On INNOVATON STATIONS and "Shade Tree Mechanics"

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An Evolutionary Approach to Innovation

by Richard Watson

Can biology teach us anything about innovation? The essence of Darwinism is that progress is created by adaptation to changed conditions. What starts as a random mutation can also spread to become the norm through a process of natural selection.

The same is surely true with innovation. New ideas are mutations created when two or more old ideas combine. For instance, Virgin Atlantic Airways is what happens when you cross an entertainment company with an airline business.

Virgin itself is also a good example of mutation and adaptation. The music retail business was created when a postal strike threatened to shut down the fledgling mail order record company. Virgin Atlantic was the result of an unsolicited approach from outside the company. Virgin Blue (a low-cost airline in Australia) is a similar story.

In my experience, what makes Virgin innovative is a strong sense of self, an ability to experiment, the skill to cross-fertilize ideas, and a willingness to change. The company has largely grown, not through the unfolding of some master plan, but through an accumulation of learning and ideas caused by threats, accidents and luck.

So, if external events and adaptation are the driving forces of biological evolution, is it possible to develop an innovation process that seeks out accidents and mutations?

This is an idea being developed by companies like Brand Genetics in the UK and Dr. Ron Alexander in Australia.

The list of things created by accident is certainly impressive; Aspirin, Band-Aids, Diners Club, DNA finger printing, dynamite, inoculation, Jell-O, Lamborghini, microwave ovens, nylon, penicillin, velcro and Vodafone to name just a few.

However, one of the defining characteristics of business is a preoccupation with orderly process ("If you can't measure it, you can't manage it."). So it's hard to imagine corporate cultures embracing randomness -- or agreeing with John Lennon, who said, "Life is what happens to you when you're busy making other plans."

Accidents are born of experimentation, but the automotive and fashion industries are almost the only industries that publicly experiment with radical mutations. What, for example, is the soft drink industry equivalent of a concept car at the Detroit Motor Show?

Zara, the Spanish clothing retailer, is a classic example of experimentation and adaptation. Store managers send customer feedback and observations to in-house design teams via PDAs. This helps the company to spot fashion trends and adapt merchandise to local tastes.

Just-in-time production (an idea transferred from the automotive industry), then gives the company an edge in terms of speed and flexibility. The result is a three-week turnaround time for new products (the industry average is nine months), and 10,000 new designs every year -- none of which stay in store for more than four weeks.

The analogy of biology also leads to an interesting idea about whether companies are best thought of in mechanical or biological terms. Traditionally, we have likened companies to machines. Organisations are mechanical devices (engines if you like) that can be tuned by experts to deliver optimum performance.

For companies that are looking to fine tune what they already do, this is probably correct. A product like the Porsche 911 evolves due to a process of continuous improvement and slowly changing environmental factors. The focus is on repetition. Development is logical and linear.

However, if you're seeking to revolutionize a product or market, the biological model is an interesting thinking tool. In this context, biology reminds us that random events and non-linear thinking cause developmental jumps. Unlike machines, living things have the ability to identify and translate opportunities and threats into strategies for survival. A good example is Mercedes-Benz working with Swatch watches to create the Smart car.

Creative leaps are usually the result of accidental cross-fertilization (variation) or rapid adaptation caused by the threat of change. Hence the importance of identifying an enemy, setting unrealistic deadlines and using diverse teams to create paradigm shifts.

The latter is a route employed by MIT who mix different disciplines together. As Nicholas Negroponte puts it, "New ideas do not necessarily live within the borders of existing intellectual domains. In fact they are most often at the edges and in curious intersections."

This is a thought echoed by Edward de Bono, who talks about the need for provocation and discontinuity. In order to come up with a new solution you must first jump laterally to a different start or end point.

For example, if you want to revolutionise the hotel industry you need to identify the assumptions upon which the industry operates and then create a divergent strategy. This could lead you to invent Formule 1 Hotels (keep prices low by focusing on beds, hygiene, and privacy), or another value innovator, easyHotel (keep rooms cheap by making guests hire their own bed linen and clean their own rooms).

What else can you do to create these jumps? A good place to start is to look at the edge (fringe) of existing markets. Here you'll find the misfits and the rebels. Companies that see things differently. People young enough not to realise that new ideas are impossible, or old enough not to care.

How else can you use a Darwinian approach to innovation? Here are five ideas:

• Look at the big evolutionary picture -- what are the driving forces?
• Create mutations -- unusual combinations of people and ideas.
• Look for new ideas and conditions that could disrupt your market.
• Treat accidents as opportunities for divergence and adaptation.
• Cooperate with other companies (create mutually beneficial eco-systems)

Finally, remember the words of Charles Darwin, "It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change."

