The Innovator’s DNA, Updated: Mastering the Five Skills of Disruptive Innovators

In “The Innovator’s DNA, Updated,” Jeff Dyer, Hal Gregersen, and Clayton M. Christensen unveil the secrets behind groundbreaking business ideas and the people who generate them. This isn’t just another book on innovation; it’s a deep dive into the behavioral and cognitive skills that distinguish disruptive innovators from the rest of us. The authors challenge the common misconception that creativity is purely a genetic gift, instead revealing that it’s a set of learnable behaviors that anyone can cultivate. By thoroughly dissecting the “innovator’s DNA”—comprising associating, questioning, observing, networking, and experimenting—the book provides actionable insights for individuals, teams, and organizations to ignite their own creative potential and drive meaningful change. Prepare to discover the precise actions you can take to “Think Different” and make a tangible difference in the world.

Quick Orientation

“The Innovator’s DNA, Updated” by Jeff Dyer, Hal Gregersen, and Clayton M. Christensen, is a meticulously researched guide that demystifies the origins of innovative ideas. Drawing on an eight-year study involving nearly a hundred revolutionary product inventors and game-changing company founders—including tech titans like Jeff Bezos and Elon Musk, and corporate leaders like Indra Nooyi—the authors present a compelling argument: innovation is less about innate talent and more about specific, learnable behaviors.

This book serves as a practical blueprint, offering a unique perspective on how individuals and organizations can systematically cultivate creativity. It promises to break down every important idea, example, and insight, ensuring comprehensive coverage of the core discovery skills. Readers will gain a clear understanding of the five key skills that drive innovation and learn actionable strategies to apply them in their own lives and workplaces, fostering a mindset that not only generates novel ideas but also transforms them into impactful realities.

Discovery Skill #1: Associating

This chapter explores how innovators connect disparate ideas to spark groundbreaking insights, emphasizing that creativity is fundamentally about connecting things.

Creativity as Connection

Steve Jobs famously stated that “Creativity is just connecting things,” and the authors expand on this by highlighting that innovators actively seek out diverse information to make surprising connections across different knowledge areas, industries, and geographies. This cognitive skill, known as associating or associational thinking, is at the core of the innovator’s DNA. It’s not a passive trait but is fueled by active discovery behaviors like questioning, observing, networking, and experimenting.

Marc Benioff and the Genesis of Salesforce

The chapter vividly illustrates associational thinking through the story of Marc Benioff, founder of Salesforce. Benioff’s journey began with early software experience and a summer at Apple, immersing him in a “think-different” world. After leading Oracle’s direct-marketing division, he sensed a significant technological shift with the emergence of Amazon and eBay. During a sabbatical that included a trip to India (strengthening his commitment to “doing well and doing good”) and discussions in Hawaii, a fundamental epiphany struck him while swimming with dolphins: “Why aren’t all enterprise software applications built like Amazon and eBay?” This question led to his synthesis of “enterprise software meets Amazon,” challenging the tradition of selling software via CD-ROMs and expensive installations. Instead, Salesforce delivered software as a service over the internet, available 24/7, effectively launching the era of cloud computing. Benioff’s continued innovation, fueled by the question “Why isn’t all enterprise software (including Salesforce) like Facebook?”, led to Chatter, a social-software application described as “Facebook for businesses,” demonstrating a continuous cycle of associational play.

What Associating Is

Walt Disney, a creative catalyst, described his job as that of “a little bee,” gathering pollen and stimulating others. This metaphor perfectly captures the essence of associating: cross-pollinating ideas in one’s own mind and in others’. Innovative leaders like Elon Musk emphasize the power of cross-fertilizing ideas from different industries, as seen in Tesla borrowing aluminum drawing and casting techniques from SpaceX to keep the Model S light. This cognitive skill of associating is the core of the innovator’s DNA.

Where Associating Happens: The Medici Effect

Innovative ideas thrive at the intersection of diverse experience. The concept of the Medici effect, coined by Frans Johansson, describes the creative spark when novel ideas coalesce in a geographic or market space. Historically, this occurred during the Islamic “golden age” (8th-13th centuries) in intellectual hubs like Baghdad, where diverse scholars and merchants converged, leading to significant innovations. Similarly, the Italian Renaissance and Silicon Valley in the 1970s experienced such effects. Today, countries like China are actively fostering these intersections, and “ideas conferences” like TED, Davos, and the Aspen Ideas Festival serve as modern-day Medici effects, intentionally bringing together diverse individuals to cross-pollinate ideas.

Innovators in the authors’ research not only frequented such events but also constructed a “TED in their heads” through intentional depth and diversity of life experiences, creating a personal Medici effect. For example, Indra Nooyi, former PepsiCo chairman and CEO, exemplifies this. Her diverse background—growing up in India, playing cricket, leading a rock band, multidisciplinary studies, and working across textile, consumer products, consulting, and electrical power industries—conditioned her to “think disruptively.” This enabled her to launch “Pepsi Refresh,” a revolutionary initiative where PepsiCo funded community improvement ideas through online voting, demonstrating her “Performance with Purpose” philosophy.

How Associating Works

Understanding how the brain stores information is key to grasping association. Unlike a dictionary, the brain connects information broadly (e.g., “theater” links to “Broadway,” “showtime,” but also “kissing,” “anxiety”). The more diverse knowledge a brain possesses, the more connections it can make. Scott Cook, founder of Intuit, calls these “powerful and essential supplements to data.” This is analogic reasoning, a critical creative tool. For example, understanding the Uber and Airbnb business models (connecting underutilized assets with demand) can trigger ideas like Neighbor (the “Airbnb of storage”). The associating “muscle” is strengthened by actively absorbing new knowledge through questioning, observing, networking, and experimenting, which triggers more neural connections.

Innovators consistently excel at associating, scoring at the 70th percentile or higher on the innovator’s-DNA assessment. Their superior associational skills are directly predicted by their frequent engagement in other discovery skills. For example, Marc Benioff’s Salesforce idea stemmed from asking, “Why isn’t all enterprise software delivered as a service the way Amazon delivers products?” Frédéric Mazzella founded BlaBlaCar by observing empty car seats on long road trips. Garrett Camp’s Uber idea came into focus through observations of San Francisco taxis and daily conversations at the LeWeb conference. Disruptive innovators are most effective at associating when they actively cross borders (geography, industry, company, profession, discipline) and leverage all their innovator’s-DNA skills. Neglecting these other skills leads to more random and less impactful associations.

On the Hunt for New Associations

Disruptive innovators actively seek new associations through three key dynamics: creating odd combinations, zooming in and zooming out, and Lego thinking.

Creating Odd Combinations

Innovators intentionally combine seemingly mismatched ideas, creating “odd couples, triplets, or quadruplets” by constantly asking, “What if we combined this with that?” This fearless union of uncommon concepts drives unique innovations. Mike Lazaridis, founder of Research In Motion (BlackBerry), learned early to connect disciplines, bridging the gap between advanced math and shop class, which later led to his vision of putting wireless and computers together to create the BlackBerry. Similarly, Larry Page, Google cofounder, created an odd combination by linking academic citations with web search to launch Google, ranking websites by popularity akin to how scholars are ranked by citations, yielding superior search results. Pierre Omidyar, eBay’s founder, even considered combining “fresh produce” and the “post office,” highlighting the unconventional thinking that increases the probability of innovative business ideas.

Zooming in and Zooming out

Innovative entrepreneurs demonstrate the unique capacity to simultaneously dive deep into details of customer experience and fly high to see the bigger picture. This synthesis often leads to surprising associations. Niklas Zennström, Skype cofounder, described this as “seeing and combining certain things going on at the same time and understanding how seemingly unrelated things could have something to do with each other.” Steve Jobs mastered this, exemplified by his search for the right plastic finish for the original Mac (zooming in on Cuisinart appliances) and his visit to a parking lot for car trim details. He also zoomed out by leading Pixar, gaining a new perspective on the media industry that, upon his return to Apple, fueled insights for iTunes, iPod, iPad, and iPhone, as he saw the powerful intersection of computing and media.

Lego Thinking

Innovators are like children collecting Legos, constantly collecting ideas. Linus Pauling’s advice, “the best way to get a good idea is to get a lot of ideas,” resonates here. Thomas Edison kept thousands of notebooks and set “idea quotas.” However, simply having many ideas isn’t enough; they must come from diverse sources. Questioning, observing, networking, and experimenting help innovators build larger, richer “stocks of building-block ideas.” The more diverse these blocks, the better they can recombine them in novel ways.

Conceptually, as the number of different building-block ideas (N) in one’s mind grows linearly, the potential ways to recombine them grows geometrically. This means that deep expertise in one field combined with broad knowledge in many others (a “T-shaped” profile) leads to greater creativity. Innovation design firm IDEO actively recruits T-shaped individuals. Such a person can generate innovative associations by either importing an idea from another field into their deep expertise or exporting an idea from their deep expertise to a broadly explored field. An example is a manufacturing expert from Bain & Company who, after visiting a hospital, applied factory “throughput” concepts to hospital patient management, drastically reducing costs and redesigning processes, leading to significant industry change.

A Safe Place for New Thoughts

After accumulating a vast “stock of ideas” through active questioning, observing, networking, and experimenting, innovators often make their most surprising associations in a relaxed state, free from distractions, not while actively trying to solve a problem. This “defocusing their attention” allows ideas to simmer. Many innovators, including Diane Greene (VMware), David Neeleman (JetBlue), and Jeff Jones (Campus Pipeline), find new ideas in the shower. Marc Benioff’s Salesforce epiphany occurred while “swimming with the dolphins.” Sleep also proves to be a consistent antidote to “tunnel vision,” increasing the chance of connecting the unconnected by 33%. Innovators know and leverage their “safe places and times” for generating ideas, emphasizing the need to create space for creative insights to unfold. This proactive approach to exploration, by consistently crossing borders (technical, functional, geographical, social, disciplinary), naturally fosters surprising associations, embodying Steve Jobs’s insight: “Creativity is just connecting things.”

