What Your CEO Wants You to Know About Innovation

Innovation has become an evergreen subject simply because it is no longer a luxury. It is now a necessity. Gone are the days of the gold watch at retirement. Today, you must earn your daily bread, well, daily.

Shrinking product life cycles, unorthodox competition, and receding barriers to entry across categories have created an unprecedented need to unleash corporate creativity. However, before you set off to “innovate,” here are a few things to keep in mind that your CEO wants you to know.

Click here for my latest FastCompany piece on “What Your CEO Wants You to Know About Innovation.”

Wabi sabi: the innovator’s competitive advantage

If innovation is your end game, pursuit of perfection isn’t the way to get there. Let’s consider the beauty of a dented bowl. {The following I’ve written for FastCompany}

We humans revere the best: the best coffee, the best cars, the best phones, the best apps, the best schools, the best doctors, the best chefs, the best companies, the best CEOs, the best athletes, the best coaches, the best designers, the best actors, the best movies, the best dresses, the best designers of the best dresses, the best directors of the best actresses wearing the best dresses, and that catch-all category: the best of the best doing what they do best.

Moreover, it is insufficient for our reptilian brains to simply recognize the best; we must recognize them publicly. To highlight our admiration for excellence, we have human-engineered lists, ribbons and ceremonies; red carpets, awards, and shiny trophies; prizes, certifications, and halls of fame. We may be able to feed our hunger, but we simply cannot satiate our collective appetite for awesomeness. We live to revere ourselves.

Of course, our pursuit of perfection makes perfect sense. After all, who would want to watch the worst athletes play equally horrible athletes coached by the worst coaches on the worst playing surfaces in the worst stadiums serving the worst food and the worst beer handcrafted by the worst companies led by the worst CEOs delivering the worst returns to the worst money managers? The market for the worst is not very liquid.

Perfection has its place.

However, what is perfection’s place with innovation? In a perfect world, the best ideas would attract the best people who would, in turn, raise money from the best venture capitalists in order to develop and sell the products of their perfect imaginations to the best customers willing to pay the best prices.

In reality, however, rarely do the best ideas or the best people win out of the gate. More often than not, innovation begins with imperfect ideas cobbled together by a band of equally imperfect co-conspirators willing to take a chance on imperfection. They recognize that companies, like humans, are not born teenagers. Ideas are born a slimy mess, crying for apparently no reason and forever in search of food and attention. Great ideas–ideas that take a decade to be noticed–are imperfect. Innovation is not a perfect science and thus should not be made to act as if it is. We need new metrics, new processes, and new incentives to encourage the pursuit and recognition of imperfection. But before we set out to create new infrastructure to support innovation, we must first change our worldview. We must not only change how we think, but what we believe. We must learn to accept imperfection as an asset in the innovation process.

To learn, look to the East.
In Japan there is a concept called wabi-sabi. Wabi-sabi represents the acceptance of imperfection. The concept is derived from Buddhist teachings and includes the recognition of asymmetry, irregularity, and modesty as attributes of beauty. In a very practical sense, the idea of wabi-sabi invites a person to consider imperfection–a dent in a copper bowl or a crack in a glass–as an object of value. It serves a purpose. The idea of embracing imperfection is entirely the opposite view we have in the Western world. Of course, we compensate for very human frailties by encouraging the pursuit of the American Dream. We drive out imperfection with hope (and a whole lot of hard work). However, why must the American Dream be an artifact of small entrepreneurial companies alone and not larger organizations? It needn’t be, but we allow it to be due to our point of view about perfection.

If there is one thing large companies can learn from startups it’s that startups embrace imperfection. Contrary to popular opinion, startups do not celebrate failure nor is it easier for people who fail in Silicon Valley to get jobs. Startups (and startup folk) simply happen to work in the early stages of innovation; they work in the birthing ward of new ideas. Crying babies and dirty diapers abound.

And so, as you set out to create a culture of innovation–to inspire your best and brightest people to innovate–know that you must first encourage the pursuit of imperfection. This does not mean to embrace failure. It means to embrace learning. Innovators do not intend to fail. They intend to learn. They use imperfection as a vehicle to test their assumptions about what might be, could be, and someday, will be the perfect product, the perfect customer experience, and the perfect path to profits.

In order to create the conditions for innovation to take root in your company, take a chance on imperfection–acknowledge its existence, its beauty, its purpose–and then, work like hell to hammer out the dents.

