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Viewpoint

STICK TO YOUR =UNS


MAX MCKEOWN
A young researcher, Richard Drew, working for a political acumen to avoid alienating the
modestly sized company in Minnesota in the US, people who matter to the success of their
Sometimes visited a local garage to test out batches of ideas, and to navigate their way to the
breaking the waterproof sandpaper – his company’s latest resources and supporters they need. It does
product. Overhearing workers cursing, he learnt not help if it teaches them to abide by the
rules brings that the heavy adhesive tape and butcher’s status quo.
great ideas paper used to create two-tone effects often Coaching should not be neutral – its
– coaching damaged new paint. questioning and challenging should lead
Drew headed back to his company’s lab to try participants onwards and upwards, giving
can help to create the world’s first specialist masking them the guts to take risks, the curiosity to
by allowing tape, but he failed so often that the CEO seek knowledge and the resilience to recover
employees ordered the researcher to from their mistakes. It

<hZ\abg`
drop the project. should give thinking
and leaders Yet when the CEO space to bring tacit
the freedom
to innovate
discovered Drew yet
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again in the lab, still and the backbone to bring
working on masking it to market.
tape, he decided not to
mhmZd^kbldl% For leaders – the

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stop him. Encouraged by people with the
this tolerant response, responsibility to renew the
but without formal
l^^ddghpe^]`^ organisation – coaching

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funding, Drew used helps if it can allow them to
hundreds of $99 purchase discover how to leave
orders to develop the
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first 3M tape. It also and resources for
provided the basis of the themselves and for
multi-billion dollar
innovation culture from
fblmZd^l employees to break the
rules, to be able to create
which tens of thousands quick and “dirty” solutions
of products, including Sellotape and Post-it and then develop them into products.
notes, have resulted. 3M’s eleventh commandment is “Thou shalt
This story is a powerful example of some of not kill ideas for new products”, which along
the actions and events necessary for with the advice that leaders “bite their
transformative innovation. In fact, we could have tongues until they bleed” is designed to
chosen a thousand other such cases from ensure that they allow smart people (in other
companies as diverse as Apple, Cemex, words, the kinds of people organisations hire)
Nintendo, Coca-Cola and Google with the same to make mistakes, rather than the leaders
essential shape and substance. making the bigger mistake of stopping them
The common factor is that such stories creating the products that reinvent and
allow us briefly to consider what behaviours reinvigorate the company.
Max McKeownÉhcZl should be encouraged and how coaching can If coaching is paid for by the business it should
Wdd`!I]ZIgji]6Wdji
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help or hinder such efforts. What can a coach contribute to the business. That means it should
Richard Hanson

'%%-!V^bhid]ZaeVaa offer innovation? How can innovation be measured by its effectiveness at directly
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coaching help? facilitating the behaviour that leads to
XgZVi^k^inVcYbVhiZgi]Z For employees – the people with the innovation and ultimately “killer cultures”, with
Vgid[^begdkZbZci#
www.thetruthabout
insights to keep renewing the organisation – a purpose that earns the right to a competitive
innovation.com coaching helps if it can give them sufficient place in the world. 

G:EGD9J8:9;GDB8D68=>C<5LDG@!B6G8=$6EG>A'%%-!L>I=E:GB>HH>DC
The following is an extract from

The Truth About


Innovation

by Max McKeown
THE TRUTH
ABOUT

INNOVATION
“Find the
creativity inside”

MAX McKEOWN
Innovation rocks. It rolls. It makes the world go round. Our

INTRODUCTION
lifestyles are the result of other people’s efforts to improve
the human condition. They mixed ideas and inventions
together. They worked hard to create the must-have and often taken
for granted stuff that surrounds us.

You have evolution to thank for your opposable thumbs and adorable belly button.
And for your amazing brain, with more connections than stars in the galaxy, that has
allowed millions and now billions of us to examine our world and seek to make it
better. That is innovation and it matters.