Tips for Developing Associating Skills

To enhance your ability to think differently and forge unexpected connections, engage in these short- and long-term exercises, designed to work for various problem-solving scenarios:

• Tip #1: Force new associations. Consider a problem and then randomly pick an unrelated item (from a catalog, Wikipedia) to force connections. Reflect on how its solution applies to your problem, making as many free and wild associations as possible. Use a table to organize insights by problem, random item, and potential associations/insights.
• Tip #2: Take on the persona of a different company. Like TBWA’s “disruption day,” brainstorm by assuming the persona of someone from an innovative company (Apple, Virgin). Alternatively, randomly pair your company with another (Fortune 500/Inc. 100 lists) and brainstorm new value through partnership or merger, combining strengths to spark new product, service, or process ideas.
• Tip #3: Generate metaphors and analogies. Provoke new perspectives by asking “What if watching TV were more like reading a magazine?” (TiVo) or “What if my product incorporated benefits of Alexa or VR headsets?” Apply existing business models (e.g., Uber/Airbnb’s peer-to-peer) to new contexts, asking “How could I be the ‘Uber of X’?” to trigger ideas like RVshare, Neighbor, GreenPal, or BloomThat.
• Tip #4: Build your own curiosity box. Collect odd, interesting things (slinky, model airplane) to randomly pull out when facing a problem. Display them, or collect surprising treasures from secondhand shops and flea markets during travels, to provoke new angles on old problems. IDEO’s “Tech Box” is a professional example of this practice, stimulating random associations and disrupting habitual thinking.
• Tip #5: SCAMPER! Use Alex Osborn and Bob Eberle’s acronym (Substitute, Combine, Adapt, Magnify/Minimize/Modify, Put to other uses, Eliminate, Reverse/Rearrange) to rethink products, services, or processes. For example, for a wristwatch: Substitute (natural wood), Combine (space for medication), Adapt (reflective mirror), Magnify/Minimize/Modify (cupholder face), Put to other uses (work of art), Eliminate (internal workings for sundial), Reverse/Rearrange (hands go counterclockwise, face on inside).

Discovery Skill #2: Questioning

This chapter highlights how innovators use relentless questioning to challenge the status quo and uncover new possibilities, rather than just accepting existing norms.

The Power of Provocative Questions

Innovators don’t just ask questions; they ask provocative ones that challenge the status quo, serving as the creative catalyst for observing, networking, and experimenting. Einstein emphasized that “the formulation of a problem is often more important than its solution,” requiring “creative imagination.” Peter Drucker likewise noted, “the important and difficult job is never to find the right answers, it is to find the right question.” Research confirms Nobel laureates’ ability to reframe problems with the right questions. For innovators, questioning is a way of life, leading to insights and challenging assumptions.

Orit Gadiesh and Challenging the Unquestionable

Orit Gadiesh, the famously inquisitive chairman of Bain & Company, exemplifies the power of questioning. Encouraged by her eighth-grade teacher to “always ask those two questions, and even a third and a fourth,” she realized that “asking questions was the true way to go.” In the early 1980s, she was assigned to help a steel-manufacturing client cut costs. Despite the CEO’s skepticism about women in the industry, Gadiesh persistently asked “why” questions about their processes. Her observations in Japan revealed the potential of continuous casting, a new technology. When the client insisted it was impossible due to 350 different products, Gadiesh went directly to customers, asking “Do you really need three hundred fifty products?” and “What is its core importance?” Through this deep inquiry into “what is,” she discovered that customers didn’t grasp the cost advantages of continuous casting. By asking fundamental questions like “What if we shrink the existing product line by 90 percent?” and “How might we maximize the addition of cost-saving materials?”, she led the company to realize that reducing products to 30 was not only possible but more profitable, allowing them to adopt continuous casting and gain a competitive advantage. Gadiesh’s relentless questioning ultimately transformed the steel company’s business and solidified her reputation as a “light-generating” leader.

What Is “Questioning”?

Questioning is a way of life for innovators, not just an intellectual exercise. Research shows innovators not only ask more questions but also more provocative ones, consistently challenging the status quo. Those who “strongly agreed” with challenging the status quo produced twice as many new businesses. While product innovators showed the highest reliance on questioning, all types of innovators (startup, corporate, process) used it significantly more than noninnovators. A. G. Lafley, former P&G CEO, epitomized this, starting conversations with deep “who, what, when, where, and how” questions about consumers’ needs and shifting to “what if” questions for customer-centric innovations. His focus on counterintuitive questions, like “How can we give consumers their Saturday mornings back?” rather than “How can we help consumers get floors and toilets clean?”, consistently yielded richer insights. Lafley’s weekly self-question, “What will I decide to be curious about Monday morning?”, highlights the active pursuit of inquiry.

How to Ask Disruptive Questions

Innovators constantly question common wisdom, approaching the world as a “question mark” to challenge their mental maps. They engage in a deep-sea exploration of “what currently is” before rocketing to the skies for “what might be.” This involves both descriptive and disruptive questioning tactics.

Tactic #1: Ask “What Is” Questions

Disruptive innovators use a variety of “what is” questions (who, what, when, where, how) to uncover unexpected subtleties. Pierre Omidyar (eBay founder) honed this by focusing on user interfaces, constantly wondering, “What are they really trying to do here?” and digging deeper with fundamental questions. Dr. William Hunter, founder of Angiotech Pharmaceuticals, changed his question from “How can we build a better stent?” to “What does the body do to these stents and why do they fail?”, leading to the innovative drug-coated surgical stent. Innovators inquire deeply to gain understanding and empathy, revealing the “real pain point” to inform better “what-caused” and “what-if” questions.

Tactic #2: Ask “What Caused” Questions

After understanding “what is,” innovators ask causal questions to grasp “why things are the way they are.” Mike Collins, founder of the Big Idea Group (BIG), shared an example of an inventor who developed a 15-minute card game. Collins’s “What caused you to develop this game?” revealed the inventor’s desire to connect with his three children after work, leading to a successful line of “12 Minute Games” sold at Target. This tactic helps uncover the real job to be done by a product or service. Taiichi Ohno of Toyota famously embedded the five-whys process (asking “why” at least five times) into the Toyota Production System, a technique adopted by many innovative companies to unravel causal chains and spark solutions.

Disrupt the Territory

Once innovators thoroughly understand “what is,” they switch gears to disruptive questions like “why,” “why not,” and “what if” to find novel solutions.

Tactic #3: Ask “Why” and “Why Not” Questions

Innovators persistently use “why” and “why not” questions for critical insights. Jeff Jones (Campus Pipeline, NxLight) notes that going “a little bit deeper asking questions one or two more times in a different way” unlocks new ideas. Edwin Land, Polaroid cofounder, was spurred to invent instant photography by his three-year-old daughter repeatedly asking “Why?” when she couldn’t immediately see a picture. Her “naive” question challenged industry assumptions, leading to a revolutionary product.

David Neeleman (JetBlue, Azul) constantly questions long-standing processes. At Morris Air, an employee’s complaint led him to ask, “Why do we treat tickets like cash? Is there a better way?”, sparking the invention of eTickets, which later spread throughout the airline industry. At Azul, his question “Why aren’t more Brazilians taking advantage of Azul’s low fares?” uncovered the high cost of cabs to the airport, prompting him to ask, “Why not start our own free bus service?” Today, Azul’s bus service transports thousands of passengers daily, making their flights more accessible.

Are You Willing to Look Stupid?

The two main inhibitors to asking disruptive questions are fear of looking stupid and not wanting to seem uncooperative. This often starts in elementary school and persists into adulthood. Innovators, however, overcome this by having sufficient self-esteem to be humble. They preface questions with phrases like, “I like to be the guy that asks a lot of dumb questions,” creating a safe space for inquiry. This courage to challenge norms, as Postman and Weingartner noted, is essential for truly learning and discovering.

Tactic #4: Ask “What If” Questions

Meg Whitman, formerly of eBay, observed that innovative entrepreneurs “get a kick out of screwing up the status quo” and constantly ask, “If we did this, what would happen?” Pierre Omidyar (eBay) similarly plays “devil’s advocate,” asking, “What if it really didn’t work this way? Or what if we really did do the opposite of this?”

In contrast, delivery-driven executives rarely challenge their company’s strategy. Innovators actively seek out “broken” things and use “what if” questions to explore new angles, often by imposing or eliminating constraints.

• Ask “what if” questions to impose constraints: While most people constrain thinking only when forced, innovators do the opposite. Marissa Mayer (Google) believed “Creativity loves constraint.” Asking “If we were legally prohibited from selling our current products… how would we make money next year?” can lead to surprising insights. Apple’s iPod (“What if it fit in a shirt pocket but held a thousand songs?”) and retail stores (“What if we used a regular-sized retail store to sell a very small number of Apple-only products?”) are examples. Hindustan Unilever’s success in rural India (selling products without traditional distribution) stemmed from asking, “How might we sell products in small villages without any access to traditional distribution networks, advertising, or infrastructure?”, leading to a direct-selling model through women’s self-help groups.
• Ask “what if” questions to eliminate constraints: Innovative CEOs like Jack Welch posed questions like, “What if you had not already hired this person…? Would you do it today?” to quickly eliminate sunk-cost constraints. Steve Jobs, returning to Apple, asked, “What would you do if money were no object?” to spur excellence. This mindset of relaxing perceived limits, such as technological availability, can open up entirely new possibilities.

Questioning Dilemmas for Senior Leaders

Senior leaders, especially CEOs, face two key dilemmas when it comes to status quo-challenging questions: they are rewarded for answers but punished for publicly questioning their firm’s strategy, creating a crisis of confidence. Additionally, it’s difficult for subordinates to question the boss, especially if the CEO established the status quo. To overcome the first, CEOs cultivate informal networks of confidantes who can challenge them privately. To tackle the second, CEOs must explicitly foster a culture where questioning is encouraged and valued, even if it challenges their own decisions, as a culture that discourages questioning ultimately stifles disruptive innovation.

Questioning as a Potential Turbocharger

Questions are a critical catalyst for creative insights, but they are necessary, not sufficient, for innovation. Without active observation, networking, or experimentation, questioning can lead to theoretical insights without real-world impact. Innovators successfully launch products when they combine their questioning instinct with other discovery skills. Leaders who question while observing, networking, or experimenting discover more, effectively turbocharging their innovation results. Jonas Salk noted, “You don’t invent the answer. You reveal the answer” by “asking the right question.” The key is to constantly create better questions to see the world with new eyes, leveraging questions to reveal potentially disruptive solutions.

