“We´re going to be innovate this year”
“Our top priority for the coming year is to innovate more”
“We have increased our budget to spend on innovation this year”
Innovation I feel is one of those icky topics these days that everyone is talking about and seemingly it is the #1 priority in most companies, yet I fear most don´t understand what it really entails.
The way I approach this type of topic is to ask myself what I don’t fully get — I look for foggy spots in my knowledge and read all I can until my brain is fried. At this point, the feeling of overwhelming frustration takes over and I have no idea what to make of anything I have just read or how to synthesise it. The next phase is usually a period of impasse which could last days, weeks or even months. Then one day, out of the blue, listening to a completely unrelated podcast or reading an article, a light bulb in my brain goes off and I discover a novel way to explain the thing that had previously “fried my brain”. This as I will explain later, is in essence what innovation is about.
One disclaimer before we start:
There are many different schools of thought on how to describe innovation, but I use innovation in its broadest sense. Innovation = creating something novel that solves a problem.
With that out of the way, let’s dive in. This chapter is broken into 3 parts:
1. What is innovation?
2. Why innovation happens?
3. How innovation happens?
Part 1 — What is innovation
The year is 1707, the fleet of Admiral Sir Clowdisley Shovell had just been wrecked near the Isles of Scilly through not being able to gauge the correct longitude position of the fleet. Over two thousand men, including Shovell, were lost.
This was not an isolated case. Problems with determining longitude was a major issue for the safe passage across the vast oceans leading to many lost vessels and a good number of shipwrecks.
Pin-pointing the location of the ship without the benefit of modern technology was a huge challenge for 18th century sailors. To locate their position on a map, navigators had to know two things: latitude and longitude.
The earth is divided into a grid like any X-Y graph where:
X-axis is the longitude. lines going pole to pole — used to find out how far east or west a place is.
Y-axis is the latitude, lines running parallel to the equator — used to find out how far north or south a place is.
If a navigator knew both his latitudinal and longitudinal position on that grid, he could figure out precisely where his ship was positioned at sea.
The latitude part — comparatively easy. Sailors used a tool called a sextant to measure the angle created by the noon sun, the ship, and the visible horizon. This angle could then be converted to degrees latitude by using a chart. Simple — now we know where we are on our Y-axis.
The longitude part — very difficult. In fact, so difficult that in July 1714, British Parliament convened a Board to examine the problem and set up a £20,000 prize for the person who could invent a device that could accurately determine longitude at sea. The rotation of the Earth on its axis and its revolution around the Sun made it infinitely hard to create a method that would allow for a measurement like for latitude.
What did navigators do about this problem? One solution was to sail to the desired latitude, then set a course due east or west until landfall was reached. Another solution was called deductive reckoning — navigators would keep track of the ship’s speed every half hour, then calculate the distance they had traveled. If one knew the latitude, course and distance the ship had traveled, an educated guess could be made as to the ship’s longitudinal position on a map or globe.
For years, people had believed the solution lay in understanding the night sky and astronomy would inevitably hold the solution to the longitude problem. They just had to develop more charts and build better equipment. However this led to nowhere.
In the end, the solution was rather simple: a clock.
Most people would have wagered a bet on the astronomers, but in fact the solution came from an unexpected source — a watchmaker, John Harrison.
Harrison built his first longcase clock in 1713, at the age of 20 and over the years had become a component clock maker. Clocks weren´t as accurate as they are now — they kept slowing down — making an accurate clock was in fact an extremely difficult endeavour. Nevertheless, Harrison managed to build a sea clock that would be worthy of solving the longitude problem.
The sailors would now set their sea clock to Greenwich time (GMT)(where longitude is 0°). At some time during the day, the sun is at its highest position in the sky — 12:00 noon. In Greenwich, you have now set your clock to the sun — it says 12:00 noon.
As you travel eastwards or westward, you repeat the same experiment by waiting until the sun is at the highest point. You take the time from your second sea clock and subtract it from the time on your Greenwich clock. Multiply the time difference by 15 and you can find out your longitude.
Longitude = (Local time — Greenwich time) X 15degrees
(15 degrees of longitude = 1 hour difference; 1 degree longitude = 4 minutes difference.)
Harrison´s sea clock albeit a simple solution, compared to the astronomical observations most sailors and the Royal Society had looked towards for the longitude problem, was at least 10X better than the status quo.
