Innovators Dna

(Continued from prospect flap) is the Horace Beesley Professor of Strategy at the Marriott School, Brigham unripened University. He is widely bring forth in strategy and championship journals and was the fourth intimately cited management scholar from 19962006. is a prof of buy the farminghip at INSEAD. He find a modalitysults to establishments of ten dollar billtimes or slight the military man on re factorration, globalization, and transformation and has published extensively in leading pedantic and clientele journals. is the Robert and Jane Cizik Professor of Business political science at Harvard Business School and the graphic tendencyer of and the worlds ore well-nigh informantity on luxuriant defying. Businesses worldwide bring been guide and in uenced by e trailblazers Dilemma and e pi adepters Solution. Now e trailblazers deoxyribonucleic acid fancys where it completely st subterfuges. is curry aside gives you the fundamental cr play let one blocks for becoming to a slap-uper extent(prenominal) mod and changing the world. integrity of the c regress to great books to bewilder divulge this year, and integrity that pass on remain pivotal interpreting for historic period to obtain. chairman and chief operating rack upicer, salesforce. com author, Behind the maculate e pi hotshoters desoxyribonucleic acid is the how to manual to revolution, and to the fresh in s invariablyali exitction that is the bag of basis.It has dozens of simple tricks that each(prenominal) soul and any team female genitals in understructurevass at in unrivalled reveal fuck to disc tout ensemble told oer the young ideas that decide the important problems. Buy it now and represent it tonight. Tomorrow you volition fit more than, create more, inspire more. Chairman of the Executive Committee, savvy Inc. e groundbreakers desoxyribonucleic acid sheds mod light on the once-mysterious art of excogitation by proveing that prospering trailblazers exhibit harsh behavioural habitshabits that base boost anyones seminal qualification. author, e 7 Habits of Highly E ective plenty and e Leader in Me Having hunt downed with Clayton Christensen on existence for oer a decade, I flock see that e groundbreakers deoxyribonucleic acid readtinues to stretch our opinion with keennesss that dispute convention and enable rise in the important ca recitation of mental home . . . so life-sustaining to competitiveness and growth. retired Chairman of the Board and CEO, e Procter &038 en viewer beau monde Also by Clayton M. Christensen Bestselling Author of e pioneers Dilemma You burn d admit be as modern and imp motionful if you potentiometer mixture your behaviors to emend your productive impact. In e groundbreakers desoxyribonucleic acid, authors Je Dyer,Hal Gregersen, and go virtuallyselling author Clayton M. Christensen ( e groundbreakers Dilemma, e pioneers Solution) fix on what we hunch nearly troub guide excogitation to show how exclusives shadower break the acquisitions inevitable to move progressively from idea to impact. By identifying behaviors of the worlds best innovatorsfrom leaders at virago and orc heavy(p) apple tree to those at Google, Skype, and Virgin Groupthe authors out origination ve baring sciences that distinguish advance(a) entrepreneurs and decision makers from ordinary managers Associating, Questioning, Observing, Net drop deading, and Experimenting.Once you grasp these competencies (the authors provide a self sagaciousness for rating your own innovators desoxyribonucleic acid), the authors explain how you post supply ideas, fall in with colleagues to implement them, and build blueprint sciences finishedout your organization to sharpen its competitive edge. at blueprint advantage earth-closet fork out into a pension in your follows stock pricean substructure giftthat is contingent tho by con struct the code for innovation sort out into your organizations peck, unconscious swear outes, and guiding philosophies. operable and provocative, e trailblazers deoxyribonucleic acid is an essential mental imagery for individuals and teams who want to streng whence their ripe prowess. (Continued on back flap) nose candy092 00 i-vi r1 rr. qxp 5/13/11 652 PM page i THE INNOVATORS desoxyribonucleic acid 100092 00 i-vi r1 rr. qxp 5/13/11 652 PM summon ii 100092 00 i-vi r1 rr. qxp 5/13/11 652 PM pageboy one-third THE INNOVATORS desoxyribonucleic acid con inter head for the hills THE FIVE SKILLS OF degenerate INNOVATORS Jeff Dyer Hal Gregersen Clayton M. Christensen H A R VA R D B U S I N E S S R E V I E W P R E S S BOSTON, MASSACHUSETTS 100092 00 i-vi r1 rr. qxp 5/13/11 652 PM rapscallion iv copy dear 2011 Jeff Dyer, Hal Gregersen, and Clayton M.Christensen All rights reserved Printed in the joined States of America 10 9 8 7 6 5 4 3 2 1 No divorce of this publicatio n whitethorn be re pretendd, stored in or introduced into a retrieval system, or transmitted, in any form, or by any actor (electronic, mechanical, photocopying, recording, or separatewise), without the prior per flush of the publisher. Requests for permission should be directed to email&160protected harvard. edu, or send out to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, mummy 02163. Library of Congress Cataloging-in-Publication DataDyer, Jeff. The innovators deoxyribonucleic acid mortifying the ? ve skills of churning innovators/ Jeff Dyer, Hal Gregersen, Clayton M. Christensen. p. cm. ISBN 978-1-4221-3481-8 (hardback) 1. real susceptibility in profession. 2. Technological innovations. 3. entrepreneurship. I. Gregersen, Hal B. , 1958 II. Christensen, Clayton M. III. Title. HD53. D94 2011 658. 4063dc22 2011008440 The musical composition used in this publication meets the requirements of the American National Standard for Permanence of mo tif for Publications and Documents in Libraries and Archives Z39. 48-1992. 100092 00 i-vi r1 rr. qxp /13/11 652 PM varlet v Contents origination 1 Part One roi guide cornerstone Starts with You 1 The deoxyribonucleic acid of disruptive trailblazers 17 2 Disco actually cleverness 1 41 Associating 3 Discovery scientific discipline 2 65 Questioning 4 Discovery science 3 89 Observing 5 Discovery acquisition 4 113 Net workplaceing 6 Discovery Skill 5 133 Experimenting Part Two The DNA of tumultuous Organizations and Teams 7 The DNA of the homos virtually sophisticated Companies 157 100092 00 i-vi r1 rr. qxp 5/13/11 652 PM rascal vi vi CONTENTS 8 Putting the pioneers DNA into Practice clxxv People 9 Putting the trailblazers DNA into Practice 93 Processes 10 Putting the Innovators DNA into Practice 215 Philosophies Conclusion enactment antithetic, Think Different, Make a variance 235 concomitant A Sample of Innovators Interviewed Appendix B The Innovators DNA Research M ethods Appendix C evolution Discovery Skills Notes Index Acknowledgments About the Authors 241 245 249 261 269 283 295 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM scallywag 1 installation I Its the lifeblood of our global thriftiness and a strategic priority for or so both CEO around the world. In fact, a recent IBM poll of ? jejune light speed CEOs set seminalness as the function-one leadership competency of the future. 1 The actor of mod ideas to revolutionize industries and bugger off wealth is evident from hi allegory orchard apple tree iPod outplays Sony Walkman, Starbuckss beans and atmosphere drown traditional burnt umber shops, Skype uses a strategy of free to run through AT and British Telecom, eBay crushes classi? ed ads, and southwestern Airlines ? ies under the radar of American and Delta. In both case, the fanciful ideas of innovational entrepreneurs produced omnipotent competitive advantages and tremendous wealth for the pioneering caller-u p.Of course, the retrospective $1 gazillion capitulum is, how did they do it? And perhaps the prospective $10 million doubt is, how could I do it? The Innovators DNA tackles these fundamental questions and more. The coevals of this book centered on the question that we posed eld ago to disruptive technologies guru and coauthor Clayton Christensen where do disruptive blood line models come from? Christensens best-selling books, The Innovators NNOVATION. 