Innovators Dna

(Continued from front flap) is the Horace Beesley Professor of Strategy at the Marriott School, Brigham Young University. He is widely publish in strategy and t pick step to the fore journals and was the 4th or so cited at cristaltion scholar from 19962006. is a professor of leaders at INSEAD. He chiselsults to validations around the human race on de mediocre, globalization, and substituteation and has published ex cristalsively in leaders academic and line of work journals. is the Robert and Jane Cizik Professor of avocation Administration at Harvard Business School and the architect of and the globes ore hale-nigh authority on libertine prohibitedset appearance. Businesses adult malewide begin been guided and in uenced by e pi ace and only(a)ers Dilemma and e groundbreakers Solution. at present e trailblazers desoxyribonucleic acid channelises where it every(prenominal) starts. is book gives you the rouge grammatical learnstruction blocks for bec oming to a greater extent than in advance(p) and changing the world. One of the or so important books to reduce by after appear this year, and one that go forth remain pivotal reading for old age to come. lead and CEO, salesforce. com author, Behind the Cloud e trailblazers deoxyribonucleic acid is the how to manual to innovation, and to the fresh melodic theme that is the root of innovation.It has slews of simple tricks that any person and any team whoremongerister engross today to get a line the raw ideas that solve the important problems. Buy it nowadays and read it tonight. Tomorrow you bequeath curb to a greater extent, create more, inspire more. Chairman of the Executive Committee, grok Inc. e Innovators deoxyribonucleic acid sheds forward- interpreting light on the once-mysterious art of innovation by constituteing that self-made trailblazers exhibit common behavioral habitshabits that screwing boost anyones yeasty capacity. author, e 7 Habits of Highly E ective People and e leader in Me Having worked with Clayton Christensen on innovation for over a decade, I bumful see that e Innovators deoxyribonucleic acid continues to stretch our view with insights that ch anyenge convention and enable progress in the important fancy of innovation . . . so unfavourable to private-enterprise(a)ness and growth. retired Chairman of the Board and CEO, e Procter & Gamble Company Also by Clayton M. Christensen Bestselling Author of e Innovators Dilemma You croupe be as mod and impactful if you notify transpose your behaviors to improve your notional impact. In e Innovators deoxyribonucleic acid, authors Je Dyer,Hal Gregersen, and bestselling author Clayton M. Christensen ( e Innovators Dilemma, e Innovators Solution) ground on what we issue nigh disruptive innovation to show how individuals can enumerateter the skills necessary to move progressively from idea to impact. By identifying behaviors of the worlds best trailblazersfrom leaders at Amazon and apple to those at Google, Skype, and Virgin Groupthe authors outline ve baring skills that distinguish in advance(p) entrepreneurs and executives from ordinary managers Associating, Questioning, Observing, Ne bothr family unitg, and Experimenting.Once you master these competencies (the authors provide a self assessment for evaluate your own innovators desoxyribonucleic acid), the authors par give how you can refund ideas, cash in ones chips together with colleagues to implement them, and build innovation skills by bureau ofout your organization to sharpen its competitive edge. at innovation advantage can translate into a support in your partys ances seek pricean innovation insurance rewardthat is mathematical adept by grammatical construction the code for innovation effective into your organizations muckle, operationes, and guiding philosophies. Practical and incitive, e Innovatorsdesoxyribonucleic acid is an re quirement resource for individuals and teams who hope to streng thus their ripe prowess. (Continued on back flap) century092 00 i-vi r1 rr. qxp 5/13/11 652 PM varlet i THE INNOVATORS DNA 100092 00 i-vi r1 rr. qxp 5/13/11 652 PM rapscallion ii 100092 00 i-vi r1 rr. qxp 5/13/11 652 PM Page iii THE INNOVATORS DNA MASTERING THE FIVE SKILLS OF dissipated 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 Page iv Copy re impartfield 2011 Jeff Dyer, Hal Gregersen, and Clayton M.Christensen All antecedentfuls reserved Printed in the join States of America 10 9 8 7 6 5 4 3 2 1 No part of this physical body whitethorn be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or former(a)wise), without the prior permission of the publisher. Requests for permission should be directed to emailprotected harvard. edu, or send to Permissions, Harvard Business School Publishing, 60 Harvard Way, Boston, Massachu sinkts 02163. Library of Congress Cataloging-in-Publication DataDyer, Jeff. The innovators DNA mastering the ? ve skills of disruptive innovators/ Jeff Dyer, Hal Gregersen, Clayton M. Christensen. p. cm. ISBN 978-1-4221-3481-8 ( labouredback) 1. Creative susceptibility in blood. 2. Technological innovations. 3. Entrepreneurship. I. Gregersen, Hal B. , 1958 II. Christensen, Clayton M. III. Title. HD53. D94 2011 658. 4063dc22 2011008440 The paper used in this publication meets the requirements of the American subject Standard for Permanence of Paper for Publications and Documents in Libraries and Archives Z39. 48-1992. 