Probably the biggest myth about innovation is that it’s about ideas. It’s not. It’s about solving problems. The truth is that nobody cares about what ideas you have, they care about the problems you can solve for them. So don’t worry about coming up with a brilliant idea. If you find a meaningful problem, the ideas will come.
The problem with ideas is that so many of them are bad. Remember New Coke? It seemed like a great idea at first. The new formula tested well among consumers and even had some initial success in the market. Yet what the marketers missed is that many had an emotional attachment to the old formula and created a huge backlash.
Our minds tend to play tricks on us. We think we’ve done our homework and that we base our ideas on solid insights, but often that’s not the case. We see what we want to see and then protect our ideas by ignoring or explaining away facts that don’t fit the pattern. In particular, we need to learn to identify and avoid these three cognitive biases that kill innovation.
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With the political season heating up, an increasingly frequent topic of discussion is how radical candidates should be. Some say that the optimal strategy is to be mainstream and court the middle. Others argue that it is better to more extreme and rile up the passions of your most active supporters.
Yet as I explain in Cascades that’s a false choice. The truth is that once seemingly radical positions, such as voting rights for women, civil rights for disenfranchised racial groups and same-sex marriage are now considered mainstream. To win those battles, however, activists needed to appeal to shared values.
What’s key isn’t any particular policy, but whether you can appeal to common values and mobilize supporters to influence institutions that will determine whether you can bring change about. You don’t do that through enforcing ideological purity or demonizing your opposition, but by putting forward an affirmative vision for a better future.
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On Halloween day 2008, a mysterious paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System appeared on a cryptography mailing list. Its author, Satoshi Nakamoto, was a pseudonym and, to this day, no one is absolutely sure of his or her true identity. Nevertheless, the revolution the paper unleashed was all too real.
While the objective of the Bitcoin paper was to establish an alternative currency—a concept that had great resonance in the midst of the global financial crisis—it soon became clear to many that the underlying technology, called blockchain, could be of even greater utility as a distributed database.
It was based on that idea that alternative, open-source blockchain platforms, such as Ethereum and Hyperledger started to appear and IBM saw an opportunity use blockchain as an operating system for data. It’s still early days, but the rough outlines are beginning to take shape and the implications are likely to be just as profound as the Internet itself.
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One of the most often repeated episodes in the history of technology is when Steve Jobs was recruiting John Sculley from his lofty position as CEO at Pepsi to come to Apple. “Do you want to sell sugar water for the rest of your life,”Jobs asked, “or do you want to come with me and change the world?”
It’s a strange conceit of digital denizens that their businesses are something nobler than other industries. While it is true that technology can do some wonderful things, if the aim of Silicon Valley entrepreneurs was truly to change the world, why wouldn’t they apply their formidable talents to something like curing cancer or feeding the hungry?
The reality, as economist Robert Gordon explains in the The Rise and Fall of American Growth, is that the measurable impact has been relatively meager. According to the IMF, except for a relatively short burst in growth between 1996 and 2004, productivity has been depressed since the 1970s. We need to rethink how technology impacts our world.
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In 2004, I was managing a major news organization during the Orange Revolution in Ukraine. One of the things I noticed was that thousands of people, who would normally be doing thousands of different things, would stop what they were doing and start doing the same things all at once, in nearly complete unison, with no clear authority guiding them.
What struck me was how difficult it was for me to coordinate action among the people in my company. I thought if I could harness the forces I saw at work in the Orange Revolution, it could be a powerful model for business transformation. That’s what started me out on the 15-year journey that led to my book, Cascades.
What I found was that many of the principles of successful movements can be applied to business transformation. Also, because social and political movements so well documented—there are often thousands of contemporary accounts from every conceivable perspective—we can gain insights that a traditional case studies miss. Here are four principles you can apply.
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In 1900, most people lived much like their ancestors had for millennia. They lived and worked on farms, using animal power and hand tools to augment their own abilities. They inhabited small communities and rarely, if ever, travelled far from home. They engaged in small scale violence and lived short, hard lives.
That would all change over the next century as we learned to harness the power of internal combustion, electricity and atoms. These advancements allowed us to automate physical labor on a large scale, engage in mass production, travel globally and wage violence that could level entire cities.
Today, at the beginning of a new century, we are seeing similar shifts that are far more powerful and are moving far more quickly. Disruption is no longer seen as merely an event, but a way of life and the fissures are there for all to see. Our future will depend on our determination to solve problems faster than our proclivity to continually create them.
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Today, everybody needs to innovate. So it shouldn’t be surprising that corporate innovation programs have become wildly popular. There is an inherent tradeoff between innovation and the type of optimization that operational executives excel at. Creating a separate unit to address innovation just makes intuitive sense.
Yet corporate innovation programs often fail and it’s not hard to see why. Unlike other business functions, like marketing or finance, in a healthy organization everybody takes pride in their ability to innovate. Setting up a separate innovation unit can often seem like an affront to those who work hard to innovate in operational units.
Make no mistake, a corporate innovation program is no panacea. It doesn’t replace the need to innovate every day. Yet a well designed program can augment those efforts, take the business in new directions and create real value. The key to a successful innovation program is to develop a clear purpose built on a shared purpose that can solve important problems.
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In a recent New York Times column, Bret Stephens argued that the political opposition needs to “celebrate prosperity, not deny or trivialize it.” He has a point. We are in the midst of a historic expansion, with record low unemployment, rising wages and low inflation. That is something to celebrate.
However, what Stephens failed to address is that, in the midst of all this prosperity, there is considerable anxiety about the economy. Some of this anxiety can be quantified in statistics like rising income inequality, national debt, credit card debt and the fact that 40% of Americans can’t cover a $400 emergency expense.
Yet the problems go deeper than that. As I explained in Barron’s, our economy can be thought of as having two key activities, capacity building and maximizing that capacity to produce output. While we are clear producing a lot of output, there are worrying signs that we are not building capacity the way we should. We need to right the ship before it’s too late.
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By 1980, IBM had hit an inflection point. It had already missed out on the minicomputer revolution. Now, with new, even smaller “microcomputers” evolving into a growing market, it was about to miss out again. So it set up a “skunk works” in Boca Raton, FL and, in less than a year, launched the IBM PC.
Today, at the end of the digital revolution, IBM is at a similar juncture. Yet its approach is the polar opposite than it took four decades ago. Rather than operating in secret, it is building a collaborative network to develop quantum computing. The reason: the technology is simply too complex for anyone to go it alone.
It’s not just IBM either. A recent report by Accenture Strategy found that found that ecosystems are increasingly seen as a “cornerstone” of future growth. In fact, almost half of the executives it surveyed are actively seeking to participate in ecosystems to create new business models. Today, if you want to compete effectively, you need an ecosystem strategy.
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In 2013, a study at Oxford University found that 47% of jobs in the United States are likely to be replaced by robots over the next two decades. As if that doesn’t seem bad enough, Yuval Noah Harari, in his bestselling book Homo Deus, writes that “humans might become militarily and economically useless.” Yeesh! That doesn’t sound good.
Yet today, six years after the Oxford Study, we are experiencing a serious labor shortage. Even more puzzling is that the shortage is especially acute in manufacturing, where automation is most pervasive. If robots are truly taking over, then why are having trouble finding enough humans to do work that needs being done?
The truth is that automation doesn’t replace jobs, it replaces tasks and when tasks become automated, they largely become commoditized. So while there are significant causes for concern about automation, such as increasing returns to capital amid decreasing returns to labor, the real danger isn’t with automation itself, but what we choose to do with it.
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