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Publication Date: July 19, 2011

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Julie Devoll, Harvard Business Review Press

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“One of the most important books to come out this year, and one that will remain pivotal reading for years to come.”

– Marc Benioff, Chairman and CEO, ; author, Behind the Cloud

Ask any CEO about their strategic priority list, and “innovation” is likely to be at the top. In fact, a recent IBM poll of 1,500 CEOs identified “creativity” as the number one leadership competency of the future. But how does one go about being creative? Some people – like Steve Jobs – are simply natural innovators, right?

According to Jeff Dyer, Hal Gregersen, and legendary innovation guru Clayton M. Christensen, innovators are not born, but, rather, made. You could be as innovative and impactful as the most creative people in business – if you change your behavior. In THE INNOVATOR’S DNA: Mastering the Five Skills of Disruptive Innovators (Harvard Business Review Press; hardcover; July 19, 2011), the authors build on what we know about disruptive innovation to reveal five specific behaviors anyone can practice to become innovative thinkers.

Nearly 15 years ago, Christensen coined the term “disruptive innovation,” and wrote two bestsellers on the topic – The Innovator’s Dilemma and The Innovator’s Solution, which examined disruptive technologies, business models, and companies. A few years ago, Dyer and Gregersen posed a fundamental question to him – exactly where do these disruptive innovations come from? The three teamed up on an eight-year study and sought to understand the innovative people behind the disruptive technologies, models, and companies. Through interviews with nearly 100 inventors of revolutionary products and services, as well as founders and CEOs of game-changing companies built on innovative business ideas, they found that specific patterns of behavior emerged over and over. With these in mind, they turned to less famous – but equally capable – innovators around the world, collecting data from 500 innovators and over 5,000 executives in 75 countries. They uncovered a key finding: one’s ability to generate innovative ideas is not merely a function of the mind, but also a function of behaviors. Five behaviors, to be exact, which comprise the “innovator’s DNA”:

• Associating: drawing connections between questions, problems, or ideas from unrelated fields

• Questioning: posing queries that challenge common wisdom

• Observing: scrutinizing the behavior of customers, suppliers, and competitors to identify new ways of doing things

• Networking: meeting people with different ideas and perspectives

• Experimenting: constructing interactive experiences and provoking unorthodox responses to see what insights emerge

THE INNOVATOR’S DNA completes an important trilogy in business literature, by deconstructing the code for generating innovative business ideas and creating a method that anyone can emulate. The authors provide a self-assessment to rate your own innovator’s DNA and offer a list of practical tips for developing each of the five skills at the end of each chapter. Through interviews and stories – from leaders at Amazon and Apple to those at Google, Skype, and Virgin Group – the authors show the five innovation behaviors in action and demonstrate how they build on each other, resulting in maximum creative impact.

The authors then take the principles of how individual people innovate – how they think and act differently – and explain how companies can use that insight to build an innovation code into the organization. They developed a list of the world’s most innovative companies, based on what they call an “innovation premium” – a stock market premium based on investors’ belief that a company will produce innovations, and even bigger income streams, in the future. Through interviews with the founders of these companies, they found that the DNA of innovative organizations likely reflects the founder’s DNA. Through a deep dive into the practices of some of the world’s most innovative companies, they found that the key to creating innovative organizations and teams is to populate them with innovative people, processes that encourage the five innovative skills, and philosophies (a culture) that give employees the courage to try out new ideas and take smart risks.

Practical, provocative, and grounded in pristine research, THE INNOVATOR’S DNA is the essential guide for individuals looking to strengthen their innovative prowess and leaders who want to leverage those innovations throughout the organization.

Jeffrey Dyer is the Horace Beesley Professor of Strategy at the Marriott School, Brigham Young University. He is widely published in strategy and business journals and was the fourth most cited management scholar in 1996-2006. Hal Gregersen is a professor of leadership at INSEAD. He teaches, consults, and coaches with executives and social entrepreneurs around the world as they tackle significant innovation and social innovation challenges. Clayton M. Christensen is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School and the architect of and the world’s foremost authority on disruptive innovation.

THE INNOVATOR’S DNA:

Mastering the Five Skills of Disruptive Innovators

Authors: Jeff Dyer, Hal Gregersen and Clayton M. Christensen

Harvard Business Review Press; July 19, 2011

Hardcover; $29.95; 304 pages

ISBN: 978-1422134818



The Key Concept of THE INNOVATOR’S DNA

The Five Skills of Disruptive Innovators

ASSOCIATING: Drawing connections between questions, problems, or ideas from unrelated fields. Innovative breakthroughs often happen at the intersection of diverse disciplines and fields. Frans Johansson described this phenomenon as the “Medici Effect,” referring to the creative explosion in Florence when the Medici family brought together creators from a wide range of disciplines – sculptors, scientist, poets, philosophers, painters, and architects. As they connected, new ideas were created at the intersection of their respective fields, spawning the Renaissance, one of the most creative eras in history. Innovative thinkers connect fields, problems, or ideas that others find unrelated.

