By Jim Euchner, VP, Global Innovation, Goodyear, and RTM Editor-in-Chief
People will work long hours, climb over steep obstacles, and endure a lot of frustration to innovate if they believe they have a real chance to create something new. An organization can be said to have a culture of innovation when it supports those people and makes it possible for bold new things to happen with some regularity. Alas, in many organizations, it is almost impossible to be truly innovative. There are too many layers of organizational defense preventing it.
This issue brings together thinking from leaders who have created such cultures and helped birth impressive innovation—even world-changing breakthroughs—in places like DARPA, Google, the XPRIZE Foundation, and IBM. Each of the authors in this issue is a recognized innovation leader and each was an invited speaker at IRI’s 2016 Annual Meeting in Orlando, Florida. They are all reflective practitioners who have thought deeply about what makes innovation work in large organizations.
Although each of these leaders has a unique style and uses a distinctive set of tools, there are common threads in their thinking that cut across the organizations they have helped to shape. Some of these common elements are:
Bold goals. Innovation happens when goals are clear, audacious, and meaningful—when goals not only inspire but also serve as the lodestone in managing the innovation program.
A degree of independence. A company’s performance engine—the structure that delivers predictable, near-term results based on existing core competencies—can strangle innovation by preventing change; after all, change endangers the performance engine. Some mechanism for shielding the innovation effort from the imperatives of the performance engine is required.
Resources. Executives need to make resources available to breakthrough innovation efforts even though the results are uncertain; they need to protect those resources and manage them with a different logic than that imposed by the performance engine and its traditional financial metrics.
A balance of discipline and freedom. Freedom from current ways of thinking and acting is required, but so is the discipline (and guts) to make tough decisions about the future of even favored projects.
Interconnection. Innovation happens when ideas collide; there need to be ways of bringing together different perspectives, different ways of thinking, and different concepts, both within the organization and across its boundaries.
Great people. Bold innovation requires great people—leaders and project staff members who are technically strong, passionate, and able to attract and motivate other great people.
The articles in this issue, each adapted from an Annual Meeting keynote or plenary talk, show how these innovative leaders have developed practices that draw on each of these elements to make bold innovation work.
In this issue:
The Road to Abundance — Innovation, Disruption, and Opportunity; 2016 Medal Address
Peter H. Diamandis (XPRIZE Foundation)
Making Innovation Happen: 2016 Medal Address
Vinton G. Cerf (Google)
Embedding Innovation in Corporate DNA
Bernard Meyerson (IBM)
Manufacturing in Space
Jason Dunn (Made in Space)
Leveraging Virtual Experimentation and Simulation in R&D
Anita Friis Sommer (LEGO) and Steven Moskowitz (Entegris)
Welcome to the Long Term
Christian Crews (Kalypso)
NOTE: In the full version of this “From the Editor” column, mention is made of an interview with Draper’s CEO Kaigham Gabriel, but due to a last minute change, the article including this interview did not make it into the issue.
The articles by Diamandis, Cerf and Meyerson clearly show that the fourth generation (4G) of innovation is required to effectively create radical innovation supported by culture but with more support by the twelve principles of 4G.
One of the principles of 4G is that organizational ambidexterity (as described in papers by Tushman and many others) is required for survival with separate organizational structures to simultaneously manage incremental and radical innovation. In 4G, an organization is split into two parts – one doing incremental innovation managed by a Chief Operating Officer and another doing radical innovation managed by the Chief Innovation Officer such as Meyerson. The options for separation are (1) start-ups as Diamandis describes or (2) splitting an organization into separate parts as Cerf describes with the example of Google which has split itself with Alphabet.
Cerf also describes the first principle of 4G which is the allocation of resources split between incremental and radical innovation. Cerf says “At Google we have 20 Percent Time … Google keeps all this exploration on track with a clear plan for the company as a whole. The core of the plan is a 70-20-10 investment model: 70 percent of the company’s investment in R&D is focused on current applications and products, 20 percent goes to developments that are adjacent to those primary product lines, and 10 percent is blue sky—and it’s really blue sky. This is where Google X lives. The idea is to do things that don’t even necessarily have a business model to begin with, just to figure out how to crack that nut, technically. This 70-20-10 model has led to things like self-driving cars and a lot of Google’s other more ambitious explorations.”
What is not described by Diamandis and Cerf are the other 4G principles but I’m confident that they exist such as the 4G iterative process needed for radical innovation that replaces the linear process for incremental innovation. The 4G iterative process determines a market need and a matching solution that includes a business model.
For example, Meyerson describes another 4G principle which is that innovators need to be “T-shaped” with both depth and breath. IBM has been practicing 4G as GE has also done to transform its business model from just manufacturing to a hybrid model based on manufacturing combined with services. And services provide most of the growth in profits. IBM’s Watson is a radical innovation of computing that focuses on services and is implementation of another 4G principle – a Knowledge Channel that connects the user of a product and service directly back to the supplier in a bi-directional channel to facilitate mutual learning between customers and suppliers. The SPEED program at IBM is another example of 4G practice using the 4G iterative process that integrates the customer into R&D. In 1G, 2G and 3G, R&D provides technology in a linear stage gate process that frequently fails because the market for the technology is just an assumption in R&D. In 4G, the market assumption is tested in R&D.