Tips for Developing Questioning Skills

To strengthen your questioning abilities, consider these tips, which can enhance your capacity to craft better questions and drive innovation:

• Tip #1: Engage in QuestionStorming. Instead of brainstorming solutions, brainstorm questions about a problem. As an individual or team, identify a challenge and list at least 50 questions about it. For teams, list one question at a time on a whiteboard, building on prior questions, strictly enforcing that only questions are allowed. Afterwards, prioritize and discuss the most important questions, then seek answers through observing, networking, or experimenting. Frequent personal QuestionStorming can significantly enhance strategic thinking, as seen in an executive’s rapid promotion after adopting the practice.
• Tip #2: Cultivate question thinking. When identifying problems, actively reframe statements into questions. This sharpens problem statements, fosters personal responsibility, and motivates participants to seek answers.
• Tip #3: Track your Q/A ratio. Innovators have a high Q/A (questions to answers) ratio. Assess your own Q/A ratio in meetings for a week. Reflect on the percentage of your comments that were questions and strive to increase it by asking questions that are not obvious or are not being asked.
• Tip #4: Keep a question-centered notebook. Regularly capture your questions in a notebook, as Richard Branson does. Periodically review them to identify patterns, questions that yield unexpected insights, challenge assumptions, or generate strong emotional responses, and those that guide you into disruptive territory.

Discovery Skill #3: Observing

This chapter highlights how innovators intently observe the world to identify problems, uncover hidden needs, and spot solutions that others miss, treating every situation as an opportunity for discovery.

Doug Dietz and the GE Adventure Series Scanners

Doug Dietz, an industrial designer at General Electric, experienced a profound shift in perspective after two years of designing GE’s newest MRI machine. Initially proud, his excitement turned to dismay when he witnessed a seven-year-old girl crying in fear upon entering the MRI room. Dietz, for the first time, saw his creation through the eyes of a terrified child, realizing the machine looked like “a brick with a hole in it” and made terrible noise in a bleak, flickering room. This observation spurred him to research, discovering that 80% of young children needed sedation for MRI scans.

Dietz assembled a team that studied environments where children felt safe, observing day-care centers and children’s museums. Brainstorming with museum staff, day-care workers, radiologists, nurses, and even children themselves, he designed the GE Adventure Series scanners. These transformed MRI rooms into immersive “adventures”—like a light-blue “canoe” room with a waterfall, koi pond, and calming aromatherapy, where children are told to lie still so fish will jump over them. Sedation rates plummeted from 80% to less than 1%, patient satisfaction surged by 92%, and sales for GE Adventure Series scanners boomed. For Dietz, success was measured not in numbers, but in “turning tears to smiles,” as evidenced by a little girl asking, “Can we come back tomorrow?” after her scan. This story illustrates the power of observation in uncovering unmet emotional needs and driving truly disruptive innovation.

A Framework for Observing: Look for the “Job” and a Better Way to Do It

IDEO’s Tom Kelley emphasizes that the “anthropologist’s role is the single biggest source of innovation at IDEO,” as observing humans in their natural environments reveals insights. Innovators often pretend to be anthropologists to understand the “job” customers are trying to get done, as defined by Clayton Christensen. Every job has functional, social, and emotional dimensions. For example, the MRI scanner’s functional job was for the physician (to get a scan), but Dietz’s observation revealed the emotional job for the child (to feel safe and calm). Understanding all dimensions is key to innovative solutions. Schools, for instance, are criticized for not educating, but students might be hiring school to meet social and emotional needs (e.g., feeling successful, having fun with friends), leading to alternative approaches like the MET school’s project-based curriculum that integrates these needs.

Frédéric Mazzella’s founding of BlaBlaCar provides another example. Faced with fully booked trains for a holiday trip, he observed that most cars on the road had empty seats. This insight, combined with his computer science background (priming him to organize data), led him to create a platform for finding and booking empty car seats. BlaBlaCar’s name itself reflects a key observation about social needs: users can choose “bla” (quiet), “blabla” (slightly chatty), or “blablabla” (really chatty) drivers. This shows how observations lead to understanding not only functional but also social needs.

The authors’ research confirms that observing is a key discovery skill for most innovators, with product innovators excelling the most. Innovators, on average, score significantly higher in observing skills than noninnovators. To develop this skill, observers: (1) actively watch customers and look for workarounds, (2) seek out surprises or anomalies, and (3) find opportunities to observe in new environments.

Actively Watch Customers—and Look for Workarounds

The most direct way to gain business insights through observation is to actively watch people as they use products to get jobs done. This reveals insights about the job itself. Gary Crocker, founder of Research Medical Inc., observed surgeons performing heart-bypass surgery and noticed a lack of “plumber tools” to manage blood flow, leading to his company’s specialized devices like Visuflo with Light Source. These innovations addressed workarounds surgeons had developed (e.g., using nurses to shine lights, trying different suction devices), which are incomplete or partial solutions indicating unmet needs.

The concept of a workaround originated in IT, referring to “working around” system problems. In business, it’s a critical clue for creating new products or services. Chuck Templeton, founder of OpenTable, observed his wife’s frustrating three-and-a-half-hour struggle to get a restaurant reservation. This “workaround” (asking for referrals, calling numerous places, waiting in line) spurred him to create OpenTable, a comprehensive online solution that helps customers find restaurants, book reservations, and access discounts, dominating the dining-reservation process by doing the “job” better.

Most company managers, despite the obvious benefits, spend little time observing customers. However, companies like IDEO have found immense value in uncovering hidden customer needs through observation. For instance, when designing a kids’ toothbrush for Oral-B, IDEO observed that existing brushes were simply smaller adult versions, difficult for children to maneuver due to lack of dexterity. This led to the innovative design of big, fat, squishy toothbrushes, which became bestsellers by better meeting children’s needs.

Look for Surprises or Anomalies

Scott Cook at Intuit instructs his teams to “savor the surprises”—the unexpected ways customers use products or the times they don’t behave as expected. These surprising workarounds are clues to incomplete solutions, prompting questions like, “Why did you do that? Well, that doesn’t make sense.” He emphasizes actively looking for the unexpected, as our minds tend to conform observations to existing beliefs.

This “noticing the unnoticed” requires a peripheral vision, looking for “people on the extremes” (IDEO). Corey Wride, founder of Movie Mouth Inc., made a surprising observation during a trip to Brazil: the best English speakers learned by watching American TV shows and movies, not traditional schools, and imitated actors’ phrases. This anomaly led him to develop Movie Mouth, software that allows users to slow down speech, define words/idioms, and even insert their own pronunciation into actors’ mouths, transforming language learning.

Observation involves all senses, not just sight. Thomas Kuhn argued that scientific breakthroughs happen when researchers identify and explain an anomaly. Similarly, in business, observing surprises can unlock innovation. Trimpin, a musical innovator, “hears” sounds from unexpected sources like trolley-cable sparks. Howard Schultz was captivated by the intoxicating smell of Italian espresso bars, leading to Starbucks. Joe Morton’s XanGo idea began with tasting mangosteen fruit in Malaysia. Engaging all senses enhances observation and triggers creative insights.

Change the Environment

Stepping into a new environment heightens our observational skills, making us more likely to notice what is new and different. Howard Schultz, founder of Starbucks, experienced this in Milan, Italy. By randomly observing Italian espresso bars, he noticed their “comfort, community, and a sense of extended family” and smelled the intoxicating aroma of coffee. This “epiphany” led him to recreate the Italian coffee bar culture in America, even discovering and bringing back the “caffe latte” from Verona. This willingness to engage in an exploratory journey transformed his vision for Starbucks.

Most executives view such undirected “new experiences” as a waste of time, but innovators understand their value in expanding knowledge and sparking divergent thinking. A. G. Lafley, former P&G CEO, regularly traveled to China, visiting stores and homes to observe product purchases and daily life, gaining deep insights into consumer behavior. This practice, combined with “harder data,” developed his “anthropologist” mindset and keen observational skills. He noted the ease of “getting lazy” back in the US where everyone spoke English, highlighting the necessity of diverse environments to challenge assumptions.

Innovators don’t always need to travel abroad; local environments can also yield insights when observed with fresh eyes. Daimler’s Dieter Gürtler took his team to a natural history museum to observe fish for aerodynamic design ideas, finding inspiration in the boxfish’s proportions and skeletal structure for a new concept car with reduced drag and weight. This demonstrated how “looking at nature” can yield unprecedented ideas. The key is to avoid “autopilot” in everyday life, as Peter Leschak noted: “Everyone is looking, not many are seeing.” Intentional observation, especially in new or overlooked environments, is vital for innovation.

Tips for Developing Observation Skills

To sharpen your observation skills and unlock new ideas, systematically integrate these practices into your routine:

• Tip #1: Observe customers. Schedule regular, focused observation excursions (15-30 minutes) to watch real people interact with your product or service in real-life situations. Identify what they like, dislike, find easy or difficult, and what unmet functional, social, or emotional needs exist. Look for surprises and workarounds. Use the ten specific questions provided earlier in the chapter (e.g., “How do customers become aware of a need for your product?”, “What frustrations do your customers have?”). Become an anthropologist of your customer’s experience.
• Tip #2: Observe companies. Select a company (one you admire, an innovative startup, or a tough competitor) and treat it as a business-school case. Research its operations, strategy, and products. If possible, schedule a visit to observe firsthand. Ask: “Are there transferable ideas for our company or industry? How is this relevant to my job/company/life? Are there ideas for a new who, what, or how in my industry?”
• Tip #3: Observe whatever strikes your fancy. Dedicate ten minutes daily to intensive, open-ended observation. Take detailed notes, capturing observations and thoughts. Later, review these notes to see how they might lead to a new strategy, product, service, or process. Use your smartphone to take photos or videos of interesting things. Train yourself to notice the unnoticed in your surroundings. (Jeff Bezos photographs “really bad innovations” for ideas on how to improve).
• Tip #4: Observe with all your senses. Actively engage all five senses (sight, smell, hearing, touch, taste) during your observations. Consider Dialogue in the Dark or Dialogue in Silence experiences to heighten sensory awareness. In daily life, intentionally focus on the sensory details: the smell of a customer’s environment (like Schultz in Italy), the texture of a product, the taste of food in slow motion. Capture these multisensory observations in your idea journal and explore the creative insights they trigger.

Discovery Skill #4: Networking

This chapter explores how innovators leverage diverse networks not just for resources but as a primary source of new ideas, deliberately seeking out perspectives beyond their usual spheres.

