complementary, 180–191 delivery, 30–37 discovery, 22–25 learning new, 143, 152
Skoll, Jeff, 32, 183 Skype, 1 sleep, 58 smart risks, 25, 26, 216, 230–233 Smith, Ross, 181–182 social challenges, 236–237 social intelligence, 44 social networks, 117–120, 128 Sony, 160, 161, 224, 228–229 Sony Walkman, 1 Southwest Airlines, 1,
149–150, 219 Starbucks, 1, 49–50, 106–107, 163 star players, 198–199 start-up entrepreneurs, 5
associating skills of, 50 experimenting skills of, 137 networking by, 115–116 observing skills of, 97 questioning skills of, 69
start-up stage, of business life cycle, 32, 35
status quo, 25–26, 66, 77, 78, 81–82
status quo bias, 25 Strategic Entrepreneurship
Journal, 4 success, in innovation, 9 sunk costs, 80 surprises, looking for, 101–106 sustaining technologies, 103 Synthes Incorporated, 163
Tata, Ratan, 89–93, 243 Tata Group, 89–93 Tata Nano, 89–93 TBWA, 61 team innovation, 181–182 teams
composition of, 184–188 functional, 229 heavyweight, 229 lightweight, 229 multidisciplinary, 188, 190–191 project, 228–230
technical expertise, 190 technology innovation, 189–190 TED (Technology Entertainment
and Design) conferences, 47, 123
Templeton, Chuck, 99 Terra Nova Biosystems, 120 Tesler, Larry, 178 Thiel, Peter, 10, 145–146, 243 “Think Different” ad campaign,
18, 37, 218–219, 240 thinking outside the box, 11, 79,
113–115 thought experiments, 145 thought processes, of inno-
vators, 3 threat-versus-opportunity
framing, 103 3M, 189–190, 222
280 INDEX
100092 99f 269-282 r0 ma 5/13/11 10:08 AM Page 280
3P framework, 165–173 time, for innovation, 221–223 Toyota, 160, 161, 197, 199 Toyota Production System (TPS),
77, 197, 199 trend spotting, 153 Trimpin, 105–106 Tushman, Michael, 103 twin studies, on creativity, 22 typography, 20–21
Unilever Heavy Electricals, 162
Vestas Wind Systems, 162, 164 Virgin Atlantic, 139 Virgin Galactic, 139 Virgin Inc., 195, 231–232 Virgin Records, 139 Visuoflow with Light Source, 98 VMWare, 58 vuja de, sense of, 91
Walkman, 224–25 Walt Disney Company, 80, 218
Weingartner, Charles, 75 Welch, Jack, 80 what-caused questions, 71–73 what-if questions, 70, 77–80, 83,
168, 201 what-is questions, 71–72 Wheelwright, Steve, 225–226 Whitman, Meg, 2, 17, 32, 77,
240, 243 why-not questions, 73, 75–77, 166 why questions, 73, 75–77, 168 workarounds, 98–99, 102 world challenges, 236–237 World Economic Forum Annual
Meeting, 47, 123 Wride, Corey, 104–105, 243 Wurman, Richard Saul, 122–123 XANGO, 70, 106, 119 Xerox, 19–20, 178
Young, Robert, 201
Zennström, Niklas, 10, 53–54, 239–240, 243
zooming in/zooming out, 53–54
281 Index
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100092 99f 269-282 r0 ma 5/13/11 10:08 AM Page 282
Acknowledgments
Almost a decade ago the innovator’s DNA research project started
to take shape and evolved through the contributions of hundreds,
even thousands, of people from around the world. Each of us feels
deep gratitude for the colleagues who played critical roles in
advancing our ideas much further than they might otherwise have
gone. We thank many of them individually below, but many others
played a pivotal role in moving this project forward and ultimately
bringing it to a conclusion.
