How to avoid or overcome “the incumbent’s curse” to achieve market dominance
By nature, books about innovation should contribute something new and/or something better to our understanding of what innovation is and isn’t as well as how to develop a mindset and skills that will enable us to (yes) contribute something new and/or something better. Gerard Tellis makes such a contribution as he explains how to build and then sustain a culture for market dominance. As Vijay Govindarajan suggests in the Foreword, “I like the central argument in this book: success breeds complacency, lethargy, or arrogance – in short, a culture that embraces the status quo instead of the future abhors risk and protects current successful products.”
This is what Tellis characterizes as “the incumbent’s curse”: Becoming successful hampers continued innovation and hinders continued leadership. He identifies three defining traits: “First, incumbents fear cannibalizing their current successful products…Second, incumbents are risk averse…Third, incumbents focus too much on the present” and probably the past. Hence a paradox: To paraphrase Marshall Goldsmith, whatever got an organization to its current success (however defined) will not only be able to sustain that success; worse yet, it will almost certainly eliminate that success in weeks and months (probably not years) to come.
Simply stated, “unrelenting innovation” is constant effort to make something new and/or make something better.” Odd are that, more often than not, innovation will not be the result. The process “fails” only when it does not continue. Every so-called “failure” is in fact a precious learning opportunity. I agree with Tellis that a culture within which innovation thrives must have defining characteristics that include the three he identifies: a willingness to “cannibalize” incumbent products and/or services, embracing risk, and a focus on the future. Organizations that aspire to establish and nourish such a culture must (a) provide appropriate incentives (i.e. strong for successful innovation but weak penalties for anything less), (b) establish internal competitive markets, and (c) empower innovation “champions” who not only create but also develop (with others) whatever is new or better.
These are among the dozens of passages I found to be of greatest interest and value, also listed to suggest the range of subjects covered during the course of the book’s narrative:
o Why Incumbents Fail to Innovate Unrelentingly (Pages 3-17)
o Understanding Technological Evolution (33-37)
o The Reflection, Hot-Stove, and The Expectation Effects (63-69)
o Availability Bias (114-121)
o Incentives for Enterprise (143-155)
o Four Characteristics of Markets (181-192)
o Four Characteristics of “Champions” (208-210)
o Steps in Empowering Champions (235-236)
o Micro Theories (238-250)
o Macro Theories (250-260)
With rare exception, the best business books are driven by research and that is certainly true of this one. Check out the list of major studies Tellis co0nsulted on Pages 17-19, the additional details in Chapter 8, his Notes (263-288), and his Bibliography (289-306. Exemplar innovation cultures include IBM, Samsung, P&G, and General Motors. However different they may be in most respects, all of them demonstrate highly developed communication, cooperation, and most important of all, collaboration. This book is also a major collaborative effort, as Tellis gratefully acknowledges on Page 307.
No brief commentary such as mine can possibly do full justice to the scope of material that Gerald Tellis provides in this volume but I hope that I have at least suggested why I think so highly of it. Also, I hope that those who read this commentary will be better prepared to determine whether or not they wish to read the book and, in that event, will have at least some idea of how to build and then nourish a culture for market dominance, an achievement that would be of substantial benefit to his readers’ professional development as well as to the success of their organization.
Those who share my high regard for this volume are urged to check out as well as Josh Lerner’s The Architecture of Innovation: The Economics of Creative Organizations as well as Reverse Innovation: Create Far From Home, Win Everywhere co-authored by Vijay Govindarajan and Chris Trimble with Indra K. Nooyi and The Other Side of Innovation: Solving the Execution Challenge co-authored by Govindarajan and Trimble; also, Steven Johnson’s Where Good Ideas Come From: The Natural History of Innovation and two co-authored by Tom Kelley and Jonathan Littman: The Art of Innovation: Lessons in Creativity from IDEO, America’s Leading Design Firm and The Ten Faces of Innovation: IDEO’s Strategies for Defeating the Devil’s Advocate and Driving Creativity Throughout Your Organization.
According to Frans Johansson, “When you step into an intersection of fields, disciplines, or cultures, you can combine existing concepts into a large number of extraordinary new ideas. The name I have give this phenomenon, the Medici Effect, comes from a remarkable burst of creativity in fifteenth-century Italy.”