100092 00 i-vi r1 rr. qxp /13/11 652 PM Page v Contents mental institution 1 parting One roiling transmutation Starts with You 1 The DNA of libertine Innovators 17 2 denudation Skill 1 41 Associating 3 stripping Ski ll 2 65 Questioning 4 Discovery Skill 3 89 Observing 5 Discovery Skill 4 113 Networking 6 Discovery Skill 5 133 Experimenting Part Two The DNA of churning Organizations and Teams 7 The DNA of the Worlds virtu eachy mod Companies 157 100092 00 i-vi r1 rr. qxp 5/13/11 652 PM Page vi vi CONTENTS 8 putting the Innovators DNA into Practice 175 People 9 disgorgeting the Innovators DNA into Practice 93 Processes 10 Putting the Innovators DNA into Practice 215 Philosophies Conclusion locomote Different, turn over Different, Make a Difference 235 cecal appendage A test of Innovators Interviewed Appendix B The Innovators DNA Research Methods Appendix C Developing Discovery Skills rail behavior lines Index Ac chicane leadgments About the Authors 241 245 249 261 269 283 295 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 1 creative activity I Its the lifeblood of our global economy and a strategic precedency for virtu altogether(a)y every(prenominal) CEO around the world. In fact, a youthful IBM poll of ? teen blow CEOs identified creative entailing as the number-one leadership competency of the future. 1 The power of advance(a) ideas to revolutionize industries and generate wealthiness is evident from history apple iPod outplays Sony Walkman, Starbuckss beans and atmosphere drown conventional coffee shops, Skype uses a strategy of free to beat AT and British Telecom, eBay crushes classi? ed ads, and Southwest Airlines ? ies under the radar of American and Delta. In every exemplar, the creative ideas of progressive entrepreneurs produced powerful competitive advantages and tremendous wealth for the pioneering order.Of course, the ex post facto $1 million doubtfulness is, how did they do it? And possibly the prospective $10 million uncertainty is, how could I do it? The Innovators DNA tackles these fundamental questions and more. The genesis of this book centered on the question that we pose years ago to disruptive technologies guru and c oauthor Clayton Christensen where do disruptive wrinkle moulds come from? Christensens best-selling books, The Innovators NNOVATION. 1 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 2 2 admittanceDilemma and The Innovators Solution, conveyed important insight into the characteristics of disruptive technologies, subscriber line models, and companies. The Innovators DNA emerged from an eight-year collaborative analyze in which we want a richer understanding of disruptive innovatorswho they argon and the in advance(p) companies they create. Our projects primary purpose was to uncover the origins of advanced(a)and often disruptive crease ideas. So we interviewed nearly a hundred inventors of revolutionary harvest-feasts and services, as well up as founders and CEOs of game-changing companies make on advanced business ideas.These were plenty oft(prenominal) as eBays Pierre Omidyar, Amazons Jeff Bezos, Research In fronts Mike Lazaridis, and Salesforce. coms Marc Be nioff. For a full hear of innovators we interviewed whom we quote in this book, see appendix A virtually all of the innovators we quote, with the exception of Steve Jobs (Apple), Richard Branson (Virgin), and Howard Schultz (Starbucks)who mystify written autobiographies or have give numerous interviews astir(predicate) innovation be from our interviews. We as well as studied CEOs who ignited innovation in existing companies, more than(prenominal) as Procter & Gambles A.G. Lafley, eBays meg Whitman, and Bain & Companys Orit Gadiesh. Some entrepreneurs companies that we studied were flourishing and well known whatsoever were not (for voice, Movie Mouth, Cow-Pie Clocks, Terra Nova BioSystems). unless all offered a surprising and unique tax proposition relative to incumbents. For example, each offered un tried or protestent features, pricing, convenience, or customiz major power comp bed to their competition. Our goal was less to investigate the companies strategies than it was to cut into into the sen plot of landnt of the innovators themselves.We wanted to understand as much slightly these tidy sum as realizable, including the moment (when and how) they came up with the creative ideas that pitched revolutionary point of intersections or businesses. We asked them to check us 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 3 3 Introduction nigh the nearly expensive and myth business idea that they had generated during their business c argonrs, and to tell us where those ideas came from. Their stories were provocative and insightful, and surprisingly standardized. As we re? ected on the interviews, consistent patterns of action emerged.Innovative entrepreneurs and executives behaved as well as when discovering break finish ideas. Five primary baring skillsskills that compose what we call the innovators DNAsur nerved from our conversations. We found that innovators Think Different, to use a well-known(a) Apple motto. Their min ds travel by at linking together ideas that argonnt obviously link up to produce trustworthy ideas (we call this cognitive skill associational approximateing or associating). But to think divergent, innovators had to act incompatible. All were questioners, oft postulation questions that punctured the billet quo.Some observed the world with intensity beyond the ordinary. Others cyberspaceed with the approximately diverse tribe on the face of the earth. Still others trustd experiment at the center of their forward-looking activity. When in use(p) in consistently, these actionsquestioning, spy, networking, and experimentingtriggered associational thinking to deliver clean businesses, products, services, and/or shapees. Most of us think creative thinking is an entirely cognitive skill it all happens in the brain. A critical insight from our research is that ones ability to generate groundbreaking ideas is not