The Innovator's DNA - NYU Integrated Marketing Presentation
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A breakdown and insight into the book "The Innovator's DNA"
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The Innovator's DNA - NYU Integrated Marketing Presentation
- 1. The Innovator’s DNA SUMMARIZED BY: CAMIA GAVIN KABEER MALHOTRA BILL STANTON MILLIE ZHAO D E C E M B E R 2 , 2 0 1 3 WRIT TEN BY: JEFF DYER HAL GREGERSEN CLAYTON M. CHRISTENSEN
- 2. Part One: Disruptive Innovation Starts with You
- 3. Who Is Classified as an Innovator? I. Start-up Entrepreneurs II. Corporate Entrepreneurs III. Product Innovators IV. Process Innovators Innovative Companies are almost always lead by innovative leaders.
- 4. Reality Check •Engaging in discovery skills does not ensure financial success •Failure often results in from not being vigilant in engaging all discovery skills •Not all innovators in the book should not be held up as an example on how to be innovative
- 5. Discovery Skills: The Courage to Innovate The Five Discovery Skills of Innovation I. Associating II. Questioning III. Observing IV. Networking V. Experimenting
- 6. Discovery Skill #1: Associating Associating is the ability to make surprising connections across areas of knowledge, industries, even geographies. • Connecting wildly different ideas, objects, services, technologies and disciplines to dish up new and unusual innovations • Innovators intentionally maneuver themselves into the intersection where diverse experiences flourish and foster discovery of new insights. • When the brain is actively absorbing new knowledge, it is more likely to trigger connections between ideas as it toils to synthesize novel outputs. • Lego thinking and getting lots of ideas from different sources creates the best of all innovation worlds.
- 7. Discovery Skill #2: Questioning Questions hold the potential to cultivate creative insights. A way of life for innovators, not a trendy intellectual exercise. Asking Disruptive Questions by treating the world as a question mark. Be willing to look Stupid! Dilemmas for Senior Leaders
- 8. Discovery Skill #3: Observing Most Innovators are intense observers Look for the “job” and a better way to do it Understanding the Job to be done Actively watch customers and look for workarounds Ten Questions to ask while observing Change the environment Develop observation skills “All of us are watchers – of television, of time clocks, of traffic on the freeway – but few are observers. Everyone is looking, not many are seeing” -Peter Leschak
- 9. Framework for Observing Look for the “job” and find a better way of doing it OpenTable.com •Find cuisine of choice •Make reservation at convenient time •Have access to discounted meals •Essentially a personal restaurant concierge
- 10. Look for surprises •Traditional thinking can tell us to steer away from anomalies •Think like a scientific researcher and seek out anomalies •Cory Wride and Media Mouth Inc.
- 11. Change the Environment From foreign countries to zoos… A new environment can help provide a fresh way to look at the same problem
- 12. Discovery Skill #4: Networking Idea Networking VS Resource Networking Discovery-Driven Executives Why they network: -New surprising ideas -Fresh perspectives -Test ideas Target -People with different traits -Experts/Nonexperts in others fields Delivery-Driven Executives Why they network: -Access to resources -Sell themselves/company -Further careers Target: -Similar people -People with resources & power
- 13. How to Idea Network •Tap people outside of the field for creative inspiration •Attending Networking Events •Form a Personal Networking Group
- 14. Discovery Skill #5: Experimenting Try Out New Experiences •Diversity of experience fosters divergent thinking •Provides larger set of ideas when associating Take Apart Processes and Ideas •Deconstruction followed by reconstruction •Michael Dell literally and figuratively took apart manufacturing of PC’s Test New Ideas Through Pilots and Prototypes •PayPal began when Michael Levchin wanted to transfer money from one Palm Pilot to another
- 15. Part Two: The DNA of Disruptive Organizations & Teams
- 16. Successful Innovation = Profits “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.” - A.G. Lafley (Chairman of Board, President & CEO of P&G)
- 17. World’s Most Innovative Companies Innovative Premium: Market Value that cannot be accounted from current business • Market Value > Cash Flows = growth & innovation • Expectations of NEW and PROFITS
- 18. World’s Top Innovative Companies Salesforce.com (founder: Marc Benioff) • First to offer online/on-demand CRM/Salesforce automaton software • Cloud computing • App Exchange: applications for businesses • Chatter “Facebook + Twitter” for business Intuitive Surgical: • Robotic assisted surgery • 3D visualization and robotic arms to ensure accuracy = smaller incisions, fewer mistakes, etc. • Future goal: Long distance surgery
- 19. Key DNA Qualities: 3P • Excel at discovery • Management should spearhead innovation • Monitor, maintain & hire high discovery-quotient people in every level People: • Encourage employees to associate, question, observe, network, and experiment • Processes are designed to hire, train, reward, and promote discovery driven people Process: • Innovation is everyone’s job • Disruption is part of the innovation portfolio • Deploy small, properly organized innovation project teams • Take smart risks in pursuit of innovation Philosophies:
- 20. People Build a team with complementary skills Lead by setting an example • Innovative leaders make a difference • Executives’ actions are signal to a organization • Create a balanced team: Understand your strengths & weaknesses Discovery- driven Delivery- driven Associating Questioning Observing Idea networking Experimenting Analyzing Planning Detail-oriented Execution