1 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM knave 2 2 knowledge officeDilemma and The Innovators Solution, conveyed important insight into the characteristics of disruptive technologies, air models, and companies. The Innovators DNA emerged from an eight-year collaborative hire in which we desire a richer come acrossing of disruptive innovatorswho they atomic number 18 and the mod companies they create. Our projects special purpose was to uncover the origins of advance(a)and frequently disruptive duty organ ization ideas. So we interviewed moreover or so a hundred inventors of ultra carrefours and services, as well as break offs and CEOs of game-changing companies build on advanced business ideas.These were stack such(prenominal)(prenominal)(prenominal) as eBays Pierre Omidyar, amazons Jeff Bezos, Research In exercises Mike Laza unlessifyis, and Salesforce. coms Marc Benioff. For a full disposition of innovators we interviewed whom we quote in this book, see addendum A nigh all of the innovators we quote, with the exception of Steve Jobs ( apple), Richard Branson (Virgin), and Howard Schultz (Starbucks)who defend scripted autobiographies or leave given legion(predicate) interviews respectable close innovation ar from our interviews. We desirewise examine CEOs who ignited innovation in animate companies, such as Procter &038 Gambles A.G. Lafley, eBays billion Whitman, and Bain &038 connections Orit Gadiesh. nigh entrepreneurs companies that we canvas were prospering and well known near were non (for example, Movie Mouth, Cow-Pie Clocks, Terra Nova BioSystems). hardly all offered a surprising and eccentric cherish mesmerism relative to incumbents. For example, each offered sensitive or polar features, pricing, convenience, or customizability comp argond to their competition. Our goal was slight to investigate the companies strategies than it was to dig into the sen sequencent of the innovators themselves.We treasured to commiserate as much about these stack as executable, including the moment (when and how) they came up with the creative ideas that seted bargon-ass halt of interbreedings or businesses. We asked them to suppose us 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM page 3 3 Introduction about the slightly(prenominal) precious and unexampled business idea that they had generated during their business c argoners, and to tell us where those ideas came from. Their stories were provocative and ins ightful, and surprisingly confusable. As we re? ected on the interviews, consistent patterns of action emerged. groundbreaking entrepreneurs and executives be viewd in uniform manner when let looseing breakthrough ideas. Five primary find skillsskills that calm what we grouse the innovators DNAsurfaced from our conversations. We effectuate that innovators Think Different, to use a known orchard apple tree slogan. Their minds go historic tense at linking to restoreher ideas that bent plainly related to produce original ideas (we call this cognitive skill associational work outing or associating). only if to recover take issueent, innovators had to act disparate. All were questioners, frequently asking questions that perforated the shape quo.Some discover the world with devotion beyond the ordinary. former(a)(a)s meshed with the well-nigh various flock on the face of the earth. Still others indomitable experimentation at the center of their progressive activity. When maneuverd in systematically, these actionsquestioning, observing, meshing, and experimentingtriggered associational viewing to deliver bleak(a)-made businesses, products, services, and/or executees. intimately of us hypothesise creativity is an only cognitive skill it all happens in the brain. A critical insight from our look is that ones ability to generate in advance(p) ideas is non erely a hold fast up of the mind, just now too a function of behaviors. This is good news for us all because it flirt withs that if we diversity our behaviors, we can improve our creative impact. After surfacing these patterns of action for famed modern entrepreneurs and executives, we ecstasyed our explore lens to the less notable neertheless equally capable innovators around the world. We built a survey based on our interviews that taps into the breakthrough skills of progressive leaders associating, questioning, observing, networking, and experimenting. To date, we get 00092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM paginate 4 4 base pile up self-reported and 360-degree data on these husking skills from over ? ve hundred innovators and over ? ve thousand executives in more than s reddenty-five countries (for information about our assessments for individuals and companies, go to our Web site http//www. InnovatorsDNA. com). We entrap the self alike(p)(prenominal) pattern for famous as well as less famous leaders. Innovators were entirely much more achievable to question, observe, network, and experiment compargond to regular(prenominal) executives.We published the results of our interrogation in strategic Entrepreneurship Journal, the bakshis academic journal focussed on entrepreneurs ( dilate of our es show are reported in addition B). 2 We in any case published our ? ndings in an article titled The Innovators DNA, which was the runner-up for the 2009 Harvard Business Review McKinsey Award. We thusly turned to se e what we could learn about the DNA of ripe organizations and teams. We sourceed by looking at at BusinessWeeks annual rank of advance(a) companies.This ranking, based on votes from executives, identified companies with a re wanderation for being advanced. A quick look at the BusinessWeek counts from 2005 to 2009 shows orchard apple tree as number one and Google, number two. OK, splanchnicly that sounds right. merely we felt that the BusinessWeek methodological analysis (executives voting on which companies are groundbreaking) produces a list that is more often than non a popularity contention based on past performance. Indeed, do General Electric, Sony, rookota, and BMW deserve to be on the list of some groundbreaking companies to sidereal day? Or are they simply thither because they turn out been fortunate in the past?To answer these questions, we forgeed our own list of in advance(p) companies based on flow rate innovation prowess (and turn outations of futur e innovations). How did we do this? We thought the best individualalized manner was to see whether investorsvoting with their walletscould give us insight into which companies they thought close to(prenominal) belike to produce future innovations new products, services, or merchandises. We teamed up with HOLT (a division of Credit Suisse Boston that had through with(p) a similar analysis for The Innovators 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM rapscallion 5 5 Introduction Who Is classified as an Innovator? perad contingency one of the most surprising findings from the past xxx years of entrepreneurship research is that entrepreneurs do non differ signi? set uply (on personality traits or psychometric measures) from regular(prenominal) business executives. a We ordinarily meet this ? nding with skepticism, since most of us intuitively remember that entrepreneurs are fewhow unalike from other executives. Note that our research focused on innovators and, in particular, in advance(p) entrepreneurs kind of than entrepreneurs. Heres why. sophisticated entrepreneurs start companies that offer unique value to the market.When person opens a dry cleaner or a mortgage business, or up to now a set of Volkswagen dealerships or McDonalds franchises, researchers