QUESTIONING: Posing queries that challenge common wisdom. Innovators frequently challenge the status quo, just as Steve Jobs did when he asked: “why does a computer need a fan?” They love to ask, “if we tried this, what would happen?” Collectively, their questions provoke new insights, connections, possibilities, and directions. We found that innovators consistently demonstrate a high Q/A ratio, where questions (Q) not only outnumber answers (A) in a typical conversation, but are valued at least as highly as good answers.

OBSERVING: Scrutinizing the behavior of customers, suppliers, and competitors to identify new ways of doing things. Innovators carefully watch the world around them – including customers, products, services, technologies, and companies – and the observations help them gain insights into and ideas for new ways of doing things. The observation trip that Steve Jobs took to Xerox PARC provided the “germ” of insight that was the catalyst for both the Macintosh’s innovative operating system and mouse, and Apple’s current OSX operating system.

NETWORKING: Meeting people with different ideas and perspectives. Innovators spend a lot of time and energy finding and testing ideas through a diverse network of individuals who vary wildly in their backgrounds and perspectives. Rather than simply social networking or networking for resources, they actively search for new ideas by talking to people who may offer a radically different view of things.

EXPERIMENTING: Constructing interactive experiences and provoking unorthodox responses to see what insights emerge. Finally, innovators are constantly trying out new experiences and piloting new ideas. Experimenters unceasingly explore the world intellectually and experientially, holding convictions at bay and testing hypotheses along the way. They visit new places, try new things, seek new information, and experiment to learn new things. Steve Jobs, for example, has tried new experiences all his life – from meditation and living in an Ashram in India to dropping in on a calligraphy class at Reed College. All these varied experiences would later trigger ideas for innovations at Apple Computer.

Adapted from THE INNOVATOR’S DNA, to be published by Harvard Business Review Press, July 2011.

An interview with the authors of THE INNOVATOR’S DNA

Q: What prompted you to write this book?

A: In 2003, the three of us were discussing Christensen’s path-breaking work on disruptive innovation. His work had done so much to explain the characteristics of disruptive technologies, business models and companies, but collectively, we wondered aloud – “where do these disruptive strategies come from?” With that question in mind, the three of us embarked on an eight-year study to uncover the origins of innovative business ideas, and found that all roads led back to the individual. Our goal was less to investigate the companies’ strategies than it was to dig into the thinking of the innovators themselves. We wanted to understand when, where and how they came up with their novel ideas. Their stories were provocative and insightful—and surprisingly similar. As we reflected on our interviews, consistent patterns of action emerged. THE INNOVATOR’S DNA is a guidebook to understanding those patterns of action, and putting them into practice – first at the individual level, and then in teams and organizations.

Q: Since Clay Christensen’s first book, The Innovator’s Dilemma, was published in 1997, an entire category of books on innovation has emerged. How do you see THE INNOVATOR’S DNA fitting into Christensen’s body of work?

A: The Innovator’s Dilemma was a classic because it not only explained the characteristics of disruptive technologies and business models, but it also explained why incumbents had difficulty responding to them. His follow-up, The Innovator’s Solution, analyzed the organizational strategies of companies that successfully responded to this dilemma and created sustainable growth.

THE INNOVATOR’S DNA is the next evolution of Christensen’s work on innovation, because it digs even deeper to identify the origins of the disruptive business ideas he spent more than a decade exploring. While his first two books focused on the technologies themselves and how companies responded to them, this one looks squarely at individual creativity in business – the root of all innovative ideas.

We answer the question: “What are the characteristics of business innovators that contribute to their ability to generate disruptive business ideas?” What we learned confirms the findings of psychologists: Creativity is not just a genetic endowment magically given to some and not others. Everyone has the ability to be a more creative problem solver—but they must develop the five skills of disruptive innovators that we identify in our research. Moreover, every company has the ability to increase its innovation capability by understanding the DNA of innovative organizations—the characteristics of people it needs to hire, processes it needs to establish, and philosophies it needs to embed within the organizational culture. Our book is a story about innovation capability—at both the individual and organizational level.

Q: Explain the role of associating – the first skill in the innovator’s DNA – and how it relates to the other four skills.

A: We found that the most important skill innovators count on is a cognitive skill we call “associational thinking.” It happens as the brain tries to synthesize and make sense of novel inputs. It helps innovators discover new directions by making connections across seemingly unrelated questions, problems, or ideas, at the intersection of diverse disciplines and fields. This is where innovative breakthroughs truly happen. It’s what Apple means when they say, “Think Different.”