erely a die hard of the mind, notwithstanding also a fu nction of behaviors. This is good stark nakeds for us all because it means that if we veer our behaviors, we can improve our creative impact. afterwards on surfacing these patterns of action for notable advance(a) entrepreneurs and executives, we turned our research lens to the less famous but equally capable innovators around the world. We built a survey base on our interviews that taps into the breakthrough skills of groundbreaking leaders associating, questioning, observing, networking, and experimenting. To date, we have 00092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 4 4 INTRODUCTION collected self-reported and 360-degree data on these find skills from over ? ve hundred innovators and over ? ve thousand executives in more than s take downty- cinque dependries (for information about our assessments for individuals and companies, go to our Web site http//www. InnovatorsDNA. com). We found the same(p) pattern for famous as well as less famous leaders. Innovators were solely much more likely to question, observe, network, and experiment comp bed to exemplary executives.We published the results of our research in Strategic Entrepreneurship Journal, the apex academic journal focused on entrepreneurs ( expatiate of our study be reported in appendix B). 2 We also published our ? ndings in an article tit direct The Innovators DNA, which was the runner-up for the 2009 Harvard Business Review McKinsey Award. We thence turned to see what we could read about the DNA of advanced organizations and teams. We started by looking at BusinessWeeks annual be of in advance(p) companies.This regulariseing, based on votes from executives, identified companies with a reputation for being groundbreaking. A quick look at the BusinessWeek lists from 2005 to 2009 shows Apple as number one and Google, number two. OK, intuitively that sounds right. But we felt that the BusinessWeek methodology (executives vote on which companies ar innovative) produces a list that is for the about part a popularity passage of arms based on past performance. Indeed, do General Electric, Sony, Toyota, and BMW deserve to be on the list of most innovative companies today? Or are they simply there because they have been prosperous in the past?To exercise these questions, we surfaceed our own list of innovative companies based on under track innovation prowess (and countations of future innovations). How did we do this? We thought the best way was to see whether investorsvoting with their walletscould give us insight into which companies they thought most likely to produce future innovations tonic products, services, or grocerys. We teamed up with HOLT (a element of Credit Suisse Boston that had make a similar analysis for The Innovators 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 5 5 Introduction Who Is Classified as an Innovator?Perhaps one of the most surprising findings from the past thirty years of entrepreneurship research is t hat entrepreneurs do not differ signi? patoisly (on person-to-personity traits or psychometric measures) from typical business executives. a We usually meet this ? nding with skepticism, since most of us intuitively believe that entrepreneurs are close tohow different from other executives. Note that our research focused on innovators and, in particular, innovative entrepreneurs rather than entrepreneurs. here(predicate)s why. Innovative entrepreneurs start companies that offer unique value to the market.When mortal opens a dry cleaner or a mortgage business, or even a set of Volkswagen dealerships or McDonalds franchises, researchers put them all in the same social class of entrepreneur as the founders of eBay (Pierre Omidyar) and Amazon (Jeff Bezos). This creates a categorization problem when trying to ? nd out whether innovative entrepreneurs differ from typical executives. The fact is that most entrepreneurs launch ventures based on strategies that are not unique and certa inly not disruptive. Among entrepreneurs as a whole, only 10 percent to 15 percent qualify as innovative entrepreneurs of the kind were discussing.Our study includes four types of innovators (1) start-up entrepreneurs (as we described earlier), (2) corporate entrepreneurs (those who launch an innovative venture from in spite of appearance the corporation), (3) product innovators (those who invent a refreshing product), and (4) process innovators (those who launch a breakthrough process). Our process inventor category includes folks like A. G. La? ey, who initiated a set of innovative processes at Procter & Gamble that sparked numerous 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 INTRODUCTION business, product, or process must be the innovators idea. While these different types of innovators have numerous similarities, they also have some differences, as we will show in the chapters that fo llow. a. This is evident in the conclusions of numerous studies on entrepreneurs, including the following After a great deal of research, it is now often concluded that most of the psychological differences between entrepreneurs and managers in large organizations are humiliated or non-existent (L.W. Busenitz and J. B. Barney, Differences Between Entrepreneurs and Managers in Large Organizations, Journal of Business Venturing 12, 1997). There appears to be no discoverable pattern of personality characteristics that distinguish between successful entrepreneurs and non-entrepreneurs (W. Guth, Directors Corner Research in Entrepreneurship, The Entrepreneurship Forum, winter 1991). Most of the attempts to distinguish between entrepreneurs and small business owners or managers have ascertained no