Why Innovation Is Going To Keep You Competitive

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How can we ensure that our teams innovate and stay competitive?

Fostering innovation, much like creativity and productivity, depends largely on the environment. Countless startups rage onto the scene chock full of bright ideas and innovative technology, and yet just as swiftly they falter and disappear. Then there are the powerhouse companies, stalwart corporations with decades under their belt who steadily create new ventures but never seem able to break through. So what is the secret to becoming truly innovative? Whether you’re a new company or an established one, are there ways to stay on the cutting edge?

Greg Satell is a popular writer, speaker, and innovation advisor whose work has appeared in Harvard Business Review, Forbes, Fast Company, Inc., and other A-list publications. His new book is Mapping Innovation: A Playbook for Navigating a Disruptive Age. I recently interviewed Greg on the LEADx Podcast, where we talked about the key elements every business needs to be innovative.  

Kevin Kruse: I like the approach to innovation like Lean LaunchPad, but you say there's a fundamental flaw with these types of solutions. Tell me about that.

Greg Satell: Well, like a Lean LaunchPad, which comes out of the work of people like Steve Blank and Alex Osterwalder and the Business Model Canvas, are really great ideas, if you're looking to start a new business even if it's not an actual startup. Even if you're launching a new product or a new business within a larger organization, it's absolutely a fantastic way to go about things. Even the federal government is using it. Congress just passed an act that sort of mandates its use within the scientific programs.

It's not going to help you scale a product. It's not going to help you cure cancer. It's not going to help you solve a really, really tough problem. It's just not what it's there to do. Other things like, let's say design thinking, which is a fantastically successful methodology, and Apple, for instance, is a big design thinking company ideal. The Stanford d.school, really, really important ideas come out from there. Very, very important methodologies, but it's not going to help you if your problem isn't well-defined. It depends on having a well-defined problem and if you don't, design thinking isn't going to work for you very well.

Kruse: If we can't be sure that any one of them is going to be our solution, what do we do?

Satell: Well, I'd say it's even more than that. I'd say the way organizations get stuck is when they say, “This is how we innovate. This is in our DNA.” It works for a while. Sometimes it can work for a long while, but eventually they're going to have to solve a problem that doesn't fit into that bucket, so what you want to do is you first want to focus on what kind of problem you have and then start thinking about how you're going to solve it. It makes no sense to start with your solution approach before you even know what kind of problem it is or haven't really thought through what problem it is. I would say just simply that: think about the problem first and then the solution, not the other way around.

Kruse: You introduce something called the Innovation Matrix. Try to describe what it looks like.

Satell: Well, it's actually pretty simple. You just ask yourself two very simple questions: how well is the problem defined and how well is domain defined? If you have a well-defined problem and a well-defined domain, that's a sustaining innovation or what a lot of people call an ‘incremental innovation,’ and they call it that quite derisively, but that's where most of your value is going to come from, but often one of those two things isn't very well-defined. Sometimes, for instance, you have a very, very well-defined problem. You just can't figure out how to solve it and when that happens, you have the iterate the solution space with some kind of open innovation strategy.

Sometimes you have a very well-defined solution set, but you have to go out and figure out what the problem is. For example, with Airbnb or Uber, it’s a very basic, very well-known technology, but they went and found a new problem to apply it to and obviously built great businesses. Experian DataLabs does the same thing, actually. It's a separate unit within this big company Experian that is stocked with these data scientists, and they don't have a PnL, they don't have revenue targets or anything like that. Their one mission is to go out and find new problems to solve.

Then the last quadrant is when neither the problem or the skills domain is well-defined and that's really in the realm of basic research. One of the interesting things was, what I found in my research of companies is, that that is probably the most underutilized area and the most important area.

If you look at companies like IBM or Microsoft who, let's face it, have their shortcomings as operators. They're not particularly agile or anything like that, but they're still around and they're still competing and they're still building exciting new products 40 or 50 years in Microsoft's case and over 100 years in IBM's case, because if you're exploring and you're finding new things and you're working on things and thinking about the long-term, you don't have to be that fast or agile if you have a 10 year head start. I mean, that's why Microsoft is doing so well on the cloud. They started around 2000. Or why IBM is doing so well with Watson. They started that in 2004, 2005, somewhere around there.

