Dr. Hal Gregersen, co-author of The Innovator's DNA - Mastering the 5 Skills of Disruptive Innovators, was a guest on my radio show recently. You can listen here.
You can read part one of our interview here.
You can read part two of our interview here.
The Innovator's DNA - Mastering the 5 Skills of Disruptive Innovators was the result of an 8-year study to uncover the origins of innovative—and often disruptive— business ideas. They interviewed nearly a hundred inventors of revolutionary products and services, as well as founders and CEOs of game-changing companies built on innovative business ideas. In the process they identified five discovery skills that distinguish innovative entrepreneurs and executives from ordinary managers:
You talk about the Vuja De experience. I read a lot of books on innovation. In reading your book and planning for this show, I did not have a deja vu experience. On the other hand, I did have what I now know was a vuja de experience. You write about vuja de experiences. What are they?
What role do they play with our observational skills?
Essentially, and I’m thinking of Scott Cook who founded Intuit, and he talked about a number of observations he had made that had enabled him to create Intuit and Quicken software, to create Quickbooks, which are both the personal financial software and small business software... some of the best-selling software anywhere in the world. And when Scott Cook or when he trained his people at Intuit when either he or they would go out he asks them to think of one question. And that is either:
- “What surprised you?”
- “What was unexpected when you went out?”
And if people come back with blank answers, no surprises and nothing unexpected, it’s practically impossible to have a vuja de experience, ie., see something for the first time.
What they were doing was they were looking through all the old the lens of all the old categories and all the old judgments and they were unable to see something new.
For me, it’s a great question to ask myself and it forces me back to the place to the people to get a new idea.
Let me give you a quick example from Proctor and Gamble. You know they are systematic about sending people out to observe. Just as Colgate Palmolive does. P&G, the average marketer spends 12.5 hours per month just observing consumers buy product or use product. That’s a day and half just watching people. And they better well come back and see some surprising things.
But even a day and a half doesn’t get you some surprises. And, so, they actually have live-ins and go live with family for 2-3-4 days and figure out what’s it like to really do what they do. Many of their employees are from middle and upper income levels. And they’ve always had the luxury of walking into a kitchen or walking into a bathroom and turning the tap and have water run in. When you’ve gotta carry water from the well to where you are living and you have this thing called Tide detergent and it has 7 rinse cycles, then water gets really heavy carrying it back and forth to get soap out of the clothes.
And that observation that comes from some deep experience which for them comes from a vuja de experience...they went back, worked with the technologists, reformulated the clothes washing detergent and had a one or two rinse cycle. And all of that comes from seeing things for the first time and really seeing them from the perspective of the end-user.
You have a list of your 25 most innovative companies. And that's based in part on what you call innovation premium as reflected in their stock price. Intuitively it makes sense. Innovative companies will be the ones most likely to survive and thrive. So, investors would pay a premium. But, quantitatively how did you measure this innovation premium beyond its stock price?
In the book, and in the current issue of Forbes it has a cover article on the “innovation premium”. And they also list an explanation for what we do.
Here’s a shortened version of what we’re talking about. Investors paying a certain price for a particular stock. Let’s take the number one company on our list, SalesForce.com. And what we do is we look at the existing cash-flows that come in to that company from existing products, serivces and markets. In this case, I’ll pay you a $100 for the cash-flows for the company for what you do today. But guess what? I’ve got confidence that in the future you’ll have new products, services, and new markets that you are operating in and because I think you’re going to do something interesting in the future. And in the case of SalesForce.com it’s a $73.00 premium. 73% higher. And you add those two together and that’s what you get for the stock price. But the premium is that piece we will pay for what we think you’re going to do in the future and that’s what the premium tells us.
On this list are the usual suspects: Google, Apple, Amazon. Rightfully, so. But refreshingly your list was more global and more comprehensive than US or multinational firms. Which company impressed you the most or surprised you the most?
One the companies that was impressive and interesting and frankly was one of the companies I had never heard of them until we had created this list. We literally scoured the world for companies with market capitalization of $10 billion US or more. And much to our surprise there was a company down the list, number 23, a Japanese company called Keyence Corporation. What do they do? We had no idea.
They make sensors and measuring instruments for factory automation. And what’s unique about them and it sounds like a boring kind of company. They actually train and encourage and make highly competent sales people who go into factories and not only do demonstrations for the product but they spend a lot of time making observations about their people and their equipment, how do they do things and what are they doing here?