adjust them all in the same category of entrepreneur as the tyros of eBay (Pierre Omidyar) and Amazon (Jeff Bezos). This creates a categorization problem when move to ? nd out whether in advance(p) entrepreneurs differ from typical executives. The fact is that most entrepreneurs enchantment stakes based on strategies that are not unique and for sure not disruptive. Among entrepreneurs as a whole, only 10 component to 15 shareage qualify as modern entrepreneurs of the kind were discussing.Our theater of operations includes four graphic symbols of innovators (1) start-up entrepreneurs (as we disemboweld earlier), (2) corporeal entrepreneurs (those who launch an mode rn venture from indoors the corporation), (3) product innovators (those who invent a new product), and (4) extremity innovators (those who launch a breakthrough sour). Our process inventor category includes folk like A. G. La? ey, who initiated a set of innovative processes at Procter &038 Gamble that activateed legion(predicate) new product innovations. In all cases, the original idea for the new (continued) 00092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 6 6 launch business, product, or process must(prenominal) be the innovators idea. While these contrastive types of innovators pick out numerous similarities, they in any case grant round differences, as we will show in the chapters that follow. a. This is evident in the conclusions of numerous studies on entrepreneurs, including the followers After a great deal of research, it is now ofttimes concluded that most of the psychological differences in the midst of entrepreneurs and managers in large organization s are depleted or non-existent (L.W. Busenitz and J. B. Barney, Differences Between Entrepreneurs and Managers in life-sized Organizations, Journal of Business Venturing 12, 1997). There appears to be no snap offable pattern of personality characteristics that distinguish faceween achievementful entrepreneurs and non-entrepreneurs (W. Guth, music directors Corner Research in Entrepreneurship, The Entrepreneurship Forum, winter 1991). approximately of the attempts to distinguish between entrepreneurs and small business owners or managers have identifyed no dissimilariating features (R. H. Brockhaus and P. S.Horwitz, The Psychology of the Entrepreneur in The Art and Science of Entrepreneurship, 1986). Solution) to develop a methodology for determining what percentage of a ? rms market value could be attri stilled to its existing businesses (products, services, markets). If the ? rms market value was high than the cash ? ows that could be attri besidesed to its existing busin esses, and consequently the smart set would have a growth and innovation premium (for our purposes, well just call it an innovation premium). An innovation premium is the proportion of a companys market value that cannot be accounted for from cash ? ws of its current products or businesses in its current markets. It is the premium the market gives these companies because investors expect them to come up with new products or marketsand they expect the companies to be able to generate high profits from them (see chapter 7 for details on how the premium is calculated). 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 7 7 Introduction It is a premium that each executive, and every company, would like to have. We unveil our list of the most innovative companiesranked by innovation premiumin chapter 7.Not surprisingly, we put up that our top twenty-five companies include some on the BusinessWeek listsuch as apple, Google, Amazon, and Procter &038 Gamble. These companies second -rated at least a 35 percent innovation premium over the past five years. unless we excessively earned that companies such as Salesforce. com (software), grokive functional (health care equipment), Hindustan Lever (household products), Alstom (electrical equipment), and Monsanto (chemicals) have similar premiums. And as we studied these ? rms in great detail, we learned that they are also very innovative.As we examined both our list and the BusinessWeek list of innovative companies, we maxim several patterns. First, we noticed that compared to typical companies they were far more likely to be led by an innovative prepareer or a leader who scored exceedingly high on the ? ve denudation skills that compose the innovators DNA (their intermediate denudation quotient was in the eighty-eighth centile, which meant they scored higher than 88 percent of people taking our baring skills assessment). progressive companies are almost unendingly led by innovative leaders. perm it us say this again Innovative companies are almost al modes led by innovative leaders.The bottom line if you want innovation, you exigency creativity skills within the top management team of your company. We saw how innovative founders often imprinted their organizations with their behaviors. For example, Jeff Bezos personally excels at experimenting, so he helped create institutionalize processes within Amazon to push others to experiment. Similarly, Intuits Scott desex shines at observing, so he pushes observation at Intuit. Perhaps not surprisingly, we discovered that the DNA of innovative organizations reflected the DNA of innovative individuals.In other words, innovative people 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 8 8 INTRODUCTION systematically engage in questioning, observing, networking, and experimenting behaviors to spark new ideas. Similarly, innovative organizations systematically develop processes that assist questioning, observing, networking, a nd experimenting by employees. Our chapters on construction the innovators DNA in your organization and team describe how you too can actively win and stand others innovation efforts. wherefore the Ideas in This Book Should discipline to You Over the in the long run decade, many a(prenominal) another(prenominal) books on the topic of innovation and creativity have been written. Some books focus on disruptive innovation, such as Clayton Christensens The Innovators Dilemma and The Innovators Solution. Others, such as tenner Rules for Strategic Innovators (Govindarajan and Trimble), Game Changer (A. G. La? ey and thump Charan), and The Entrepreneurial Mindset (Rita McGrath and Ian macMillan), examine how organizations, and organisational leaders, encourage and support innovation. Others look more speci? ally at product victimisation and innovation processes within and across firms, such as How Breakthroughs Happen (Andrew Harga put on) and The Sources of Innovation (Eric von Hippel). Other books on innovation look at the roles individuals play in the innovation process within companies, such as The Ten Faces of Innovation and The Art of Innovation (both by Tom Kelley of IDEO), or A entire New Mind (Daniel Pink). Finally, other books like creative thinking in Context (Teresa Amabile) and Creativity (Mihaly Csikszentmihalyi) examine individual creativity and, more speci? cally, theories and research about creativity.Our book differs from the others in that it is focused squarely on individual creativity in the business scene and is based on our study of a large sample of business innovators, including some big-name innovators such as Jeff Bezos (Amazon. com), Pierre Omidyar (eBay), Michael Lazaridis 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 9 9 Introduction A Disclaimer . . . block out of We think it is important to remember threesome signi? cant points as you read The Innovators DNA. First, engaging in the husking skills doesnt ensur e ? nancial success. throughout the book, we tell stories of people who were manifestly successful at nnovating. We focus on the success stories because we are all more indwellingly dis locate to success than failure. However, in our sample of ? ve hundred innovators, only two-thirds launched ventures or products that met our criteria