We are living in exponential times. The pace of change is accelerating fast, the growth of population and technology is unprecedented and there is enormous uncertainty. To succeed in this new reality requires us to radically change how we think, behave, do business, learn and go about our day-to-day.
Innovation in Exponential Times
The issue of living in exponential times is that our psychology is only equipped to think linearly and that is why we are experiencing so many unexpected problems and challenges. When we were living in more linear times we could predict things with much more certainty.
In terms of change, technology change is accelerating with the greatest momentum, followed by social change which lags behind by some distance, followed by business and political change which are much slower in catching up. Everything is being driven by technological change.
What that really means is our horizon for certainty is getting closer and closer. Where in the past companies would have ten or even twenty year strategies, it’s very difficult to see beyond two or three years nowadays. There are surprises ahead of us, everywhere.
So that’s our world. We live at a very fast pace and we all feel it. We feel it physically, we feel it emotionally, we feel it psychologically and we need to learn to deal with it. With all this pace comes opportunities, and they are opportunities for innovation.
So one question that business leaders and employees must ask themselves is “Are we aligned or misaligned with where the world is now?” The world is changing and we need to be as clear as possible about where we are in that world. We need to ask: “What is our position?”
Succeeding through innovation really means changing the way you think. And it’s probably not just changing it once but changing it in a very frequent way.
In fact, to develop the flexibility that we can change our thinking at will is a very powerful strategy and resource to have.
So it’s changing the way you think about what? About everything.
Strategic Innovation
Strategic innovation in an organisation is actually a culture. It’s a way of thinking and it must filter down into the way you recruit, develop and motivate people, the way you lead people, the way you discard, improve or disrupt processes, the way we structure our organisation when past structures are no longer relevant, useful or effective, the way we relate with our customers and our employees and associates, the way we relate with our competition and particularly the way we relate to the future.
All of that, as well as the classic understanding of innovation, to develop and launch products and services.
So ask yourself these questions:
“What business are you really in?” This is a very powerful question. When Steve Jobs returned to Apple he asked himself this question and decided that rather than being in the computer business they were in the business of connecting people to their passions. And this new purpose for Apple really drove a whole array of innovations, and new markets, disrupting old markets, to where Apple is now: the wealthiest company on the planet.
“Why are you really successful?” And is what made you successful today going to get you to where you want to go? And the likelihood is, it isn’t. We need to start looking at ourselves honestly and starting to change, even the winning formulas that got us to where we are now.
“What does your customer need now and in the next three years?” It’s all about customer needs. They can be latent needs, they can be obvious needs, they can be needs that you can help to create. But companies now and in the future need to get very close to understanding the value that they can deliver to those needs.
“What identity do you want customers to associate to your business or brand?” How do you want them to see you? They need to position you in their mind and you need to be positioned as somebody that can make a difference in and add value to their lives.
And “Who do they become by doing business with you?” By adding value, do they become special, do they become unique? Do they feel as if they belong? Do they feel part of something?
These are very important questions that need answers and questioning on a regular basis. Take some white space out of your business where instead of working IN your business you can work ON your business and answer questions just like this.
Culture is Key
Culture is the key to unlocking innovation and growth in any system. Ask yourself, “Are you shaping culture or is it shaping you?” If you’re not shaping your organisational culture then the chances are that it’s shaping you. Leaders need to constantly shape the culture of the organisation they’re in so that it evolves and is relevant as we move through the fast pace of change.
If we are not attending to culture, it will drift. And it may drift into areas that really no longer align with your business, with your vision, with your strategy, with your purpose. And then it starts to become a glass ceiling.
Back in the late 1980s, it was believed that innovation was all about new techniques or bringing “new blood” into the organisation. Business and organisational culture were not being discussed. By bringing in new creative thinkers and new techniques, organisations did achieve a degree of innovation but they very quickly changed back to the status quo. Because they weren’t managing the culture, “new blood” quickly became “old blood”. It was eventually discovered that it was an organisation’s culture that put a glass ceiling on their ability to innovate. So what was needed was a cultural transformation to Breakthrough that glass ceiling, Breakthrough the cultural status quo ceiling. And that’s why the Breakthrough approach was developed.
