Why You’re Struggling with Innovation. And How to Get Better.

And Why Good Managers are Actually the Problem.

The modern typewriter had a problem. When Christopher Sholes developed the first model in 1868, it was an amazing development for its time. But if you tried to type too quickly on it, the type bars had a tendency to bang into one another and get stuck.

Sholes consulted an educator who helped him analyze the most common pairings of letters. He then split up those letters so that their type bars were farther apart and less likely to jam.

He slowed down typing speed to prevent the typewriter from jamming. Which then sped up the typing.

This dictated the layout of the keyboard, which came to be known for the first six letters in the upper row — QWERTY.

In 1873, the Sholes & Glidden typewriter became the first to be mass-produced, and its keyboard layout soon became standard. Nearly 150 years later, despite the fact that sticking type bars are an obsolete problem, the original inefficient design continues to be the standard.

It’s a telling lesson in the power of inertia. And in the barriers that prevent innovation.

The Least Innovative System Imaginable

Imagine trying to design a system that prevented innovation. Your goal is to structure a company in a way that will actively discourage people from innovating. What would it include?

People told to develop new, innovative ideas and then not given any time to work on them?

Cut the resources available to everyone looking to advance new opportunities?

Create inconsistent messaging as senior management lauds the importance of innovation and plasters the walls with motivational posters, yet actual policy and daily decisions run counter?

Bureaucratic processes that require layers of approvals to depart from the typical methodology?

Harsh judgment of any experiment that doesn’t yield spectacular results on the first try?

Systems that reward maintaining the current status and are unforgiving of risks that jeopardize it?

It’s easy to see how a system with these aspects would discourage new ideas and innovation. Yet these same traits are also present in many of today’s companies.

Somehow, many of the features of a hypothetical organization designed to stifle innovation, are present in the places we work today. Despite leaders citing a love of creativity and innovation, putting this desire into practice continues to be a struggle. As Charles Eames warned,

But why? Why do so many companies want to create innovative cultures yet somehow end up creating the polar opposite?

Because many of these companies have good managers. And good managers tend to discourage innovation.

Customers (and Hence Managers) Don’t Want Innovation

Good managers stay close to their customers. They know that if they’re to consistently support the company’s bottom line, they need to be attuned to customer needs and desires.

Before managers decide to invest in a new technology or strategy, they’ll consider their customers — Do they want it? Will this be profitable? How big is the potential market?

The better that managers ask these questions, the better their investments are aligned with customers. And the less likely they are to put out the next New Coke.

But while this is an advantage in identifying the next round of product improvements, it’s a major liability to wholesale innovation.

Most customers can quickly identify incremental improvements. Those areas are at the forefront of their experience and it doesn’t require a lot of imagination to come up with some improved features. So good managers, as you’d expect, are very adept at leading teams to identify and incorporate incremental improvements.

But major innovation — 10x type changes — often come from completely new perspectives. They come from thoughts and ideas that most customers haven’t even considered. As the old (dubiously quoted) Henry Ford saying goes,

With a typical management structure, it makes it nearly impossible to justify diverting resources from known customer needs and desires to unproven markets and questionable investments. The systems and processes that keep the business running are specifically designed to identify and cut those initiatives that do not align to the customer’s current needs.

The solution then, needs to reverse this structure. It needs to override the systems that are highlighting innovation as unprofitable in the short-term and encourage their pursuit. It needs to protect these new ideas from the typical business plan mentality and be willing to take a shot on the unknown. Mainly, it needs to be willing to divorce innovation from customer needs. As Steve Jobs said,

And to do that, you need to separate this out from the traditional mainstream business.

The Chance for a Billion Dollar Return

Choice A: You can give a million dollars, bottom line, to your company through your efforts this year, guaranteed.

Choice B: You can give a billion dollars, bottom line, to your company through your efforts this year, with one chance in a hundred.

Dr. Astro Teller, Captain of Moonshots (CEO) of X, Alphabet’s moonshot factory, offered these two choices to his audience as he began an A360 talk on how to 10x your thinking.

In response to his question, most people prefer to chance the billion-dollar return, particularly with a 10x expected utility on the odds. Yet when asked whether their bosses would agree with that choice, most people say no — they feel their management would prefer them to opt for the safe returns.

