The Little Black Book of Innovation, With a New Preface: How It Works, How to Do It

Praise for Scott D. Anthony’s The Little Black Book of Innovation

"The Little Back Book of Innovation distills two decades of research and real-world experience into the ultimate reference guide for novices and veterans of the Innovation Wars. A vital handbook for leaders seeking to teach and evangelize the power of innovation."

—Colin Watts,

Chief Innovation Officer, Walgreens

"The Little Black Book of Innovation is rich and insightful with actionable tips to increase your organization’s innovation capacity. It’s easy, engaging, and essential reading for business leaders and their teams that will ignite innovative thinking in your organization."

—Melanie Healey,

Group President North America and Global Hyper-Super-Mass-Channel, Procter & Gamble

"At Ayala, we know we have to become more innovative to compete in quickly changing markets. That’s why we’ve worked closely with Scott Anthony and his team to develop our leaders’ innovation skills. The Little Black Book of Innovation brings together the best of Anthony’s experiences and insights into an easy-to-understand, supremely practical book."

—Jaime Augusto Zobel de Ayala,

Chairman and CEO, Ayala Corporation

Praise for Scott D. Anthony’s The Silver Lining

A valuable playbook for bringing disruptive innovation into the enterprise at a time when many corporations are pulling back on their innovation initiatives.

— Dominic Basulto, Big Think

The lessons that Anthony draws from times of great economic upheaval are useful any time and anywhere.

—Rolf Dobelli, getAbsract.com

"In tough times, companies often hunker down and focus on the core. But those companies that stop innovation are sowing the seeds of their own destruction. The Silver Lining’s practical tools can help companies innovate successfully."

—Vijay Govindarajan, professor, Tuck School of Business at Dartmouth College;

Professor in Residence and Chief Innovation Consultant at General Electric

"The Silver Lining clearly shows that companies can successfully innovate in the face of change. Put this book’s ideas to work today."

—Michael Mauboussin, Chief Investment Strategist, Legg Mason Capital Management

Anthony’s playbook is a welcome source of hope for those of us in the midst of the Great Disruption. Required reading for companies experiencing cataclysmic change.

— Mark Contreras, Senior Vice President/Newspapers, the E.W. Scripps Company

Also by Scott D. Anthony

Building a Growth Factory, with David S. Duncan

Dual Transformation: How to Reposition Today’s Business While Creating the Future, with Clark Gilbert and Mark W. Johnson.

The First Mile: A Launch Manual for Getting Great Ideas to the Market

The Innovator’s Guide to Growth: Putting Disruptive Innovation to Work, with Mark W. Johnson, Joseph V. Sinfield, and Elizabeth J. Altman

Seeing What’s Next: Using the Theories of Innovation to Predict Industry Changes, with Clayton M. Christensen and Erik A. Roth

The Silver Lining: An Innovation Playbook for Uncertain Times

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First eBook Edition: April 2017

ISBN: 9781633693401

eISBN: 9781633693418

To Joanne, as always.

CONTENTS

Cover

Title

Copyright

Dedication

Preface to the Paperback Edition

Preface to the Original Edition

Introduction My Innovation Journey

Part One Laying the Foundation

Chapter 1 The Innovation Imperative

Chapter 2 The Masters of Innovation

Chapter 3 The Mount Rushmore of Innovation

Chapter 4 Innovation’s Seven Deadly Sins

Part Two The 28-Day Innovation Program

Week 1 Discovering Opportunities

Week 2 Blueprinting Ideas

Week 3 Assessing and Testing Ideas

Week 4 Moving Forward

Conclusion The Innovator’s Pledge

Appendix

Notes

Index

Acknowledgments

About the Author

PREFACE TO THE PAPERBACK EDITION

Innovation Lessons from a Milkshake-Drinking, Kite-Flying Shark

On May 25, 2016, I stood before an imposing audience. I was intimidated—cowed, even. The feeling I first felt when in front of a crowd of more than ten people? Nothing compared to this. The moment I completely froze while staring for the first time at the red light on top of a video camera? A breeze.

I took a deep breath and started simply: Good morning.

Good morning Mr. Anthony, replied 290 fourth-grade students, including my ten-year-old son, Charlie, in unison.

I was at Stamford American International School (SAIS) in Singapore, explaining key innovation concepts to Charlie’s class. SAIS entered the Singapore market in 2009. As part of its effort to compete against the dominant incumbent (the Singapore American School), it made the decision to focus on technology and innovation. The fourth-grade curriculum involves a unit of inquiry in which students focus on innovation. Charlie gamely suggested to his teacher, Ms. R (Vesna Radivojevic), that perhaps his dad could come and share some thoughts with the class.

Presenting the ideas that appear in this and related books to ten-year-olds is challenging. You never want to talk down to children, but you can’t assume understanding of basic business concepts like profits, cash flows, strategy, bankruptcy, and so on.