Our century’s greatest innovation will be the method of innovation. We are beginning
to understand how to increase our ability to improve together. We are learning how
to move from individual invention to group innovation.

This book shares some of what we have learned about innovation, what it is, how it
happens, and how it can be increased. New insights into how our brains work
collectively provide us with the opportunity to create the equivalent of a bigger brain,
capable of dreaming and working together to make those dreams reality.

Everyone can help. Every kind of intelligence and personality plays a part.
Our need for innovation has shifted power closer to the source of that
power ? Us. We are the future.
You’ve seen the big picture, haven’t you? The typical big company wants TRUTH

big products. They want big ideas. If they’re big shots with big balls then
they place big bets on a big future. No one wants the small project. Or to
be the small project manager. Who wants to do that?
1

BET SMALL TO WIN BIG


Problem with the big bet approach is that you are limited to a small
number of guesses. You are forced to choose too early. Judging win- All or nothing
ners and losers before the race begins. Putting all your eggs in one
big basket. Or worse – putting all your faith in one egg. bets are only
Most of us accept the common sense notion that risk should be
spread. For some reason it is hard for most companies to spread that
wise when the
risk by sharing out the ‘risk dollars’ between many small projects.
Some leaders seem to find it easier to bet big on their own hunches future is certain.
than to bet on their people.
A few years ago, Whirlpool decided to make a big bet on innovation
If winning is
by making hundreds of little bets. Instead of investing half a million
dollars each on a few ideas they learned how to take smaller calcu-
certain then bet
lated risks. The choice was no longer all or nothing. It was 20 million
dollars in 400 bite-size chunks of $25,000. Enough money to test everything. If
ideas, engage small teams of people and do enough learning to
inform future funding decisions. The little bets now bring in $1 billion there’s nothing to
a year.
Betting big has other, less obvious, disadvantages:
lose then bet
Most of the time, a big project develops a life of its own. No-one everything.
wants to take the decision to write-off all the money wasted so far so
it becomes a zombie project - using up resources years after it is
unnecessary or unwanted.
Often by the time a big project is completed the advantages of starting it are no longer relevant. Competitor
products have overtaken the original objectives so that even if the big project succeeds it will fail.
Bizarrely, a big project is less likely to have rigorous criteria for investment than a small project. A big boss
does not have to justify his big decisions. And, a big decision is less clearly defined than a small decision
because there is simply more of it to define.
Betting small helps in a number of ways:
The safest investments are those that start to pay off soonest. Even better are those that inform the next round
of investment decisions. A small project may develop into a big project having contributed to the success of
the company.
The small bet allows more people to contribute. It engages their talents and goodwill. It encourages them to
experiment with comfortable levels of responsibility.
Not all ideas require huge amounts of funding to take to market, or benefit from a large amount of money in
the early stages of development. They can be ruined by the weight of expectation, and the rush to justify
expenditure.
Toyota believes in betting small to win big. In one year, its employees suggested over 750,000 ideas for
improvement. The company then implemented over 80 percent! In isolation, most suggestions were small and
incremental. The total impact of quarter of a million improvements is to strengthen their culture of innovation
- getting better is a habit gained through repetition.
Sony’s success with the Walkman showed another side of betting small to win big. It did not know which com-
bination of features would most appeal to customers so it developed over two hundred different models each
available in different colours. The resulting thousands of variants each represented a small bet that allowed TRUTH

them to find out what customers wanted by offering them choice.


All or nothing bets are only wise when the future is certain. If winning is certain then bet everything. If there’s
nothing to lose then bet everything. Since the future is not certain the best choice today is usually the one that
1
will leave you free to make most choices tomorrow. This is because you do not know what choices will be

BET SMALL TO WIN BIG


attractive tomorrow. You may change. You may learn something new. The future will change what works and
what does not.
Too many attempts to innovate fail because all the resources are used up before the successful
solution, the magic formula is found. Making as many small bets as possible increases the number
of attempts possible and keeps options open.

