Three conditions for innovation
I have been fortunate enough to work in a variety of startup types: standalone entities that were acquired or IPO’ed, startups nested inside of existing corporate enterprises, large industry joint ventures. And when I say “fortunate,” I mean that I have witnessed the good, the bad, and the ugly when it comes to trying to champion innovation. Here is what I have learned about the conditions required for innovation to flourish:
First, the management team must have channel and operational autonomy. Do not underestimate the impact that lack of channel autonomy can have on innovation – it is the difference between success and failure. I spent years with some of the best and brightest trying to build and sell into a channel that we didn’t, and couldn’t, control. From product design to testing to deployment to sales, we were dependent on our investors for approval. If you can’t get to market, someone else will.
Second, the culture and working environment needs to be “neutral.” What I mean by this is that the team, investors, buyers, users, etc., cannot be invested in a particular, predicted outcome. If an innovation necessitates an outcome or result – revenue, increased profitability, new or adjacent market penetration – then you aren’t really innovating. You are optimizing. Confuse the two at your own peril (think Sony today versus 1995).
Finally, innovation is directly correlated to the talent pool. How many times have you witnessed the hiring of – or hired yourself – the “domain expert?” There is a steadfast belief that years of experience is the secret to success. Baloney. Hiring a domain expert does not guarantee success; it guarantees that you have access to minutia.
Some of the most successful ventures I have been involved with were the result people who simply didn’t know any better. Had they known the nitty-gritty details of the market they were trying to disrupt, they never would have tried because the market obstacles would have seemed insurmountable.
The New York Times’ Thomas Friedman wrote recently on the hiring practices at Google. My favorite quote by Google SVP Laszlo Bock relates to the value of expertise versus mindset:
“If you take somebody who has high cognitive ability, is innately curious, willing to learn and has emergent leadership skills, and you hire them as an H.R. person or finance person, and they have no content knowledge, and you compare them with someone who’s been doing just one thing and is a world expert, the expert will go: ‘I’ve seen this 100 times before; here’s what you do.’ Most of the time the nonexpert will come up with the same answer … because most of the time it’s not that hard. Sure, once in a while they will mess it up … but once in a while they’ll also come up with an answer that is totally new.”
Given the choice, learn to hire for mindset first and skill or domain expertise second. The latter can be taught; the former is the DNA of innovation.