No doubt this book would not have been possible without the
gracious gift of time given to us by so many disruptive innovators
who shared insights into the personal characteristics that helped
them innovate. While we interviewed close to a hundred such
innovators, we give special thanks to the following: Nate Alder
(Klymit), Marc Benioff (Salesforce.com), Jay Bean (ah-ha.com;
OrangeSoda, Inc.), Jeff Bezos (Amazon.com), Mike Collins (Big
Idea Group), Scott Cook (Intuit), Gary Crocker (Research Med-
ical, Inc.), Michael Dell and Kevin Rollins (Dell Computer), Orit
Gadeish (Bain & Co.), Aaron Garrity and Joe Morton (XanGo),
Diane Greene (VMware), Andreas Heinecke (Dialogue in the
Dark), Jennifer Hyman and Jenny Fleiss (Rent the Runway), Eliot
Jacobsen (Freeport, Inc.; Lumiport), Josh James and John Pestana
(Omniture), Jeff Jones (NxLight; Campus Pipeline), A.G. Lafley
(Procter & Gamble), Mike Lazaridis (Research in Motion), Kristin
Murdock (Cow-Pie Clocks and Greeting Cards), David Neeleman
(JetBlue; Azul), Pierre Omidyar and Meg Whitman (eBay), Mark
283
100092 99g 283-294 r1 rr 5/13/11 10:08 AM Page 283
Ruiz (Hapinoy), Ratan Tata (Tata Group), Peter Thiel (PayPal),
Corey Wride (Movie Mouth), and Niklas Zennström (Skype).
Lisa Stone, assistant to Clayton Christensen, worked hard to
coordinate many aspects of the project, but most of all she excelled
at setting up interviews with high-profile innovators. While this
might sound straightforward, it was at times a Herculean task to
coordinate the schedules of four busy people across three conti-
nents. Thanks, Lisa, for making miracles happen.
We would also like to extend special thanks to Michael McConnell
of HOLT (a section of Credit Suisse), who conducted the research
we used to calculate the innovation premium for the companies we
analyze in the book. Michael’s thoughtful guidance and careful
analysis made our ranking of the world’s most innovative compa-
nies possible. We cannot thank him (and HOLT) enough for his
expertise and insights.
When the writing finally came to a close, we reached out to sev-
eral innovators and best-selling authors who gave their valuable
time to carefully read the manuscript and provide us with feed-
back. For those efforts we’d like to thank Marc Benioff, A.G. Lafley,
Stephen Covey, and Scott Cook.
At Harvard Business Review Press many people extended them-
selves throughout the life of the project to make this a better book.
Melinda Merino, our editor, listened intently to our original pitch
and took it forward with vision and commitment. We appreciate
her thoughtful guidance on the book’s structure and content, as well
as her unwavering support and encouragement. More than once her
optimism came through with a cheery voice and a warm smile that
kept the creative ideas flowing and the manuscript moving along. At
Harvard Business Review, Sarah Cliffe gave us valuable feedback and
guidance on our original HBR article, “The Innovator’s DNA.”
Bronwyn Fryer, our HBR editor and later a freelance editor who
worked with us on the book, was indispensable in making our writ-
ing more coherent. She constantly pushed us to make the ideas
284 ACKNOWLEDGMENTS
100092 99g 283-294 r1 rr 5/13/11 10:08 AM Page 284
within each chapter more interesting, compelling, and accessible—
and she did it with exceptional speed and professionalism. As the
book moved into production and marketing, many others played
key roles in sustaining the energy behind our ideas and keeping us
focused on key deadlines. In particular, Jen Waring, Courtney
Cashman, Julie Devoll, and Alex Merceron fully leveraged their
professional skills in handling every aspect of the manuscript.
Beyond Harvard Business Review Press, two organizations and
their people were especially helpful in making this book a reality. At
Innosight, Scott Anthony, Mark Johnson, and Matt Eyring worked
tirelessly with us to shape our ideas for practical use by leaders
around the world. Their efforts helped keep the ideas solidly on
the ground where the greatest good can be done. Similarly, at
Stern+Associates, Danny Stern and his team were exceptional at
helping us frame the ideas for an even broader audience—and, we
hope, maximum impact.
From Jeff Dyer
When we started this project almost ten years ago, I had no idea of
the joyful, but challenging, journey before me. The innovator’s DNA
research has opened my eyes to the fact that all of us can make cre-
ative contributions towards a better world. I would first like to
acknowledge my sage and insightful coauthors, Hal Gregersen and
Clayton Christensen, who have taught me much and have made this
book possible. In particular, Hal excels at asking great questions and
stepping back to look at the big picture; Clay is a master at theoriz-
ing and knowing how to use “the case” to make theory interesting
and practical. Moreover, they are both great friends and wonderful
human beings.