References
Snyder, NT, Strategic Innovation: Embedding Innovation as a Core Competency in Your Organization, 2003,
Jossey-Bass Business & Management

Rosenhead, J (Ed.),1992, Rational Analysis For A Problematic World: Problem Structuring Methods for
Complexity, Uncertainty, and Conflict, John Wiley & Sons

Liker, JK, The Toyota Way:14 Management Principles From The World’s Greatest Manufacturer, 2004, McGraw-
Hill
TRUTH
A worker suggests an idea worth millions to her company. Should her
managers keep their promise to give ten percent of the value of the idea
even though it means paying her $1 million? Or should they keep the
money and give her a gesture of appreciation, a gift voucher perhaps, since it’s
2

SHARE MORE TO GET MORE


the thought that counts?

It seems simple, but it’s amazing how many managers forget that you
have to share to get people’s best work. Don’t expect breakthrough The purpose of
innovations in return for free t-shirts or gift certificates. Recognition
has its place but it doesn’t pay the mortgage. Some managers are sharing rewards
tempted by their inner scrooge when faced with the reality of passing
on the profits. Where the idea is lucrative they may find the prospect
uncomfortable of paying subordinates more than senior staff. Resist
is to encourage
the temptation and the excuses that go with it. more great
If you want more, higher quality ideas then you will have to share
more. People you trust to generate innovations are smart enough to
want fair returns for their contribution. When the path to shared
innovations
rights and rewards is not clear people tend to keep their best ideas
secret or undeveloped. Others will leave to seek rewards from a new employer or by starting up a new compa-
ny. The people you should most want to keep are those most likely to leave if they do not receive their fair-
share. The bold, obsessive, entrepreneurs leave first.
Different kinds of rewards will lead to different kinds of innovation. Short-term bonuses for managers are rarely
a good match to increasing long-term innovation. Short-term financial rewards tend to encourage management
behaviour that is unhelpful to the innovation process. The volume of ideas becomes more important than their
value.
The purpose of sharing rewards is to encourage more great innovations and the behaviour that goes with it.
Good ideas take time and effort. Great innovations demand careful, rigorous, imaginative joining-up of ideas.
Incentives need to motivate the right kind of effort. Each stage in the innovation process should have a clear
rewards mechanism.
Paying people for submitting suggestions, or introducing prize draws that reward some of those who put for-
ward ideas, may generate more suggestions but will not encourage better ideas. The only reward for the act of
submitting an idea should be recognition for having participated along with access to support, knowledge and
training that can help the individual take the next steps to develop the idea.
Lessons and knowledge gained from attempts to implement an innovation deserve rewards. One pharmaceuti-
cal company now gives stock options to those brave enough to conclude that their own research projects will
ultimately fail. It does this to encourage fast learning rather than back-covering, defensiveness.
You can also try rewarding people by promoting them to the most senior levels based on the impact of ideas.
It works for 3M, the post-it people, who also elevate those who have taken personal risks to sell and imple-
ment their ideas.This approach has a number of strengths. The hierarchy becomes not only a meritocracy of
past results but also a meritocracy of future growth. This is motivational to other innovation-minded individu-
als and ensures that the leadership team includes an innovation perspective.
Sharing is mirrored behaviour. We share most with those who share with us. Sharing is risky. Sharing new
ideas is a gamble: Will the idea be laughed at? Will time spent developing the idea be wasted? Will credit for
the idea be taken? Will the idea be stolen? Or ruined? The risks are so high that most people need to know
that the upsides of sharing are considerable and that the process for sharing can be trusted before they will
actively look for ideas that go beyond their job descriptions and pay grade.
Money is not the only motivation for sharing and developing ideas. Sharing the benefits that come from an TRUTH
idea does not only mean financial benefits. You can share glory, the thrill of creation, the satisfaction of
achievement, and the respect of colleagues. They are not directly paying the mortgage either but they are
attractive to many people as long as they are real and first-hand. 2
It’s tempting not to share benefits especially for the super-ambitious who often minimise the