We can see from this short tale, that innovation is really about a novel solution that is at least 10X better. Innovation is about solving a problem. This could be done by connecting two disparate ideas or cross-pollinating two different departments. This is what I alluded to at the start —I find a way to climb up the hills of clarity not by reading more of the same topic but instead from new information from a completely disconnected subject.
Some other 10X innovation test examples:
- Tesla electric cars — pass the 10X improvement over internal combustion cars
- Iphone — passes the test over the antiquated Blackberries and Nokias.
- Iphone 12 Pro — doesn´t pass the test. It had some new features and functionality but nothing revolutionary compared to the status quo.
Part 2 — Why innovation happens
Today, innovation is #1 priority for most companies, and yet most don´t even know how innovation happens. Leaders often ask, “Why aren´t we innovating?”, or “Why are we so slow to innovate?”
The problem with the question “Why aren´t we innovating or why are we slow?” is that it’s misunderstanding how progress happens. Instead of asking why innovation sometimes stops, we have to ask the question:
Why does innovation or technological progress ever happen at all?
The mistake of the first question is the intuitive but incorrect notion that innovation naturally happens on its own over time — it doesn’t. I can tell you this for sure, because my online bank has the exact same horrible user interface it had in 2010. The way technology works is that by default, it stands still, and it moves forward only when something pushes it forward.
We have the same misconception when we think about evolution. Natural selection doesn’t make things “better” by itself — it only optimises biology to best survive in the environment it finds itself in. When something in that environment changes — a predator becomes faster or a certain type of food becomes scarce — species that were previously optimised to the environment no longer are. This change forces the genetics of the species to react in order to optimise to the new environment.
In the natural world, when food on the ground becomes scarce, species will feel the pressure of hunger and over time, their genetics will re-optimise by developing good bodies for climbing or long necks or wings. A running species that becomes a climbing species hasn’t become better — just better fit for the current circumstances.
Optimisation in the natural world of species is simple because the end goals are simple: the core needs of biological creatures are always the same — to self-preserve and reproduce.
Similarly, in the business world, we need to figure out the core goals and needs of companies. Companies are run by people — human beings — who are biological creatures. Like any other biological creature, our first instinct is to always satisfy our basic needs — food, shelter, clothing. Assuming these are met, thinking about innovation isn´t something that would help these people towards optimising for their environment.
So if we want innovation and technological progress, what kind of yearning do we want people to feel?
Turns out there are two pretty powerful drivers:
Uncontrolled longing for increase in material gain; or social value, such as status, or power. In a capitalist world, the more value you create for others, the more you are able to charge for it. So company executive will strive to create better products and services in order to optimise, which just means making as much money as they possibly can.
Whilst greed can lead to incremental progress, if you really want to move the needle (10X improvements), you need ambition — the desire and determination to achieve something. Reasons for this kind of ambition can vary — it could be the desire to be famous and renowned, to leave one’s mark. Or the pure confidence in oneself to change the world because the status quo frustrates the hell out of you.
In an established industry full of incumbent winners running on greed (making as much money as possible) is like the highest layer of trees in a crowded rainforest. They’ll push upward only as needed, nudging and elbowing each other for little gains and victories as they compete for sunlight, mostly trying to keep their place in the canopy. Greed only wants sunlight — it doesn’t care how high up it is when it gets it.
But below, under the canopy, is the ambitious hungry underdog yearning for sunlight and will spend 15 hours a day working on getting it. When the breakthrough comes (he climbs the hills of clarity) — underdog bursts up through the canopy into the open sky and spreads its leaves out wide. Suddenly, the trees that had been on top are blocked from the sun. Greed is now replaced by the much more powerful drive of survival, and innovation kicks into high gear as they scramble upwards for their life.
The environment has been changed — it’s been disrupted — and in this new world, created by the underdog disruptor, companies have to innovate in order to re-optimise for this new environment. Some end up back on top, others die — and at the end of it all, a 10X improvement has been made.
We all witnessed an example of this when Apple rocketed through the mobile phone canopy in 2007 and forced all of the other companies to make a smartphone or die. Samsung managed to get itself back into the sun. Nokia did not. Tesla is now bursting through the automobile canopy and forcing other car companies to figure out how to get some sun again. In time we will know the Nokias and Samsungs of the automobile canopy.
This makes one beg the question: why don´t companies stop the underdogs from reaching the canopy? It turns out existing companies at the top of the canopy become too complacent because they don´t have to compete for the sunlight — it just comes to them so why waste resources when you can easily get the sun. It´s only when the environment changes, they are forced to re-optimise for the new environment.