The Genesis of Uber: Networking for Ideas

The idea for Uber in 2008 illustrates the power of idea networking, sparked by ongoing conversations between Garrett Camp and Travis Kalanick at the LeWeb conference in Paris. After selling his first startup, StumbleUpon, Camp was frustrated by San Francisco’s taxi limitations and expensive “gypsy cab fleet” workarounds. He began brainstorming an on-demand black-car service, even texting his favorite drivers and registering “UberCab.” A scene in the James Bond film Casino Royale, showing a car moving on a phone map, solidified his vision for a phone-summoned car service.

In Paris, Camp extensively discussed his idea with Kalanick, who had just sold his startup, Red Swoosh. Kalanick initially had his own startup idea, “Pad Pass” (a global network of luxurious lodgings). But the week-long discussions, fueled by their shared frustration with Paris taxis, increasingly focused on Uber. Kalanick convinced Camp not to own cars but to create a mobile app connecting drivers and riders. A late-night, frustrating taxi experience in Paris further cemented their resolve. Upon returning to San Francisco, they launched Uber, a service that revolutionized mobility by connecting drivers and riders through an app, demonstrating how persistent, diverse conversations can ignite, develop, and refine groundbreaking business models.

What Idea Networkers Do

Mark Zuckerberg aptly noted that “Ideas typically do not just come to you. They happen because you’ve been talking about something and talking to a lot of people about it for a long period of time.” Innovators are idea networkers, distinct from resource networkers (most executives who network for resources, sales, or career advancement). Idea networkers actively seek out people with diverse backgrounds and perspectives to extend their knowledge and bounce ideas off of others for feedback.

Innovators like Pierre Omidyar (eBay) consciously seek insights from “unusual places” and from people with “diverse backgrounds, diverse ways of thinking.” He avoids a “directed way,” preferring to be “exposed to some different styles of thinking.” Marc Benioff (Salesforce) even had a conversation with the State Oracle of Tibet, the “official medium… in charge of innovation for the Tibetan government,” highlighting the extreme diversity of contacts innovators cultivate. They intuitively understand that new ideas are often triggered by individuals living in different networks.

Ron Burt, a University of Chicago sociologist, calls this bridging a “structural hole” or “gap” between different social networks. His research found that managers with broader networks of contacts, especially those disconnected from others in the organization, generated more highly valued ideas. These managers had “early access to diverse, often contradictory, information and interpretations,” giving them a competitive advantage in seeing and developing good ideas. This is “creativity as an import-export business.” Such broad networks led to better performance evaluations, higher salaries, and more promotions.

The example of Joe Morton, cofounder of XanGo, illustrates this. During a trip to Malaysia, he learned about mangosteen fruit’s health benefits from locals like Mahathir (bridging his health and nutrition network with a local homeopathic network). His brother David, a medical student, then searched for scientific research on xanthones in mangosteen. This combined knowledge led Morton to found XanGo, a successful billion-dollar mangosteen juice company, by leveraging insights from disparate networks. Often, being in a new, foreign environment helps produce this kind of serendipitous networking and questioning. Kurt Workman’s Owlet sock monitor for babies, for example, stemmed from a conversation with a nurse friend about wireless pulse oximetry, combined with his personal experience of family SIDS risk, illustrating how seemingly disparate connections can lead to highly successful ventures.

Tap Outside Experts

Purposeful networking often involves reaching out to experts in different fields of knowledge. Kent Bowen, founding scientist at CPS Technologies, a company known for advanced ceramic composites, made networking a priority, famously stating, “The insights required to solve many of our most challenging problems come from outside our industry and scientific field.” He actively sought out individuals in other disciplines who had faced similar problems.

For example, when CPS struggled to uniformly disperse submicron materials for its composites, Bowen contacted a senior polymer chemist from Polaroid (a photographic-film manufacturer). This expert, with knowledge of dispersing microscopic silver halide particles, helped CPS solve the problem in weeks, significantly strengthening their product. Similarly, to address ice-crystal formation in ceramic slurries (causing cracks), CPS scientists talked to sperm-freezing specialists, who knew how to prevent ice-crystal growth in cells during freezing. Integrating their techniques into CPS’s manufacturing process led to stronger, lighter ceramic composites. Bowen’s practice of reaching beyond his industry was critical to these innovations.

However, Scott Cook of Intuit cautions that sometimes, for paradigm-shifting ideas, talking to experts can reinforce the current paradigm, making direct observation of customers or market phenomena more effective. Innovators must be discerning, remembering to ask counterintuitive questions and maintaining a healthy skepticism when interacting with experts.

Attend Idea-Networking Events

Richard Saul Wurman, founder of the TED (Technology Entertainment and Design) conferences, created a modern-day “Medici effect.” He noticed the convergence of technology, entertainment, and design, and built a forum for experts from diverse fields to share cutting-edge ideas, sparking a “collision of ideas” among speakers and audience. Innovators, including Jeff Bezos, regularly frequent idea conferences like TED, Davos, and the Aspen Ideas Festival, which bring together entrepreneurs, academics, politicians, and artists from around the world to present and debate new projects. This cross-disciplinary exchange significantly boosts associational thinking.

Attending conferences outside one’s direct industry can also spark new ideas, as shown by a transportation executive who found an innovative solution by dropping into a beekeeping conference. David Neeleman, founder of JetBlue and Azul, developed key ideas like satellite-TV at every seat and at-home reservationists by networking at conferences and with industry contacts. He purchased LiveTV, the company with the satellite technology, securing a competitive advantage for JetBlue. Similarly, at an airline conference, he learned about Embraer, a Brazilian plane manufacturer, leading him to visit Brazil and arrange for JetBlue-specific hundred-seat jets, optimizing for midsize cities and gaining an exclusive deal.

Beyond external conferences, some innovators, like Richard Branson, create internal networking opportunities. Branson transformed an old castle into a “conversation hub” for diverse people from the entertainment industry to foster idea exchange within Virgin Music, demonstrating a deliberate process for sparking innovative ideas.

Form a Personal Networking Group

Many innovators cultivate a small, trusted network of “go to” individuals for finding or testing new ideas. Jeff Jones and Eliot Jacobsen, both innovative entrepreneurs, described how they “jam” together, energizing each other’s creative juices. Many innovators maintain a “kitchen cabinet” of creative confidantes—often fewer than five people, though some cultivate larger groups of 20-30 innovation advisors from diverse industries. They regularly ask these contacts, “What’s keeping you up at night?” to piece together trends and directions, often leading to surprising insights.

Senior executives face unique challenges in candidly discussing new ideas due to intellectual property concerns and the difficulty of challenging the status quo they may have created. One CEO described forming an “unofficial group” of “fairly senior, fairly seasoned people” who are comfortable “throwing out ideas and then forgetting about them if these hunches or speculation aren’t right.” This informal network allows for critical, sensitive discussions. Building a trusted, diverse idea network takes time but yields significant dividends, fostering serendipity and collaborative idea development. Michael Dell highlighted that Dell’s innovation is “quite collaboratively, building on each other,” making it difficult to attribute ideas to a single person because “you’ve got twenty-seven fingerprints all over the thing.” Idea ownership is less important than collective development through idea networking.

Networking: How Well Do You Take Rejection?

Networking often involves facing rejection. To minimize this when making a pitch, it’s effective to tell people, “I’m interested in your ideas. I’m interested in your perspective,” which taps into their desire to help or be seen as an expert. Once engaged, being “interesting” is key to keeping the conversation open. This involves:

• Breadth of experience: Traveling widely, experiencing diverse activities, reading broadly, and having a wide network increases your conversational appeal.
• Perfecting your elevator speech: Being able to tell short, interesting stories about the problems or challenges you’re trying to solve sparks interest.

Networking is most effective when engaging with people from different social networks (business functions, companies, industries, countries, ethnic groups, age groups, political groups, religions). This diversity fosters a greater variety of ideas. Attending idea conferences, or asking “Who else has faced a problem like this before?” and connecting with those individuals, can jump-start the diversity of your network.

Tips for Developing Idea-Networking Skills

To cultivate strong idea-networking skills, integrate these actionable steps into your routine:

• Tip #1: Expand the diversity of your network. List your usual top-ten contacts for new ideas. Then, consciously identify and meet with people who are significantly different from you in terms of age, country of origin, socioeconomic group, ethnic group, industry, or function.
• Tip #2: Start a “mealtime networking” plan. Schedule at least one meal per week with someone from a different background. This consistent practice, like that of Eliot Jacobsen, ensures regular exposure to fresh perspectives.
• Tip #3: Plan to attend at least two conferences in the next year. Choose one conference related to your expertise and another on an unrelated topic. Actively seek to meet new people, understand their challenges, and ask for their ideas and perspectives on issues you’re facing. Remember Galileo’s wisdom: “I have never met a man so ignorant that I couldn’t learn something from him.”
• Tip #4: Start a creative community. Identify a few founding members who are open to discussing new ideas and will stimulate creative thinking. Choose a creative meeting place and convene regularly (at least monthly) to discuss trends and generate new ideas.
• Tip #5: Invite an outsider. Arrange weekly lunches with a smart person from a different function, profession, company, industry, country, or age group. Ask for their perspective on your innovation challenges and ideas. Alternatively, host an “open house for ideas,” inviting 2-4 non-experts to present their viewpoints on a situation.
• Tip #6: Cross-train with experts. Seek out experts in different functions, industries, or geographic regions and attend their training sessions or meetings. Immerse yourself in their work and world (e.g., Google and P&G’s employee swap) to gain rich insights and challenge fundamental assumptions in your own industry.

Discovery Skill #5: Experimenting

This chapter reveals how innovators actively try out new ideas through prototypes, pilots, and experiential exploration, embracing the world as their laboratory to answer “what if” questions and gather crucial data for future solutions.

Jeff Bezos and the Spirit of Experimentation

For innovators, the world is their laboratory. They actively try out new ideas through prototypes and pilot tests, constantly exploring and testing hypotheses. Jeff Bezos, Amazon founder, epitomizes this. In 1994, observing the internet’s 2,300% annual growth, he asked, “What would people buy remotely?” After researching top mail-order products, he saw an opportunity in books, as no single catalog could contain all titles. This led to the launch of Amazon, “Earth’s Biggest Bookstore,” leveraging wholesaler Ingram to offer vast selection without physical stores or inventory. This was his initial experiment.

Bezos, however, had bigger dreams, aiming to become an online discount retailer. He made the risky bet of building large, initially underutilized warehouses. Despite analysts’ skepticism and a stock tank, Amazon became a leading online retailer and virtual mall. But Bezos’s experimentation continued: in 2007, he launched the Kindle e-reader, which successfully transformed Amazon into a device maker and market leader. Later, he introduced Alexa, the virtual personal assistant, and pioneered Amazon Web Services (cloud computing), leveraging Amazon’s existing infrastructure to rent data storage at low prices, capturing a significant market share in Silicon Valley.