SHARE MORE TO GET MORE


contribution of others in their own minds and conversations. Such behaviour is greedy and
counterproductive because ultimately it will minimise the discretionary contribution that people
make. Better, far better, to share.
TRUTH
When the Disney CEO was asked to choose one winner from twelve final-
ists in an internal competition for new business ideas he responded,
‘Let’s just do them all! Can’t a company our size try something every
once in a while just because it feels right? What if it does fail? It’s still not going
3

LEADERS GET THE INNOVATION THEY DESERVE


to cost as much as one expensive movie script.’
He was right. Not all the ideas worked but the ones that did
transformed Disney from a backwater family favourite to a glob- Imagination and
al entertainment mega-giant. And they all came from existing
members of the company in the first three months of CEO investment must
Eisner’s tenure. He adopted a style that was playful and bold,
holding informal staff lunches - not to grill them on numbers come before
and projects but to liberate creativity. He led by example by
proposing off-the-wall ideas, and encouraging his team to give innovation.
him the ideas that might embarrass them, to give ideas that
went too far.
Leaders set the tone. Maybe you know that already but it’s worth repeating. Every little thing you do
and say as a leader sends a message about what you want, what you care about, and whether sup-
porting you will be worthwhile.
Steve Jobs told the team building the Apple Mac computer ‘We’re here to put a dent in the universe.
Otherwise, why even be here?’ His words gave the team permission to challenge boundaries.
Permission freed them to do amazing work. It provided an audience for innovation. They knew that
their leader knew and cared about the difference between mediocre and brilliant, ugly and beautiful.
If the leader focuses on the future people will take more time to prepare for the future. Thinking about
the future makes it easier to believe the impossible will be possible. Customers will demand, and
competitors will deliver, what is impossible now. Working backwards from the future makes it easier
to imagine and play our part.
If the leader focuses on the present people will spend most of their time doing what they can in the
present. Thinking about here-and-now tends to trap people in the rules and pressure of the moment.
People work hard to make end of month goals but don’t pay attention to what customers need next
year. Imagination and investment must come before innovation. It is difficult to imagine progress
without time in which to make it and difficult to invest effort in the present without time in which to
reap dividends. Innovation is unlikely for those stuck in the short term.
Leaders matter to innovation. The way you think. The way you talk. The way you talk about how you
think. People look for signals from their leaders. Signs. Symbols. They may say nothing but notice
everything.
Radical innovation depends on leadership. People want to know where they are going and whether
the destination is worth the pain of the moment. It is here that the leader’s ability to make the future
seem desirable and a path to that future seem possible is valuable.
There are many best ways of leading originality. Each would depend on the type of company, the peo-
ple involved, and the kind of innovation desired by the leader. Here are three broad groups of effec-
tive innovation leader:
First, the brash, colourful, look-at-me, egomaniac who has mile-high expectations and no sense of
what can and can’t be achieved. Unrealistic. Impossible. Childish. Argues. Throws Tantrums. Never
satisfied.
TRUTH
Second, the quiet, unassuming executive. No flashiness. Making decisions about process and
rewards that make innovation easier. They work behind the scenes. They avoid the media. They
remove bottlenecks. They are about team. Never arrogant.
Think of Lou Gerstner arriving as CEO at IBM. The company was failing. He made the decision to keep
3

LEADERS GET THE INNOVATION THEY DESERVE


the company together. He urged the company to fight the competition not each other. He understood
that the team could solve its own problems as long as egos did not get in the way. He helped the
company to free its creativity. Innovation was the result.
The third group fits somewhere between the other two! The point is that there are two
ways of leading innovation. Both work. A combination of the two is probably ideal.
Inspirational when necessary, methodical facilitator of human creativity for the rest of the
time.