This leads us nicely to our next part: how to innovate then.
Part 3 — How innovation happens
When companies say their #1 priority is innovation, they´ve completely failed to understand the drivers behind it. Saying we must innovate this year, is like saying we must fill up our car with petrol or electricity. Sure you can fill up your car with fuel, but why do you want to fill your car.
Innovation for the sake of innovation sounds like this:
You: “Hey neighbour, “what are you working on?”
You: “What are you doing?”
Neighbour: “didn’t you hear, INNOVATION”
You: “But what?”
You: “What do you plan to do with the innovation?”
Neighbour: “I am going to sell it to others”
Innovation is a lot like that. Just innovating for the sake of innovating doesn’t make sense. Doesn’t paint a picture for why you set out in the first place. We don’t buy a car simply so we can buy more fuel. Car is a lot more valuable if we can go somewhere.
Now we know, we can´t innovate, simply by saying innovate. We learnt earlier that one of the main drivers behind innovation and technological progress is ambition. That explained why people innovate. Next question, how? Answer: give them a problem to solve
A Problem to solve
Simply put, what is that thing that you want to find a solution for.
This could be your reason to exist — which we discussed in the first chapter of this mini series. Your reason to exist or your vision might be suggestive of an imminent environment change or maybe you yourself are a catalyst for that change. Instead of waiting for some other underdogs to come rocketing up through the canopy and change the environment, you yourself decide to do it.
Tesla having just burst through the canopy of the automobile industry and being satisfied with its newly acquired sunshine, is instead already trying to change the environment before anyone else does by being a leader in autonomous driving. All because they see this as a way to “accelerate the advent of sustainable transportation” — their reason to exist.
How did we get the cordless screwdriver? Did someone in Bosch say, “This year we are going to innovate. We don´t know what, but we are going to innovate.” No.
The credit for the cordless power tools goes to NASA.
The problem to solve: We´re dangling by a cord attached to this space station, going 27,600km/hour around the Earth, there is no place to plug-in my power tool to make repairs.
The innovation was a derivative of the problem: battery powered power tools to replace parts on the Space Station. Later the consumer industry caught on and put the same technology in our hands so we could drill a hole in our walls to hang up a painting without having to find a power socket first.
Try another, how did we get the MRI machine — the most powerful machine amongst all a doctor has in his arsenal, allowing conditions to be diagnosed without cutting you open. Did the medical professionals agree at some conference: lets innovate this year. I think you know the answer. So how did we get the MRI machine?
For that we must thank the physicist, Isidor Isaac Rabi. His problem: get a better understanding of how stars and planets are formed by studying gas clouds. Afters years looking into this problem, he finally figured out that nucleus of atoms resonate at different frequencies based on where the atom is on the periodic table, when it encounters radio waves.
It then took a clever medical technologist to create a machine that can be used to put humans inside of it and be able to distinguish one tissue from another. I don´t know about you but I am very glad for the cross-pollination that allowed for the MRI — much better they can figure out what´s wrong with me without cutting me open first.
For innovation, there must be a problem to solve first.
The underlying quality needed to make innovation happen: Perseverance — persistence in doing something despite difficulty or delay in achieving success.
Innovation is trial and error. Innovation is something that fails and fails, until is succeeds. Innovation is something that happens when passionate people doggedly soldier on despite failures because they can see the light at the end of the long tunnel. There are no quick wins. Yet, most companies set a timeframe on innovation. They lack the foresight and the willingness to admit there are many unknowns. They think they have it all and incremental changes are enough to make the revenue needed to keep share holders happy.
If your problem or reason to exist is something you believe in deeply, you will keep trying until you find a solution. If it was easy, someone would have done it already. Remember innovation must be at least10X better than the status quo.
Innovation is hard but it will all be worth it when you finally burst up through the canopy and change the environment and force all the incumbents to re-optimise. Do not give up too easily.
Continue with the series
- Intro: How to build a company that lasts
- #1 Why do you exist
- #2 Bold leaders double down
- #3 Do you know your competitors
- #4 Short-term money dilemma
- #5 The right way to increase your company´s worth
- #6 The first rule of innovation is: you don´t talk about innovation
- #7 How to align your entire team and empower them
- #8 Company-centric metrics vs user-centric metrics
- #9 Build teams that help customers make progress
- #10 How to escape when you´re stuck in a rut