- 21. Innovative Teams Big Idea Group (BIG): Intermediate company between innovators and distribution channels •“Idea Generation” • Look for innovative ideas through its networks •“Winnowing” • Panels of strong discovery skill individuals to evaluate •“Refinement” • Evaluate potential value & size of the marketplace • Strong delivery skills needed • Some discovery skills to assess innovation adaptations •“Capture Value” • Product launch in market http://www.bigideagroup.net/ IDEO: Design firm that takes a human-centered & design- based approach to helping organizations innovate and grow •T-Shape teams • Deep expertise in a specific area & shallow expertise in multiple areas •“human factors” determine desirability of an idea •“technical factors” assess feasibility of an idea •“business factors” evaluate business viability
- 22. Processes DNA of Innovative Companies DNA of Innovative Individuals The DNA of innovative companies reflects the DNA of innovative individuals. Their approach changes the way the organization leads and does business
- 23. Discovery Processes Questioning Five-Whys Observing Manufacturing Employees Idea Networking Internal External Experimenting Rapid Trial & Error
- 25. Philosophies “Innovation is deeply ingrained in all of the nooks and crannies of our culture” -Jeff Bezos
- 26. Philosophy #1 Innovation is everyone’s job (not just R&D)
- 27. Philosophy #2 Disruptive Innovation is part of our innovation portfolio
- 29. Philosophy #4 Take Smart Risks in Pursuit of Innovation “If you’re not prepared to be wrong, you’ll never come up with anything original”
- 31. Conclusion 5 Skills of Disruptive Innovation: Associating ExperimentingNetworkingObservingQuestioning
- 32. Conclusion DNA of Innovative Companies: Philosophies: Innovation needs to be thought of daily, by the entire company Processes: Use of the 5 skills of innovation People: Discovery-oriented executives over delivery-oriented
- 33. Key Takeaways •Innovation is more nurture than nature •Anyone can train to become more innovative •Innovative companies are led by discovery- oriented leaders •Innovation is an investment in yourself
- 34. Thank you
Notas del editor
- Entrepreneurs do not differ greatly from successful innovative CEOs.
- Developing Associating Skills
- -Observe how people use a service and find out what they are really trying to do, then improve on it -OpenTable.com founder Chuck Templeton observed his wife trying to make reservation for a table for 3.5 hours with no luck -Boiled down the process of eating out to 3 main points: finding desirable cuisine, making a convenient reservation, getting a good deal
- -Media Mouth Inc. founder Cory Wride saw an anomaly/outlier in Brazil – best English speaker had no formal training and learned by watching American TV shows like friends -Media Mouth Inc. designed to teach languages through TV and movies
- -Automobile engineer from DaimlerChrysler took a team to a local museum to watch fish - Came up with innovative design idea based on size and skeletal structure of boxfish
- -Idea networkers expose themselves to new ways of thinking and new people -Resource networkers are looking for similar people to help acquire resources or to advance their career
- -Jeff Bezos regularly attends TED talks
- Part One of the book described innovative people and the 5 discovery skills. The second part of the book dives into innovative companies that more often then not, lead by these innovative leaders like Steve Job(Apple), AJ Lafley (P&G), Jeff Besos (Amazon), Mike Lazardis (RIM), Meg Whitman (ebay), etc. However, there’s no “i” in team and therefore – no successful innovator can be success without teamwork. The authors studied top ranking companies then isolated the 3 key dna qualities of a team and provide examples of how to put it into practice. 8 year collaborative study to understand innovators and the innovative companies they created by igniting innovation within their company. Deep-diving into their thinking. Over 500+ innovators & 5,000 executives in 75+ countries
- Innovative people think differently and act differently to generate new ideas/insights new products & services Future innovations: look at firms’ current and skate to the money Deep Dive into innovative companies: 1) Business Week: Calculate 5 Year Innovation Premium. Firm’s market value was higher than cash flows of existing businesses = cannot be accounted for, therefore investors are expecting companies to come up with profitable new products or markets. Deep dive allows the authors to
- Started by looking at Business Week annual ranking of top innovative companies. 2005-2009 ranking based on votes from executives & identifies the companies with reputation for being innovative .. But is it then based on popularity? At least this is how our authors felt that it was more based on past performance Innovative Premium was calculated by the authors to show what companies are thinking towards the future. Have investors vote and provide insights into the companies they think would produce the future innovation (new services, products, markets). Determine the % of market value that is attributed to current products/services/markets. Then if they % of market value is higher than cash flow that could be attributed to its existing then the company would have a growth and innovation premium IP = a proportion of a company market value that cannot be accounted from cash flows of current business Investors expect these companies to come up with new products and generate high profits Higher the %IP the higher an investor’s epecations of future innovations Column 1: Business Week 2005-2009 innovative companies by voting Column 2: is a re-rank based on the innovative premium. Brands like Honda and Toyota are not on top and going to experience a negative % premium due to new competitors. Investors are not expecting growth and maybe even drop in innovations Column 3: different companies to show where innovation is happening now… Patterns: More likely to be lead by an innovative leader/founder with high discovery skills Innovative companies are almost always led by innovative leaders you need to creatively skills without top management team, innovative leader imprint their organizations with their behaviors. Their companies mirrors them if an innovative leader systematically employs that 5 discovery skills then the company is systematically employing the 5 discovery skills