Kruse: With products like Watson it starts with this fundamental research, and I worry that there's just less and less of that happening except for super wealthy companies.

Satell: Yeah. What's amazing about the basic research is how consistently good the ROI is. Just in terms of ROI it's probably the best thing you can do. It takes a long time, but it's almost like a sure bet that if you invest into it, it's going to pay off. The other thing which if I had any advice for like, small business owners or companies that aren't in this Fortune 500 or aren't billion dollar companies, I would say that the most important thing that they could do is focus on that exploration piece, because that's where you can really, really pull in front of your competitors, and there are so many resources out there for small and medium sized companies.                                             

There are government resources, the manufacturing hubs, most of the big programs like the Joint Center for Energy Storage Research, which is exploring next generation batteries. They have affiliate programs that cost either nothing or more like a Chamber of Commerce membership than like a hospital wing. You see what IBM is doing with Watson, or a lot of big companies now that are building big technologies. They'll make a couple of big bets, but they understand that there's a lot more value than they can pursue, so they love the idea of partnering with small companies and being almost like the electricity company or some utility where they build the base technologies, and then let hundreds or thousands of other companies go out and figure out all the different business models.

The last thing, and Jeffrey Welser, the guy who runs IBM's lab out in Silicon Valley, he came up with a great point. He said that local universities can be a great resource because they understand where the technology is going and nobody talks to them.

So build relationships, invite local professors in fields that are important to your industry to come in to lecture, to experiment with data that you might have in your company. To have a source where they can find interesting research problems is actually an amazing resource and really doesn't cost you anything because A) Academics aren't in it for the money anyway, and B) They're always starved for resources. You can really build those deep relationships, and actually when I talk to VCs who invest in really cutting-edge technology, like CRISPR, the genomics technology, that's what they do. They try and get close to the researchers, and build a network and build those relationships.

Kruse: Do you have to hire innovative people to get innovation? I mean, what would be your approach?

Satell: It's interesting because I had that question as well. It's one of the reasons I wrote the book, because I couldn't see any commonality between any innovators. They all seemed to do things a different way. I would say two things. The most important thing and the one that they all had in common was this exploration piece, that you shouldn't be looking for great ideas. You should be looking for good problems. I didn't find any commonalities and any kind of brainstorming technique or organizational structure or agility or anything like that, anything that you hear all the time. What they did do is they had a systematic and disciplined way of identifying new problems and if you find a good problem, the creativity tends to come. However you get there, it tends to come, so that's the first thing. I would say if you're a person in a big corporation and you’re thinking “How can I innovate? I don't have a license,” what you can do is you can go find a problem that's worth solving, that needs solving.

The second thing, ironically, and this wasn't as universal, but I would say the vast majority of companies built a very collaborative culture, and you don't need the best people. You need the best teams, and there's certain metrics. There's a lot of research that's come out over the past five or 10 years, things like social sensitivity, things like whether people speak in roughly equal terms, or if there's one or two people dominating the conversation. Google just did a study on safe spaces, whether people feel comfortable maybe sharing a nutty idea or whether they're scared of speaking up because they feel they'll be instantly rebuked. I would say those two things. You know, find a good problem and really push that team approach and collaborative culture. Try and push out this idea that prima donnas innovate, because as best as I can see, that it's really just the opposite.

Even the top scientists. I think 30 years ago there was a great study of what made the star engineers at Bell Labs, what made them so much better than anybody else, and really the key thing was the connections they had to the others in the lab. If they needed a piece of information, they knew where to get it and did that because they had built those connections and built those links, and because they had been generous and they were good listeners, so they were able to pull on those relationships and know where that important nugget of information or insight was, because they had the relationships with the people who had those ideas.

Kruse: I always ask our listeners to become a little bit better every single day. So can you challenge us with something specific that we can do to become more innovative?

Satell: I'm going to sound like a broken record, but go out and find a good problem. It's not about ideas. Nobody cares what ideas you have. They care what problems you can solve, so go out and find a problem worth solving.

Kevin Kruse
NY Times bestselling author, Inc 500 entrepreneur, and keynote speaker on Wholehearted Leadership and Extreme Productivity. Download 'How Millionaires Plan Their Day: A 1-Page Tool' at http://kevinkruse.leadpages.co/1page/