And then they go back to their offices and ask:
“Could we modify our product to make it perfect for their application?”
And then they go back and work with the customer to the point that they are exceptionally satisfied with these sensors that make raman noodles perfect when they come out of the machine.
And so, what we realized with a company like that is you don’t have to be...a fancy consumer products company to be an innovative company. This company sells sensors for factory automation systems. But they have realize that if they embed on one of these innovation skills deep within our people, in this case observing people, we will be able to generate value from that investment that will be multiples more than what we put into it.
We've reached the imagination moment in our show. Let's imagine President Obama has a few moments this week. He finds your book. . He picks up his Blackberry and calls you.
Hal, he says. He gets all personal because he is the President. We're facing some disruption these days. But, we're not finding a way to move progressively from one idea to its impact. Again and again.
What if you and your two co-authors join up with myself and Vice-President Biden. We want to hear your thoughts, maybe 3 things that we as a nation can do to move progressively from one idea to its impact. Again and again.
What would those three things be?
I would tell you the following if I was talking to him.
I would say:
“Look. When we look at innovative companies it starts at the top. Every one of these companies who create sustainable ideas that make a difference they are led by CEOs and senior managers who actually innovate themselves. They engage these skills in an every day way. And so, if I were to look at a country it would be the same thing.
Here’s the challenge. But, let me step back for just a moment to me being a teenager again. When I was a teenager I wanted to be the President. I pursued it enough that I actually ended up working later in college, I worked a couple of times in Washington DC for two senators. What I learned working on the staffs of those two senators was when you work in Washington D.C. and you live within the Beltway you end up living within those buildings that are around the capital and the White House. And what then happens is it becomes extremely easy not have a silo built in your world and your way of working with the world that is not extremely incestuous. And that comes from talking to people who look like you and think like you even if they are on the other side of the political spectrum. They still are politicians.
My suggestion is I would get every single policy make out of their offices and into the field where people are facing these challenges. I don’t mean promotional opportunity to get votes for the next election.
I wonder how many people who are stuck in this budgetary grid-lock, how many of them have spent two days not pitching their views or their party, but how many of them have spent two days maybe living with a family that is struggling with the burdens of living in this economy for the past two years? I would be hard pressed to find even a handful of politicians making these policy decisions who have a good grip on what it’s like right now for people that they are making the decisions for.
It’s easy for me to step back and say this. I don’t have the answer but. But I look back to the financial crisis in 2009 and wonder how many of the CEOs and executives of the major banks in the world ever took the time to get out of their offices to walk down to their home loan making office and just watch the process of how these loans were being made?
I bet if they had they would have sniffed something ugly really fast. And they would have done something.
For me, the first recommendation is get policy-makers out of their offices and into the real world and using these observational and other skills of being an innovator to generate some better solutions.
2nd policy suggestion? Do everything we possibly can to invest in the next generation of innovation leaders. These are the kids and the young people who are growing up who are not just going to solve today’s problems but they are going to be the solvers of tomorrow’s problems that will probably be bigger than the ones we’re facing today.
And what I mean by investing in them is on one level creating educational learning experiences that foster these skills. And another investment and again I would ask those policy-makers to pay attention to the world around them. Look in your neighborhood, identify some families that you will foster their innovation skills so that some day they might be the next president and they might be better at solving the problems we face tomorrow.
That’s so great. Thanks for sharing that!
Let’s talk about social media. As I read your book and thought about the five skills, particularly associating, I thought about social media. I find it a great tool to feed this habit. Others think it’s fiendish devil breaking down our associations with each other.
What’s your thoughts?
Social media has the potential for innovation if we use it carefully. And it has the potential to crush innovation if we use it the it is systematically set up for us to use.
So, it’s like when we buy a book on Amazon, Amazon is smart enough to figure out what are some books that are like that book that we just bought and:
“ Might you like this one, too?”
Well, what social media does is it basically says:
“Who are some people like the people you already know that you might like?”
And we start building these networks more often than not that are like us. And when that happens, instead of becoming a mechanism for great social and positive change in the world it often becomes a mechanism for deep in-breeding and self-centered thinking that leads to catastrophes.