He agrees with Richard Dawkins who suggests (in The Selfish Gene) that ideas, or memes, compete, in a real sense, for space in our minds. Hence the importance of a process for collective, collaborative generation and refinement of ideas. In terms of both the number of people and the number of ideas, “the more the merrier.”
Here is what Johansson recommends
What to Avoid
1. Associative limits and barriers that exclude anyone and anything from the process that is “different,” “doesn’t fit,” etc.
2. Arbitrary deadlines that eliminate ideas too soon
3. Disagreement and conflict that become personal
4. Failure to execute ideas (“the greatest failure of all”)
5. Loss of motivation
What to Ensure
1. Diversification of participants (e.g. expertise, perspectives, and approaches)
2. Recognition of trends and patterns that can be integrated
3. “Intersection hunting” (i.e. searches for connections in unlikely places and see where they lead)
4. Ignition and explosion of ideas
5. Sufficient time for evaluation of ideas
Frans Johansson is the author of The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts, and Cultures, published by Harvard Business Review Press (2006).
OTHER SUGGESTED READINGS
The Art of Innovation: Lessons in Creativity from IDEO, America’s Leading Design Firm (2001)
The Ten Faces of Innovation: IDEO’s Strategies for Defeating the Devil’s Advocate and Driving Creativity Throughout Your Organization (2005)
Tom Kelley with Jonathan Littman
The Little Black Book of Innovation: How It Works, How to Do It (2011)
Scott D. Anthony
Collaboration: How Leaders Avoid the Traps, Create Unity, and Reap Big Results (2009)
Morten T. Hansen
“I believe that any problem can be solved with a picture. And that anybody can draw it.”
Dan Roam is the author of two international bestsellers, The Back of the Napkin: Solving Problems and Selling Ideas with Pictures and Unfolding the Napkin: The Hands-On Method for Solving Complex Problems with Simple Pictures, both published by Portfolio Trade, a Penguin imprint. The former was selected as Business Week and Fast Company’s best innovation book of the year, and was Amazon’s #5 selling business book of 2008. The Back of the Napkin has been published in 25 languages and is a bestseller in Japan, South Korea, and China. Portfolio also published his latest book, Blah Blah Blah: What To Do When Words Don’t Work (November, 2011) Roam has helped leaders at Microsoft, eBay, Google, Wal-Mart, Boeing, Lucas Fims, Gap, Kraft, Stanford University, The MIT Sloan School of Management, the US Navy, and the United States Senate solve complex problems through visual thinking. Dan and his whiteboard have appeared on CBS, CNN, MSNBC, ABC News, Fox News, and NPR. His visual explanation of American health care was selected by BusinessWeek as “The World’s Best Presentation of 2009″. This inspired the White House Office of Communications to invite him in for a discussion on visual problem solving.
Here is an excerpt from my second interview of Dan. To read the complete interview, please click here.
Morris: Before discussing Blah Blah Blah, a few general questions. First, for those who have not as yet read one or both of the “napkin” books, please explain why using relatively simple drawings can have great impact when we attempt to answer a question, solve a problem, persuade others to agree, or to express the essence of an important concept.
Roam: When we see an idea clearly illustrated right in front of us, much more of our mind lights up than if we were just talking about it. With simple and clear pictures, we see more, understand more, and share more than words alone ever could. As humans, we are essentially walking, talking “vision” machines. Three-quarters of all the sensory neurons in our brain are dedicated to processing vision, and in the first four months after we’re born almost all brain development in takes place in those areas that process vision and movement.
From the time we are infants, we know how important sight is to understanding the world around us and guiding us safely through it. What is a shame is how quickly we forget that once we enter school. We spend years perfecting the tools of spoken but we don’t spend two days learning to understand how we SEE. The essential point is this: if we really want someone to understand what we’re talking about, we should actually talk less – and draw more.
Morris: The hieroglyphics on cave walls pre-date the earliest attempts at a verbal language. So the insights you share in the two Napkin books have been common knowledge for at least several million years?