Fortunately, my experiences living in Asia since 2010 served as good preparation for this moment. Over the past few years, I’ve shared the concepts described in The Little Black Book of Innovation in countries such as Thailand, Indonesia, India, the Philippines, China, and South Korea with audience members with variable ability to understand English (of course, their English is universally superior to my nonexistent Thai, Indonesian, Hindi, Tagalog, Chinese, and Korean). Those contexts forced further deconstruction and simplification of concepts and augmenting spoken words with vivid images.

Innovation Mount Rushmore, which appears in chapter 3 of this book, was the beginning of this shift, but, while I was preparing for SAIS, it hit me that perhaps there was an even simpler way to communicate the essence of successful innovation: A picture. Of a shark. Drinking a milkshake. Flying a kite.

There are numerous schools of innovation thought: Design thinking. User-centered design. Lean start-up. TRIZ. Disruptive innovation. Each of these innovation schools, naturally, teaches its own language system. A design thinker might talk about customer journeys or abductive thinking. A lean start-up advocate will extol the virtues of a minimum viable product. A disruptive scholar will talk about the job to be done. None of these phrases is completely obvious to people who aren’t adherents of the respective school. And it gets worse when acolytes break out acronyms that allow quick communication with like-minded scholars but cause nothing but confusion for the layperson (my company is as guilty of this as the next person—an Innosighter might describe conducting JTBD analysis to figure out a CVP in a SOA for a key SD).¹ Discordant language systems result in significant barriers between practitioners.

But, if you get to the essence of these different belief systems, there are many commonalities. At the simplest level, everyone agrees that innovation has three essential components:

Find a problem a customer can’t adequately solve.

Develop a different and better way to address that problem.

Execute a series of tests to address key uncertainties.

The image of a milkshake-drinking, kite-flying shark serves as a simple reminder of these components.

First, the milkshake. This references Harvard Business School professor and Innosight cofounder Clayton Christensen’s famous parable about a company seeking to boost the sales of its milkshake. While pondering strategy, the company has an Ah-ha! moment that causes it to reframe the milkshake (a condensed version of this parable appears in day 3 of this book’s twenty-eight-day innovation program). The consumers who buy milkshakes aren’t buying milkshakes, notes Christensen. They are hiring them to get jobs done in their lives.

Specifically, in the morning, consumers are looking for a commuting companion. The milkshake does that job beautifully. You can hold it in one hand so you can sip it while you drive. The word milk in the name helps to minimize consumer guilt. It is so thick that it takes a long time to drink, thus providing companionship during a forty-five-minute commute. What else could get the job done? You could try a banana. But it is a bad companion. It is gone in three minutes, and leaves a decaying peel behind. A candy bar leaves you feeling guilty. Cereal is too complicated. And so on.

In the afternoon, there is a different job to be done. Now, consumers are looking to appease small children. Purchasers are parents who are emotionally exhausted from saying no to their children all day. The milkshake is a small reward that lets the parent feel like a hero. But the milkshake doesn’t do this job well. It is too thick. It takes kids forever to suck the milkshake through a thin little straw. So frustrated parents sit. And watch. And wait. Many milkshakes get thrown away half-completed. Framing the category around the job the customer is trying to get done helps to highlight that the product—and indeed, the entire purchase and use experience—should ideally be different in the morning from the afternoon.

The milkshake reminds you to put the customer in the center of the innovation equation. What is the problem your customers are trying to solve? What specific progress are they trying to make in a specific circumstance? What are they currently hiring to solve that problem? What barriers stand in the way of success? Some innovators have intuition that helps them answer these questions. Some innovators invest the time to deeply study the customer to tease out answers. But no innovation can succeed if it doesn’t address a problem that matters.

Once you identify a problem, the next step is to come up with a potential solution. Enter the shark. It reminds innovators of the power of lateral thinking to short-circuit the process of coming up with a powerful idea (this idea is explored in more depth in day 8 of the training program).

About two decades ago, Speedo hired a British scientist named Fiona Fairhurst and asked her to help develop a swimsuit that would allow swimmers to move through the water faster. The way designers historically framed the problem was to find ways to lower the friction of the suit. After all, the less friction, the faster someone can swim, right? Fairhurst framed the problem differently. She asked, Where in nature is there something that is large but can swim really fast? A shark, it turns out, is the answer. Sharks are huge, but some species can go more than thirty miles per hour in bursts through the water. And a shark’s skin is not perfectly smooth. Rather, sharks have something called denticles that help propel them through water.

Like a good biomimicrist, Fairhurst drew inspiration from nature as she helped to design Speedo’s Fastskin. As Fastskin-wearing swimmers obliterated record after record, event organizers banned it from competitions to stop the sport from turning into a technological arms race.

Creativity is just connecting things, noted the legendary Steve Jobs. When you ask creative people how they did something, they feel a little guilty because they didn’t really do it, they just saw something. One of the most persistent findings from the innovation literature is that magic happens at intersections, where different mind-sets and skills collide together. Once you have identified a problem worth solving, remember the shark and find who has already confronted that problem. They might not be in your company. They are probably not in your category. They might not be in your country. And, as Fairhurst’s example shows, they might not be a they! But inspiration exists.