References

Capek, PG, Frank, SP, Gerdt, S, & Shields, 2005, DA history of IBM’s open-source involvement and
strategy, IBM Systems Journal, Volume 44, Number 2
Gerstner, L, 2003, Who Says Elephants Can't Dance?: How I Turned Around IBM, HarperCollins
Stewart, JB, Disney War, 2005, Simon & Schuster
Yadav, MS, Prabhu, JC, Chandy, RK, Managing The Future: CEO Attention and Innovation Outcomes,
Journal of Marketing, Vol. 71 (October 2007), 84-101
A few years ago, Proctor and Gamble’s CEO, set a goal to find 50 percent TRUTH

of its innovations outside the company. His decision has boosted growth,
and doubled its billion dollar brands and share price. Should you limit
yourself to the talent inside your company? Could you get a bigger brain with the
4

LOOK OUTSIDE FOR A BIGGER BRAIN


talents of millions in the outside world?
Every attempt at innovation is a guess. You start with a problem
and try to solve it without knowing what will work. The more Every attempt at
attempts made to solve a problem the more likely a solution is
to emerge. innovation is a
This approach was famously described by Edison who said ‘I guess. You start
have not failed once (to make the light bulb work). I have suc-
ceeded in proving that those 700 ways will not work. When I with a problem
have eliminated the ways that will not work, I will find the way
that will work.’ and try to solve it
Less well known is that Edison didn’t invent the light-bulb. It
was designed fifty years before he was born! He saved time by
without knowing
buying patents from outside the company and improving upon
the various designs, and then moved his research team’s atten-
what will work.
tion to developing the other inventions necessary to deliver a
working lighting system. The innovation, not the invention, changed the world.
Looking outside allows you to eliminate ways that will not work. It also increases the chances of you
finding someone who has found the one way that does work. Not because they are necessarily
smarter than you but because they have guessed right. You can now move onto new problems that
need solving.
The Proctor and Gamble CEO, says that he made up the fifty percent number because it was just a
way of saying that ‘we don’t care where the ideas come from’. He understood that innovation does
not exist in a vacuum and that the important thing is not the origin of the ideas but their usefulness
to the company.
There are three main advantages of going outside for ideas:
First, you can quickly benefit from lucky guesses where a successful solution is just a matter of work-
ing through the many different possibilities. The solution is not difficult just time consuming. Being
open to the right solution wherever it comes from reduces the time required to solve a simple prob-
lem.
Second, you can find different approaches to solving difficult problems. Such a problem may require
a combination of different skills outside of your experience. It may be that it is only a difficult problem
if you lack those skills. For those with the required knowledge it is an easy problem.
Third, working with outsiders brings you solutions for problems you didn’t recognise as important.
The problem and the solution are new to you. Or maybe they match one of your existing solutions to
an entirely new problem. The solution is old but the application of that solution is new. They bring
opportunities that would have missed with an insider only perspective.
Increasing external collaboration increases innovation productivity. Research produces more usable
ideas. Time to market reduces. The choice is not between inside and outside ideas or between inter-
nal and external innovators. You will need both. Insiders will have to find outsiders with ideas worth
pursuing and then work together to deliver innovative products.
Xerox didn’t invent photocopiers. Microsoft didn’t invent word processing, spreadsheets, email, or TRUTH

windows. Apple didn’t invent MP3 players. Hoover didn’t invent vacuum cleaners. Amazon didn’t
invent online shopping. Sony didn’t invent games consoles, video recorders, or portable cassette
player. They brought together outside inventions into innovations that people wanted to buy. 4

LOOK OUTSIDE FOR A BIGGER BRAIN


Time saved on basic research and invention can be put to use making improvements. The winning
difference between one product and another is usually in the new way existing ideas com-
bine rather than the newness of the technology. Each year, products come more richly
packed with ideas. New combinations of existing and new ideas. Doesn’t matter where
they come from.