Roam: The oldest drawings ever found are located deep in the Chauvet Cave in south-central France. These paintings of horses, bison, and bulls date back 32,000 years. In the entire sweep of recorded human history, these beautiful images represent the beginning of the “whoosh.” We don’t know anything about the early humans that created these images, but we do know they could draw extremely well. These are the earliest markings ever made by humanity, and they are sketched more wonderfully than most of us could do today.
Morris: Relatively simple drawings can be a great resource for brain storming sessions because almost anyone can draw without possessing highly-developed drawing skills. However, what Tom Kelley characterizes as “ideation” [begin italics] does [end italics] require them. Don’t people have to have something worth communicating, first?
Roam: We all have ideas we believe are worth communicating, and we have them all the time – which is precisely why so many of us talk so much. Those ideas may not be fully developed, we may be uncertain of them, and they may be complex or controversial, but we typically have no shortage of them. And that is why drawing them out – even in the most crude circles-boxes-and-arrows manner – is such a great idea. Drawing out our thoughts forces us to clarify them, look at them from multiple perspectives, and think them through in a vibrant way.
Morris: Since the publication of the two Napkin books, presumably you have received a blizzard of feedback from those who read one or both of them. Of all that you have learned from what your readers have shared, what do you consider to be most valuable? Why?
Roam: I have received thousands of comments from readers over the past three years. The most frequent involve a reader sharing a moment of pictorial discovery, either in a meeting that was saved when someone went up to the whiteboard and drew the idea that clarified everything, or when they completed a difficult sale by drawing out the solution for all to see. Without a doubt, I have learned the most from readers who had never drawn and, thanks to my books, decided to give it a try. The sense of discovery and enthusiasm that permeates these notes illuminates visual possibilities that I had never considered myself. I always knew pictures made things clearer to me; it is electrifying to see how common that is even among people who never considered themselves “visual.”
Morris: From which sources did you learn the most about what the mind is and does, in general, and what the verbal and visual minds do, in particular?
Roam: I have read, studied, participated in, and discussed with experts three different approaches to understanding the mind. First, I took an academic approach to understanding the mind: in university I studied biology and I was fascinated with the evolutionary development of the human brain, and more recently I consulted with vision scientists and neurobiologists at leading universities. Second, I took an applied approach: I studied meditation for four weeks in a Thai monastery (including spending one week in silent isolation), I participated in cognitive behavioral therapy sessions to see how my mind reacted to various situations and I participated in extensive psychodynamic therapy sessions to try to see why. Third, I took an intuitive approach: I simply monitored myself in hundreds of business meetings and noted when I and other people seemed to be understanding each other and when we did not – and then noted what we were talking about and how we approached it.
Morris: What are the defining characteristics of “vivid thinking”
Roam: “Vivid Thinking” is a mnemonic. Vi-V-id stands for Visual-Verbal-Interdependent thinking. It is a simple idea that says we haven’t really thought through an idea until we have both talked about it and looked at it, and that we can’t really explain an idea until we can both write about it and draw it. Vivid thinking does not accept that an either/or verbal-vs-visual approach ever fully illuminates an idea; on the contrary Vivid Thinking demands that we must exercise both our verbal and visual minds in concert if we really wish to understand an idea. Talk + look; write +draw = Vivid.
Morris: By what process can vivid thinking be strengthened?
Roam: Like anything we do, Vivid Thinking becomes strengthened through practice. For all its successes, our educational system has in fact allowed us to become lazy thinkers. By relying almost entirely on our verbal mind, we have taught ourselves to shut our visual mind down and to denigrate its importance. My goal in “Blah-Blah-Blah” is to introduce a set of simple tools and rules that reawaken our visual mind and kick it back into gear.
* * *
Here is an excerpt from my second interview of Dan. To read the complete interview, please click here.
He cordially invites you to check out the resources at these websites:
I also urge you to check out these videos:
Even the staid British publication The Economist recently claimed, “Innovation is now recognized as the single most important ingredient in any modern economy.”
(Tom Kelley: The Ten Faces of Innovation)
For the SMU Cox School of Business – Business Leadership Center, I recently presented my new session on innovation: Adaptation, Exaptation, Innovation: Processes and Environments That Invite Successful Innovation.
