What is the Foundation of Innovation?

by Kenneth Gray

What is the Foundation of Innovation?

It was my privilege to serve for over 30 years the customers, employees, and shareholders of one of the most respected Fortune 50 brands in the world, Caterpillar Inc. That association provided my family and me opportunities to live in Asia, Europe, and North America and me with career experiences in engineering, product development, marketing, dealer development, new product launch, product management, and executive leadership. Over the last 20 years of my career, I was fortunate enough to lead several large global businesses and serve as Caterpillar’s first Global Director of Innovation.

The astounding people I had the pleasure of serving as members of my teams created some of the most successful products in Caterpillar’s 90-year history and one in particular, the Edison-Award winning 336E H Hydraulic Hybrid Excavator, is regarded as being among the ten most innovative in their history. The products and services we created could not have been innovative or even successful without a tremendous amount of experimentation, trial, and error. Recently, I was honored to speak at Deloitte’s 13th Annual Global Chemicals Think Tank at Yale University’s School of Management where I reflected on what has worked for me when it is time to innovate. While I can’t say this approach will work for everyone, these are the ten questions I ask myself when innovation needs a jump-start.

1.Have I articulated the strategy for my team to follow and why it’s important?

Good people fill the vacuum of leadership that a poorly articulated strategy creates. One thing that has not changed between today’s rapidly accelerating digital world and our linear past is the key role that leaders play in defining and communicating strategy—the beacon for your team to follow. People will do what they think is best, and what they believe is right may or may not be in the direction you want to lead the business. If your strategy is clear and everyone understands why it’s important, you will find people innovating to deliver the vision. If the vision is developed with them, you will find your life gets even easier. When they own the vision—when it is their vision—then innovation receives their discretionary time, and you get to spend more and more of your time as a strategist, mentor, coach, and cheerleader.

2. Have I defined innovation?

A clear definition of innovation is an essential aspect of any comprehensive business strategy. Ensure your team thoroughly understands your definition of success. Be sure they understand what innovation looks like to you. Is it an aspirational view (e.g., Doblin’s core, adjacent, and transformational)? Is innovation required throughout the value chain (e.g., the Doblin 10 Types of Innovation), or is focus needed for now on the product and service only? If your definition of innovation is unclear, your people will do what they think is best. Again, good people will fill the void of leadership you vacate.

3. Have I provided the processes and tools of innovation?

If you are asking your team to do something new or simply do more of it, doesn’t it make sense that they will need new, perhaps, even more, tools and processes to do whatever it is? While it is unlikely leaders can represent every tool and process in the innovation universe, leaders still play a key role in curating the tools and processes. Take stock of what is available to your teams. Do they have the tools to ideate? Scale? Activate the market? Crowd source? Collaborate? The key here is for the leader to be open to the new and emerging processes and tools of innovation. While you cannot possibly understand them all, support and encourage your team to experiment with what’s out there.

4. Have I defined the lanes in which we want to innovate?

While benchmarking the most innovative companies in the world to learn how we could make our people more innovative, an insightful colleague said, “You can’t create the energy of the storm, but like a lightning rod, you can direct the energy of the storm.” If your business happens to be passenger aircraft, it’s unlikely you want your teams thinking about the next breakthrough in disposable diapers. There are, however, passenger experiences you want to create. You would be very comfortable with your teams innovating around these desired customer experiences. While trusting your team, giving them freedom, is key to creating an innovative culture, you also must maintain focus on the business you are running. To accomplish both, tell your team where you want them to innovate. Erect the lightning rods needed to focus the energy of the storm.

At this point, something as essential to a culture of innovation as it is subtle begins to emerge. Once the strategy has been clearly articulated, everyone understands what is meant by innovation, the tools and processes of innovation are available, and the team knows the lightning rods around which the business needs innovation, mutual trust can begin to form. When the team knows you will stand behind whatever crazy ideas they have around the lightning rods, and you, in turn, know they are focused on the lightning rods, mutual trust begins to grow.

5. Have I over-communicated and repeated?

One of my Japanese mentors was fond of saying, “Communicating strategy is like a dripping faucet.” Creating a strategy is easy; communicating it is the difficult part. A leader should communicate the vision like a dripping faucet, over and over again, until your people have heard enough. When they begin to complain about the monotony of your message, tell them again—and repeat. Never assume everyone understands the vision. Assume constant reminders are required to keep everyone on track.

6. Have I chosen team members unlike myself?

Innovation arises from the clash of differences. The most innovative teams are people of different backgrounds, genders, ethnicities, educations, experiences, disciplines, and interests. One of the most productive and admittedly accidental improvements I ever made to a team of engineers was to add an anthropologist. The results were amazing. Diversity of thought is an essential ingredient of an innovative culture. Look around the room. Are you comfortable with everyone? If you are, it’s time to make a change.