Everyone knows they need to be “creative” and “think outside the box” – to “associate.” The million dollar question has always been – how? The most exciting thing we discovered is that the other four skills – questioning, observing, networking, and experimenting – are behavioral skills that, when practiced regularly, trigger associational thinking. This means that if you act a certain way, you can, indeed, “Think Different.” Collectively, these five discovery skills – the cognitive skill of associating and the four behavioral skills – work together to constitute the innovator’s DNA, with your actions catalyzing your thoughts. We’ve cracked the code for generating business ideas, and it’s one that anyone can follow. Creativity is not just a genetic predisposition – it’s an active endeavor.

Q: Your research indicates that the majority of executives excel at “delivery” skills, rather than “discovery” skills. What is the difference between the two, and why do they matter in executive teams?

A: Innovators excel at the five discovery skills and seek to fundamentally change existing business models, products, or processes. In contrast, we found that most senior executives excel at execution—they work hard to efficiently deliver the next thing that should be done given the existing business model. The executives we interviewed were extremely intelligent and accomplished at delivering results—but they didn’t have much direct, personal experience with generating innovative business ideas. They excelled at “delivery skills”: analyzing, planning, detail-oriented implementing, and disciplined executing.

But we found that large companies typically fail at disruptive innovation because the top management team is dominated by individuals who have been selected for delivery—execution—skills, not discovery skills. Organizations need both skill sets to be successful, so it’s imperative to craft an executive team that not only possesses both skills collectively, but also understands the importance of each.

Q: In your research, you devised a list of the world’s most innovative companies, that stands in stark contrast to lists created by other authorities in the field. What’s the most surprising thing about this list, and what does that mean for other companies out there?

A: The biggest surprise about our list is that some of the world’s most innovative companies aren’t necessarily household names. Several of the top 25 companies on our list are relatively unknown (such as Intuitive Surgical and Keyence Corporation) and completely off the radar screen of organizations that rank the world’s most innovative companies.

Other lists, like the one compiled by Bloomberg BusinessWeek, are essentially popularity contests based on past performance. The “winners” are those companies that business executives have heard about and who have been innovative in the past—companies like Nokia, 3M, GE, Sony, and Toyota. Rather than looking at the past, our methodology focuses on current and future innovation performance. Our list of the most innovative companies is based on what we call an “innovation premium”—a stock market premium based on investors’ belief that a company will produce innovations, and even bigger income streams, in the future. Investor insight is key—they’re voting with their wallets.

Our list of the top 50 most innovative companies does not include Nokia, 3M, Sony, GE, or Toyota. Instead, it’s led by companies like , a company who led the cloud computing charge, and Intuitive Surgical, a company who makes million dollar medical robots that perform surgeries with incredible precision. These companies may not be as well-known as some companies on the Bloomberg BusinessWeek list, but investors are impressed with their growth prospects.

The good news is that if a company wants to become one of the most innovative in the world, leaders can achieve this by focusing on their innovation premium. P&G would not have been on our list in 2000, but they made the list based on their 2005 – 2009 performance. A.G. Lafley and his team transformed P&G’s innovation premium from 22% to 33% over the course of 10 years. Put simply, companies, even big companies, can generate an even greater innovation premium by paying systematic attention to how they nurture the Innovator’s DNA skills throughout their organization.

Q: This leads us to the second part of your book, which explains how to apply what we know about the DNA of individual innovators to teams and organizations. What is your advice to executives tasked with spreading innovation throughout the company?

A: One of the most important findings of our research is that if top executives want innovation, they need to stop pointing their fingers at someone else and take a hard look at themselves. Our interviews with dozens of senior executives of large organizations revealed that in most cases, they did not feel personally responsible for coming up with innovations. They only felt responsible for “facilitating the process” to make sure someone in the company was doing so.

But in the world’s most innovative companies, senior executives like Jeff Bezos (Amazon), Marc Benioff (), and A.G. Lafley (Procter & Gamble) didn’t just delegate innovation; their own hands were deep in the innovation process. In fact, our research found that executives at the world’s most innovative companies—leaders like Bezos, Benioff, and Lafley—personally spend 50% more of their time every week trying to come up with innovative ideas for new products, processes, and businesses that generated profits for their companies.

In order for executives to spread innovation throughout the company, they must lead the innovation charge by understanding how innovation works, improving their own discovery skills and sharpening their ability to foster others’ innovation capability.

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THE INNOVATOR’S DNA:

Mastering the Five Skills of Disruptive Innovators

By Jeff Dyer, Hal Gregersen and Clayton M. Christensen

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