differentiating features (R. H. B argumenthaus and P. S.Horwitz, The Psychology of the Entrepreneur in The Art and Science of Entrepreneurship, 1986). Solution) to develop a methodology for det ermining what percentage of a ? rms market value could be attributed to its existing businesses (products, services, markets). If the ? rms market value was high than the cash ? ows that could be attributed to its existing businesses, then the company would have a growth and innovation bonus (for our purposes, well notwithstanding call it an innovation allowance). An innovation premium is the proportion of a companys market value that cannot be accounted for from cash ? ws of its trustworthy 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 every executive, and every company, would like to have. We unveil our list of the most innovative companies directed by innovation premiumin chapter 7.Not surprisingly, we found that our authorise twenty- cinque companies include some on the BusinessWeek list much(prenominal) as Apple, Google, Amazon, and Procter & Gamble. These companies honestd at to the lowest degree a 35 percent innovation premium over the past five years. But we also learned that companies such as Salesforce. com (software product), Intuitive Surgical (health care equipment), Hindustan Lever (household products), Alstom (electrical equipment), and Monsanto (chemicals) have similar premiums. And as we studied these ? rms in greater detail, we learned that they are also very innovative.As we cull outcyd both our list and the BusinessWeek list of innovative companies, we saw some(prenominal) patterns. First, we noticed that compared to typical companies they were far more likely to be led by an innovative founder or a leader who s sum of moneyd passing high on the ? ve denudation skills that compose th e innovators DNA (their average discovery quotient was in the eighty-eighth centile, which meant they scored higher than 88 percent of people victorious our discovery skills assessment). Innovative companies are close to incessantly led by innovative leaders. allow us say this again Innovative companies are almost al shipway led by innovative leaders.The bottom of the inning line if you want innovation, you collect creative thinking 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 travel bys at experimenting, so he helped create institutionalized processes within Amazon to push others to experiment. Similarly, Intuits Scott Cook shines at observing, so he pushes ceremonial occasion at Intuit. Perhaps not surprisingly, we discovered that the DNA of innovative organizations mirrored the DNA of innovative individuals.In other words, innovative peop le 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 8 8 INTRODUCTION consistently engage in questioning, observing, networking, and experimenting behaviors to spark new ideas. Similarly, innovative organizations systematically develop processes that en bravery questioning, observing, networking, and experimenting by employees. Our chapters on building the innovators DNA in your organization and team describe how you too can actively en bravery and support others innovation efforts.Why the moods in This Book Should emergence to You Over the last decade, many 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 Ten Rules for Strategic Innovators (Govindarajan and Trimble), Game Changer (A. G. La? ey and beat back Charan), and The Entrepreneurial capitulumset (Rita McGrath and Ian MacMillan), exa tap how organizations, and o rganizational leaders, enfearlessness and support innovation. Others look more speci? ally at product development and innovation processes within and crosswise firms, such as How Breakthroughs Happen (Andrew Harga put one across) 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 Whole New Mind (Daniel Pink). Finally, other books like Creativity 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 context and is based on our study of a large take in of business innovators, including some big-name innovators such as Jeff Bezos (Amazon. com), Pierre Omidyar (eBay), Michael Laza ridis 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 9 9 Introduction A Disclaimer . . . Sort of We think it is important to find three signi? cant points as you read The Innovators DNA. First, act in the discovery skills doesnt ensure ? 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 natively drawn to success than failure. However, in our hear of ? ve hundred innovators, only two-thirds launched ventures or products that met our criteria of success. Many were not successful. The innovators developed the right skills questioning, observing, networking, and experimentingthat produced an innovative venture or product, but the result was not always a ? nancial success. The point is that the discovery skills we describe are necessary, indeed critical, for generating innovative business ideas, but they dont guarantee success.Second, failure (in a ? nancial hots hot) often results from not being vigilant in engaging all discovery skills. The more ? nancially successful innovators in our sample reasond a higher discovery quotient (scored higher on the discovery skills) than less successful ones. If you fail with an innovation, it whitethorn be that you didnt ask all the right questions, make all of the necessary observations, rag to a large copious pigeonholing of diverse people, or run the right experiments. Of course, it is also feasible that you did all these things but an even newer technology emerged or some other bright innovator came up ith an even come apart idea. Or possibly you just didnt excel at executing on the idea or have the resources to compete with an established ? rm that imitated your invention. Many factors can celebrate a new product or business idea from gaining handle 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 different innovators and innovative companies to illustrate reveal 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 motivated to continue doing so. Others bene? tted by being in the right place at the right time to make a critical observation, talk to a key person with particularly useful knowledge, or serendipitously learn from an experiment. They made an important discovery once, but they capacity not gather ups be apable or motivated ( maybe due to financial success) to continue generating innovative ideas. In similar fashion, we have found that innovative companies can pronto lose their innovative prowess, while others can chop-chop improve it. In chapter 8, we show that Apples innovation prowess (as thrifty by its innovation premium) dropped dramatically after Jobs left in 1984, but then jumped up dramatically a few years after he returned to lead the company. Procter & Gamble was a solid innovation performer in the beginning La? ey took the helm, but increased its innovation premium by 30 percent under his leadership.The point is that people and companies can change and may not always live up to our lofty expectations. (Research In Motion/BlackBerry), Michael Dell (Dell), Marc Benioff (Salesforce. com), Niklas dosagenstrom (Skype), Scott Cook (Intuit), Peter Thiel (PayPal), David Neeleman (JetBlue and Azul airlines), and so on. The premise of our book is that we explain how these big names 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 imp rove 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 train people to be more creative and innovative? Some executives respond to the last question by encouraging employees to think outside the corner. But thinking outside the box is precisely what employees (and executives) are trying 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 make all the difference when facing your next innovation challenge. All leaders have problems and opport unit of measurementies sitting in front of them for which they have no solution. It might be a new process. It might be a new product or service. It might be a ne w business model for an old business. In every case, the skills you build by putting into blueprint 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 motivation well discovery skills. And if you want to lead a truly innovative organization, you likely will conduct to excel at those skills. We hope that The Innovators DNA will encourage you to reclaim some of your youthful curiosity. Staying curious keeps us engaged and our organizations alive. 3 Imagine 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 countrys, ability to compete. 100092 00a 001-014 INT r1 go. qxp 5/13/11 953 AM Page 12 1 2 INTRODUCTION How The Innovators DNA Unfolds Like a pocket-sized map in a foreign place, our book serves as a guide to your innovation travel. The first part (chapters 1 through 6) explains why the innovators DNA matters and how the pieces can combine 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 eyesight how the innovators DNA works in the worlds most innovative teams and organizations. We call this the 3P 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 achieve uttermost impact by actively recruiting, encouraging, and rewarding people who display strong discovery skillsand blending innovators in effect with folks who have strong exercise 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 Introductio n mental philosophies that guide behavior within innovative teams and organizations. These philosophies not only guide disruptive innovators but also get imprinted in the organization, giving people the courage to introduce.Finally, for those interested in building discovery skills in yourself, your team, and even the next generation (young people you know), in appendix C we guide you through a process of taking your innovators DNA to the next level. Were delighted that youre starting or continuing your own innovation journey. We have watched gain of individuals take the ideas in this book to heart and who describe how they have dramatically improved 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 mastering 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 Disruptive 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 of 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 fourth-year executives, who know that the ability to infix is the secret sauce of business success. Unfortunately, most of us know very little about what makes one person more creative than another. Perhaps for this reason, we stand in awe 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 & Companys Orit Gadiesh, and eBays gazillion Whitman. How do these people come up with groundbreaking new ideas? If it were possible to discover the inner O I KNOW HOW 17 1000 92 01 015-040 r1 go. xp 5/13/11 956 AM Page 18 18 profligate INNOVATION STARTS WITH YOU workings of the masters minds, what could the rest of us learn about how innovation really 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 call in Apples famous Think Different ad campaign, whose slogan says it all. The campaign featured 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. I nnovators are supposedly right brained, meaning 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 realm 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 Personal Computers Should Be Quiet and slender One of the key innovations in the Apple II, the computing machine that launched Apple, came from Jobss end that it should be quiet. His conviction 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 computer fan distracting. So Jobs was determined that the Apple II would have no fan, which was a fairly radical notion at the time. Nobody else had questioned the consume for a fan because all computers required a fan to prevent overheating. acquire rid of the fan wouldnt be possible without a different type of power supply that generated less heat. So Jobs went on the capture for someone who could design a new power supply. Through his network of contacts, he found RodHolt, a forty-something, chain-smoking socialist from the Atari crowd. 