I quote from many books that discuss creativity and innovation, including books by Tom Kelley, Steven Johnson, Gary Hamel, Twyla Tharp, Bernd Schmitt, and Roger Martin, among others. As I developed the material, I stole/borrowed/compiled/wrote eight assumptions about our current situation, and asked 8 questions… Here are the assumptions and questions:
• 8 Assumptions:
1) What worked yesterday will not work as well tomorrow
2) Someone is trying – now! — to leave you in the dust
3) Everyone; every product; every process…can get better
4) Creativity, as a habit, can be developed
5) Innovation, as a practice, can be achieved
6) It takes time, training, effort to be creative, and to be innovative
7) It is far better (it works best) to be innovative “together”
8) Innovation is a habit/a discipline/a routine – in other words, it needs constant attention and focus… always
• 8 Questions for the Innovator:
1) What are we doing now that could be done better tomorrow? (hint – practically everything)
2) What could we learn from a totally unexpected source/field/discipline?
• how could we take some “field trips” – how could we open our eyes a little wider?
3) What could we learn from the best within our industry?
4) What could we learn from the worst in our industry (what should we never do?)
5) Where are our bottlenecks – how are we killing good ideas?
6) Where are our records – that is, where are we recording all of our possible good ideas? (Where are we losing our good ideas?)
7) Where do people experience hassles, of any kind, in their interactions with us? How can we get rid of these hassles?
8) And – what could go wrong? (Beware of the problem of unintended consequences. – Consider the parable of the “free refill”).
After having read and reviewed so many business books, I now share brief comments about what I consider to be the 25 most valuable business insights and the books in which they are either introduced or (one man’s opinion) best explained. Here are second five:
6. Customer Evangelism: Satisfaction is determined per transaction; loyalty is determined by sustainable satisfaction; zealotry occurs only when customers say “Yes!” to this question posed by Fred Reicheld: “Would you strongly recommend us to a friend, neighbor, or colleague?”
Best Sources: Fred Reichheld’s The Ultimate Question: Driving Good Profits and True Growth and Creating Customer Evangelists: How Loyal Customers Become a Volunteer Sales Force co-authored by Ben McConnell and Jackie Huba.
7. EDNA: This is an acronym I devised long ago when I began to teach English at Kent School in Connecticut.
Exposition (i.e. expose, reveal, open up, reveal) explains with information.
Description makes vivid with compelling images.
Narration explains a sequence and/or tells a story
Argumentation convinces with logic and/or evidence
Effective communication relies on mastery of one or more of these four.
Best Sources: Robert B. Cialdini’s Influence: Science and Practice (5th Edition) and Crucial Conversations: Tools for Talking When Stakes Are High co-authored by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler
8. Employee Engagement: Recent research indicates that, on average, less than 30% of a workforce in the U.S. is actively and positively engaged. The others are either passively engaged (i.e. mailing it in) or actively disengaged (subversive and toxic). Increase active and positive engagement by (a) convincing workers that they and what they do are appreciated, (b) making crystal clear what expectations of them are and how their performance will be measured, (c) earning and sustaining their trust and respect by setting an with what you say (both verbally and non-verbally) and with what you do.
Best Sources: Freedom, Inc.: Free Your Employees and Let Them Lead Your Business to Higher Productivity, Profits, and Growth co-authored by Brian M. Carney and Isaac Getz, Simon Sinek’s Start with Why: How Great Leaders Inspire Everyone to Take Action, Edward M. Hallowell’s Shine: Using Brain Science to Get the Best from Your People, and The Why of Work: How Great Leaders Build Abundant Organizations That Win co-authored by Dave Ulrich and Wendy Ulrich.
9. Innovation: In essence, innovation achieves improvement of what already exists and that could include almost anything (e.g. an idea, assumption, theory and strategy as well as a product, process, or behavior). Almost anything can be improved and almost anyone can do that by embracing that challenge and pursuing that opportunity.
Best Sources: Tom Kelley’s The Idea of Innovation and The Ten Faces of Innovation (both co-authored with Jonathan Littman) as well as Steve Johnson’s Where Good Ideas Come From: The Natural History of Innovation and Henry Chesbrough’s Open Innovation: The New Imperative for Creating and Profiting from Technology
10. Lean: The concept of “less is more” can be dated back at least to ancient Greece. In a business context, its core concept is elimination of whatever is wasteful such as a production process that consumes too much time and effort as well as raw materials, one that results in omissions, duplications, redundancies, and flaws. Albert Einstein probably said it best: “Make everything as simple as possible…but no simpler.”