–Andrew Razeghi is Managing Director of StrategyLab, a growth strategy and innovation consulting firm He is also a Lecturer at the Kellogg School of Management at Northwestern University. Follow him on Twitter @andrewrazeghi.

The foundation of innovation: on filling the void & letting go.

The comedian and avid golfer Bob Hope once quipped, “I tell jokes to pay for my greens fees.” As an educator-consultant-author-speaker-investor-entrepreneur I’ve long felt the same about music. When I’m not in the classroom, in the boardroom, on the stage, or in the garage working with founders and corporate innovators, I am a cellist. Some years ago, I originally went to school to study music; to become a professional musician. My idols were Yo-Yo Ma and Mstislav Rostropovich. The stage was my office. And my heart belonged to Bach. In part, what drew me to the discipline of innovation is my background in music. Innovation, like music, is the opportunity to fill the void. Innovation pushes. Innovation pulls. Innovation bucks the trend. But mostly, innovation creates that which does not exist. Innovation, like music, has and always will do the same. Innovation fills the void.

As our past and present lives collide on occasion in mysterious ways, about a year ago, music and innovation (in my life) converged in the most magical of circumstances. Somewhat accidentally, I met two of the most-celebrated and creative artists working in the restaurant industry today, Chef Grant Achatz and sculptor-designer-artist Martin Kastner. We met – of all places – via Twitter. Martin was looking for a cellist to play a single note. And I, well, I wasn’t looking for anything. I just happened to see the request and responded enthusiastically. Serendipity matters. Over the course of the next several months, I along with Grant, Martin, and another Chicago-area cellist, Teddy, met at Alinea and at Teddy’s performance space to begin experimenting with sound, music, taste, and the guest experience. Although there was and continues to be a more specific mission, our mission was to experiment. (I will let the authors of the idea – Grant and Martin – share the story of where this grand experiment may lead as it continues to be written). In the interim, as a student of innovation, I wanted to share a small moment for me in my interaction with both Grant and Martin that lends invaluable insight into the process of innovation. It has to do with leadership.

In the course of our experiments, what most impressed me about both Martin and Grant (among other things) is how they both inspire creativity in others. Conventional wisdom (and Hollywood) have led us to believe that creative geniuses suffer control issues and command and control innovation from the top (e.g. Steve Jobs). In my experiences with Grant and Martin, nothing could be further from that reality. While they both have tremendous vision, expertise, and informed opinions about the world as they would like it to be, how they engage with those around them, left a significant and meaningful mark in my mind. Put simply, they give permission. They allow people to create. It may sound trivial, but that creative license – that ability to try, try, and try again; to put your own creative energy to work in order to generate possible solutions to a simple problem is the art (and the heart) of innovation. In order to get scale with creativity and to continue to push it forward, you must – to quote Grant – “let go.” This is quite the opposite of control.

If you have 5 minutes and are interested in hearing about the meaning of innovation, its purpose, and how to inspire it in others from Martin and Grant themselves, find some time and watch this.

Thank you, Chef, for the wisdom, the opportunity, and the permission to create.

“Over the past year, I have learned that the best thing I can do to perpetuate creativity – to keep pushing it forward – ironically, is to let go of power.”

- chef Grant Achatz

Innovation Moments

Contrary to popular opinion, innovation is not about “big ideas.” It’s about “small moments.” Small, irritating, painful, annoying, complicated moments that, when solved, create new wealth for problem-solvers and make the experience of living on Mother Earth better. Moments such as:

  • waiting on hold to make a restaurant reservation (solution: OpenTable)
  • finding and booking a parking spot (solution: SpotHero)
  • entering credit card information on your mobile (solution: Braintree’s Venmo Touch)
  • manually processing payroll (solution: SurePayroll)
  • finishing a book you’ve started (solution: SlimBooks)
  • getting an answer without having to search for one (solution: Quora)
  • finding a babysitter at the last minute (solution: SitterCity)
  • the list goes on…

Rather that sitting around attempting to conjure up big ideas, focus on identifying small moments of frustration in people’s lives – whether your current customers, potential customers, in your relationship with your suppliers, your employees, or within and across entire industries. Those painful moments are like maps. They will show you where to innovate. They will help you succeed. Don’t focus on big ideas. Focus on small moments: moments where happiness is created and money is made.

Where Word of Mouth Comes From

“…and we plan on creating a viral video to help promote it.” 