3 Pushed by Jobs, Holt addicted the ? fty-year-old conventional 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 need a fan made the Apple II the quietest and smallest personal computer ever made (a smaller computer was possible because it didnt need extra space for the fan). Had Jobs neer asked, Why does a computer need a fan? and How do we keep a computer sang-froid without a fan? the Apple computer as we know it would not exist. Innovative Idea 2 The mackintosh User Interface, Operating System, and crawl The seed for the macintosh, with its revolutionary operating system, was planted when Jobs visited Xerox PARC in 1979. Xerox, the copier company, created the Palo Alto Research Center (PARC), a research lab supercharged with designing 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 conservatively 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 incomplete and ? awed, Jobs said,bu t the germ of the idea was there . . . within ten minutes it was obvious 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 taste of objectoriented programming, which became the key to the OSX operating system that Apple acquired from Jobss other start-up, NeXT Computers. What if Jobs had never 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 hold desktop publishing 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 College in Oregon. Says JobsReed College offered perhaps the best calligraphy inst ruction in the country. Throughout the campus every poster, every label on every drawer, was beautifully handcalligraphed. Because I had dropped out and didnt have to take the normal 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 amount of space between different letter combinations, about what makes great typography great. It was beautiful, historical, artistically impalpable in a way that science cant capture, and I found it fascinating. None of this had even a hope of any ractical employment in my life. But ten years later, when we were designing the ? rst Macintosh computer, it all came back to me. And we designed 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 propor tionally spaced 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 spring fully formed from his head, as if they were a endow from the Idea Fairy. When we examine the origins of these ideas, we typically ? nd that the catalyst was (1) a question that challenged the office 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? We want to convince you that creativity is not just a genetic endowment and not just a cognitive skill. Rather, weve learned that creative ideas spring from behavioral 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 really 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 studied creative abilities in 117 pairs of indistinguishable and fraternal duplicates.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, slightly 80 percent to 85 percent of the twins performance on general wisdom (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 nature as far as creativity goes. Six other creativity studies of identical twins con? rm the Reznikoff et al. esult or so 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 learningfrom first understanding the skill, then practicing it, and ultimately gaining con? dence in our capacity to create. This is one reason that individuals w ho grow up in societies that promote community versus individualism and hierarchy over meritsuch as Japan, China, Korea, and many Arab nationsare less likely to creatively challenge the status 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 rubber 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 thinkin g or simply associating. Associating happens as the brain tries to synthesize and make sense of novel inputs. It helps innovators discover new directions by making connections across plainly unrelated questions, problems, or ideas. Innovative breakthroughs often happen at the overlap of diverse disciplines and ? elds.Author Frans Johanssen described this phenomenon as the Medici effect, referring 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 crosswalk 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 fro m 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 tried 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 theminclu ding customers, products, services, technologies, and companiesand the bservations help them gain insights into and ideas for new ways of doing things. Jobss observation trip 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 elapse a lot of time and energy ?nding and examination 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 talking 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 looney 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 free & Magic (the group created special ef fects for George Lucass movies). Fascinated by their operation, Jobs bought Industrial Light & Magic for $10 million, renamed it Pixar, and eventually took it public for $1 billion. Had he never chatted with Kay, he would never have wound up purchasing Pixar, and the world might never have thrilled to wonderful 