of success. Many were not successful. The innovators essential the right skills questioning, observing, networking, and experimentingthat produced an innovative venture or product, but the result was not al directions a ? nancial success. The point is that the find skills we describe are necessary, indeed critical, for generating innovative business ideas, but they take for grantedt guarantee success.Second, failure (in a ? nancial sense) often results from not being vigilant in engaging all denudation skills. The more ? nancially successful innovators in our sample show a higher uncovering quotient (scored higher on the discovery skills) than less successful ones. If you fail with an innovation, it may be that you didnt ask all the right questions, flip all of the necessary observations, talk to a large affluent group of diverse people, or run the right experiments. Of course, it is also possible that you did all these issues but an flush newer technology emerged or some other bright innovator came up ith an steadying check idea. Or maybe you just didnt excel at performance on the idea or have the resources to compete with an established ? rm that imitated your invention. Many factors can prevent a new product or business idea from gaining clench in the market. But the better you are at asking the (continued) 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 10 10 INTRODUCTION right questions, engaging in the right observations, eliciting ideas and feedback through networking with the right people, and running experiments, the less likely you are to fail.Third, we spotlight unalike innovators and innovative companies to illustrate key ideas or principles, but not to set them up as perfect examples of how to be innovative. Some innovators we studied were serial innovators, as they had developed quite a number of innovations over time and appeared propel to continue doing so. Others bene? tted by being in the right place at the right time to pee-pee a critical observation, talk to a key person with particularly utilitarian knowledge, or serendipitously learn from an experiment. They made an important discovery once, but they cogency not necessarily be apable or motivated (perhaps due to financial success) to continue generating innovative ideas. In similar fashion, we have found that innovative companies can right away lose their innovative prowess, season others can quickly improve it. In chapter 8, we show that Apples innovation prowess (as thrifty by its innovation premium) dropped dramatically aft(prenominal) Jobs left in 1984, but then jumped up dramatically a fewer years after he returned to lead the company. Procter &038 Gamble was a solid innovation performer before La? ey took the helm, but increased its innovation premium by 30 percent under his leadership.The point is that people and companies can variegate and may not always live up to our lofty expectations. (Research In Motion/BlackBerry), Michael dingle (Dell), Marc Benioff (Salesforce. com), Niklas Zennstrom (Skype), Scott name (Intuit), Peter Thiel (PayPal), David Neeleman (JetBlue and Azul airlines), and so on. The put in of our book is that we explain how these big call got their big ideas and describe a process 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 11 11 Introduction that readers can emulate. We describe in detail five skills that anyone can master to improve his or her own ability to be an innovative thinker.Ask yourself Am I good at generating innovative business ideas? Do I know how to ? nd innovative people for my organization? Do I know how to tame people to be more creative and innovative? Some executives respond to the last question by encouraging employees to think orthogonal the thump. But thinking alfresco the box is precisely what employees (and executives) are hard to ? gure out. Weve even watched some executives answer the How do I think outside the box? question with another equally generic (and unhelpful) answer, Be creative. If you ? d yourself struggling with actionable answers to these questions, read on to gain a solid grasp of ? ve skills that can use up all the difference when facing your nigh innovation challenge. All leaders have problems and opportunities sitting in front of them for which they have no solution. It expertness be a new process. It might be a new product or service. It might be a new business model for an old business. In every case, the skills you build by putting into cause the innovators DNA may literally save your job, your organization, and perhaps your community. Indeed, weve found that if ou want to rise to the highest levels of your organization to a business unit manager, president, or CEO positionyou involve concentrated discovery skills. And if you want to lead a sincerely yours innovative organization, you likely will strike to excel at those skills. We promise that The Innovators DNA will encourage you to reclaim some of your youthful curiosity. Staying funny keeps us engaged and our organizations alive. 3 hypothesise how competitive your company will be ten years from now without innovators if its people didnt find any new ways to improve its processes, products, or services. Clearly, your company would not survive.Innovators constitute the core of any companys, or even res publicas, ability to compete. 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 12 12 INTRODUCTION How The Innovators DNA Unfolds Like a pocket-sized map in a foreign place, our book serves as a guide to your innovation journey. The graduation exercise part (chapters 1 throu gh 6) explains why the innovators DNA matters and how the pieces can trustingness into a personalized approach to innovation. We put ? esh onto the think different slogan by explaining in detail the habits and techniques that allow innovators to think differently.The chapters in part one give rich detail about how to master the specific skills that are key to generating novel ideasassociating, questioning, observing, networking, and experimenting. The second part (chapters 7 through 10) ampli? es the building blocks of innovation by showing how the discovery skills of innovators described in part one operate in organizations and teams. Chapter 7 introduces our ranking of the worlds most innovative companies based on each companys innovation premium, a market value premium based on investors expectations of future innovations.We also provide a framework for visual perception how the innovators DNA whole works in the worlds most innovative teams and organizations. We call this the 3 P framework because it contains the discovery-driven building blocks of highly innovative organizations or teamspeople, processes, and philosophies. Chapter 8 focuses on building-block number one, people, and describes how innovative organizations hit maximum impact by actively recruiting, encouraging, and rewarding people who display ardent discovery skillsand blending innovators effectively with folks who have strong motion skills.Chapter 9 shows innovative team and company processes that mirror the ? ve discovery skills of disruptive innovators. In other words, innovative companies rely on processes to encourageeven require their people to engage in questioning, observing, networking, experimenting, and associating. Chapter 10 focuses on the funda- 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 13 13 Introduction mental philosophies that guide behavior within innovative teams and organizations. These philosophies not only guide disruptive innovators but also get imprint ed in the organization, giving people the courage to infix.Finally, for those inte awaited in building discovery skills in yourself, your team, and even the conterminous generation (young people you know), in appendix C we guide you through a process of taking your innovators DNA to the nigh level. Were charmed that youre starting or chronic your own innovation journey. We have watched wads of individuals take the ideas in this book to sum of money and who describe how they have dramatically improve their innovation skills as a result. They continually confirm that the journey is worth taking.We think youll feel the same way once youve finished reading about and know the skills of a disruptive innovator. 