Looking ahead

The right time to create a culture of innovation is when you're in the lead.
Illustration by Kishore Das

It doesn’t matter what industry you are in: someone, somewhere is building a product, process or business model designed to kick your ass. If it’s you, then you define the rules by which others must play the game. If it’s not you, then you better get comfortable playing by someone else’s rules. Someone is going to start a revolution that will disrupt your industry and amaze your customers. It can be you, but only if you are willing to accelerate innovation and bake it into the way you work. So, what would it look like if you were to create a culture of innovation?

1. Be hungry for change: In the next 24 months, your organisation, and you, will change. The question is: will these changes be crisis-driven or opportunity-led? A culture of innovation is one where people are hungry for change because they want to establish the ground rules.

2. Question the unquestionable: Think like an outsider. Challenge your taken-for-granted assumptions — about the way your industry works, what your competitors are doing, your customers’ expectations and what your employees are truly capable of. Southwest questioned the hub-and-spoke route system, Muhammad Yunus questioned the ‘poor are not creditworthy’ assumption, Mary Kay Ash questioned the ‘women only buy in stores’ paradigm and Apple questioned the wisdom that the music industry would never sell songs for 99 cents. As human beings, we feel the urge to protect and defend instead of questioning what we believe about the way the world works. When you are wrapped around the axle of protecting the status quo — which usually happens because you helped establish and perfect it — the temptation is to spend your energy defending it instead of questioning it. Unfortunately, it’s almost impossible to create the next big thing if you can’t let go.

3. Go to the intersection of trends to find opportunities: Competitive advantage goes not to the strongest, smartest or richest firms, but to those that develop the capacity to see what others can’t see and turn those insights into innovations faster than their competitors. Innovators aren’t necessarily futurists, but they pay close attention to the warning signs that precede major cultural, societal and market shifts. You can’t win with yesterday’s ideas, so what are the big, converging trends that are headed your way? The white space where rising trends intersect is a huge opportunity for innovation.

4. Look for breakthroughs beyond your industry: Where do new ideas come from? They don’t come from sitting in the same office, talking to the same people, looking at the same computer screens day after day. Spending the majority of your time with people who share your beliefs and assumptions doesn’t unleash your creativity, it sharpens your prejudices. It doesn’t promote discovery and leads to closed-mindedness. Toronto-based Goldcorp ran an online contest, inviting people to help it find gold in an ailing gold mine in Canada. More than 1,400 people downloaded data about the 55,000-acre property and people from 51 countries around the world submitted 77 proposals using methods and technology that, in many cases, Goldcorp had never heard about. For $500,000 in awards, the company and its global brain trust found more than $3 billion in gold, making Red Lake the richest gold mine in the world. Some of the most elegant solutions will come from places outside your industry. The question is: do you have the organisational humility to look outside?

5. Look beyond customer imagination: Inside companies all over the globe, the term ‘customer-driven’ means that customers should articulate their expectations and suppliers should rise to meet or exceed them. Right? But that’s not the way it played out with some of the greatest innovations in the world. Who asked Douglas Engelbart to create the computer mouse or Roy Plunkett to discover Teflon or Freon? Who asked Starbucks founder Howard Schultz to create a comfortable place between home and work to have coffee — for $4? And what about people selling used goods or doing research? They weren’t shouting out for the invention of eBay or Google, were they? Customers are smart and never to be underestimated, but they don’t always know what they want and even if they did, they can’t always tell you. In fact, listening to customers might derail you from pursuing breakthrough innovation and changes that will differentiate your business. How many customers are aware of your future capabilities? How many customers are in the right frame of mind to share their ideas for an innovative new product that is likely to displace the one they just bought? Had Steve Jobs asked consumers what they wanted before developing the iPod, what would they have said? What was on the market sold for less than $60. How many focus group members would have said, “We’re okay with your $400 price?”

6. Let limitation drive creativity: Are limitations a blessing or a curse? It’s up to you. Limitations come in all shapes and sizes: they could be financial, regulatory, geographical or political. These constraints can call forth cleverness and be a springboard for creativity or paralyse you. Limitations can drive you towards simplicity and force you to do more with less in more ingenious ways or become a convenient excuse for not doing the critical and creative thinking required to push to the next level. When you have an abundance of resources, you have less motivation to be creative — it’s easy to take what you have for granted. Innovators often apply their imagination and ingenuity to find unique solutions within the constraints they can’t change.

For more than 40 years, regulatory limitations have been a source of innovation for Southwest Airlines. Its flight attendants know that the Federal Aviation Administration (FAA) gives no leeway on what must be said in pre-flight safety announcements. Most firms would have left it at that, but not Southwest. Its people saw the regulations as an opportunity to be creative. On many Southwest flights, you will hear the attendant sing the safety announcement or incorporate it into a comedic routine. Here’s the power that comes from exploiting constraints: first, people actually learn from the announcement. Second, it takes the monotony out of waiting for the flight to take off and eases the stress of nervous flyers. Finally, customers get off the airplane with an unforgettable experience — one that causes the firm to stand out — and tell their friends and colleagues about what happened.

7. Jettison the incumbent mentality: You can’t shape the future by looking in the rearview mirror or wallowing in past glories. When you stop bringing something fresh to the table, the game is over. Incumbents are vulnerable to the fatal trap of thinking the future will be more of the same, only better — more choices, better features and better design — all incremental improvements on yesterday’s headlines. Innovators see the future as a whole new game. Incumbents seek to grow market share by being better than the competition. But even if they are better, competitors catch up, innovations become commoditised and incumbents eventually get forced into a price war. Innovators sidestep the price-value discussion by creating new markets and making the competition irrelevant. So, if you’re going to innovate over the long haul, you better learn how to manage the creative tension that comes with pouring yourself into something the world is ecstatic about and then letting go of it to pursue the next big thing.

How did Jobs and Apple come up with game-changing innovations one after another for over 25 years? One could hardly accuse the people at Apple of not being fanatical about what they believe in or not being devoted to what they have created. Yet, they have demonstrated the incredible discipline to challenge those beliefs and let devotion to one product give way to another.