If I had a nickel for every time I’ve heard those words from new product and new venture teams when discussing their plans for marketing their big ideas, I’d have a lot of nickels.

Think about what is implied in the words “creating a viral video.” (See: guaranteed success, a foregone conclusion, a sure winner!). Notice: the plan is not only to create a video, but to create a viral video, one that will catch fire and reach millions overnight. Why write a book when you can write a best-seller? Why produce a film when you can produce a box office hit? Uh, because…

Here’s the thing. Creating virality (or what used to be called “Word of Mouth”) is not an adjunct to the product or service you are selling. It’s not something you do after you create. It’s something you need to be doing while you create. Word of mouth comes from the product or service itself. Be great and you will achieve greatness. The world loves nothing more than to recognize the exceptional. Humans need heroes. We want to be led by, to believe in, and to be moved by those who inspire us to greatness.

In your attempt at greatness, keep this in mind. If there is any tie that binds together abnormal success stories, it’s a near-obsessive focus on the product, service, or problem the individual or organization is attempting to solve. Greatness comes from the product not after it. As the old saying goes: advertising is the price you pay for being unoriginal.

Abnormal success stems from the love of the game. It’s about the product. It’s about you. Invest in the product. Invest in yourself. Be great. Serve others. Go beyond what is considered reasonable service. Deliver what no one else would even consider delivering. Be exceptional. If you want to create virality, create products – whether art, businesses, experiences, music, services – that will cause your audience to fall hopelessly in love with you. That is the art of word of mouth. That is how you “go viral.” Be great and you will achieve greatness.

Want your team to be more innovative? Do this.

It’s one of the most overlooked drivers of innovation: personal motivation. Scholarly studies have revealed that aligning personal motivation to creative challenges is one of the most effective ways to unleash creativity among individuals and among teams, but why do so few organizations take the time to do it?

I believe we don’t take the time because many organizations don’t entirely understand what inspires creativity. Sure they understand new product processes, funding mechanisms, experimentation plans, and how to market new ideas, but most organizations haven’t yet figured out the fuzzy front end of innovation – namely how to create he conditions for “better” ideas to be incubated. As a result most organizations do what “feels right” when forming innovation teams, but don’t necessarily form the teams in the context of what we now about human creativity.

When in search of innovation, the conventional approach is to field a cross-functional team with the thought that the different perspectives will yield more creative outcomes. This does work. However, what it doesn’t take into account are the motives of those team members – which may in fact be even more important in yielding better outcomes.

Diversity + Personal Motivation + A Problem Worth Solving = An Opportunity for Innovation. Diverse perspectives alone are only one variable. Assuming you’ve identified a problem worth solving or a need worth fulfilling, don’t forget the role of personal motives. One of my favorite examples I’ve shared via my blog at FastCompany.

If…

It’s a small word with big implications.

If I only had the time, I’d do it.

If I only had the money, I’d take that chance.

If I only knew people who could help me build it, I’d start.

IF is the most reasonable excuse not to do something. It’s a seemingly impenetrable argument (particularly when supported by “because…”).

People “get” IF and therefore IF has become the best way to express we are ambitious without actually acting on our ambitions. After all, who can question a person’s ambition in light of a lack of resources?

Everyone accepts IF.

The implied meaning of IF is: “it’s not your fault.” Most respond with: Me too. IF I only had the time, money, and connections, I’d…! [Insert affirmative head nod here].

IF is safe.

IF is always safe; much safer than WHEN.

In order to get what you really want however, you need to change the way you act. That begins by changing the way you think.

Changing the way you think is not an exercise in courage. It’s an exercise in willfulness. Those who succeed at living the lives they want to live are not more courageous. They are simply more willing. Courage is the willingness to take action in spite of fear not in the absence of it.

To overcome IF, you need to find a way around deficits in time, money, and resources. Here are a few things to try.

First, success is not a question of having enough time. It’s a question of what you do with the time that you do have. Those who succeed at living the lives they choose to lead have a different relationship with time. Morning. Evenings. Weekend. You have time. It’s simply wasted or allocated to the path of least resistance. But stop for a moment to think about your relationship with the time you do have. Assume you work 60 hours per week (including commute times), sleep 6 hours per night, spend 3 hours per day eating, paying bills, getting ready for whatever it is you are getting ready for. That leaves 45 hours each week for investing time in what you really want. That’s nearly 2 days each week (or 1 week per month, 3 months per year). You have the time. Take control of it or it will take control of you. Figure out where you are spending time today doing what is reinforcing where you are in exchange for where you want to be.