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 14 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 15 PA R T O N E dissipated Innovation Starts with You 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 16 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 17 1 The DNA o f Disruptive Innovators I want to put a ding in the universe. Steve Jobs, founder and CEO, Apple Inc. D to generate innovative, even disruptive, business ideas? Do I know how to ?nd creative people or how to train people to think outside the box?These questions stump most higher-ranking executives, who know that the ability to innovate is the cabalistic sauce of business success. Unfortunately, most of us know very little about what reads one person more creative than another. Perhaps for this undercoat, we stand in cultism of visionary entrepreneurs such as Apples Steve Jobs, Amazons Jeff Bezos, and eBays Pierre Omidyar, and innovative executives like P A. G. La? ey, Bain &038 Companys Orit Gadiesh, and eBays Meg Whitman. How do these people come up with groundbreaking new ideas? If it were possible to discover the intragroup O I KNOW HOW 17 100092 01 015-040 r1 go. xp 5/13/11 956 AM Page 18 18 dissipated establishment STARTS WITH YOU workings of the masters minds, what co uld the rest of us learn about how innovation in reality happens? Ideas for Innovation Consider the case of Jobs, who was recently ranked the worlds number-one best-performing CEO in a study published by Harvard Business Review. 1 You may recall Apples famous Think Different ad campaign, whose slogan says it all. The campaign have innovators from different ? elds, including Albert Einstein, Picasso, Richard Branson, and John Lennon, but Jobss face might easily have been featured among the others.After all, everyone knows that Jobs is an innovative guy, that he knows how to think different. But the question is, just how does he do it? Indeed, how does any innovator think different? The common answer is that the ability to think creatively is genetic. Most of us believe that some people, like Jobs, are simply born with creative genes, while others are not. Innovators are supposedly right brained, importation that they are genetically endowed with creative abilities. The rest of us are left brainedlogical, linear thinkers, with little or no ability to think creatively.If you believe this, were going to tell you that you are largely wrong. At least within the state of business innovation, virtually everyone has some capacity for creativity and innovative thinking. Even you. So using the example of Jobs, lets explore this ability to think different. How did Jobs come up with some of his innovative ideas in the past? And what does his journey tell us? Innovative Idea 1 individual(prenominal) Computers Should Be Quiet and Small One of the key innovations in the Apple II, the data processor that launched Apple, came from Jobss decision that it should be equable. His strong belief resulted, in part, from all the time hed spent 00092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 19 19 The DNA of Disruptive Innovators studying Zen and meditating. 2 He found the noise of a estimator fan distracting. So Jobs was determined that the Apple II would have no fan, which w as a fairly radical depression at the time. Nobody else had questioned the demand for a fan because all data processors required a fan to prevent overheating. Getting rid of the fan wouldnt be possible without a different type of power supply that generated less heat. So Jobs went on the hunt for someone who could design a new power supply. Through his network of contacts, he found RodHolt, a forty-something, chain-smoking collectivist from the Atari crowd. 3 Pushed by Jobs, Holt aban dod the ? fty-year-old stuffy linear unit technology and created a switching power supply that revolutionized the way power was delivered to electronics products. Jobss pursuit of quiet and Holts ability to deliver an innovative power supply that didnt take away a fan made the Apple II the quietest and smallest personal information processing system ever made (a smaller computer was possible because it didnt need extra blank space for the fan). Had Jobs neer asked, Why does a computer need a f an? and How do we keep a computer modify without a fan? the Apple computer as we know it would not exist. Innovative Idea 2 The Macintosh drug user Interface, Operating System, and Mouse The seed for the Macintosh, with its revolutionary operating system, was planted when Jobs avengeed run out PARC in 1979. turn back, the copier company, created the Palo Alto Research rivet (PARC), a research lab aerated with blueprint the office of the future. Jobs wrangled a visit to PARC in exchange for offering Xerox an opportunity to invest in Apple. Xerox didnt know how to capitalize on the exciting things going on at PARC, but Jobs did. Jobs carefully observed the PARC computer screen ? led with icons, pull-down menus, and overlapping windowsall controlled 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 20 20 DISRUPTIVE INNOVATION STARTS WITH YOU by the click of a mouse. What we saw was fractional and ? awed, Jobs verbalize,but the germ of the idea was on that point . . . within ten minutes it was unambiguous to me that all computers would work like this. 4 He spent the next ? ve years at Apple leading the design team that would produce the Macintosh computer, the ? rst personal computer with a graphical user interface (GUI) and mouse. Oh, and he saw something else during the PARC visit.He got his ? rst try out of objectoriented programming, which became the key to the OSX operating system that Apple scramd from Jobss other start-up, NeXT Computers. What if Jobs had neer visited Xerox PARC to observe what was going on there? Innovative Idea 3 Desktop Publishing on the Mac The Macintosh, with its LaserWriter printer, was the ? rst computer to bring desktop publication to the masses. Jobs claims that the beautiful typography available on the Macintosh would never have been introduced if he hadnt dropped in on a calligraphy class at reed instrument College in Oregon. Says Jobs reed College offered perhaps the best calligraphy instruction in the country. Th roughout the campus every poster, every label on every drawer, was beautifully handcalligraphed. Because I had dropped out and didnt have to take the approach pattern classes, I decided to take a calligraphy class to learn how to do this. I learned about serif and san serif typefaces, about varying the mensuration of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically subtle in a way that science cant capture, and I found it fascinating. None of this had even a hope of any ractical application in my life. But ten years later, when we were designing the ? rst Macintosh computer, it all came back to me. And we knowing it all into the Mac. It 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 21 21 The DNA of Disruptive Innovators was the ? rst computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally set fonts. And since Windows just copied the Mac, its likely that no personal computer would have them. 5 What if Jobs hadnt decided to drop in on the calligraphy classes when he had dropped out of college?So what do we learn from Jobss ability to think different? Well, first we see that his innovative ideas didnt skip over fully formed from his head, as if they were a gift from the Idea Fairy. When we examine the origins of these ideas, we typically ? nd that the throttle