When Profit spoke to Scott D. Anthony in 2009, the managing director of Innosight Asia-Pacific had just published Silver Lining, a book about innovating during tough times. But he’s still got plenty of advice to give for executives, which is why he has written a new, practical guide, The Little Black Book of Innovation. So, what has changed between the publication of his two books?
“If you look at what’s happened over the past couple of years, you’ve seen some real separation in the marketplace between those who have continued to innovate and those who didn’t make the historical investments in innovation.” he told Profit. “We’re seeing a lot of companies now falling by the wayside, The brutal reality of today’s world is if you don’t innovate you’re not going be around for even the short term, let alone the long term.”
Here, Profit talks to Anthony about how to innovate in today’s business climate, the problem with focus groups, and the trends he’s watching now.
Profit: In your book you describe something called the Innovator’s Paradox. Why is this important?
Anthony: This is something that impacts a lot of companies. The notion is when you’re in a situation where you need to transform, it can be very hard to do it. When you’ve got the luxury to have the resources, time, and the ability to do transformational things, you don’t feel the urgency, so you don’t give things the proper time and space that they need.
Profit: So how do avoid this Paradox?
Anthony: There are really two things that are critical. The first is having constant paranoia. There is something about just living life knowing that today’s business is not tomorrow’s business, that today’s competitive advantage is not tomorrow’s competitive advantage — and recognizing that no matter how well your business is going today, there is disaster lurking around the corner.
But the second piece is the thing that makes this really tricky: The people who you ask to go and do the new things, to create tomorrow’s business, to create the transformations, they actually can’t feel paranoid, because if people feel paranoid they get very, very rigid. Instead of thinking expansively and thinking creatively, they essentially replicate what you’re already doing.
That’s the magic in this. You’re paranoid enough that you’re always investing in new growth, investing in transformation. But the people who are receiving that investment must feel free, unbridled and optimistic about what the future holds. It’s not an easy thing to do.
Profit: What characteristics should executives consider when they’re building teams to work on innovation?
Anthony: There’s been some good research on this topic recently, summarized in a book that came out in 2011 called The Innovator’s DNA by Hal Gregersen, Jeff Dyer and Clayton Christensen. The thing that the professors describe in that book is people who, on a statistical basis, are more likely to come up with and launch successful innovations follow five specific behaviors: They’re good at associational thinking, which means they can connect things that don’t appear to be natural pairs; they question; they discover; they network; and they experiment. So you want to, as much as you can, look for people who follow these behaviors.
The other thing that the professors found — and I think most executives intuitively understand this — is sometimes those particular behaviors and skills run counter to the skills that are required to deliver and be an excellent operator. Not always, sometimes people have the ability to do both of those things, but sometimes the people who you can count on the most to bring in the month, the quarter, the year are the people who just follow a different set of behaviors. Ask them to go fill in a blank piece of paper or come up with something that’s never been done before, and they just freeze. They don’t have the skill set required to do that.
Profit: Are focus groups useful for driving innovation?
Anthony: The danger of focus groups is you get together a small group of people, they start reverberating off each other, and you get kind of a middle-of-the-road answer.
But the biggest problem with a focus group is you’ve removed people from context. So you’ve brought people to some kind of central location, they’re behind a glass wall and they’re talking. What you really want to do is understand not what people say, but what people do. Those two things are just fundamentally different.
People will say what they think you want them to say, but what they do and the way they actually live their lives are fundamentally different. The reality is you get pretty limited insight from focus groups. I would much rather go out in the field, spend time with real people, live with them, work with them and watch them to understand the things that they cannot easily articulate.
Like anything, focus groups have their place. If you’ve got an idea you want to bounce off people, if you want to show them something, if you want them to play with something, getting a few people together is a good thing to do. But if you’re trying to fundamentally discover new opportunities for innovation, a focus group is just not a particularly useful tool.
Profit: Finally, what trends are you watching in 2012?
Anthony: One of the things that I’m seeing is the rise of the big-impact innovator. What I mean by “big-impact innovator” is a large company that goes and attacks one of the big social problems in the world today: population control, poverty, lack of clean water, etc.
What you really need to break the back of important problems isn’t an innovative idea. It’s all the things that a large company has: the scale, the reach, the brand, the access, etc.
People inside these organizations are recognizing that they can have tremendous impact not in a corporate social responsibility way, but actually building for-profit, powerful businesses that also change the world. So I think we’re going begin to see more people talk about this.