The DNA of Innovative Companies

I recently read a great article called the ‘The Innovator’s DNA’, written by Jeffrey H. Dyer, Hal B. Gregersen, and Clayton M. Christensen.

The article presents the findings and conclusions from a six-year study in which the authors looked into what habits and skills distinguish the most innovative entrepreneurs from other executives. These successful innovators include Steve Jobs, Amazon’s Jeff Bezos, eBay’s Pierre Omidyar, and P&G’s A.G. Lafley.

When the CEO is also an Innovator

Their conclusions are that the most innovative companies are led by innovative entrepreneurs. These leaders, unlike CEOs of other companies, do not delegate innovation. They do it themselves.

In other words, innovative CEOs and leaders create a culture of innovation within their companies. Most often these are companies that they have founded.

This makes perfect sense. Since leaders define the culture of their organizations. Their personalities, behavior, priorities, and values set the tone and example for others to follow.

But, what about companies that are not led by innovator geniuses? Can’t they also become innovative?

When the CEO is not an Innovator

I believe that they can. And yet, unlike companies where innovation comes from the top, like Apple, Google, and Amazon.com, they need a different approach to create a culture of innovation.

Based on lessons from innovative companies, as well as my own experience, I believe there are several key elements that are critical for creating an environment of innovation.

First, it’s important to remember that innovation can come from anyone, and can occur anywhere and anytime. In addition, innovation is not only about new products. Some great companies created their success through process and business model innovations (Southwest Airlines, Amazon, Dell).

Great ideas can come from anyone inside, as well as outside the organization, including customers, suppliers, and partners. Therefore, the key is to create a culture that encourages and empowers everyone to come up with and share new ideas.

The Main Attributes of an Innovative Company

Thus, I believe that the main elements of an innovative company are:

Leadership and Culture

There needs to be a company culture that encourages risk-taking, doesn’t punish failure (rather uses it as a learning experience), encourages and facilitates the sharing of ideas and information. People need to be able to experiment with new ideas without the fear of failure.

Innovation is often a product of genuine curiosity, of questioning status quo and hypotheses. New ideas can come from networking with and learning from people outside our industry, our country, and our profession. These habits and behaviors need to be part of the company’s culture.

This is where the CEO’s own DNA can have a major influence. And yet, even if she is not already an innovator, she can still develop innovation skills and habits, and in doing so, set an example for the rest of the company.

Also, leaders can complement their own weakness in this area by infusing innovation to the company’s DNA through a dedicated recruiting process, and the empowerment of innovative managers within the company.

Customers and Suppliers

A company needs to be close to its customers and users; know and understand their problems, challenges, and needs. Observe the “jobs” that they are trying to get done. Ask them questions like “why?”, “why do you do that?”, and “what if?”

Most great ideas are not born in research labs, engineers’ cubicles, or conference rooms. They often come from observing and studying what users are trying to do. How can we do it better, simpler? How can we apply new technologies to solve these problems differently?

Companies need to establish relationships with their customers, suppliers, and partners that are based on trust, respect, and open communication. And listen, really listen to them.

Process and Criteria

There needs to be a simple process that regularly collects, reviews, and selects ideas from all of the above sources.

It needs to be simple for people to submit, share and present their ideas. Also, there needs to be a clear set of criteria by which ideas are reviewed and ranked. People that submit ideas should get prompt feedback and recognition.

Of course, there needs to be a specific budget for funding those ideas that get selected. Further, there is a need to allocate time and budget for conducting multiple experiments around these new ideas.

Such a process, supported by the above culture, will encourage and motivate people throughout the company to create innovative ideas. Even if they do not always become a new product/service or a new business model.

In conclusion, Innovation, much like customer service, cannot be left to one person in the company, not even the CEO. Therefore, to become an innovative company, it needs to be a skill and a habit of everyone in the organization.

Who do you consider to be an innovative company? Why?

Ziv Azmanov