The data collection effort for this book has been immense, and
I have many research assistants to thank who have worked untold
hours to make this manuscript possible. I would especially like to
285 Acknowledgments
100092 99g 283-294 r1 rr 5/13/11 10:08 AM Page 285
thank Nathan Furr, Mihaela Stan, Melissa Humes, Ryan Quinlan,
Jeff Wehrung, Nick Prince, Brandon Ausman, Jon Lewis, Stephen
Jones, Andrew Checketts, and James Core. In addition, I would like
to thank Spencer Cook for developing the tools to capture individ-
ual assessment data on our website, as research without data is not
possible. Thanks also to Greg Adams for his expert analysis of the
data that was used to test hypotheses in our Strategic Entrepre-
neurship Journal article, “Opportunity Recognition, Entrepreneur
Behaviors, and Origins of Innovative Ventures.” I would also like to
recognize and thank the scores of MBA students at Brigham Young
University who took my Creative Strategic Thinking course and
interviewed innovative entrepreneurs as part of their class projects.
Their work—and the interview transcripts they provided—was
invaluable in helping us to understand the processes by which inno-
vators discover new business ideas. Corey Wride, one of those MBA
students, was particularly helpful in reading the manuscript and
offering very useful suggestions. The transcriptions of all of the
innovator interviews, including the ones conducted by Hal, Clay,
and me, were done by Nina Whitehead and her staff, who always
managed to meet my ASAP deadlines. Indeed, all of the staff mem-
bers that support me at Brigham Young University are terrific and
deserve my thanks, especially my assistants Holly Jenkins, Stephanie
Graham, and Stephen Powell. I also must extend my heartfelt
thanks to Dean Gary Cornia and the other deans at the Marriott
School at Brigham Young University for the research funding that
has supported this project over the last ten years.
I must also acknowledge the contribution of my parents, Bill
and Bonnie Dyer. My mother has been a constant source of love
and support throughout my life. My father was an amazing exam-
ple to me in every aspect of life; but for this book, in particular,
I thank him for teaching me that it’s okay to ask questions.
Finally, I owe a deep debt of gratitude to my wife Ronalee and
my children, Aaron, Matthew, and McKenzie, who have always
286 ACKNOWLEDGMENTS
100092 99g 283-294 r1 rr 5/13/11 10:08 AM Page 286
supported me on this project despite the fact that it has taken a
great deal of my time and attention. Ronalee, especially, deserves
recognition for always taking such great care of our children and
me—we are all greatly blessed because of her love. So thanks,
Ronnie—the book is finally done.
From Hal Gregersen
For me the innovator’s DNA speaks deeply about the genesis of
ideas with impact. Now at the project’s end, it’s rewarding to reflect
on the ideas and actions of others that have shaped my innovation
journey. Let’s start with parents.
My father was a master at many things, ranging from the repair
and maintenance of anything mechanical to playing the clarinet,
saxophone, and bass with such intensity and mastery that his feet
often tapped out the beat in his sleep. My mother was equally adept
at making music with the flute and piano, but more important,
she always paid attention to what wasn’t being said when others
spoke. Her inquisitive ears and eyes reflected a heart in search of,
and then in service of, hidden needs. Thank you, Mom and Dad,
for constantly questioning the world (albeit from different angles)
and passing that legacy on to your children.
Shifting from home to school, one teacher stands out above
all in terms of unbridled curiosity—J. Bonner Ritchie. I worked
with him intensely during my master’s program, where he single-
handedly rewrote the maps in my mind by constantly confronting
my worldviews. Put simply, Bonner personified the innovator’s
DNA long before we ever put these ideas onto paper. His unsettling
questions, uncanny observations, and unusual dexterity with
metaphor lifted my own sense of inquiry to an entirely different
level. For that gift, Professor Bonner, thank you.
After finishing my PhD, I started a twenty-year search to under-
stand what makes great global leaders great. That search, however,
287 Acknowledgments
100092 99g 283-294 r1 rr 5/13/11 10:08 AM Page 287
was certainly not a solo effort. Many colleagues in the academic
world and executives in the business world played an important
role in the hunt. In particular, Stewart Black, as well as Mark
Mendenhall, Allen Morrison, and Gary Oddou, demonstrated
unbridled inquisitiveness in our work (and friendships)—just as
we had discovered global leaders doing in theirs. To each I give
heartfelt thanks, professionally and personally.