People want to take risks. They want to deliver large-scale innovation. But they feel that their management disagrees.

And in many cases, they’re right.

Imagine you’re managing a team of employees to produce and support an existing product line. Now ask yourself, is innovation absolutely critical to grow your business?

If not, and you can meet demand based on your existing business plan, what’s your motivation to invite additional risk?

Most managers — and as a result most teams — don’t need to rely on major innovation to survive. They’re able to sustain their business with the same things that have worked for them in the past — until suddenly and without much warning — it no longer will.

Most people see innovation as an idea problem. But it’s not. It’s a resource allocation problem.

The question isn’t how do you generate more ideas, but how do you align your best people, and sufficient resources, to your best opportunities. As the great Peter Drucker wrote,

Sergey Brin recognized this concern at Google and developed a 70/20/10 responsibility model. Seventy percent of time was reserved for daily operations and taking care of the current business. Twenty percent went towards the next level of advancements. And the final ten percent went towards major innovations and moonshots.

Google then implemented tracking systems to ensure people were prioritizing this breakdown — and make sure managers didn’t allow the urgent to override the important.

Not every idea would work out — actually the vast majority would end up as flops — but by continuing to prioritize innovation, Google put themselves in a position to take advantage of the ones that did. As Eric Schmidt described it,

Separate Your Moonshots from the Main Business

Yet in many companies, simply prescribing a breakdown isn’t enough. Existing management practices and systems are too ingrained in the culture. Stability and near-term returns will always override the long-term investment needed to encourage major innovation.

The solution then, lies in separating out those who focus on major innovation from the standard product line. It’s taking a group and telling them that their entire job is to choose Choice B — and creating an environment that encourages that mentality.

If their job is to choose Choice B, and pursue ideas with a 1% success rate, failure will be unavoidable. So experimentation happens in a controlled environment, with quicker learning and much less negative consequences.

If their job is to choose Choice B, they’re not held to a quarterly return, so new innovations can be protected and developed.

They don’t need to guarantee a quarterly return, so risk-taking is easier to encourage. They can experiment and fail within controlled environments, so learning happens much more quickly and with much less negative consequences.

And since most new innovations don’t begin as clear successes, they can be developed within a protected space until they’re formed into more defined ideas. Sir Francis Bacon recognized this four centuries ago when he wrote, “As the births of living creatures are at first ill-shapen, so are all innovations, which are the births of time.”

But most importantly, the difference between delivering a million dollar return and a billion dollar return is not about working 1000 times as hard. And it’s not about being 1000 times smarter.

It requires a complete perspective shift. It requires separating this group from the typical management business plans and customer demands and pushing them to tackle completely new challenges. As Dr. Teller put it,

Success Comes from Feedback Loops

In a conversation with Shane Parrish, former Y Combinator partner and the founder of Pioneer, Daniel Gross, describes the key to success as positive feedback loops. Our surrounding environments create feedback loops that either reinforce or discourage critical behaviors — which initiate chain reactions of either positive, or negative, behaviors.

Alexander Graham Bell, no stranger to innovation himself, agreed with Gross on the importance of surroundings towards creative success. In the 1901 volume, How They Succeeded, Orion Swett Marden interviewed Bell, then 54, who shared the following life lesson,

For innovation to be a success, it needs an environment of positive feedback loops — one that traditional management practices and business models are ill-equipped to support. The inertia towards supporting today’s needs and demands is too great to maintain enough focus on long-term innovation.

We cannot expect people to pursue moonshots within an environment designed for incremental improvements. We cannot expect people to pursue Choice B, when every feedback loop in place reinforces Choice A.

Until this responsibility is separated from the current management decision-making model, companies will continue to miss the opportunities for major innovations. Not because they’re making poor decisions. But because they’re making decisions based on criteria that are soon to become obsolete.

The alternative is to create groups that encourage these new perspectives and experiments. Which leads to ideas where people say, “there’s no way that could ever work.” Until, of course, they do.

Thanks, as always, for reading. Agree? Disagree? Other suggestions? Let me know, I’d love to hear your thoughts. And if you found this helpful, I’d appreciate if you could help me share with more people. Cheers!

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Enemy of the Status Quo.

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