Garage Shop Innovation

by Richard Watson

Too much experience, too much familiarity, or too much money can kill innovation fast. That's why game changing ideas tend to come from a lone inventor or two in a cramped garage.

A while ago I wrote a piece for Fast Company called "An Evolutionary Approach to Innovation." The central idea was that Darwinism teaches us quite a bit about innovation. In particular, random mutations and adaptations caused by a particular local context or by rapidly changing conditions can spread to become the norm through a process of natural selection. Innovations are generally mutations created when one or more old idea is cross-fertilized by another.

The same is true with trends. New trends emerge when someone starts to think or behave differently -- or starts to create or customize something because existing offers do not fit with their needs or circumstances. If conditions are right a trend will become widely accepted, eventually moving from the fringe to the mass-market and from early adopters and trendsetters to laggards. Trends that occur at an intersection of other trends may also turn into megatrends, which are the key disrupters and drivers of innovation and change across all industries.

Creative leaps also tend to emerge when someone with a differing perspective tries something new -- either through bravery or sheer naivety. If that person is young or comes from another place (i.e. a different discipline or perhaps a different country) things sometime start to happen. Put two or move differing people together and the sparks can really fly.

But why is this so? In my experience it's because older people have usually invested too much under the current system and therefore have too much to lose if a new idea displaces an older one. Equally, people that don't move around or come from the same department or discipline sometimes fail to see what is hidden under their own noses, whereas people from ‘somewhere else' often see it.

For these reasons game changing ideas and radical innovations tend to come, not from well-funded industry incumbents (i.e. large organizations), but from lone inventors or a couple of individuals in a cramped garage. In other words, too much experience, too much familiarity or too much money can kill innovation faster than phrases like "I like it but" and "We tried that once."

Perhaps this explains why, for instance, 25% of Silicon Valley startups are created by either Indian or Chinese entrepreneurs. They see things differently. Another example of outsider thinking and mutation is Virgin Atlantic Airways. Richard Branson managed to shake up the airline industry precisely because he did not have an airline industry background. So when other airlines were worrying about legroom, routes and punctuality, Branson was cross-fertilising his experience from the entertainment industry and worrying about why flying wasn't more fun.

Not all new ideas and innovations make it of course. It's a case of survival of the fittest (or luckiest). Eventually, however, the sheer number of new ideas that are hatched means that a few emerge and make it into the mainstream where they do battle with deeply set vested interests. Then it's usually youth and energy versus experience and money. Organizations are like this too in a sense. They start of hungry, agile and curious and end up bloated, lazy and stiff.

So my question is this. If external events and adaptation are the driving forces of innovation, is it possible to develop an innovative culture and process that seeks out change and mutation? Moreover, if evolution is the result of genetic accidents is it possible to replicate such accidents through experimentation? An imminent threat of extinction would certainly explain why it often takes a crisis to spur a lazy and bureaucratic organization to adapt and embrace change.

My answer is that generally speaking it's not. This may be a heretical statement, especially coming from someone that makes a living advising companies how to create innovation systems, but I think it's true. Some large companies are excellent at innovation. It's their reason for being and is imprinted in their DNA.

However, for most large organizations innovation is an inconvenience. Organizational cultures develop a kind of corporate immune system that subconsciously suppresses or rejects any new idea that could threaten the existing business. Quite right too. The primary aim of established organizations is to extract revenue and profit from legacy businesses and not to do anything that would upset the apple cart.

This primarily means executing flawlessly in the present and requires tight control and strict hierarchies. Small companies, in contrast, have less to lose and are not encumbered by their history. Their mental models about 'what works' are less fixed and they are more open to picking up weak signals about change.

So here's my idea. If your organization is the kind that does innovation well, then great. Equally, if you're halfway decent at innovation, keep with the program and perhaps play around with some of these thoughts about using trends as a framework for innovation and scenario planning. If you're lucky you may give birth to a strange mutation. If this happens recognize it as a gift and run with it as far as it goes.

If, however, you are the type of organization that's not very good at innovation then give up. That's right. Throw in the towel and get into hunting instead of agriculture. In other words stop trying to grow your own through research & development and go out hunting with mergers and acquisitions instead. Seek out small innovative companies and buy them.

Big organizations, even ones that are really bad at innovation, are very good at scaling up an idea and dealing with everything from intellectual property and sales to marketing and finance. This is handy because these things are precisely what startups and small companies are often very bad at.