Bezos’s experimental nature, stemming from childhood tinkering and summers on his grandparents’ ranch (where he learned to “improvise” and “regroup and try another approach” when one way didn’t work), has been institutionalized at Amazon. He encourages employees to “go down blind alleys and experiment,” stating, “Experiments are key to innovation because they rarely turn out as you expect, and you learn so much.” He actively seeks to reduce the cost of experiments to increase their volume, believing that this dramatically boosts innovation.

Three Ways to Experiment

Innovators who start new businesses and invent new products are consistently the best experimenters, often launching from ground zero and demonstrating a higher propensity for risk-taking. Experimentation is also the strongest differentiator between innovators and noninnovators. The authors found that most innovators engage in at least one of three forms of experimentation:

1. Trying out new experiences through exploration: This involves engaging in interactive learning without an explicit intention to test an idea, simply to see what can be learned. Steve Jobs’s meditation, ashram visits in India, and calligraphy classes are examples. Such diverse experiences expand knowledge and foster divergent thinking, allowing for unexpected connections years later.
2. Taking things apart—either physically or intellectually: This involves deconstructing products, processes, or ideas to understand their inner workings. Michael Dell’s disassembly of his first Apple II computer to understand its components led to his “direct from Dell” business model. Albert Einstein intellectually dismantled Newton’s theory of time and space to develop his theory of relativity through “thought experiments.”
3. Testing an idea through pilots and prototypes: This is the classic laboratory approach, where an idea is tested by creating a working model or small-scale trial to see if it works. Thomas Edison famously found “10,000 ways that will not work.” Jeff Bezos’s gradual expansion of Amazon from books to a full online retailer, and Virgin’s diverse business ventures (from records to space tourism), illustrate continuous piloting and adaptation. Apple’s successful iPod, iPhone, and iPad, alongside less successful ventures like the Newton, also reflect this experimental approach.

Try Out New Experiences

Many executives view trying out new experiences as a waste of time unless directly linked to a desired learning outcome. However, discovery-driven executives understand that interactive learning without obvious practical application is crucial for divergent thinking and building a broader set of ideas. Steve Jobs’s calligraphy class, for example, had no clear practical application at the time but proved vital for the Macintosh’s typography a decade later. Innovators trust that seemingly unrelated “dots will somehow connect in your future.”

The story of Kristin Murdock, who turned cow manure into money with Cow-Pie Clocks, illustrates this. Her curiosity about “interesting looking old petrified cow pies” found in the desert led her to collect, glaze, and eventually insert clocks into them as gag gifts. Despite initial rejection from friends (“They hated them… they thought it was so sick”), a serendipitous encounter with Donny Osmond led to national exposure and a profitable internet business, eventually expanding to a greeting-card line based on funny sayings. Her “entre-manure” success highlights the value of seemingly worthless explorations.

Research shows that living and working in different cultures significantly boosts innovation. Individuals living abroad for at least three months are 35% more likely to start innovative ventures or invent products, with additional benefits from more countries. CEOs with international assignments deliver roughly 7% higher market performance. A. G. Lafley’s diverse international experience (student in France, P&G operations in Japan, head of Asia operations) served him well as P&G’s CEO. Similarly, Reed Hastings’s Peace Corps experience in Swaziland continues to influence Netflix’s strategy.

Furthermore, working in different industries or companies enhances innovation, offering diverse problem-solving approaches. P&G and Google’s employee swap fostered insights into different company operations. Finally, learning new skills in different arenas, like Jobs learning calligraphy or Nate Alder learning scuba diving (leading to the Klymit vest insulated with argon gas), builds “T-shaped” expertise and boosts innovation capability. Experimenters seek these diverse experiences to expand knowledge and innovative capacity.

Take Apart Products, Processes, and Ideas

Experimenters love to deconstruct things to understand their inner workings. Michael Dell’s infamous act of disassembling his new Apple II computer at age sixteen, much to his parents’ dismay, was driven by a desire to “see how it worked.” His subsequent experiments with components and add-ons led him to realize the exorbitant cost difference between PC components and retail prices. This sparked his critical question, “Why does it cost five times more to buy a PC in the store than the parts cost?”, and ultimately led to the “direct from Dell” business model, which allowed customized, cheaper computers assembled directly from components.

Similarly, Larry Page of Google was a childhood tinkerer who disassembled power tools. This habit carried into his work, where he “tinkered with various ideas related to efficiently searching the web,” eventually leading to the page-ranking algorithm that revolutionized web search. Albert Einstein also “took apart Newton’s theory of time and space” through “thought experiments,” generating his innovative theory of relativity. In essence, experimenters deconstruct products, processes, or ideas to ask “why” they work as they do, often triggering ideas for improvement.

Test New Ideas through Pilots and Prototypes

Innovators understand the crucial role of pilots and prototypes in testing ideas and gathering data. Max Levchin and Peter Thiel, cofounders of PayPal, initially pursued a security software for PalmPilots, transforming it into a “wallet” to secure credit card numbers. This initial pilot failed due to a small market. They then tried a second experiment: allowing PalmPilots to “beam” money between devices. While this gained venture capital, it too proved flawed (“if you have to meet face to face to exchange money… you could just hand the other guy a check”). However, these failures generated crucial data, leading to a “midcourse change”: attaching money to an email. This made PayPal highly “viral” due to the vast number of email users, ultimately leading to its global success as the world’s largest processor of email payments. The PayPal experience highlights that innovative entrepreneurs “realize the importance of experimenting with prototypes and pilots to see what they can learn.”

Some innovators, like PayPal’s founders, launch prototypes directly to market as experiments. Others, like Jennifer Hyman and Jennifer Fleiss of Rent the Runway, meticulously test competing prototypes. Observing her sister’s struggle to find an affordable designer dress for a wedding, Hyman conceived of a Netflix-like model for renting high-end fashion. They conducted three experiments:

1. Harvard campus pilot: Renting dresses to undergrads who could try them on first. This confirmed market demand and good return condition.
2. Yale campus pilot: Women could see but not try on dresses. Fewer rentals but still successful.
3. New York City test: Women rented solely from PDF photos and descriptions. This showed viability for a web-based rental model (5% willingness).
   These systematic experiments were critical to designing Rent the Runway’s successful online business model.

The amount of experimentation needed often correlates inversely with prior questioning, observing, and networking. More effective engagement in these discovery skills means fewer, but better-designed, experiments. Even after thorough preparation, persistent experimentation is crucial for disruptive insights. Serendipitous experiments, like Southwest Airlines’ discovery of quick turnarounds under financial pressure or IKEA’s accidental “knockdown kit furniture” concept, also highlight the role of trial and error in innovation. Ultimately, innovators accept that most experiments won’t work, but they are the only way to generate necessary data for success.

Tips for Developing Experimenting Skills

To cultivate a strong experimenting mindset, actively incorporate these activities into your life and work:

• Tip #1: Cross physical borders. Visit (or live in) a new country, a different functional area within your company, or a new company in a different industry. Embrace a “passport mindset” to break routines. Engage in new social or professional activities, attend unfamiliar lectures, or visit unusual museums. Ask: “What could my team learn from this? What could I replicate?” Strive to cross one new border at least once a month.
• Tip #2: Cross intellectual borders. Subscribe to a newspaper, newsletter, or magazine from an entirely different context (e.g., a foreign country, a different industry). If you’re in oil and gas, read about hospitality. If you’re in marketing, read about engineering. This broadens your mental models.
• Tip #3: Develop a new skill. Plan to acquire new knowledge or skills in different arenas. Take classes in acting, photography, mechanics, or electronics. Try new physical activities like yoga or scuba diving. Explore university courses from history to chemistry. Or, deep-dive into another function within your own company (e.g., operations, finance) to understand its workings.
• Tip #4: Disassemble a product. Find an old, broken item at home, a junkyard, or a flea market. Take it apart piece by piece, searching for insights into its design, engineering, and production. Draw or write your observations in a journal. This mirrors Michael Dell’s early learning.
• Tip #5: Build prototypes. Identify something you want to improve or invent. Design and construct a crude prototype using random materials from your home or office. Play-Doh is excellent for this. Consider purchasing a 3D printer or hiring an industrial designer for more advanced prototypes.
• Tip #6: Regularly pilot new ideas. Embrace learning through “trial and error.” Plan and carry out frequent small-scale experiments (pilot tests) at work. This requires courage to fail and learn from those failures. Commit to running at least one pilot test of an idea in the next month.
• Tip #7: Go trend spotting. Actively seek out emerging trends by reading books, articles, magazines, blogs, and other sources focused on future trends (e.g., Kevin Kelly, Chris Anderson). Reflect on how these trends might lead to interesting experiments for new products or services, and then creatively conduct those experiments.

The DNA of the World’s Most Innovative Companies

This chapter delves into what makes organizations innovative, introducing a new methodology for ranking them and the 3P framework—People, Processes, and Philosophies—that mirrors the innovator’s DNA.

Defining Innovative Companies: Beyond Popularity Contests

The chapter begins by challenging traditional rankings of innovative companies, specifically Businessweek’s annual list, which was based on executive surveys. The authors argue this resulted in a “popularity contest based on past performance,” featuring companies like GE, Sony, and Toyota that, by 2010, no longer seemed as innovative as their reputations suggested.

To create a more accurate measure, the authors partnered with HOLT (Credit Suisse) to develop a methodology based on investor expectations of future innovations. They define an innovation premium as the proportion of a company’s market value that cannot be accounted for by the cash flows from its existing products and businesses in current markets. This premium reflects investors’ belief that a company will produce profitable new products or markets in the future.

Their analysis of Businessweek’s top 25 (2005-2009) revealed significant differences. Amazon, Apple, and Google ranked high on both lists, but companies like Samsung, Sony, Honda, Toyota, and BMW showed an innovation discount, indicating investors expected declining profits from existing businesses and little future growth from innovation. This highlighted that investors value not just innovation, but profitable innovation.