During the 1990s and early 2000s, I experienced a perfect incu-
bator at BYU for uncovering some of the early innovator’s DNA
ideas—especially around questioning and curiosity. These inklings
took shape and took hold in discussions with colleagues across the
campus, especially Gary Cornia, Matt Holland, Curtis LeBaron,
Lee Perry, Jerry Sanders, Michael Thompson, Greg Stewart, Mark
Widmer, Dave Whetten, and Alan Wilkins, along with a cadre of
exceptional research assistants including Cyndi Barrus, Chris Bing-
ham, Bruce Cardon, Jared Christensen, Ben Foulk, Melissa Humes
Campbell, Spencer Harrison, Mark Hamberlin, Julie Hite, Marcie
Holloman, Rob Jensen, Jayne Pauga, Alex Romney, Laura Stan-
worth, and Spencer Wheelwright. On the administrative side,
Holly Jenkins always excelled at supporting this work and was a
joyous breath of fresh air when things seemed deceptively heavy.
Crossing the Atlantic to teach at the London Business School
and then INSEAD shifted my role in the innovator’s DNA project
onto a truly global trajectory. INSEAD’s tagline, ”The Business
School for the World,” is much more than marketing hype.
Colleagues, administrative support, and executive education
participants come from every corner of the earth. Numerous inno-
vation and entrepreneurship-focused colleagues from each cam-
pus (Fontainebleau, Singapore, and Abu Dhabi), including Phil
Anderson, Henrik Bresman, Steve Chick, Yves Doz, Soumitra
Dutta, Charlie Galunic, Morten Hansen, Mark Hunter, Quy Huy,
Roger Lehman, Will Maddux, Steve Mezias, Jürgen Mihm, Mike
Pich, Subi Rangan, Gordon Redding, Loïc Sadoulet, Filipe Santos,
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Manuel Sosa, James Teboul, Ludo Van der Heyden, Hans Wahl,
and Luk Van Wassenhove have been exceptional at nurturing
insight-laden conversations. Administrators in the dean’s office—
Frank Brown, Anil Gaba, Dipak Jain, and Peter Zemsky—and in
the organizational behavior area—Paul Evans, Martin Gargiulo,
and Herminia Ibarra—have been equally generous in their sup-
port of the innovator’s DNA research. In addition, several INSEAD
research grants have been pivotal in moving the research along at
critical stages, and coaches from the INSEAD Global Leadership
Center have debriefed numerous Innovator’s DNA 360 Assess-
ments with consistent professionalism. Other INSEAD support
staff have been truly helpful to the project, while personal assis-
tants Jocelyn Bull, Melanie Camenzind, and Sumy Manoj have
played a key role in keeping my work (and often my life) on track
over the years. Finally, many thanks to at least a couple thousand
INSEAD executive education participants (executives, entrepre-
neurs, and social entrepreneurs) who contributed key insights
about the innovator’s DNA over the years and provided reams of
critical research data.
In the business, government, and social enterprise world, many
executives were particularly generous with their time and talents
related to nurturing my evolving insights on innovation. Stefan
Bauer at Eli Lilly has been a dedicated collaborator and constant
source of wisdom and insight when it comes to understanding
what innovation is and how to make it happen. His ideas and his
life have helped transform my own. Similarly, Schon Beechler, an
academic, consultant, and executive coach, has done the same
while working with me on numerous innovation-centered proj-
ects, ranging from recent professional development workshops on
questioning at the Academy of Management to ongoing research
with Teach for America about its teachers’ innovation skills. Oth-
ers include David Breashears (filmmaker, photographer, adven-
turer); Larry Kacher at ADIA; Fadi Ghandour at Aramex; Edward
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Dolman, Steven Murphy, Lisa King, Karen Deakin, Gillian Holden,
and Naomi Graham at Christie’s International; Ahmet Bozer and
Stevens J. Sainte-Rose at Coca-Cola; Andreas Heinecke, Orna
Cohen, and Meena Vaidyanathan at Dialogue in the Dark; Mark
Ruiz at Hapinoy; Pat Stocker at Marriott; David Daines and Denice
Jones at Nu Skin; and Dave Ulrich, Wayne Brockbank, and Norm
Smallwood at RBL (Results-Based Leadership).