Best Sources: James Womack’s Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Revised and Updated and Lean Solutions: How Companies and Customers Can Create Value and Wealth Together, both co-authored with Daniel T. Jones
Note: You may also wish to check out Most Valuable Business Insights: 1-5.
Observe real people in real life situations to find out what makes them tick…
This is step # 2 in the IDEO five step methodology:
• The IDEO five step methodology…
#1 Understand the market.
#2 Observe real people in real life situations to find out what makes them tick…
#3 Visualize new to the world concepts and the customers who will use them.
#4 Evaluate and refine the prototypes in a series of quick iterations. Plan on a series of improvements.
#5 Implement the new product for commercialization.
This week, I’ve had a chance to do a “ride along” with an account manager for a client (in preparation for some training sessions). I watched, listened, and learned.
As we talked afterwards, it was clear that a new pair of eyes (mine) could see some things that someone constantly in the midst of an endeavor misses. Not because of a lack of desire to see – but simply because it is tough to see what is always in front of you. Thus, the wisdom of IDEO’s approach: they always start by going out and observing real people, at work or at leisure, with real products, in their own settings…
As I observed, I thought of some recommendations to make. Some of these are in fact “new.” Some are, in fact, quite old – you know, the tried and true, but so easily ignored or forgotten.
So, I am preparing a list of “try these” items for our client. I think it could be valuable.
Now, it’s your turn – and my turn. Conduct a “ride-along” with yourself. Yes, it very difficult – to look at and observe your own practices, to look at what you are doing, or not doing, with a new set of eyes. (It is easier for an “outsider” to see what you have become oblivious to). And ask these questions, all in the quest to do your work better:
• What can I try?
• What I try that is simply different?
• What can I try that is new?
This much I do know – there is a competitor lurking right around the corner that will offer some of these different/new approaches. You may as well be the one to come up with them yourself.
You can purchase my synopsis of The Art of Innovation, with handout + audio, at our companion web site, 15minutebusinessbooks.com.
The first steps of a creative act are like groping in the dark: random and chaotic, feverish and fearful, a lot of busy-ness with no apparent or definable end in sight. There is nothing yet to research. For me, these moments are not pretty. I look like a desperate woman, tortured by the simple message thumping away in my head: “You need an idea.”
You need a tangible idea to get you going. The idea, however miniscule, is what turns the verb into a noun – paint into a painting, sculpt into sculpture, write into writing, dance into a dance.
Twyla Tharp, The Creative Habit
I was just revisiting my handout from the book Where Good Ideas Come From. Steven Johnson argues that a lot goes into the discovery of those really good ideas. To get to “good idea, “ you have to: go with the “flow;” you have to have, and then jettison, a bunch of bad ideas; you have to learn to rely on hunches much more than those fast/sudden/amazing eureka moments (which, really, is not the secret sauce behind most good ideas); you have to come to realize that good hunches are slow in coming – -they are “slow hunches.”
You have to build, and take advantage of, an environment that nurtures good ideas:
This is a book about the space of innovation. Some environments squelch new ideas; some environments seem to breed them effortlessly.
Good ideas come from many places:
Good ideas are not conjured out of thin air; they are built out of a collection of existing parts, the composition of which expands (and occasionally, contracts) over time.
A good idea is a network… an idea is not a single thing. It is more like a swarm.
Good ideas come from people – notice that that is “people” (plural!):
The most productive tool for generating good ideas remains a circle of humans at a table, talking shop.
And, remember, that creativity, and then innovation, are the result of good ideas. Johnson’s decision to talk about good ideas was significant:
I have deliberately chosen the broadest possible phrasing – good ideas – to suggest the cross-disciplinary vantage point I am trying to occupy.
So…pretend that you have a group of people who have nurtured the idea generation skill that is needed. You come together to work on generating new, good, usable ideas.
What do you do?