The authors’ own Forbes List of Most Innovative Companies (launched in 2011) focused on large public companies with a market value over $10 billion and an R&D investment. This list featured companies like Salesforce (No. 1, with its disruptive cloud computing and AppExchange) and Intuitive Surgical (No. 2, maker of the da Vinci surgical robots). These companies, alongside Amazon, Apple, and Google, demonstrated high innovation premiums by not only introducing novel products but also generating significant profits. The authors emphasize that “innovation is not complete until it shows up in the financial results.” The latest Forbes list for 2018 continues to highlight companies driving digital transformation, like ServiceNow and Workday, and those transforming industries, like Tesla and Netflix.

The DNA—People, Processes, and Philosophies—of Innovative Companies

Highly innovative companies, like highly innovative individuals, possess a distinctive “DNA.” This organizational DNA is often imprinted by the entrepreneurial founders. Jeff Bezos at Amazon, for instance, actively seeks “builders” by asking job candidates, “Tell me about something that you have invented.” He institutionalizes experimentation processes like Web Lab, encouraging employees to “go down blind alleys.” His philosophy, the “institutional yes,” fosters a culture where employees are willing to “take these leaps” and “figure out how to do this,” rather than defaulting to “no.”

This consistent pattern led to the 3P framework for innovative organizations:

• People: Innovative companies are typically led by founder entrepreneurs who excel at discovery, exhibiting a high discovery quotient. They actively staff all management levels with individuals possessing strong discovery skills, monitoring the mix of discovery and delivery skills. They might even create senior-level innovation positions, ensuring that the organization is filled with “far more people who excelled at the five discovery skills.”
• Processes: Just as innovative individuals systematically engage questioning, observing, networking, and experimenting, innovative organizations develop processes that encourage these same behaviors in employees. Nike CEO Mark Parker fosters a questioning culture. A. G. Lafley (P&G) instituted processes for observing customers. Marc Benioff (Salesforce) introduced Chatter and conferences to boost networking. Jeff Bezos (Amazon) institutionalized experimentation. These leaders build their personal innovator’s DNA into their organizations through systematic processes.
• Philosophies: Organizational discovery processes are supported by four guiding philosophies that foster courage to innovate: (1) innovation is everyone’s job, not just R&D’s; (2) disruptive innovation is part of our innovation portfolio; (3) we should deploy lots of small, properly organized innovation project teams; and (4) we should take smart risks in the pursuit of innovation. These philosophies embody the founders’ courage and risk-taking mindset, democratizing innovation, embracing failure as a learning opportunity, and empowering small teams.

This 3P framework explains how innovative organizations build the “code for innovation” into their very fabric. The authors also emphasize that these principles apply equally to teams, as organizations are increasingly collections of teams, and the innovator’s DNA thrives at both levels.

How Innovative Is Your Organization or Team?

To quickly assess your organization or team’s innovation profile, reflect on these questions, answering based on actual behaviors and philosophies:

• People:
  1. Do your leaders have a track record for generating innovative ideas?
  2. Does your organization actively screen for creativity/innovation skills during hiring?
  3. Is evaluating an employee’s creativity/innovation skills an important part of performance appraisals?
• Processes:
  4. Does your organization frequently brainstorm wild or different ideas by drawing analogies?
  5. Does it encourage questions that challenge the status quo?
  6. Does it cultivate ideas by giving opportunities to observe customers/competitors/suppliers?
  7. Has it instituted formal processes to network outside the company for new ideas?
  8. Has it adopted processes for frequent experiments/pilots of new ideas?
• Philosophies:
  9. Does your organization expect everyone to offer creative ideas?
  10. Are people not afraid to take risks and fail, with top management supporting it?

Score your survey: 45+ is very high on innovator’s DNA; 40-44 is high; 35-39 is moderate to high; 30-34 is moderate to low; below 30 is low.

Putting the Innovator’s DNA into Practice: People

This chapter explains how innovative companies actively recruit and foster discovery-driven individuals throughout their ranks, recognizing that leadership modeling and complementary skills are crucial for sustained innovation.

The Impact of Innovative Leaders

An organization’s actions, particularly those of its leaders, signal the true importance of innovation. Unlike most senior executives who delegate innovation, leaders in the world’s most innovative companies, such as Jeff Bezos (Amazon), Marc Benioff (Salesforce), and Elon Musk (Tesla), are deeply involved in the innovation process. Andy Jassy (Amazon Web Services) notes Bezos’s ability to “look around corners” and generate valuable new ideas constantly.

Leaders of highly innovative companies typically score around the 88th percentile in discovery skills (high discovery quotient) and only around the 56th percentile in delivery skills, indicating a focus on innovation over execution. This contrasts sharply with typical executives who average 68th percentile in discovery and 80th percentile in delivery, having risen through execution. This difference has a powerful imprinting effect: when leaders prioritize discovery, it fosters an innovation focus throughout the company, as employees see it as a path to top executive positions.

Apple’s performance under Steve Jobs powerfully illustrates this. During his initial tenure (1980-1985), Apple’s innovation premium was 37%. Without him (1985-1998), it plummeted to -31%, as investors lost confidence. Upon his return, Jobs restructured his senior management team with more discovery-driven capacity, leading Apple’s innovation premium to surge to 52% (2005-2010). The executive team at Xerox PARC, despite developing groundbreaking technologies (mouse, GUI), lacked the discovery skills to exploit them, as Larry Tesler observed: “Jobs and Apple programmers understood our technology and what it meant more than any Xerox executive understood after years of showing it to them.” This underscores how innovative leaders are essential for both generating and exploiting revolutionary ideas.

Similarly, A. G. Lafley’s leadership at P&G (2000-2009) boosted its innovation premium from an average 23% (1984-2000) to 35%. Lafley consciously modeled innovation behaviors, regularly engaging with consumers to understand their experiences. His “infectious curiosity” about improving consumer lives inspired his team. He also emphasized that innovation is a team effort, noting that breakthroughs are “never one person. It’s always a group.” This highlights that leaders must not only be innovative themselves but also foster a collaborative, innovation-focused environment.

Building a Team and Organization with Complementary Skills

While populating an organization with discovery-driven individuals is important, effective execution is equally vital. Innovative leaders understand their own strengths and weaknesses in discovery and delivery skills and actively balance them with others’ strengths.

For example, Michael Dell (Dell Computer) and his president, Kevin Rollins, had a “tug of war” between discovery and delivery. Dell, with his “idea a day,” represented the “entrepreneurial-juice stuff,” while Rollins was the “governor of the innovation engine.” Their subtle jokes (Curious George for Rollins, a bulldozer for Dell) symbolized their complementary roles. Similarly, eBay founder Pierre Omidyar, strong in discovery but weak in execution, brought in Jeff Skoll (Stanford MBA) to handle the “analytical and practical side,” professionalizing the eBay website and operations.

The authors’ research at Microsoft, studying Ross Smith’s Windows Core Security teams, revealed the power of complementary discovery skills. The highly innovative six-person Microsoft Defect Prevention (DP) team consistently generated valuable ideas, like “productivity games” for user feedback (saving millions and improving quality). The team’s success stemmed from each member excelling at a different discovery skill: Smith (associating), Bob Musson (questioning), Dan Bean (questioning and observing), Joshua Williams (networking), and Harry Emil (experimenting). This created a collective discovery aptitude far exceeding individual abilities, leading to higher synergies in innovation. Smith’s leadership fostered mutual trust and encouraged risk-taking, creating a “safe space for others to innovate.”

This principle of complementary skills extends to the entire organization. The relative importance of discovery and delivery skills varies throughout the innovation funnel. At Big Idea Group (BIG), CEO Mike Collins deploys different skill mixes at each stage:

• Idea generation (Stage 1): Actively seeks innovative ideas from inventors, relying on strong discovery skills.
• Winnowing (Stage 2): Panels with strong discovery skills evaluate ideas for market potential, as “execution-focused” individuals tend to only analyze why ideas won’t work.
• Refinement (Stage 3): Design and engineering collaborate to build prototypes, requiring strong execution skills, but discovery skills remain crucial for innovative adaptations.
• Capture value (Stage 4): Product launch (manufacturing, marketing, sales) relies heavily on delivery, but BIG also innovates in distribution channels, using a wider variety than typical companies (e.g., Learning Company, QVC, licensing to Hasbro).

This shows that while early stages need more discovery, people with strong discovery skills should be sprinkled throughout every team and stage to find innovative solutions.

The Value of Complementary Human, Technical, and Business Expertise

Beyond discovery and delivery skills, multidisciplinary teams with diverse expertise are crucial. IDEO, a leading innovation design firm, staffs teams with T-shaped individuals who have deep expertise in one area and shallow expertise in many others. Their teams include:

• Human factors experts: From behavioral sciences (e.g., anthropology), they provide insight into the desirability of an idea from the user’s perspective, orchestrating observations to gain deep user empathy. They ensure the design meets user needs (e.g., experiencing the world in a wheelchair for wheelchair design).
• Technical factors experts: From engineering or science, they bring expertise in technologies feasible for a product or service design, assessing technical feasibility. This is vital for choosing optimal technologies after user needs are identified.
• Business factors experts: With a business background (e.g., MBA in operations, marketing, finance), they determine the business viability and profitability of an idea. Their expertise is more relevant in later stages, for manufacturing, distribution, promotion, and pricing.

3M’s challenge with its color-changing gift bag illustrates the critical need for business innovation alongside technology innovation. Despite a remarkable product, it failed to reach the market because 3M’s business side (e.g., treasury rules on profit margins) lacked the innovation to find a profitable path. Companies often relegate innovation to R&D, stifling technological breakthroughs with rigid business models. By staffing teams with complementary expertise, IDEO can approach problems from multiple angles, leading to desirable, feasible, and viable solutions. Innovative companies ensure a mix of people with diverse skills and backgrounds to view and solve problems holistically.

Putting the Innovator’s DNA into Practice: Processes

This chapter details how innovative companies embed the innovator’s DNA into their organizational structure, developing systematic processes that encourage and enable questioning, observing, networking, and experimenting among all employees.

How Innovative Organizations Find Discovery-Driven People

Highly innovative organizations prioritize attracting creative talent. Steve Jobs famously sought “A+ players,” believing that “a small team of A+ players can run circles around a giant team of B and C players.” Innovative companies explicitly screen candidates for creativity and innovation skills in their hiring processes.