Now I give deep thanks to my incredible coauthors, Jeff and
Clay, for their contributions to this book and to my life. When Jeff
joined BYU, he brought along his father’s “institution builder”
mentality. Jeff not only worked tirelessly to support colleagues’ cre-
ative efforts in the strategy group; he reached beyond the strategy
world to collaborate with me on an experimental MBA class, Cre-
ative Strategic Thinking. We hoped to merge a strategic perspec-
tive on how companies innovate with a psychological perspective
on how individuals innovate. This merger created a perspective-
changing classroom experience that continues on, with Jeff at the
helm. The unexpected side benefit of that course was an increas-
ing level of collaboration around where innovative ideas come
from and how they successfully move forward. Our collaboration
has been powerful, both professionally and personally. Jeff ’s capac-
ity to craft clear ideas and to exert discipline onto a project when
it might otherwise drift is exceptional. These gifts proved invalu-
able during a decade that rocked the Gregersen family in many
unexpected and difficult ways. Through it all, Jeff not only kept
the project on track, but even more important, he provided steady
personal support in the midst of difficult life challenges. I will
always be grateful to him for his professional excellence and his
personal friendship.
Almost ten years ago I first met Clay Christensen. I still remem-
ber the conversation as though it were yesterday. We talked in
depth about the transforming power of questions in our lives, at
home and at work. It was a dialogue steeped with insight and a bit
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of a precursor to the disruptive questions—in a good way—that
Clay would come to pose throughout the project. However, little
did any of us know that Clay (and his family) would tackle a series
of serious health challenges in the coming years: his heart attack,
then cancer, and then a stroke. Each took a heavy toll on Clay’s
health, and with each he faithfully clawed his way back to well-
being. Through it all, I stand amazed at his capacity to continue
taking on work and to do so with his characteristic kindness. When
I discussed innovator’s DNA ideas with Clay—whether he was in
good health or fighting to recover—he more often than not would
reset a theoretical framework for the book or a chapter that almost
always made it better. His passion for theory and his capacity for
building good theory left indelible marks on the innovator’s DNA.
No wonder he’s the author of disruptive innovation. Most of all,
I express gratitude to Clay that during his own physical challenges
he still found the time to supply energy-giving support and insight
into my own family’s ups and downs.
Finally, my gratitude comes full circle back to home. Our grand-
children Elizabeth, Madysen, Kash, Brookelynn, and Stella endlessly
surprise me with innocent nuggets of insight about the subtle and
often unseen nuances of life. Our children Kancie, Matt (and Emily),
Emilee (and Wes), Ryan, Kourtnie, Amber, Jordon, and Brooke con-
tinue to roam the world (literally and symbolically) in pursuit of
ideals and actions that make a difference. Collectively and individ-
ually, their resilience through difficult times inspires and encour-
ages my own hope in a brighter future—and with good reason.
Almost ten years ago my wife, Ann, bravely took on the frighten-
ing challenges of breast cancer. Unfortunately, two years later,
physicians acting on automatic pilot completely misdiagnosed the
rapid return of her cancer and, as a result, she passed away sud-
denly and perhaps unnecessarily (raising profound questions for
which there will likely not be clear answers in this life). Out of that
tragedy, though, another miracle walked into my life: Suzi, who
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grabbed my hand and heart to start a global journey that neither
of us expected. We married and later left the United States to expe-
rience more cultures and people than I ever thought the world
could dish up. Living and traveling with Suzi always includes
unplanned excursions that create wonder, awe, and, at the core, a
restoration of the heart. On those journeys it’s inspiring to watch
her completely engaged with sketching and painting her keen
observations of the world. Her counterintuitive take on life and
her deeply intuitive sense of direction are solid anchors in my
sometimes topsy-turvy world. Indeed, “forever and always” have
taken on even deeper meaning as we face the joys and sorrows of
earthly experience (including Suzi’s own experience with breast
cancer). What a gift it is to be married to your best friend. Nothing
better—especially when so much time and energy went into writ-
ing this book. So thank you, Suzi, for joining me on the journey
and infusing it with such joy. I have never seen blue like that before.
From Clayton M. Christensen
I feel the same sense of gratitude to the many individuals Jeff and
Hal have already mentioned. I add to these my wife Christine, who
takes over most things when writing a book takes over my life.
In addition I wish to thank the hundreds and hundreds of
managers—some senior executives, but most in the middle ranks,
who also taught us profound lessons about how to be innovators—
because they have repeatedly failed at it. Few of these managers will
find their names in this book despite the fact that they shaped our
thinking profoundly. But I hope that they hear their voices within
its pages—not attributed, unfortunately, because there literally are
too many to mention. Great theories only emerge from work in
which researchers repeatedly try to find anomalies that the theory
can’t explain—which is why I am so thankful for those who were
willing to explain to us why things don’t always work as expected.