So how powerful is culture? If we were to look at a simple cycle of how business gets results, the first thing we would do is set out some clear, measurable outcomes. Then we would develop a strategy and execute it. From the execution of the strategy we get the results and ideally those results equal or surpass our outcomes. This simple model is all very well, but culture typically intervenes between strategy and execution.
And unless you have a culture that is aligned to your strategy and is enabling execution, then we get a disconnect. And this disconnect will block the whole cycle. It was Peter Drucker who said “Culture eats strategy for breakfast”. Over our years of working with many different types of organisations across the globe, we’ve found that statement to be very true.
Leadership is obviously very important in defining outcomes and success, in developing strategy, in enabling execution and in managing results. But its most crucial role is in evolving and shaping the culture.
Thinking Outside the Box
You have no doubt heard the phrase ‘Thinking outside of the box’. But have you ever wondered “What’s the box?” The box, whether it applies to you as an individual or a team or an organisation, consists of walls and ceilings. Let us examine their composition.
The first wall is our core beliefs. These include such beliefs as who we believe we are, how we believe people think of us, and how we believe people will respond to us. These also include our beliefs about the world we live in and whether it is a safe place, an exciting place or a dangerous place. Organisations have these core beliefs, some of which are unconscious. These beliefs can be either enabling or limiting. When they are limiting you have another wall of your box: fear. Fear is the big one: fear of risk, fear of uncertainty, fear of the unknown, fear of failure. Fear serves to make us risk adverse, limits our ability to even see possibilities, let alone lets us feel that we can achieve them.
The third wall is the rules that we have for ourselves, our implicit rules, rules that we were are likely to have been socialised with. Rules about what’s possible. Rules about what’s acceptable. Many competitors are playing a game in business and they’ll play the same game to the same rules. Often it takes somebody to step outside of that box and create new rules to initiate the Breakthrough, to create a whole new product area or category that then everybody else follows. They create new rules.
And finally, the fourth wall is our habits. These include our behavioural and thinking habits. We get into ruts in the way we think, we get lazy in the way we think or we just don’t think. We’re often not really thinking in a very aware way. We’re thinking superficially, we’re not going deep, we’re not really looking at what’s happening below the causes that we see.
Our Filters
One of the biggest filters we have is what we call the “Already knowing” filter. With this filter we come to new things already knowing how they’re going to work, already knowing where they’re going to fail, already knowing how the customer is going to react. It’s a really powerful filter that can be incredibly useful but can also limit our thinking.
In fact, there are four domains of knowledge: there’s the “things that we know we know” (i.e. already knowing), there’s the: “things we know we don’t know” (also part of already knowing). And then there are “the things we don’t know we know”, and that’s usually hidden unconsciously and it takes an event to trigger this. Everything we’ve ever experienced is lodged somewhere into our system. But the most exciting and interesting area is the “things we know we don’t know.” And that area is vast. In fact, everything new is going to come out of this area. If we look at our own experience, 25 years ago we didn’t know we didn’t know the internet, we didn’t know we didn’t know mobile phones, we didn’t know we didn’t know we’d be a super-connected world. All of those things have come out of this area. If we’re operating out of our filter of already knowing it’s very difficult to get to that place.
Building a Culture of Innovation
So we need to break patterns, think differently, think disruptively and above all we need to create new rules. A culture of innovation is what we need to be building. The companies that innovate the most, the fastest and the most successfully have created cultures that enable, reinforce and reward innovation.
If we look at innovation versus effort, we can identify three zones and three types of innovation. The first zone is complacent. It’s very low effort and the results are not great. The second zone is overload. This is where there is a great deal of effort, and a fair degree of innovation, but none of it really strategic or aligned to our purpose. This is not strategic innovation and people are overloaded. Then we have the Holy Grail, which is the high-performance zone where our innovation efforts are strong, strategic and aligned to our purpose and the future vision of our business.
BlackBerry is an example of a company that started in the high performance zone and then became complacent and lost its market position. Nokia was in the high-performance zone and then went into overload. Apple is a great example of a company that has been in both complacency and overload in the past and is now in high-performance.