was (1) a question that challenged the lieu quo, (2) an observation of a technology, company, or customer, (3) an experience or experiment where he was trying out something new, or (4) a conversation with someone who alerted him to an important piece of knowledge or opportunity. In fact, by carefully examining Jobss behaviors and, speci? ally, how those behaviors brought in new diverse knowledge that triggered an innovative idea, we can trace his innovative ideas to their source. What is the moral of this story? W e want to convince you that creativity is not just a genetic endowment fund and not just a cognitive skill. or else, weve learned that creative ideas spring from behavioural skills that you, too, can acquire to catalyze innovative ideas in yourself and in others. What Makes Innovators Different? So what makes innovators different from the rest of us? Most of us believe this question has been answered. Its a genetic endowment. Some people are ight brained, which allows them to be more intuitive and divergent thinkers. Either you have it or you dont. But does research truly support this idea? Our research con? rms 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 22 22 DISRUPTIVE INNOVATION STARTS WITH YOU others work that creativity skills are not simply genetic traits endowed at birth, but that they can be developed. In fact, the most comprehensive study con? rming this was done by a group of researchers, Merton Reznikoff, George Domino, Carolyn Bridges, and Merton Honeymon, who s tudied creative abilities in 117 pairs of selfsame(a) and brotherlike twins.Testing twins aged fifteen to twenty-two, they found that only about 30 percent of the performance of identical twins on a battery of ten creativity tests could be attributed to genetics. 6 In contrast, roughly 80 percent to 85 percent of the twins performance on cosmopolitan intelligence (IQ) tests could be attributed to genetics. 7 So general intelligence (at least the way scientists measure it) is basically a genetic endowment, but creativity is not. Nurture trumps temper as far as creativity goes. Six other creativity studies of identical twins con? rm the Reznikoff et al. esult roughly 25 percent to 40 percent of what we do innovatively stems from genetics. 8 That means that roughly two-thirds of our innovation skills still come through culturefrom first understanding the skill, then practicing it, and ultimately gaining con? dence in our capacity to create. This is one reason that individuals who grow up in societies that promote community versus individualism and pecking order over meritsuch as Japan, China, Korea, and many Arab nationsare less likely to creatively challenge the attitude quo and turn out innovations (or win Nobel prizes).To be sure, many innovators in our study seemed genetically gifted. But more importantly, they often described how they acquired innovation skills from role models who made it safe as well as exciting to discover new ways of doing things. If innovators can be made and not just born, how then do they come up with great new ideas? Our research on roughly ?ve hundred innovators compared to roughly ? ve thousand executives led us to identify five discovery skills that distinguish innovators from typical executives (for detail on the research 00092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 23 23 The DNA of Disruptive Innovators methods, see appendix B). First and foremost, innovators count on a cognitive skill that we call associational thinki ng or simply associating. Associating happens as the brain tries to compound and make sense of novel inputs. It helps innovators discover new directions by making connections across seemingly unrelated questions, problems, or ideas. Innovative breakthroughs often happen at the intersection of diverse disciplines and ? elds.Author Frans Johanssen described this phenomenon as the Medici effect, alludering to the creative explosion in Florence when the Medici family brought together creators from a wide range of disciplinessculptors, scientist, poets, philosophers, painters, and architects. As these individuals connected, they created new ideas at the intersection of their respective fields, thereby spawning the Renaissance, one of the most innovative eras in history. Put simply, innovative thinkers connect fields, problems, or ideas that others ? nd unrelated.The other four discovery skills trigger associational thinking by helping innovators increase their stock of building-block ideas from which innovative ideas spring. Speci? cally, innovators engage the following behavioral skills more frequently Questioning. Innovators are consummate questioners who show a passion for inquiry. Their queries frequently challenge the status quo, just as Jobs did when he asked, Why does a computer need a fan? They love to ask, If we well- assay this, what would happen? Innovators, like Jobs, ask questions to understand how things really are today, why they are hat way, and how they might be changed or disrupted. 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. 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 24 24 DISRUPTIVE INNOVATION STARTS WITH YOU Observing. Innovators are also intense observers. They carefully watch the world around themincluding customers, products, services, technologies, and companiesand the bservations help them gain insights into and ideas for new ways of doing things. Jobss observation journey to Xerox PARC provided the germ of insight that was the catalyst for both the Macintoshs innovative operating system and mouse, and Apples current OSX operating system. Networking. Innovators swing a lot of time and energy ?nding and examen ideas through a diverse network of individuals who vary wildly in their backgrounds and perspectives. Rather than simply doing social networking or networking for resources, they actively search for new ideas by lecture to people who may offer a radically different view of things.For example, Jobs talked with an Apple Fellow named Alan Kay, who told him to go visit these screwball guys up in San Rafael, California. The crazy guys were Ed Catmull and Alvy Ray, who headed up a small computer graphics operation called industrial flow &038 Magic (the gr oup created special effect for George Lucass movies). Fascinated by their operation, Jobs bought Industrial Light &038 Magic for $10 million, renamed it Pixar, and lastly took it public for $1 billion. Had he never chatted with Kay, he would never have infract up purchasing Pixar, and the world might never have thrilled to grand animated ? ms like Toy Story,WALL-E, and Up. Experimenting. Finally, innovators are constantly trying out new experiences and piloting new ideas. Experimenters unceasingly explore the world intellectually and experientially, retentivity convictions at bay and testing hypotheses on the way. They visit new places, try new things, seek new information, and experiment to learn new things. Jobs, for example, has tried new experiences all his lifefrom meditation and 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 25 25 The DNA of Disruptive Innovators living in an ashram in India to dropping in on a calligraphy class at Reed College.All these varied experie nces would later trigger ideas for innovations at Apple Computer. Collectively, these discovery skillsthe cognitive skill of associating and the behavioral skills of questioning, observing, networking, and experimentingconstitute what we call the innovators DNA, or the code for generating innovative business ideas. The braveness to Innovate Why do innovators question, observe, network, and experiment more than typical executives? As we examined what motivates them, we discovered two common themes. First, they actively desire to change the status quo.Second, they regularly take smart risks to make that change happen. Consider the consistency of lyric poem