You have some brainstorming sessions. And then, you have the chance of sparking/catching those good ideas. You are looking for that someone in that crowd that can help you come up with just the right next new idea:
This is not the wisdom of the crowd, but the wisdom of someone in the crowd. It’s not that the network itself is smart; it’s that the individuals get smarter because they’re connected to the network.
So, what do you in this brainstorming session? You brainstorm. But, we all know, brainstorming done poorly does not work.
Here is some genuinely important “how to brainstorm well” counsel from The Art of Innovation (Lessons in Creativity from IDEO, America’s Leading Design Firm) by Tom Kelley.
• Seven Secrets for Better Brainstorming…
1) Sharpen the focus.
2) Playful Rules. (e.g. – at IDEO: Go for quantity. Encourage wild ideas. Be visual).
1. Number your ideas. (it creates quantity – it makes it easier to refer to specific ideas…)
2. Build and Jump.
3. The Space Remembers.
4. Stretch your mental muscles.
5. Get physical. (including: big blocks; competitors products; use the body itself!)
• Six ways to kill a brainstormer…
The boss gets to speak first (the boss gets to speak!)
Everybody gets a turn.
Experts only please.
Do it off-site.
No silly stuff.
Write down everything.
And, like with every other skill that you develop, you’ll have to do it a bunch — practice brainstorming, that is. Remember the tried and true adage: “perfect practice makes perfect.”
You know, at one time there must’ve been dozens of companies makin’ buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw. Now how would you have liked to have been a stockholder in that company? You invested in a business and this business is dead. Let’s have the intelligence, let’s have the decency to sign the death certificate, collect the insurance, and invest in something with a future.
(Lawrence Garfield — “Larry the Liquidator” – played by Danny DeVito, in the movie, Other People’s Money)
news item: Blockbuster finally files for Chapter 11
Born, 1985: (The first Blockbuster store opened in Dallas, Texas on October 26, 1985 at the corner of Skillman and Northwest Highway. By the way, I used to rent videos at that specific store. I had no idea that it was the first).
Died, September 23, 2010: (though some smaller version might last a little longer).
The lessons are many. Like:
#1 Customer loyalty is dead. Really dead.
#2 Someone intends to go right past you – you’d better beat them to the punch.
#3 If the product you are selling is no longer the product that works best, you have no future.
#4 If these three are true, then you will go under – it’s just a matter of when, not if.
These are the thoughts that I have as I reflect on Blockbuster going into bankruptcy. Netflix, and redbox, and youtube, and iTunes, all simply passed them by. And Blockbuster simply was not nimble enough, not quick enough, not able to react and change fast enough, and now they are on the verge of gone.
Lots of thoughts, from plenty of books, come to mind, like:
Verne Harnish, in Mastering the Rockefeller Habits, reminds us that all business starts with the functions of Making or Buying something. So, if people no longer want to buy what you offer, you’ve got real trouble…
In Get There Early: Sensing the Future to Compete in the Present (Using Foresight to Provoke Strategy and Innovation) by Bob Johansen (Institute for the Future), we learn about the VUCA world of (VUCA originated at the U. S. Army War College – the graduate school for Generals-to-be):
It’s the volatility that helped doom Blockbuster.
In The New Experts: Win Today’s Newly Empowered Customers At Their Decisive Moments by Robert (Bob) Bloom, Bob basically wrote Blockbuster’s obituary. Consider these quotes from his book:
Today’s buyers – empowered by the Internet, assured by the enormous choice in every segment of commerce, and capitalizing on the acute vulnerability of sellers struggling in this new selling climate – have taken control of the entire purchase progression.
Buyers no longer care who they buy from.
Today, buyers are in control.
This reversal of supremacy has placed every business around the globe in a perilous situation.
This confluence of technology and choice started customer loyalty down the slippery slope – ultimately, customer loyalty died.
It is a scary world out there. Somebody is out to beat you in tomorrow’s market.
I’ll end with a well-known quote from Gary Hamel (quoted by Tom Kelley in The Art of Innovation):
To those few companies sitting on the innovation fence, business writer Gary Hamel has a dire prediction: “Out there in some garage is an entrepreneur who’s forging a bullet with your company’s name on it. You’ve got one option now – to shoot first. You’ve got to out-innovate the innovators.”