Darwin observed: “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” Cultures can be viewed as species within a vast ecosystem. Cultures that do not evolve and adapt are doomed to die. Cultures that innovate are flexible, agile, adaptable and evolving. Cultures that are not innovative suffer from one or more of these symptoms: they have internal inertia, the are risk adverse, they lack talent, they lack top support and they lack investment.
The Drivers of Innovation
So what are the drivers of innovation? Well the first is aligning your innovation with your purpose. This is the most powerful thing you can do. And if you don’t have an authentic purpose, you need one.
The next driver is customer-centricity and customer-closeness. You cannot afford to be apart from your customer. You need your customer as an ally to your business, you need to be working with them day in, day out and you need to understand them. You need to understand their fears, their worries, you need to understand where you can add value to them. You need to get close and have them as the core of your business and innovation initiatives.
There has been a subtle shift from product design to experience design. The experience that you offer to your consumer is paramount. Apple is an exemplar of an organisation focused on the customer experience, and they invest enormous effort and resources into getting it right. Apple are more than a computer, phone or app, Apple is a whole experience.
Co-creation is another driver. Getting together with your customers, with your suppliers (and sometimes even your competitors) to co-create.
You need the best talent available and you need to be hiring for innovation, hiring for the purpose of your company, hiring for the future of your company and the future you want to build.
You need to anticipate and adapt to market evolutions and revolutions. The internet of things is no longer a hypothesis, an idea or a concept. It’s here and its influence and growth has become exponential. The global brain has been constructed and if we are not part of it, we’re very much at risk. We need to be on top of this and at least recognise where we can adapt it, where we can start to bring the future into our present more quickly. We need to adopt and implement emerging technologies.
Creative behaviour and disruptive processes need to be encouraged in our own businesses. Many of us are frightened of this; we fear disruption, we want to control everything. But we live in a world where you can’t control everything. It is better to accept this reality and to break out of fear. Innovators can very quickly switch to a mode of protectionism once they are successful and have something to safeguard. In this mode, their innovative capacity drops, their entrepreneurial drive disappears, and they start bringing in and recruiting people who are more interested in maintaining the status quo than shooting them up another ‘S curve’ into growth.
There is always a balance to strike between long-term innovation and short-term objectives and this particularly comes to a head in relation to financial objectives. As leaders we need to have the courage to stick to our long-term innovation goals that are aligned to our purpose, and to the future business we want to create and be careful that we do not sacrifice some of those for short-term finances.
“Test fast. Adjust fast. Fail fast.” That’s a great mantra. So we don’t have to risk everything on the tests. Rapid prototyping is the way to cut through all of this. Also, co-creating with your consumer so that you’re not testing on your consumer, you’re actually testing and refining with your consumer.
Another important driver is the activation and innovation of your ecosystem. In fact, create an ecosystem that will enable and leverage your innovation. Who can you pull into that ecosystem? Every organisation has a much bigger ecosystem than it is aware of, that it is actually investing in, taking time with, getting analysis from, experimenting with, testing with. It’s an incredible resource that needs to be activated for exponential innovation.
You need to ask yourselves: “Is your innovation process planned or spontaneous? Integrated or autonomous? Internal or collaborative? Local or global?” If you cannot answer these, this lack of clarity may be what is holding you back.
We have a paradox in that innovation is increasingly becoming a global game. So it’s merging and combining talents, ideas, insights and resources across the globe. This is the only way to be successful in the future. But the paradox is that innovation also needs to be localised and to serve specific market needs. Managing this paradox is a secret to success.
The Importance of Insights
Insights are important because they allow us to discover what we don’t know what we don’t know. The route into that is listening. Listening to your market. Listening to your customer. Listening to your people. Listening to the world as it changes. And then acting on those insights, trusting them, having processes for getting them.
These insights need to be deep. “So what’s missing?” is the question to ask. They need to be far. “What opportunities do we have?” They need to be beyond. “What’s possible?”
Is it the Big Idea or the Big Result we need? Often we are looking for a Big Idea and that can paralyse us. What we really need to look for is the Big Result. And the Big Result can come from a small idea or a chain of small ideas that are amplified and magnified into a big result. Don’t always go looking for the big idea. Most of the big results that we see around at the moment started with that small idea.