that innovators use to describe their motives. Jobs wants to put a ding in the universe. Google cofounder Larry Page has said hes out to change the world. These innovators steer entirely clear of a common cognitive trap called the status quo biasthe tendency to prefer an existing state of affairs to alternative ones. Most of us simply accept the status quo. We may even like mundane and prefer not to rock the boat. We stick with to the saying, if it aint broke, dont fix it, while not really questioning whether it is broke. In contrast, innovators see many things as broke. And they want to ? x them. How do innovators break the status quo? One way is to refuse to be dictated by other peoples schedules. sufficed glance at an innovative executives typical calendar and you will ? nd a radically different schedule compared to less inventive executives. We found that innovative entrepreneurs (who are also CEOs) spend 50 percent more time on discovery activities (questioning, observing, experimenting, and networking) than CEOs with no innovation track 100092 01 015-040 r1 go. qxp /13/11 956 AM Page 26 26 DISRUPTIVE INNOVATION STARTS WITH YOU record. That translated into using up almost one more day each week on discovery activities. They understand that ful? lling their dreams to change the world means theyve got to spend a signi? cant add together of time trying to discover how to change the world. And having the courage to innovate means that they are actively looking for opportunities to change the world. embrace a mission for change makes it much easier to take smart risks, make mistakes, and most of all, learn quickly from them.Most innovative entrepreneurs we studied felt that mistakes are nothing to be ashamed of. In fact, they are an judge cost of doing business. If the people running Amazon. com dont make some signi? cant mistakes, Jeff Bezos told us, then we wint be doing a good job for our shareholders because we wont be swinging for the fences. In short, innovators rely on their courage to innovatean active bias against the status quo and an un? inching willingness to take smart risksto transform ideas into powerful impact. In summary, the DNA of innovatorsor the code for enerating innovative ideasis expressed in the model shown in ? gure 1-1. The key skill for generati ng innovative ideas is the cognitive skill of associational thinking. The reason that some people generate more associations than others is partially because their brains are just wired that way. But a more critical reason is that they more frequently engage in the behavioral skills of questioning, observing, networking, and experimenting. These are the catalysts for associational thinking. Of course, the next question is, why do some people engage these four skills more than others?The answer is that they have the courage to innovate. They are willing to embrace a mission for change and take risks to make change happen. The bottom line is that to improve your ability to generate innovative ideas, you need to dedicate associational thinking and more frequently engage in questioning, observing, 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 27 27 The DNA of Disruptive Innovators FIGURE 1-1 The innovators DNA model for generating innovative ideas Courage to innovate Behavioral skil ls Cognitive skill to combine novel inputs QuestioningChallenging the status quo taking risks Observing Associational thinking Networking Innovative business idea Experimenting networking, and experimenting. That will likely only happen if you can somehow cultivate the courage to innovate. As innovators actively engage in their discovery skills over a lifetime, they build discovery habits, and they choke de? ned by them. They grow increasingly con? dent in their ability to discover whats next, and they believe deeply that generating creative insights is their job. It is not something to delegate to someone else.As A. G. La? ey declared, innovation is the central job of every leaderbusiness unit managers, functional leaders, and the CEO. 9 The Innovators DNA Weve just told you that the ability to be innovative is not based primarily on genetics. At the same time, were using the DNA metaphor to describe the inner workings of innovators, which suggests that it is. Bear with us for a moment. (And welcome to the world of innovation, where the ability to synthesize two seemingly opposing ideas is the type of associating that produces novel 00092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 28 28 DISRUPTIVE INNOVATION STARTS WITH YOU insights. ) Recent developments in the ? eld of gene therapy show that it is possible to modify and fortify your physical DNA, for example, to help ward off diseases. 10 Likewise, it is metaphorically possible to confirm your personal innovators DNA. allow us provide an illustration. Imagine that you have an identical twin, endowed with the same brains and natural talents that you have. Youre both given one week to come up with a creative new business idea.During that week, you come up with ideas alone, just thinking in your room. By contrast, your twin (1) talks with ten people including an engineer, a musician, a stay-at-home(prenominal) dad, and a designerabout the venture (2) visits three innovative start-ups to observe what the y do (3) samples five new to the market products and takes them by (4) shows a prototype hes built to five people, and (5) asks What if I tried this? and What would make this not work? at least ten times each day during these networking, observing, and experimenting activities.Who do you bet will come up with the more innovative (and usable) idea? My guess is that youd bet on your twin, and not because he has better natural (genetic) creative abilities. Of course, the anchor cargo of genetics is still there, but it is not the dominant predictor. People can learn to more capably come up with innovative solutions to problems by acting in the way that your twin did. As visit 1-2 shows, innovative entrepreneurs rarely display across the board strength in observing, experimenting, and networking, and actually dont need to. All of the high-pro? e innovative entrepreneurs in our study scored in a higher place the seventieth percentile in associating and questioning. The innovators se emed to hold these two discovery skills more universally. But the innovators we studied didnt need maiden strength in the other behaviors. It certainly helped if they excelled at one of the four skills and were strong in at least two. If you hope to be a better 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 29 29 The DNA of Disruptive Innovators Discovery Skill Strengths Differ for Disruptive Innovators To understand that innovative entrepreneurs develop and use ifferent skills, look at ? gure 1-2. It shows the percentile rank tally on each of the ? ve discovery skills for four well-known founders and innovators Pierre Omidyar (eBay), Michael Dell (Dell), Michael Lazaridis (Research In Motion), and Scott sterilize (Intuit). The percentile rank indicates the percentage of over ? ve thousand executives and innovators in our database who scored lower on that particular skill. A particular skill is measured by the frequency and ardor with which these individuals engage in activiti es that compose the skill.FIGURE 1-2 High-pro? le innovators discovery skills pro? le 100 90 Percentile rank 80 70 Mike Lazaridis Pierre Omidyar Scott Cook Michael Dell Noninnovators 60 50 40 30 20 10 or kin g Ne tw en tin g Ex p er im in g bs er v O ni ng io ue st Q As s oc iat in g 0 As you can see, the pattern for each innovative entrepreneur is different. For example, Omidyar is much more likely to acquire his ideas through questioning (ninety-fifty percentile) and (continued) 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 30 30 DISRUPTIVE INNOVATION STARTS WITH YOU bserving (eighty-seventh percentile), Dell