- Not about digging into the strategies but into the thinking of innovation Saleforces.com: Disrupt software industry 1-1-1 philosophy 1% of all employee's time, all of its products and equity go towards improving communities and promotion compassionate capitalism “business of changing the world
- Building block of discovery-driven building blocks of highly innovative organizations & teams People: Management should spearhead innovation Excel at discovery Monitor, maintain & hire high discovery-quotient people in every level: management, functional, and decision-making stage of the innovation process Process: Encourage employees to associate, question, observe, network, and experiment Processes are designed to hire, train, reward, and promote discovery driven people Philosophies: Innovation is everyone’s job Disruption is part of the innovation portfolio Deploy small, properly organized innovation project teams Take smart risks in pursuit of innovation
- Innovative companies are often led by innovative leaders and employees are often filled with people who excelled at the 5 discovery skills and wiser than the less innovative companies about the strategic use of discovery-driven people. Therefore innovative leaders make a difference Steve Job & Apple: Went to Xerox and understood the use of the mouse and GUI interface within an hour vs. the executives at Xerox At apple from 1980-1985 and innovation premium was 37%, lets and IP was -31%, came back from 2005-2010 IP was 52% Brought back innovation to Apple to 52% Innovation Premium AJ Lefley & P&G – ignite innovation IP before Lafley was +23% 2001-2009 Lafley tenure yield +35% IP Initiated major organizational changes “connect & develop)” Increased innovation at P&G to 35% Innovation Premium with “Connect & Develop” Demonstrated innovation is a team effort Michael Dell Discovery & delivery with Kevin Rollins. “Michael owns more of the entrepreneurial juice. 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..” eBay: 1) Pierre Omidyar (creative work, develop products and problem solving) was aware he has strong discovery but weak delivery, so he hired Jeff Skoll (analytical and practical) Overall key takeaway: Application of discovery tips in the book will take practice Ability to generate ideas and the ability to execute those ideas Creative Discovery is difficult Innovation is an investment in yourself
- BIG: intermediary between product inventors and innovative product-buying companies/distribution channels
- 1. Jeff Bezos: Five-whys to discover why an employee had a hand injury from a conveyor belt 2. ”If you’re not in the jungle, you’re not going to know the tiger” A. Keyence Corporation: Japanese company that specializes in factory automation devices had the salesforce go to observe the manufacturing of their different sites. One obseration was that noodles were being cut unevenly which effected quality. They innovated a machine to cut perfect noodles and Intnat Noodles makers now depend on those machines to keep consistency in their product. B. Google and P&G did a swap of marketing and HR employees. They worked in each others offices and observed campaign rollouts and strategy creation. One outcome was that when P&G was about to launch a new diaper, Google employees questioned why there weren’t any mommy bloggers invited to the event. P&G invited the bloggers and the launch was tremendously successful. 3. Companies encourage innovation through yearly employee idea contests, 10 min engineers pitch, and meals provided by the company so people can talk across apartments Open Market Innovation: P&G used Connect and Develop (C&D) processes to launch many products while spending less on R&D internally. They worked with independent researchers, other companies, and sometimes even competitors. 4. Monsanto’s Digital Planting Experiements, Creators of Nivea and Eucerin whose Hamburg headquarters is in the shape of a skin cell and tries out the effectiveness of new skin products on about 6,000 volunteers each year.
- Show who we are by showing our “heroes” It was a message to the employees too Make it Safe - In order to have everyone be an innovator, the company needs to make a “safe space” for this. Researchers call it “psychological safety” CEO of Southwest Airlines says, “I just watch, I listen, and I encourage them to ask me the tough questions.” Give them Time – Google’s 20% rule, where engineers can spend up to 20% of their time on side projects and ideas
- Innovative companies put their money where their mouth is. More is spent on R&D, more human and financial resources are allocated to innovation projects. Through this commitment, they can achieve “disruptive” innovation results. Creating products that impact the market tremendously or open up entirely new markets.
- Size – Amazon’s “Two Pizza” teams: teams should be small enough (6-10 people) to be fed by two pizzas Google’s engineers work in teams of 3-6 people. “We try to keep it small. You don’t get productivity out of large groups” Autonomy and Diversity– Teams need a good mix of players to have breakthrough ideas come out, and they need space to work since the more disruptive their ideas, the more they may challenge the status quo
- It’s hard to take risks when there’s a fear of failing. Innovative companies look at failure as a learning experience and use it to get closer to a winning product. “Smart” risks – Learning from failures, why they didn’t work, without hurting the brand. Having teams of people who are using all the Discovery Processes lowers the risk of innovation failure. This makes the risks “smart”