One of the questions I get asked quite often, both at conferences and when coaching executives, is what type of personality is best suited for innovation so that they can optimize their hiring. Are technical people better than non-technical people? Introverts better than extroverts? Is it better to hire foxes or hedgehogs?
The first thing I tell them is that there has been no definitive research that has found that any specific personality type contributes to innovation. In fact, in my research I have found that there is not even a particular kind of company. If you look at IBM, Google and Amazon, for example, you’ll find that they innovate very differently.
The second thing I point out is that every business needs something different. For example, Steve Jobs once noted that since Apple had always built integrated products, it never learned how to partner as effectively as Microsoft and he wished it would have. So the best approach to hiring for innovation is to seek out those who can best add to the culture you already have.
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In 1957, Ken Olsen founded Digital Equipment Corporation (DEC) with his MIT classmate, Harlan Anderson, and by the 1960s, the company had pioneered the minicomputer revolution. Much cheaper than IBM mainframes, but still powerful enough to be useful, these machines helped make DEC one of the world’s leading technology companies.
Hailed as a visionary, Olson was named “America’s most successful entrepreneur” by Fortune magazine in 1986. Yet as AnnaLee Saxenian explained in Regional Advantage, by that time the minicomputer industry was already being disrupted by PC’s and DEC would never recover. It was acquired by Compaq in 1998.
The truth is that everybody gets disrupted eventually, even a visionary entrepreneur like Olsen. What makes the difference is whether you are able to chart a new path. That takes more than merely being smart and ambitious, you need to empower change from within. It’s never easy, but there are some basic principles that can help you reinvent your organization.
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In 1980, IBM was at an impasse. Having already missed the market for minicomputers, it was now seeing a new cadre of competitors emerge. Fledgling companies like Apple and Commodore were selling stripped down computers for personal use and the market was growing quickly. It looked like IBM would miss out again.
So the company’s leadership authorized Don Estridge and Bill Lowe to set up a skunk works in Boca Raton, FL and begin work on what was to become the PC. Working largely in secret and eschewing many of IBM’s traditional standards and processes, the team would bring the PC to market in just a year and change computer history.
Today, the computer industry is at a similar impasse. As Moore’s Law comes to an end, there is an urgent need to introduce new computing architectures, one of the most promising being quantum computing. However, this time, rather than working in secret, it has embarked on a highly collaborative journey to advance the technology and bring it to market.
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I was recently invited by Accenture Strategy, along with other thought leaders such as Bruce Weinstein and Andrew Winston, to discuss its research on trust and competitive agility. In a study of 7000 companies the firm found that trust among a diverse ecosystem of stakeholders is increasingly becoming a competitive advantage.
One of the most interesting aspects of the discussion was how crucial trust is for driving transformation and change. We tend to think of trust as static, but Accenture’s research, as well as that of the participants, made it clear that trust is especially important when you need to drive an organization to do something different.
All too often, transformation is seen as a simple matter of strategy and tactics, but it’s far more than that. Nobody can really drive change alone. You need buy-in from a variety of stakeholders, such as customers, employees, suppliers, analysts and investors to make it work. So before you set out to transform your organization, you first need to build trust.
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When IBM first debuted its Watson system on the game show Jeopardy! in 2011, it was like something out of science fiction. Here was a computer that could not only understand spoken questions, but answer them faster and more accurately than the best human players. Nobody had ever seen anything even remotely like it before.
Today, less than a decade later, artificial intelligence has been transformed from the incredible to something approaching the mundane. Not only do we have capabilities that are similar to the original Watson system on our phones, we can access top-notch resources from a number of companies, often for free.
Yet probably the biggest difference from those early days of Watson is how AI has evolved from a system to an ecosystem. Much like the evolution from mainframes to personal computers, companies now can access different components to build a system designed specifically for their business. That’s how a technology becomes transformational.