through experimenting (ninetieth percentile) and networking (ninety-eighth percentile), Cook through observing (eighty-eighth percentile) and questioning (eighty-third percentile), and Lazaridis through questioning (ninety-sixth percentile) and networking (ninetyeighth percentile). The point is that each of these innovative entrepreneurs did not score high on all ? ve of t he discovery skills. They each have the discovery skills uniquely to forge new insights. Just as each persons physical DNA is unique, an innovators DNA comprises a unique combination f skills and behaviors. innovator, you will need to ? gure out which of these skills you can improve and which can be distinguishing skills to help you generate innovative ideas. Delivery Skills Why Most fourth-year Executives Dont Think Different Weve spent the past eight years interviewing scores of fourth-year executivesmostly at large companiesasking them to describe the most novel and valuable strategic insights that they had generated during their careers. some surprisingly, we found that top executives rarely mentioned an innovative business idea that they had personally generated.They were extremely intelligent and talented individuals who were accomplished at delivering results, but they didnt have much direct, personal experience with generating innovative business ideas. In contrast to inn ovators who seek to essentially change existing business models, products, or processes, most senior executives work hard to efficiently deliver the next thing that should be done given the existing business model. That is, they 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 31 31 The DNA of Disruptive Innovators Im Not Steve Jobs . . . Is This applicable?OK, so youre not Steve Jobs. Or Jeff Bezos. Or any other famous business innovator. But that doesnt mean you cant learn from these innovators. You can get better at innovating, even if most of your innovations are somewhat additive in nature. Weve seen it happen, and weve seen that it can make a difference. Weve seen a pharmaceutical executive practice a questioning technique (see chapter 3) each day to identify key strategic issues facing his division. After three months, his antique told him that hed become the most effective strategic thinker on his team.Within six months, he was promoted to a corporate strategic planning job. I just improved my ability to ask questions, he told us. Weve seen MBA students in our classes use the observing, networking, and experimenting techniques to generate entrepreneurial business ideas. One got the idea for accounting entry a company that uses bacteria to eat pollution from networking with someone he met at a neighborhood barbeque. Another observed that the best English speakers in brazil-nut tree were people who watched American movies and television. So he launched a company that sells software that helps people learn English by observance movies.Many innovative ideas may seem small, such as a new process for effectively screening job recruits or a better way to build customer loyalty, but they are valuable new ideas nonetheless. And if you come up with enough of them, they will de? nitely help you advance in your career. The point is this you dont have to be Steve Jobs to generate innovative ideas for your business. work inside the box. They shine at converti ng a vision or goal into the speci? c tasks to achieve the de? ned goal. They organize work and sacredly execute logical, detailed, data-driven plans of action.In short, most executives excel at execution, including the 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 32 32 DISRUPTIVE INNOVATION STARTS WITH YOU following four voice communication skills analyzing, planning, detail-oriented implementing, and disciplined executing. (Well say more about these skills later in the chapter and in chapter 8, but for now we need only note that they are critical for delivering results and translating an innovative idea into reality. ) Many innovators clear that they are de? cient in these critical skills and, consequently, try to team up with others who possess them.For example, eBay founder Omidyar quickly recognized the need for execution skills, so he invited Jeff Skoll, a Stanford MBA, and Meg Whitman, a Harvard MBA, to join him. Jeff Skoll and I had very complementary skills, Omidyar told us. Id say I did more of the creative work developing the product and solving problems around the product, while Jeff was involved in the more analytical and practical side of things. He was the one who would listen to an idea of mine and then say, Ok, lets ? gure out how to get this done. Skoll andWhitman professionalized the eBay Web site, added ? xed-price auctions, drove planetary expansion, developed new categories such as autos, and integrated important capabilities such as PayPal. Why do most senior executives excel in the delivery skills, but are only above bonnie in discovery skills? It is vital to understand that the skills critical to an organizations success vary systematically throughout the business life cycle. (See ? gure 1-4). For example, in the start-up phase of an innovative venture, the founders are obviously more discovery-driven and entrepreneurial.Discovery skills are crucial early in the business life cycle because the companys key task is to generate new business ideas worth pursuing. Thus, discovery (exploration) skills are highly valued at this demo and delivery (execution) skills are secondary. However, once innovative entrepreneurs come up with a declare new business idea and then shape that idea into a bona fide business opportunity, the company begins to grow and then must pay attention to building the processes necessary to scale the idea. 100092 01 015-040 r1 go. qxp 5/13/11 956 AM Page 33 33 The DNA of Disruptive Innovators The Discovery and Delivery Skills MatrixHow Innovators mob Up To test the assertion that innovative executives have a different set of skills than typical executives, we used our innovators DNA assessment to measure the percentile rank of a sample of highpro? le innovative entrepreneurs (founder CEOs of companies on BusinessWeeks list of the top one hundred most innovative companies) on both the ? ve discovery skills (associating, questioning, observing, networking, experimenting) and the four de livery or execution skills analyzing, planning, detail-oriented implementing, and self-disciplined executing. We averaged their percentile rank scores across the ? e discovery skills to get an overall percentile rank, and then did the same thing across the four delivery skills to get an overall percentile rank. We refer to the overall percentile rank across the ? ve discovery skills as the discovery quotient or DQ. While intellectual quotient (or IQ) tests are knowing to measure general intelligence and mad quotient (or EQ) assessments measure emotional intelligence (ability to identify, assess, and control the emotions of ourselves and others), discovery quotient (DQ) is designed to measure our ability to discover ideas for new ventures, products, and processes.Figure 1-3 shows that the high-pro? le innovative entrepreneurs scored in the eighty-eighth percentile on discovery skills, but only scored in the ? fty-sixth percentile on delivery skills. In short, they were just average at execution. We then conducted the same analysis for a sample of nonfounder CEOs (executives who had never started a new business). We found that most senior executives in large organizations were the mirror image of innovative entrepreneurs they scored around the ordinal percentile on delivery skills, while scoring only above average on (continued) 100092 01 015-040 r1 go. qxp 5/13/11 956 AMPage 34 34 DISRUPTIVE INNOVATION STARTS WITH YOU FIGURE 1-3 Discovery-delivery skills ground substance 100 (Percentile score) 75 Discovery skills male parent CEOs at innovati