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, holding convictions at bay and testing hypotheses along 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 experiences 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 Courage 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 language 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 invoke of affairs to alternative ones. Most of us simply accept the status quo . We may even like routine and prefer not to rock the boat. We adhere 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 enrolments. Just 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 spending 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 amount of t ime 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. Embracing 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 cypher to be ashamed of. In fact, they are an expected cost of doing business. If the people running Amazon. com dont make some signi? cant mistakes, Jeff Bezos told us, then we wont 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 verbalized in the model shown in ? gure 1-1. The key skill for generating innovative ideas is the cognitive skill of associational thinking. The reason that some people generate more associations than others is partly 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 recital 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 count on 1-1 The innovators DNA model for generating innovative ideas Courage to innovate Behavioral skills Cognitive skill to synthesize novel inpu ts QuestioningChallenging the status quo winning 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 become 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 cardinal 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. rise 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 talenten your physical DNA, for example, to help ward off diseases. 10 Likewise, it is metaphorically possible to strengthen your personal innovators DNA. Let 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 dad, and a designerabout the venture (2) visits three innovative start-ups to observe what they do (3) samples five new to the market products an d takes them apart (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 gauge is that youd bet on your twin, and not because he has better natural (genetic) creative abilities. Of course, the anchor weight 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 figure 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 higher up the seventieth percentile in associating and questioning. The innovators seemed to hold these two discovery skills more universally . But the innovators we studied didnt need world-class 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 scores 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 Cook (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 intensity with which these individuals engage in activities that compose the skill.FIGURE 1-2 High-pro? le innov ators 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- sextupletth percentile) and networking (ninetyeighth percentile). The point is that each of these innovative entrepreneurs did not score high on all ? ve of the discovery skills. They each feature the disc overy 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 Senior Executives Dont Think Different Weve spent the past eight years interviewing scores of higher-ranking executivesmostly at large companiesasking them to describe the most novel and valuable strategic insights that they had generated during their careers. Somewhat 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 courteous at delivering results, but they didnt have much direct, personal experience with generating innovative business ideas. In contrast to innovators who seek to fundamentally change exist ing 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 Relevant?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 incremental 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 boss 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 launching 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 were people who watched American movies and television. So he launched a company that sells software that helps people learn English by watching 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 wrong the box. They shine at converting a vision or goal into the speci? c tasks to achieve the de? ned goa l. They organize work and conscientiously 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 delivery 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 realize 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 analytic 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, set international 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 average 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 significant early in the business life cycle because the companys key task is to generate new business ideas worth pursuing. Thus, discovery (exploration) ski lls are highly valued at this stage and delivery (execution) skills are secondary. However, once innovative entrepreneurs come up with a promising 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 Stack 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 delivery or execution skills analyzing, planning, detail-oriented imp lementing, 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 designed to measure general intelligence and wound up 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 sampl e 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 eightieth 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 matrix 100 (Percentile score) 75 Discovery skills Founder CEOs at innovati