For me, social media has a double-edge. It could be used for something quite incredible or incredibly good. Or it could be used for something that actually is incredibly destructive.
For me, it is being conscious for what am I using it for? Am I using it in a thoughtful way? Am I using it in a way that taps into different ways of looking and seeing the world. That might be somebody from a different company, somebody from a different country, somebody from a different community or background. When I use social media to connect me to into places I normally wouldn’t connect that’s when it becomes fun and interesting. I think we could create some positive social values.
A couple examples. One is an early guest on this show: Bill Davidow who is the author of OVERCONNECTED: The Promise and Threat of the Internet. He talks about the threat of creating self-reinforcing echo chambers.
Sometimes in my frustration, I see social media and particularly Twitter as a high-school popularity contest. It’s easy to fall into it. Who doesn’t want the validation of thousands of people saying:
“Hey that’s a great thought you had.”
On the other hand, it’s a great opportunity to connect with other people around the world. I’m fascinated with the democracy movements in the Middle East and northern Africa using social media to get their story out in an environment where diversity of thought is maybe, perhaps, not encouraged. And I’m beginning to see the common thread of innovation and community and the need to connect and ask questions is as common in these democracy movements as it is here in corporations trying to find new ideas to reach out to consumers who are in effect their voters.
I’m an American. I grew up in the US. But, now I live in several countries. Part of the year I live in Paris, France; part of the year I live in Abu Dhabi and the United Arab Emirates in the middle of the Middle East. I can empathize with what you are talking about.
Many times in the Middle East the approach to innovation there is buying innovative things vs building innovative people.
One of the great by-products of the democracy movements in the middle east is that it is fostering these Innovator’s DNA skills that will help them. They have a deep need for incredibly creative people to create systems and solutions in a world that is turned upside down in the last 12 months.
When you present it like that it seems there is such fantastic potential there that awaits them. The potential for growth that is going to come from allowing all of these voices to participate in exchanging ideas that will bring change in their daily lives.
Readers are leaders. Jim Rohn says that. I’m just smart enough to quote him. You’re a leader. What are you reading these days?
I mentioned one book earlier that I am half-way through. It’s called Your Creative Brain: 7 Steps to Maximize Creativity, Productivity and Innovation in Your Life.
It’s written by Shelley Carson of Harvard Medical School. She is a medical scientist who has basically looked at every part of the brain and gives these incredibly clear explanations as to how they contribute to somebody getting a great new idea.
I find it fascinating and that’s the research I mentioned earlier about how most people find associational thinking exhausting and how can you make it fun and easy. It’s a great book. Very provocative.
Another book is from someone I mentioned earlier. It’s from John Hunt. And it’s called the Art of the Idea. In that, John basically says:
“Look. Ideas will prod and push the world forward.”
And he has some incredible one-liners and phrases in the book that really caused me to turn my head and think differently.
Your book is so rich with advice and case studies and how-to’s. I’m hesitant to ask this last question. But, can you leave our listeners with one parting thought on developing their Innovator’s DNA?
At the very core, The Innovator’s DNA tells us to act different so that we can think different and in the end make a difference. Not only for the work we do today, but for the work we might do tomorrow. And not only for our own sake but for that next generation of innovators in the world who need role models. They act differently, think differently, they make a difference in the world we want to create hopefully a much better place.
Where can we find you on the web?
The Innovator’s DNA. Great place to start.
I’m on Twitter as well as Hal Gregersen.
I’d like to put some of those ideas and ask people not only to like them but to challenge them as well.
Next Guest: Jeffrey Phillips
Jeffrey Phillips is one of the 34 expert contributors who created the excellent book: A Guide to Open Innovation and Crowd-Sourcing: Advice from Leading Experts.
Jeffrey is VP - Marketing and a lead consultant for OVO Innovation. Jeffrey has led innovation projects for Fortune 5000 firms, academic institutions and not-for-profits based on OVO Innovation's Innovate on Purpose methodology. The Innovate on Purpose methodology encourages organizations to consider innovation as a sustainable, repeatable business process, rather than a discrete project.
Jeffrey contributed a chapter on Open Innovation Typology.
We will talk about his chapter, why the different types of open innovation matter, corporate examples of open innovation and their results as well as the process for creating this great book.
Wednesday, August 3 at 9:30 AM, Central. You can listen here.