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I am grateful for the opportunity Jeff and Hal gave me to work
on their team. Hal taught me the value of asking the right ques-
tions. Jeff taught me how to get the right answers. My role on our
team was to stand in the coach’s box by third base. I would wave
Hal and Jeff on to home plate, chapter after chapter. I hope that we
can play again.
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About the Authors
Jeff Dyer is the Horace Beesley Professor of Strategy at the Marriott
School, Brigham Young University, and adjunct professor of strategy
at the University of Pennsylvania’s Wharton School. Dyer holds a
PhD in Management from UCLA. He is the only strategy scholar in
the world to have published five times in both Strategic Management
Journal and Harvard Business Review. The impact of his work is
evidenced by the fact that he was recognized by Essential Science
Indicators as the fourth most cited management scholar and seven-
teenth most cited overall scholar (1996–2006) in the combined fields
of management, finance, marketing, operations, and economics. His
Oxford book, Collaborative Advantage, was awarded the Shingo
Research and Professional Publication Award.
Dyer, a former Bain & Company manager, regularly gives
speeches, consults, and conducts training programs in the areas of
innovation and strategy. His past clients include Baxter Interna-
tional, Boeing, Ford, Kraft, General Electric, Johnson & Johnson,
and Medtronic.
Hal Gregersen is a Professor of Leadership at INSEAD, where he
pursues his vocation of executive teaching, coaching, and consult-
ing by researching how leaders discover new ideas, develop the ca-
pacity to realize those ideas, and deliver high-impact results. He
holds a PhD from the University of California, Irvine. Before join-
ing INSEAD, he taught at the London Business School, Dart-
mouth’s Tuck School of Business, and Brigham Young University.
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He also served as a Fulbright Fellow at the Turku School of Eco-
nomics in Finland.
Gregersen has coauthored many books, including It Starts with
One: Changing Individuals Changes Organizations, and has published
over fifty scholarly articles. Putting this research into practice, he con-
sults with senior teams, conducts workshops, and delivers keynote
speeches with global clients, including Adidas, Aramex, Cemex,
Christie’s, Coca-Cola, Daimler, IBM, Intel, LG, Lilly, Marriott, Nokia,
Sanofi-Aventis, Twinings, and the World Economic Forum. He also
works with social enterprises such as Teach for America, Dialogue
in the Dark, and Room 13 to help build the next generation of
leaders. Traveling the world, he pursues a lifelong avocation—
photography—as part of a global community of social entrepreneurs
committed to creating positive change through the arts.
Clayton M. Christensen is the Robert and Jane Cizik Professor
of Business Administration at Harvard Business School. He is
regarded as one of the world’s foremost experts on the manage-
ment of innovation and technological change. Christensen holds a
BA in economics from Brigham Young University; an MPhil in eco-
nomics from Oxford University, where he studied as a Rhodes
Scholar; and MBA and DBA degrees from Harvard Business
School, where he graduated with highest honors as a George F.
Baker Scholar. His publications on the management of technolog-
ical innovation have received numerous academic awards, includ-
ing the McKinsey Award and the Global Business Book Award. One
of his most recent articles, “How to Measure Your Life,” published
in the Harvard Business Review, won the 2010 McKinsey Award. In
addition to his academic pursuits, Christensen is the founder of
three successful companies: CPS Technologies, Innosight LLC, and
Rose Park Advisors. During the administration of President Ronald
Reagan, he served as a White House Fellow.
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- Contents
- Introduction
- PART ONE Disruptive Innovation Starts with You
- 1 The DNA of Disruptive Innovators
- 2 Discovery Skill #1 Associating
- 3 Discovery Skill #2 Questioning
- 4 Discovery Skill #3 Observing
- 5 Discovery Skill #4 Networking
- 6 Discovery Skill #5 Experimenting
- PART TWO The DNA of Disruptive Organizations and Teams
- 7 The DNA of the World’sMost Innovative Companies
- 8 Putting the Innovator’s DNA into Practice People
- 9 Putting the Innovator’s DNA into Practice Processes
- 10 Putting the Innovator’s DNA into Practice Philosophies
- Conclusion Act Different,Think Different, Make a Difference
- Appendix A Sample of Innovators Interviewed
- Appendix B The Innovator’s DNA Research Methods
- Appendix C Developing Discovery Skills
- Notes
- Index
- Acknowledgments
- About the Authors