• Amazon (No. 3 on original list, No. 5 on recent) looks for “builders” by asking recruits to share ideas on how they would build on, grow, or improve existing business units, or what they have “invented.” This sends a powerful signal that invention is expected and valued.
• Google (No. 6 on original list) uses innovative techniques like the defunct Google Labs Aptitude Test (GLAT), which included quantitative problems and creative challenges (“This space left intentionally blank. Please fill it with something that improves on emptiness.”), to find bright and curious candidates. They also host Google Code Jam, a timed problem-solving contest that screens thousands of global applicants for programming jobs, fostering a passion for programming.
• IDEO recruits “T-shaped” individuals with deep expertise and a passion for their field, demonstrating a commitment to excellence and a desire to create new things.
• Apple looks for “entrepreneurs… high energy contributors who defined their previous role in terms of what they contributed and not what their titles were,” emphasizing a track record of excellence and a “Surprise me” motto for recruiters.

A study by Harvard’s Groysberg, Nanda, and Nohria showed that a firm’s processes and resources play a significant role in star analysts’ performance. Stars moving to firms with less effective processes saw performance declines. This suggests that companies can turn B people into A performers (or vice versa) depending on their innovation processes and resources, highlighting the critical role of organizational context in nurturing talent.

Processes That Mirror the Discovery Skills of Disruptive Innovators

Innovative companies effectively institutionalize the personal behaviors of their leaders as organizational processes.

Discovery Process #1: Questioning

Many innovative companies adopt variations of Taiichi Ohno’s five-whys questioning process from the Toyota Production System (TPS). This technique involves repeatedly asking “why” (at least five times) to uncover root causes of problems and spark innovative solutions. Jeff Bezos exemplified this when an Amazon associate injured his thumb on a conveyor belt. By asking five “whys,” Bezos’s team traced the issue to a lack of proper space for personal bags, leading to the simple solution of providing portable tables and additional safety training. This demonstrated the importance of focusing on root causes and the power of questioning in problem-solving. Amazon actively teaches and uses this process in its training programs.

Apple, though not formalizing it as “five whys,” implicitly uses a “five what-ifs” process for brainstorming. The iPad, for instance, emerged from Steve Jobs and his team asking, “Why isn’t there a middle category of device, in between a laptop and a smartphone? What if we build one?” This consistent questioning of the status quo is a core part of highly innovative company cultures, which Hal Gregersen’s research on “Questions Are the Answer” further explores.

Discovery Process #2: Observing

Innovative companies turn keen observations into business insights. Intuitive Surgical (No. 2 on original list) leveraged surgeon Fred Moll’s firsthand observations to develop the da Vinci surgical robots. Moll’s team precisely measured surgeons’ hand movements and filtered out tremors to create highly precise robotic arms, enabling smaller incisions and faster recoveries. Intuitive Surgical continues to observe surgeons to develop new tools, expanding the robot’s surgical applications.

Keyence Corporation (No. 23 on original list) ensures 25% of annual sales come from new, advanced products by requiring its 7,000 salespeople to spend hours observing customer production floors. By watching instant-noodle makers, Keyence observed variable noodle thicknesses compromised quality, leading them to develop laser sensors that measure noodles to 1/100th of a millimeter, becoming indispensable to customers.

Beyond customer observation, leading innovators observe other companies. Google and P&G’s 2008 employee swap spurred innovation. Google marketers observing P&G’s Pampers promotion were “stunned” that “mommy bloggers” weren’t invited, leading P&G to embrace influencer marketing. The swap also led to P&G’s successful online campaign inviting spoof videos of its “Talking Stain” ad, leveraging consumer-generated content. IDEO’s David Kelley emphasizes, “If you’re not in the jungle, you’re not going to know the tiger,” highlighting the importance of firsthand observation over mere questions or assumptions.

Discovery Process #3: Idea Networking

Innovative companies excel at idea networking, establishing formal and informal processes for knowledge exchange internally and externally.

Internal networking: Most companies share ideas, but innovators elevate it. Google’s “Innovator’s Challenge” invites employees to submit ideas for top-management review, with winning ideas receiving resources. Marissa Mayer (Google) held regular brainstorming sessions where engineers pitched ideas for rapid discussion and complementary idea generation. Google’s democratic innovation culture allows employees to rate ideas on an internal board and use 20% of their time on pet projects (e.g., Gmail, Google News, AdSense), fostering internal collaboration and allowing “market forces” to determine idea progression. Google Cafe’s free food also facilitates serendipitous internal networking.

External networking: Companies increasingly look outside for ideas, a trend known as open market innovation. P&G’s Connect + Develop (C&D) initiative aimed to increase external new product ideas from 10% to 50% by 2006. P&G uses third-party matchmakers like NineSigma and InnoCentive to link with external technologies and researchers, preparing technical briefs describing problems to be solved. This has led to many successful products like Swiffer WetJet and Crest Whitestrips. Reckitt Benckiser (RB) uses its RB-Idealink website to list “most wanted” jobs and request solutions, leading to products like Finish Quantum. RB also licenses its brands to entrepreneurs, quickly evaluating new product ideas within three months. This external networking ensures a constant flow of innovation, with RB launching or changing a product formula every eight hours.

Discovery Process #4: Experimenting

Companies with high innovation premiums institutionalize experimentation. Monsanto (No. 9 on original list) invests in genetically engineered seeds through its “molecular breeding platform” software, which accelerates plant production by tracking terabytes of data on individual seed genotypes. This digital experimentation predicts good/bad crops, reducing planning time and yielding innovative drought-resistant and herbicide-immune crops.

Beiersdorf Group (No. 14 on original list), maker of Eucerin, runs extensive experiments at its Hamburg research center. It tests new skin products on 6,000 volunteers annually, using advanced technology to measure skin changes. They discovered sunscreen users weren’t applying enough UV protection, leading to adjustments in product and consumer education. Beiersdorf runs its own experiments (e.g., on cell cultures instead of animal testing) and launches 150-200 new products and applies for 120-150 new patents annually.

Amazon’s Jeff Bezos institutionalized his “penchant for experimenting,” encouraging employees to “go down blind alleys” and “increase the number of experiments you try from a hundred to a thousand.” Amazon offers pilot products/services to half its customers, comparing responses. Google uses “beta” labels to release products early and often, getting rapid customer feedback, and has hundreds of small teams simultaneously piloting new projects. These processes lead to a high volume of innovative offerings.

Combining Discovery Processes to Produce Innovations

While discovery skills can be deployed separately, they are most powerful when combined systematically. IDEO, the innovation design firm, attributes its success to its team processes, which iteratively combine questioning, observing, networking, and experimenting, even completely redesigning a shopping cart in five days.

• Process #1: Questioning: IDEO project teams start by asking diverse questions to understand problems, like “What are the problems with cheese graters?” or “Who are the ‘extreme users’?” These questions are written on sticky notes and prioritized, guiding the subsequent data-gathering phase.
• Process #2: Observing: Teams go into the field to observe and document customer experiences firsthand, especially “extreme users.” They look for “latent customer needs”—needs not yet seen or expressed—and capture photos and videos of customers interacting with products, like a cheese grater clogging or a mandoline posing safety hazards.
• Process #3: Networking: While observing, IDEO team members talk to product users, especially “experts” (chefs, highly competent home cooks), gaining insights into their likes, dislikes, and challenges. They strive for deep empathy to champion the user’s story within the team, returning with “the golden keys of innovation.”
• Process #4: Brainstorming Solutions and Associating—the Deep Dive: All insights are brought back to a “Deep Dive” brainstorming session, where team members share observations, quotes, photos, and videos. The team leader facilitates discussions, and the Tech Box (filled with odd, unrelated items) is used to stimulate associational thinking for innovative design solutions.
• Process #5: Prototyping (Experimenting): The final phase involves “rapid prototyping,” building working models of the best ideas. David Kelley emphasizes that “a prototype is worth about a million words,” providing crucial feedback for iterative design. IDEO takes prototypes (like the redesigned cheese grater with an optimized tooth pattern for less clogging and greater safety) to diverse users for feedback, constantly refining them by “build[ing] to think and think[ing] to build.”

By systematically combining these iterative processes, IDEO consistently generates successful design innovations, fostering a culture where every team member is empowered and responsible for innovation.

Putting the Innovator’s DNA into Practice: Philosophies

This chapter reveals the foundational philosophies that permeate the world’s most innovative companies, explaining how these guiding beliefs cultivate a deep, company-wide commitment to innovation, empowering employees to take “smart risks.”

Philosophy #1: Innovation Is Everyone’s Job, Not Just R&D’s

Innovative companies reject the limiting belief that innovation is solely the domain of R&D. Leaders like Jeff Bezos, Elon Musk, and Marc Benioff actively instill “innovation is everyone’s job” as a core philosophy. When Steve Jobs returned to Apple, his “Think Different” campaign, while outwardly inspiring customers, was equally aimed at Apple employees to remind them that the company’s heroes were innovators and that working at Apple meant being an innovator.

Arne Sorenson, CEO of Marriott International, emphasizes the critical need to communicate: “You have permission to innovate. We’re going to reward you for innovating. We’re not going to penalize you for mistakes.” With 6,700 hotels acting as “living labs,” Marriott encourages local leaders to innovate, allowing the company to tap into a wealth of ideas.

A. G. Lafley at P&G reinforced this philosophy, declaring, “The P&G we’re trying to unleash today asks all hundred thousand-plus of us to be innovators.” He backed ideas from employees, such as a successful hair-care product line for women of color, setting a tone for a “we-innovate” philosophy.

Creating a Safe Space for Others to Innovate

Establishing “innovation is everyone’s job” requires psychological safety, where team members feel comfortable expressing opinions, taking risks, running experiments, and acknowledging mistakes without punishment. David Neeleman (Azul, JetBlue) believes “If you foster an environment in which people’s ideas can be heard, things naturally come up.”

Leaders often overestimate their ability to encourage discovery in others. Data shows team leaders rate themselves significantly higher than their managers, peers, or direct reports. This “better-than-average” effect can lead to missed opportunities. Len Schleifer and George Yancopoulos, cofounders of Regeneron, fostered a safe space by consistently asking challenging questions and arguing about scientific principles, creating a culture where “nothing is unchallengeable.” This encourages open inquiry and avoids the “not invented here” bias, where ideas from outside sources are discounted. Innovative leaders conquer this by genuinely hearing and supporting others’ ideas, establishing a widely shared belief that innovation is everyone’s job.

Give People Time to Innovate

Innovative leaders understand that innovation requires a significant time commitment, so they allocate more human and financial resources to it. Google’s 20% project rule allows some engineering groups to spend one day a week on self-chosen projects. This initiative, adhered to by founders Sergey Brin and Larry Page, has yielded highly successful products like Gmail, Google News, and AdSense, with roughly half of Google’s new product launches stemming from these projects. The 20% rule visibly symbolizes management’s belief that everyone can and should innovate.