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In early 2004, Viacom announced it would spin off Blockbuster Video, leaving CEO John Antioco master of his own fate. He moved quickly to meet the threat posed by Netflix head on, launching Blockbuster Online in 2004 and, after successfully testing the concept in a few markets, ending late fees in early 2005.
Still, not satisfied with playing catch-up, Antioco searched for model that would return his company to dominance. He found it in 2006 with the Total Access program. Within a few weeks of announcing the promotion, Blockbuster was winning the majority of new subscribers, outstripping Netflix for the first time.
It was a textbook case of sound strategy and execution meeting a disruptive threat, but it would not end well. In 2010 Blockbuster would declare bankruptcy and become a cautionary tale. We tend to think that driving change is merely a matter of coming up with a clever plan and executing well. Yet that isn’t enough. You also need learn how to survive victory.
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Every year, IBM publishes its list of five innovations that will change the world in five years. There aren’t just predictions, but represent grand challenges that the company intends to take on. As IBM’s Chief Innovation Officer Bernie Meyerson once put it to me, “What we’re really aiming for isn’t to predict the future, but to change the future.”
Last year, for example, the “5 in 5” included combining crypto-anchors with blockchain to secure the world’s supply chain and IBM formed a joint venture with Maersk to help bring that about. It also included a new form of encryption, called lattice-based cryptography and more transparent AI algorithms, all things its scientists are actively working on.
This year’s “5 in 5” is different in several ways. First, rather than a horizontal overview, it focuses on one industrial vertical: the food supply chain. Second, rather than focusing exclusively on information technology, it foresees an intense collaboration between the computer industry and other fields. Third, it marks a break from business as usual to a new era of innovation.
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In 2009, Jeffrey Immelt set out on a journey to transform his company, General Electric, into a 124 year old startup. Although it was one of the largest private organizations in the world, with 300,000 employees, he sought to become agile and nimble enough to compete with high-flying Silicon Valley firms.
It didn’t end well. In 2017, problems in the firm’s power division led to massive layoffs. Immelt was forced to step down as CEO and GE was kicked off the Dow after 110 years. The company, which was once famous for its sound management, saw its stock tank. Much like most startups, the effort had failed.
Somewhere along the line we got it into our heads that large firms can’t innovate and should strive to act like startups. The truth is that they are very different types of organizations and need to innovate differently. While large firms can’t move as fast as startups, they have other advantages. Rather than try to act like startups, they need to leverage what they have.
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When Laura Baldwin arrived at O’Reilly Media in 2001 as Chief Financial Officer, she was well equipped for the job. She had previously held the same position at Chronicle books and then spent a few years as a consultant for BMR & Associates, a firm that specializes in helping media companies.
The challenges at O’Reilly, however, were somewhat unique. Over the years the company had become something akin to the official publisher of Silicon Valley and had ridden the dotcom boom to prominence. Now that the boom had turned to bust, O’Reilly was in dire straits and banks were calling in loans.
So Baldwin did what a good CFO does, she instilled better financial management and within a few years the company had returned to profitability. Yet she and the firm’s founder, Tim O’Reilly, began to see an opportunity to truly transform the business. Today, as President, she focuses not just on publishing books, but on everything that comes after.
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Market watchers like to follow trends because they are often a good indicator of what will happen next. The near future usually does look like the recent past, but not always. Sometimes we hit an inflection point. That can make things veer sharply from the trend and that change things in a way that can be truly transformational.
For example, for the first two decades of the 20th century, electricity and the internal combustion engine had limited impact, but around 1920 they became transformative and drove a 50-year productivity boom unlike anything before or since. Something similar happened with digital technology around 1995.
Today, we are likely on the cusp of three major inflection points in energy, synthetic biology and computation that will have that kind of transformative power. The impact of any one of these is hard to foresee, but when you take all three in tandem it raises the possibility of entering a completely new era. The future may be unlike anything we’ve ever seen before.
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