The Four Mindsets
Mindset is paramount because you cannot out-perform your mindset. We have identified four predominant mindsets which operate in the world and in organisations. We can get stuck in any one of these. What we need to do is understand them and then chose which ones to use for our benefit.
The first mindset is what we call magical. This is the mindset where anything is possible, there are no limits, it’s the possibility mindset. It comes when you ask that question “What’s possible?”
The next mindset is the heroic mindset. As we develop as children, heroes become very important to us and we see ourselves as heroes. We know what we’re going to do in the world. We don’t ask how, it’s just what we’re going to do. In the heroic mindset we are unstoppable. We have a big “I can” attitude. There’s a phrase, “The tyranny of how”, which can really lower our sights on what we’re going to create.
The third mindset is resigned and this is where we have a belief system that “I can’t”. This is where we start to give up. This is where we’re fearful of failure. This is where we don’t even take a risk because we think we might fail. The resigned mindset is very powerful and very common.
Finally is the cynical mindset which is where we have the belief that “Nobody can” and “Even if you can, so what? What’s the point?” This is the result of fear. The fear of the unknown, the fear of change, the fear of uncertainty and it can drive a lot of cynical thinking.
So looking at your own leadership team and organisation, which of those four mindsets do you see operating? Although we have described these mindsets as individual, each of these mindsets is present in each of us.
There is no real growth or creativity in the cynical or resigned mindsets. So at Breakthrough we recommend a mindset of magical thinking with heroic action. This mindset is what has created everything around us.
Creating the Future
The winners create the future first. Think about this: Amazon is the world’s biggest bookseller but it doesn’t have a bookshop. That is magical if you think about it, and it’s happened. They’ve created the future. Also consider this: when Bill Gates was at the peak of his success and his company was the second most valuable company in the world, he was asked what kept him awake at night. He replied that it was a group of students in a garage somewhere creating the future, just as he and his friends had done all those years ago. As he said this, there were, indeed, a group of students who were creating the future. It was Google.
Getting to the future first means everybody else needs to follow. And a new future starts with a new conversation. Starting from today, what new conversations can you have, even with yourself, about your customers, about your brands, about your company, about your competition, about your industry, and about your future?
And remember that vision without action is just hallucination. So many people have had great ideas that have never become innovations because they have stayed as ideas and limitations got in the way. They didn’t get into action, or they got into action and then stopped after the first failure.
To create the future you need to be in the future. Creating white space away from the business, working on your business, looking at what’s over the horizon and using insights, all help us to create the future from the future. If we create it from the present or the past, it’s full of limitations. You need to jump out there. Jump out there, into 2025, and design a future you want, the best future for you. And then, looking back, work your way back. Steve Jobs said “You can’t join the dots looking forward. You can only join the dots looking back.” So get out there and look back and join the dots.
Get out into 2025, come back to now and see how your trajectory differs from your current business-as-usual trajectory. That gap is the Breakthrough gap. That gap is the innovation gap. And then pull the future into the present. Once you’ve got some aspects of that future that you want your business to create, you want your customers to experience, look around there will be things now you can pull into the future.
Live Your Vision
Live your vision now. Vision is not something you go to, vision is something that you come from every day. Without a vision you can’t do that, all you can do is react to what happened.
Start with Yourself
Finally, start with yourself. What could you transform? The following is inscribed on the tomb of an Anglican Bishop in Westminster Abbey (1100 A.D.) “And now, as I lie on my deathbed, I suddenly realise: If I had only changed myself first, then by example I would have changed my family. From their inspiration and encouragement, I would then have been able to better my country, and who knows, I may have even changed the world.”
Written by:
Dr Bart Sayle, CEO and Nick Hawker, Transformation Director, The Breakthrough Group. Bart Sayle is the author of Riding the Blue Train: A Leadership Plan for Explosive Growth.
The Breakthrough Group specialises in accelerated business growth, unleashing mindset, behaviour and culture transformation to deliver outstanding business results, with over 20 years experience working with leading companies including Mars, Jacobs Douwe Egberts, Danone, Unilever, Ferrero, Pepsico, Coca-Cola, Bayer and P&G.
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