Similarly, 3M has its 15% rule, and P&G encouraged employees to spend 25% of their time “on the system” (discovering new ways to execute). Atlassian Labs has an annual “FedEx” day where software developers spend 24 hours generating and prototyping new product ideas, providing a successful hack-a-thon experience that fuels product development. The acid test for this philosophy is whether 70% or more employees respond with a resounding “yes” when asked if they are expected to innovate and if innovation is part of their performance reviews.

Philosophy #2: Disruptive Innovation Is Part of Our Innovation Portfolio

Highly innovative companies don’t just invest in R&D; they allocate a greater percentage of resources to platform and breakthrough (disruptive) innovation projects, not just derivative ones. Derivative projects involve incremental improvements to existing products (e.g., Sony’s PS5). Platform projects are new product categories (e.g., Apple’s MacBook Air). Breakthrough (disruptive) innovations create entirely new markets with unique value propositions and often radical technologies (e.g., Sony’s Walkman, Apple’s iPod/iPhone, Amazon’s Kindle/Alexa).

Google famously uses a 70-20-10 rule for engineering efforts: 70% for core business (web search), 20% for extending the core (Gmail, Docs), and 10% for “fundamentally new businesses” (Google Pixel, self-driving vehicles). Larry Page explicitly stated their willingness to fund “projects that have a 10 percent chance of earning a billion dollars over the long term.”

Amazon and Apple also allocate significant resources to platform and breakthrough innovation, despite not following a specific rule. Apple ventured into music and phone businesses, and Amazon into e-readers, digital assistants, and cloud computing—all new markets. Jeff Bezos acknowledges that new ventures often face external and internal resistance (“Why are you expanding outside of media products?”). However, Amazon persists in its “habitual pursuit of breakthrough business ideas.” The acid test for this philosophy is whether at least 25% of innovation projects are dedicated to platform or breakthrough innovations, signaling a “dream bigger” mindset. Bezos pushes Amazon to “think as big as you can” when pursuing new ideas.

Philosophy #3: Deploy Small, Properly Organized Innovation Project Teams

Innovative companies know that small project teams are the best vehicles for taking new ideas from inception to market. Amazon’s “Two-Pizza Team” rule (6-10 people) allows for a larger number of projects and more “blind alleys” in search of new products. Google engineers typically work in teams of 3-6 people, fostering productivity and flexibility. This “let a thousand flowers bloom” approach enables Google to create numerous new product offerings.

The organization of these teams is critical, especially for radical innovations. The more radical the innovation, the more autonomy the project team requires from the organization’s existing functions and structure.

• Derivative innovations (incremental improvements) are best handled by functional teams (specialists in each component) or lightweight teams (primarily from one group with light allocation from others).
• Platform innovations (new product categories) benefit from heavyweight teams, where members are colocated, led by influential managers, and shift primary loyalty beyond their functional groups to the project’s collective responsibility.
• Breakthrough innovations (entirely new business models) often require fully autonomous business units. Amazon’s cloud-computing business, for example, was set up as an autonomous unit due to its entirely different business model.

In essence, resource allocation to platform/breakthrough innovations won’t pay off without the right team autonomy and diversity. Radical innovation demands broad knowledge diversity within the team to generate radical ideas.

Philosophy #4: Take “Smart” Risks in Pursuit of Innovation

Most companies shy away from platform and breakthrough innovations, seeing them as too risky compared to derivative projects. Highly innovative companies counter this by embracing a philosophy of “Take smart risks in the pursuit of innovation.” Breakthrough innovations require a willingness to fail, an ethos rare in the corporate world.

Amazon excels at taking smart risks, accepting failures like the Fire phone. Jeff Bezos states, “failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.” He encourages employees to “swing for the fences,” seeing mistakes as an expected cost of business.

IDEO’s slogan, “fail often to succeed sooner,” reinforces this philosophy company-wide, indicating that if employees aren’t failing, they aren’t innovating. Richard Branson (Virgin) also identifies “the ability to fail” as a core value, acknowledging that “Virgin would not be the company it is today if we had not taken risks along the way.”

Innovative companies distinguish between good and bad failures. Good failures, like those at Google, mean: (1) you know why you failed and gained relevant knowledge, and (2) they happen fast enough and aren’t big enough to compromise your brand. Google’s leaders openly acknowledge trying things that won’t work, knowing they’ll “move on.” Apple’s Jonathan Ive emphasizes the “sense of looking to be wrong… It’s about being excited to be wrong because then you have discovered something new.” This embrace of failure as a learning vehicle emboldens employees.

Innovative companies are wrong less often because they take smarter risks by:

• Hiring and developing discovery-driven people.
• Institutionalizing processes that support questioning, observing, networking, and experimenting.
• Designing fast experiments to test hypotheses.

This approach means the actual risk is lower because the right people and innovation processes increase the probability of success. Fully leveraging the innovator’s DNA reduces the likelihood of financial failure.

In summary, highly innovative companies thrive on foundational philosophies that create a company-wide commitment to innovation. They ensure innovation is everyone’s job, prioritize disruptive innovation in their portfolio, use small, well-organized project teams, and encourage smart risk-taking. These philosophies, backed by consistent actions, empower employees to ignite new ideas and successfully bring them to market. A company with this DNA will be able to answer “yes” to these four core questions, fostering a vibrant culture of innovation.

Conclusion: Act Different, Think Different, Make a Difference

The core message of “The Innovator’s DNA, Updated” is that to “Think Different,” individuals, teams, and organizations must “Act Different.” This means consistently engaging in the five discovery skills: associating, questioning, observing, networking, and experimenting, coupled with the courage to innovate. Consistent practice transforms these skills into habits and capabilities, making individuals and organizations truly different, leading to concrete impact.

Leveraging Discovery Skills for Impact

The ultimate goal of mastering discovery skills is to make a difference. While uncovering a big, disruptive idea that initiates meaningful change is ideal (like Bezos, Musk, and Benioff, whose organizations employ hundreds of thousands and products influence millions), the impact can also be on a smaller scale. These business innovators often move beyond disrupting industries to tackle tough global challenges like poverty, education, and disease.

• Salesforce’s Marc Benioff exemplifies this with his 1-1-1 philosophy, dedicating 1% of employee time, 1% of products, and 1% of equity to community improvement and compassionate capitalism. He sees himself in the “business of changing the world.”
• Andreas Heinecke, founder of Dialogue in the Dark, a for-profit social enterprise, used his innovator’s-DNA skills (exceptional at idea networking and questioning) to create jobs for the blind. By hiring blind experts to guide sighted visitors through experiences in complete darkness, he helped people understand and appreciate blindness while addressing societal barriers. Over six million visitors in 30 countries have experienced these exhibitions, making Dialogue in the Dark a major employer of blind people.
• Even smaller, derivative innovations can have significant impact. Google’s Code Jam improved hiring. P&G’s use of bloggers and consumer-generated content revolutionized marketing. Blake Mycoskie’s TOMS Shoes, with its “one for one” model (one pair given for every pair sold), addressed foot diseases in children.

The Courage to Act Now

The journey of creative discovery is challenging but deeply rewarding. Being a creator is psychologically and emotionally gratifying, even beyond financial gains. Mark Ruiz, cofounder of MicroVentures, is driven by a “deep sense of mission and purpose,” constantly building new ventures to solve problems in the Philippines.

Innovators like Ruiz and Richard Branson (who lives by “Screw it. Let’s do it”) embody a “disposition to act” despite uncertainty. Skype cofounder Niklas Zennström uses the analogy of a desert island race: those who “just start running” based on intuition are more likely to win than those who over-analyze. The challenge is to act and figure it out as you go, gaining valuable feedback by fully engaging innovator’s-DNA skills. Windows of opportunity close quickly, demanding rapid implementation.

Ultimately, innovation is an investment—in oneself, in others, and in one’s company. Meg Whitman (formerly of eBay) advises “to have the courage to plant acorns before you need oak trees.” This means planting ideas with less than complete confidence, knowing the alternative is stagnation. By understanding and reinforcing the innovator’s DNA in individuals, teams, and organizations, you can cultivate not just growth saplings but the “real oak trees of future growth.” The conclusion echoes Apple’s sentiment: “The people who are crazy enough to think they can change the world are the ones who do.” So, “Just do it. Do it now!”

Key Takeaways

The Innovator’s DNA provides a comprehensive framework for understanding and cultivating innovation. Here are the most important insights:

Core Lessons:

• Creativity is not just genetic; it’s a learnable behavior. Approximately two-thirds of innovation skills are acquired through learning, not innate talent.
• Innovators “Act Different” to “Think Different.” Their distinctive cognitive skill of associating is triggered and amplified by four behavioral skills: questioning, observing, networking, and experimenting.
• Innovation is a team sport. Successful innovation requires a balance of discovery skills (generating novel ideas) and delivery skills (executing those ideas), with high-performing teams leveraging complementary skills and diverse expertise.
• Innovative organizations mirror the DNA of innovative individuals. They embed innovation into their people, processes, and philosophies.
• Courage is key to innovation. Innovators possess a bias against the status quo and a willingness to take “smart risks,” viewing failure as a learning opportunity.

Next Actions:

• Assess your own Innovator’s DNA: Use the provided quizzes or online tools (InnovatorsDNA.com) to understand your strengths and weaknesses in discovery and delivery skills.
• Prioritize discovery time: Consciously allocate more time in your week for discovery activities (e.g., at least 30% for leaders).
• Identify a compelling innovation challenge: Choose a real problem or opportunity to focus your skill-development efforts.
• Practice discovery skills relentlessly: Start with QuestionStorming, then systematically work on observing, networking, and experimenting, involving your team where possible.
• Seek a coach or creative mentor: Find someone you trust to provide honest feedback and support your journey in developing new habits.
• Foster a culture of inquiry: Encourage questions, embrace diverse perspectives, and celebrate learning from failures in your team or organization.
• Champion “Innovation Is Everyone’s Job”: Advocate for explicit time, resources, and performance recognition for innovation at all levels.

Reflection Prompts:

• What is one core assumption in your work or industry that you could challenge today by asking “Why?” or “What if?”
• How can you intentionally expose yourself to a “new environment” (physical, intellectual, or social) this week to spark unexpected connections?
• Who in your network could offer a radically different perspective on a problem you’re currently facing, and what action will you take to connect with them?