References
Huston, L, & Sakkab, N, 2006, “Connect and Develop: Inside Procter & Gamble's New Model for
Innovation,” Harvard Business Review, Vol. 84, No. 3, March 2006.
Hughes, Thomas P. 1977. Edison's method. In Technology at the Turning Point, edited by W. B. Pickett.
San Francisco: San Francisco Press Inc., 5-22
Owen, D, Copies in Seconds: How a Lone Inventor and an Unknown Company Created the Biggest
Communication Breakthrough Since Gutenberg - Chester Carlson and the Birth of the Xerox (New
York: Simon and Schuster, 2004)
Madonna is the queen of re-invention. She has sold over 200 million singles making TRUTH

her the most successful female artist of all time. How has she managed to thrive over
two decades while others around her have faded away? What can you learn from her
approach to innovation? 5

MADONNA KNOWS MORE THAN YOUR BOSS


Having one hit single is hard work, but no one can be sure
what will rock and what will rot. Who would have guessed that You don’t know
three teen mouseketeers, Britney, Justin, and Christina from the
world of Disney would dominate the pop charts or that an ani- what will be
mated frog would outsell serious muzos Coldplay?
successful next.
You don’t know what will be successful next. You do know it will
be different. Which means that being the same won’t work. You do know it
Which means that you have to reinvent to stay successful.
will be different.
The first hit is the result of a more-or-less chance series of
mutations that produce something that better fits the environ- Which means
ment, or appeals to the music buying public more than the
next 180 seconds of licks and hooks. Individual ambition keeps that being the
new acts constantly bubbling up. They offer new choices for the
constantly evolving musical taste of the buying public. Teens same won’t work.
know little about past music and so buy the flavour of the
moment. Which means
Constant competition in a changing market means that only an that you have to
act that can change will maintain its position in the charts.
Unfortunately, they often don't know why they have been suc- reinvent to stay
cessful - it just happened that way - so find it hard to modify
what they didn't design in the first place. successful.
Even worse, they rarely have time to do any mutating of their own since they are busy with tours,
interviews, video shoots and music award ceremonies. There are no “free floating resources” left to
find new habits, hooks, or fashions.

The same stuff happens with organisations and with our individual careers. Success, particularly big
success, makes us think that we have the answers. People just keep doing the thing that has brought
them success in the past. We even hire people who fit into our established way of doing things. It
reduces the range of variation, in the genotype of the firm and the phenotype of its members, in the
service of efficiency. In other words, we endanger future success by betting on the habits of past suc-
cess.

Lacking either the time or the humility to consider other options, companies naturally lose their com-
petitive position when the market shifts from beneath it. Structural inertia kills the future of a firm just
as surely as three-chord monotony will eventually bring about the demise of a band.

Being very good or even better is not enough. You need to become the hub of new things that are as
popular as the old things were. Sure it's a risk ? the socalled 'liability of newness', but then so is stay-
ing the same. You can reduce the risk by understanding how the reinvention queens and kings keep
all virgin fresh while building on past success.
Madonna does not work alone. Her reinventions come about by listening to those who are listening TRUTH

to music trends and being credible enough to attract producers who are producing the latest thing.
She has the reputation of being good for other people's careers - not just her own.

Nintendo is a king of reinvention. It began in 1889 producing handmade playing cards. It experiment-
5

MADONNA KNOWS MORE THAN YOUR BOSS


ed with a range of new ventures, including a taxi company, a ‘love hotel’ chain, and instant rice. All
but one failed - toy making. While desperately looking for new toy ideas, the CEO noticed an extend-
ing arm made and used by a maintenance engineer for his own amusement. The Ultra Hand was a
huge success, selling 1.2 million units. Its creator, Yokoi, went onto design the Game Boy
selling 200 million units. Reinvention continued with the Wii games console.

Success is not an excuse to stop. It’s an opportunity to reinvent.

References
Odum, EP, 1959, Fundamentals of Ecology, Second edition, Philadelphia and London: W. B. Saunders
Co

Sheff, D, 1999, Game over: How Nintendo Conquered the World, Cyberactive Media Group

Taraborrelli, JR, 2008, Madonna: An Intimate Biography, Pan Books