Second, in terms of “IF I had the money…” You do have the money. Stop spending it on things that are not aligned with what you really want. Also, remember: it’s not just your money that is available. It’s OPM (other people’s money). Risk capital exists as an industry to fund people like you; people with aspirations, creative solutions to big problems; and ideas that can make the world a better place. Capital is easy to come by. Creating ideas – thoughtful, sustainable, profitable, uniquely relevant ideas – is the hard part. Rather than focusing your energies on not having enough resources, focus on solving the problem you’d like to solve. The money will find you.

Finally, in terms of “IF I only knew people who could help me.” You do (but they may not know you need the help). For them to help you, you need to share the problem that you are attempting to solve. Protecting your idea (not sharing it with anyone for the fear they will “steal it”) only hurts you. After all, how valuable is the idea known to no one? Sure it may make you feel comfortable by not sharing it, but the fact is (with 7 billion people on the planet) you are not the only one with the idea. Talk about your idea every chance you get. Share it with everyone. Be deliberate about asking for help. You’ll be surprised how luck visits those who make their intentions known.

If you want to move from the life you are living to the life you want to live, start by thinking about time, money, and resources differently.

When you have time, commit to x, y, and z to push your idea forward.

When you have money (by not spending it on a, b, and c), invest it in pushing your idea forward.

When you have a chance to talk about your idea with people you know and people you don’t, do.

Here’s the thing. IF never comes through wishful thinking. You need to drag it – kicking and screaming – into your life. Opportunity doesn’t knock. Opportunity is locked behind a solid steel door called the status quo; accessible only to those who are willing to kick the door down in order to find it. IF comes to those willing to make it happen.

For the coming year, kick IF to the curb. You’ll be surprised at the progress you’ll make.

Buy & Hold At Your Own Risk

I’m not a financial planner. I am a business strategist who focuses on organic growth and innovation. From my perch, I am always “in the market” for disruptive ideas – sometimes selling and always buying. Given my survey of the world around me, I am amazed how much the business of personal investing has remained relatively unchanged for the past several decades.

Given the seismic changes we’ve witnessed in other industries, we’re still playing the game the way we have always played it (buy and hold, diversify, dollar cost average, etc.). However, given shrinking product life cycles, CEO tenure (contracting), receding barriers to entry in many categories (driven by technology and organized social networks), and unorthodox competition (it’s not the enemy you know, it’s the one you don’t), one thing is for certain: the days of buying and holding stock in any given company are over. And if you think diversification will save you, tread cautiously. As Warren Buffett has observed, “Diversification is protection against ignorance. It makes little sense for those who know what they’re doing.”

As much attention that has been paid to financial crises, fiscal cliffs, mortgage meltdowns, and corporate greed, I continue to be amazed that no one has reinvented the business of personal investing in any significant way. Not since Chuck Schwab democratized personal investing in 1973 have we seen anything from the industry worth writing home about. Or maybe I missed it?

I suppose fee-based advisory services have been growing (vs. commissioned sales people), but this is an incremental innovation in the otherwise disrupted industry of financial services. Of note as well is Bank of America’s Keep the Change program, but at the end of the day, its essentially a clever marketing tactic. In general, it’s safe to say: personal banking has become a commodity.

Levels of client service are difficult to differentiate and position much less to protect, yet it seems to be a favored strategy (by everyone). As a result, the majority of banking brands are lost in the shuffle selling the same old things they’ve always sold: incrementally-better rates of return over “the next guy”, arcane financial products requiring an advanced degree to interpret, and that perennial gimmick – wait for it – free checking. Even gas stations have created brands that live at a higher level than banks. Yet why has no one done the same in banking?

So, here’s a challenge to the banking world. You are dealing in a product that is emotionally-charged, aspirational, and – in some cases – so hotly debated that it is one of the leading causes of marital divorce. Yet, you are allowing yourselves to be commoditized. Many industry leaders would love to have the emotional equities that exist in the business of money. Imagine what a brand-driven company like P&G, Neiman Marcus, or Disney could do with a banking brand? I’m not suggesting any of these companies go into the banking business, rather I’m suggesting that banks think about their brands as “brand leaders” think about building brands.

There is money on the table folks (figuratively and literally). Pick it up.