7. Am I focused on the customer experience or technology?

“If all you have is a hammer, every problem is going to look like a nail.” It’s easy to fall in love with technology or design and then hope customers will want it. It’s super easy to fall into the “if you build it, they will come” trap. Innovation begins and ends with the customer experience, not the technology. Deep understanding of your customers’ businesses, needs, opportunities, and problems will lead to experiences you want to create for them. Technology may be the means of creating the desired experience, but innovation is about applying your team’s diverse skills to create the experience you want for your customers or clients. Innovation is not about finding a home for your pet technology.

8. Am I talking directly to unfriendly customers?

It’s fun to talk to customers who like you, and there’s no question it’s easier to keep a current customer than to earn a new one. But if growth is among your business objectives, you need to get out there and talk to customers who just don’t like you. It’s critical to establish relationships with customers who think your product or service is terrible and who believe there is no chance they will ever do business with you. As difficult as these conversations will be, the key to unlocking growth is probably in the hands of customers who are loyal to someone else.

9. Am I nurturing a culture of experimentation?

Let me be intentionally provocative here.

If you’re trying to grow a culture of innovation, whether your company is large or a startup, remove the word “failure” from your vocabulary. I know its in vogue to talk about learning from failure. Failure is cool, but I know of no high-performing team who has ever embraced the concept of failing routinely. We are taught from the time we are in kindergarten that failure is a bad thing. By the time students reach university, it’s too late to unlearn what we have taught them. Face it. We reward winning and punish failure. By the time you’re standing in a board room, let me tell you from personal experience it’s not fun explaining that while we failed to deliver an experience our customers want, our team learned a whole lot from the millions of dollars we invested. Conversations with your investors or in the boardroom about failure do not end well.

When the world was linear, it was difficult enough to forecast when linearly developing technologies and opportunities would converge to maximize customer utility and benefit your business. Today’s digital world is exponential. The system of simultaneous linear equations we were trying to solve in business has become highly nonlinear. 10-Year product strategies are obsolete. Multi-generational product plans that laid out linear developments in a product line over as much as a decade make no sense whatsoever today. You simply cannot foresee when exponential technologies will converge to create an astonishing experience for your customers. In fact, it’s just as difficult to predict what that incredible experience might be.

So experiment! Get your most creative thinkers together with people who know your customers extremely well together with people who have completely different perspectives than anyone on your team. Together, craft a vision of your customers’ future experience. Determine what pieces need to exist for your vision to come to fruition and make these the lightning rods around which you want to innovate. Then don’t experiment with the end point. In other words, don’t place a huge bet. Curate a family of experiments around the first, smallest steps you need to take to achieve the vision. Place a bunch of small bets. Then use the outcomes of these experiments to either determine the next steps or to adjust your vision. The cool kids use the word “pivot.” Just be prepared to use the results of your experiments to adjust your vision as you move forward.

10. Am I growing mutual trust by pivoting our vision based on outcomes of experiments?

To demonstrate you are truly supporting a culture of experimentation, your vision of the future must be influenced by the outcomes of your team’s experiments. Outcomes either support the first steps required to deliver the vision and lead to the next set of experiments, or they alter what we expect the future to be. Either way, your team must see the influence that the outcomes of their experiments have on your collective vision. Don’t forget to over communicate the impact of their outcomes. Remember the dripping faucet. You demonstrate respect by responding to their outcomes. They reciprocate respect when they see you change.

Wrapping it Up

Mutual respect may be the key to an innovative culture. As I visit some of the most innovative companies in the world, their leaders all seem to trust that their people are innovating in ways that align with their values and the needs of their clients and business. In turn, their people trust their leaders to “have their backs” if they’re trying something crazy, so long as it’s consistent with their values and business needs. So how do you create mutual respect? Start by articulating a clear strategy. Finish by demonstrating that your people have a tremendous influence on that vision.

All rights reserved © 2016 Gray Ventures, LLC.

This article originally appeared on the Edison Awards site

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Kenneth GrayKenneth Gray is a product and operations executive who most recently led a Fortune 50 Company’s initiatives to drive passion for innovation for this iconic brand. In addition to his most recent role, Ken’s last 20 years encompassed diverse global leadership positions in product, operations, marketing, dealer development, and engineering. He has lived and worked in Asia, Europe, and the Americas, is an Edison and Platts Global Energy Award winner, and has been featured in Forbes, Inc. Magazine, Fast Company Magazine, and Crane’s Business.

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