Finally, the kite. That reminds innovators of the best way to approach the uncertainty that necessarily comes along with innovation. In my fifteen years in the innovation field, I have seen hundreds, if not thousands, of ideas. Some are from seasoned senior leaders at global giants. Some are from young entrepreneurs looking to create the next big thing. Some are from colleagues.

They are all the same.

Every innovative idea is partially right and partially wrong. The trick when you are standing at what I call the first mile of innovation is you don’t know which part is which. Your first instinct might be to try to solve that problem through analysis. Talk to customers. Run financial forecasts. Interview experts. Align leadership. Develop what everyone agrees is a perfect plan, and then go execute. Perfect plans don’t exist. If you try to find truth through analysis, you will learn a lesson taught by the great American philosopher, actor, and, yes, occasional boxer Mike Tyson, who once said, Everybody has a plan, until they get punched in the face. The punch comes when you realize that your seemingly perfect plan was resting on a flawed assumption. The punch will come. Great innovators find creative ways to take their punches early and react.

That’s exactly what the Wright brothers did more than a hundred years ago.² From the beginnings of civilization, legions of would-be innovators were obsessed with a perplexing problem: Birds could fly, but humans couldn’t. People built prototype after prototype that failed to take off from the ground or quickly crashed when launched off a cliff or bridge. The lucky innovators dusted themselves off and went back to the drawing board. The unlucky ones …

The Industrial Revolution only made the problem more tantalizing. The Wright Brothers finally cracked it by following a distinctly different approach. Before they built a plane, they flew kites and gliders. The great thing about flying a kite is that when (not if!) it crashes, no one gets hurt, and it is easy to try again. To optimize their kites, they hacked a cardboard box, bicycle spoke wire, and a fan into a wind tunnel. Imagine how it felt in 1901, when everyone else was obsessed with crazy contraptions that had little hope of working and the Wright Brothers ran two hundred experiments over two months. As Wilbur Wright later reflected, Sometimes the non-glamorous lab work is absolutely crucial to the success of a project.³

Great innovators find creative ways to test and learn. It isn’t just building prototypes (though prototypes are great), it is researching analogies, running thought experiments (Albert Einstein’s insights about relativity were famously influenced by him imagining running alongside a beam of light), and using models and simulations to learn in resource-efficient ways.

So, the milkshake story reminds innovators to find a problem worth solving. The shark reminds them to draw inspiration from outside analogies. And the kite reminds them to creatively run experiments around their key assumptions.

The picture has two other, slightly subtler, visual reminders. Notice the shark has a tattoo of a lightbulb on its arm. Commonly used as an icon for innovation, the lightbulb also serves as a vital reminder of the difference between invention (creating something new) and innovation (doing something different that creates value). Who invented the lightbulb? Most people would name Thomas Alva Edison (who appears prominently in the first three chapters of this book). The Wizard of Menlo Park can indeed lay a credible claim to developing some of the fundamental technologies behind the incandescent light bulb, and, with more than a thousand US patents to his name, is one of the world’s great inventors. Lots of other people can claim credit for the technologies behind the lightbulb. The reason we associate Edison with it is not because he was a great inventor. It is because he innovated the provision of light. The world’s first electricity-generating facility was owned by the Edison Electric Company, operating in lower Manhattan. That company merged with rival Charles A. Coffin to create General Electric, a company that today operates in more than 150 countries and has close to $150 billion in revenues. Never forget Edison’s most famous quip: Genius is 1 percent inspiration, and 99 percent perspiration.

Finally, why is the shark wearing sunglasses? Because sunglasses are cool. As is innovation. A bedrock belief behind our work is that innovation isn’t magical. It isn’t mysterious. It isn’t a black art. It isn’t a purely God-given talent. It is a discipline that can be mastered and managed. It is a skill that improves with careful practice and benefits from expert tutelage. That doesn’t, however, mean that innovation should be approached clinically or dispassionately. Wear sunglasses. Have fun. Push boundaries. Break rules. Maintaining a spirit of playfulness builds resilience in the face of what can often be significant challenges.

They say a picture is worth a thousand words. The text above spent about fifteen hundred detailing the milkshake-drinking, kite-flying shark. There’s more to successful innovation, of course. A would-be innovator seeking to launch a new business needs to form a team; develop a comprehensive business model to create, deliver, and capture value; build robust processes to scale an idea; fend off competitors; and much, much more. Practitioners seeking innovation mastery should certainly explore these and other areas. Before mastery, however, comes competency. The simple image serves as a strong visual reminder of the building blocks of that competency, and creates an easy conversation starter with would-be innovators.

As a teaching technique, the picture worked well enough that Charlie and his friend Kellen could recall it six months after the session. I used it the next week with five hundred employees at a big financial services organization and thirty regional human resources leaders. That was enough successful kite flights to make it a presentation staple, so it had pride of placement when this author again found himself in SAIS in November 2016.

Good luck and happy innovating.

PREFACE TO THE ORIGINAL EDITION

In the middle of 2010, I ran an experiment. I told the subjects of the experiment—my colleagues