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by Rod Collins, Innovation Sherpa at Salt Flats

 There are few business leaders who would deny that we are living in a time of unprecedented innovation.  Google and Wikipedia, Facebook and Twitter, iPhones and iPads, Spotify and Netflix—none of which existed a mere two decade ago—have radically changed the way markets work. Toward the end of his life as he contemplated the rapid developments of the emerging digital age, Peter Drucker astutely observed, “If you don’t understand innovation, you don’t understand business.”  The need to innovate—and to innovate quickly—has become a business imperative for thriving in a post-digital hyper-connected world, and yet most businesses today struggle in the face of this challenge.

According to Steve Denning, the principle reason that many U.S. firms are dying is a failure to innovate that stems from a lack of resources to cultivate new ideas and pursue innovations capable of keeping pace with a more competitive global marketplace. If Drucker and Denning are right in their assessment of the importance of innovation, filling this resource gap may very well be job one for today’s business leaders.

Walter Isaacson’s recent book, The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution provides important insights into what business leaders need to do to install the processes that naturally enable innovative workplaces. Isaacson’s comprehensive overview of the evolution of the digital age is as much a story about management evolution as it is about technological revolution. While Isaacson chronicles the back-stories behind the development of physical devices, such as the transistor, the computer, and the Internet, he also sheds light on the creation of new organizational structures that serve as the incubators and the accelerators of innovation. The “invention of a corporate culture and management style that was the antithesis of the hierarchical organization” is the context, without which, the content of innovation may have never happened. Perhaps the reason so many companies struggle with innovation is because they are operating from the wrong context.

Among the many lessons that Isaacson draws from understanding the dynamics of how innovation works, there are four key lessons that may help business leaders close their innovation gap.

1.  Collaborative Teamwork

 Innovation is a collaborative process and teamwork is its essential skill.

“Innovation comes from teams,” according to Isaacson, “more often than the lightbulb moments of lone geniuses.” This is perhaps the one most important observation about how innovation works. The context for innovation has more to do with leveraging the collective intelligence of the many than with relying on the individual intelligence of the few.  Teams that excel at innovation tend to be collegial and typically bring together people with a wide diversity of skills. Whereas traditional organizations organize by departments of similarly skilled workers under the direction of single supervisors, innovative organizations tend to organize by project in more self-managed structures that are better suited for enabling the serendipity that is often the fuel of innovation.

Teamwork is the essential skill because innovation is, at its core, a collaborative process. While traditional leaders recognize the need for collaboration—as noted in a recent IBM CEO study that found that 75 percent of CEO’s identified collaboration as the most important organizational attribute—the same study found that most of them are not quite sure what to do to transform their organizations into collaborative enterprises. As long as they remain unsure, their organizations are likely to be disadvantaged in a rapidly changing world.

2.  Distributed Power

Innovation is more likely to thrive in organizations where power is distributed rather than centralized.

Isaacson notes, “The Internet was born of an ethos of creative collaboration and distributed decision making.” This ethos runs contrary to the fundamental norms of traditional hierarchical structures where power is centralized at the top. It is not surprising that leaders are challenged when it comes to building collaborative organizations because embracing collaboration inevitably means enabling distributed decision-making, which doesn’t come naturally to leaders schooled in the dynamics of command and control.

The problem with maintaining centralized power in fast-changing times is that business leaders are prone to miss innovative breakthrough opportunities because they are far more comfortable with attempting to preserve the status quo than they are with adapting to new emergent realities. Isaacson points to the example of Xerox, whose leaders were not equipped to handle a radically new innovation—a rudimentary personal computer—created by their own research and development team. If the Xerox organization had been more of a network of distributed authority, such as Google is today, the history of the personal computer could have been very different. According to Isaacson, “Xerox could have owned the entire computer industry.” Instead, they ceded this opportunity to Steve Jobs, who on a chance visit to the Xerox R&D facility, recognized the possibilities of an amazing new technology.

3.  Complementary Styles

The best leadership of innovation comes from teams that bring together people with complementary styles.

 A key finding that Isaacson observed in his study of innovative organizations is that, in building leadership teams, they were highly effective in pairing visionaries with people who could execute innovative ideas. Isaacson cites the example of Intel, founded by two visionaries—Robert Noyce and Gordon Moore—whose first hire was Andy Grove, a disciplined manager who knew how to install operating procedures and get things done.

The leadership at successful innovative enterprises rarely emanates from one strong leader. Instead, it “comes from having the right combination of different talents at the top.” In addition to the threesome at Intel, another example of effective tripartite leadership is at Google, where Larry Page, Sergey Brin, and Eric Schmidt have combined their skills to build one of today’s most innovative businesses.

Another way that leaders can bring together complementary styles is by building crowdsourced organizations, such as Wikipedia and Linux, that provide the framework for a diversity of people to combine their talents in self-organized structures where the leadership team emerges from the interactions of the participants. While Jimmy Wales and Linus Torvalds are the recognized leaders of their respective ventures, neither of these two visionaries maintains tight control over their innovative enterprises.

4.  Learning Systems

The most important development of digital age innovation is the human-machine symbiosis that has transformed the essential orientation of all systems from programming to learning. 

This fourth lesson is significant because it undercuts the fundamental dynamics that have defined the way large groups of people work together. Human-machine symbiosis began in the Agrarian Age when humans first built tools to ease the burden of physical work. This symbiosis catapulted to a new dimension with the advent of mass production. The human-machine symbiosis of the Industrial Age was almost Borg-like where large numbers of people interacted with each other in rigidly prescribed ways. This form of symbiosis led to the creation of the command-and-control structures that have defined the practice of management for over a century. The basic orientation of these management systems is prescribed programming where workers are presented with fixed plans and incentives are put in place to make sure they don’t deviate from the program.

With the advent of the Digital Age, the human-machine symbiosis has once again catapulted to a new dimension that can be best described as mass collaboration.  Isaacson observes that today’s computer technology “augments human intelligence by being tools both for personal creativity and for collaborating.” As a result, the symbiotic relationship is an iterative learning partnership that combines the strengths of both humans and machines. While machines can collate information incredibly fast, humans are better at the intuitive skills of sense-making and pattern recognition. Isaacson points to the example of the Google search engine, which rapidly collates the individual judgments of billions of people to provide sensible search results. He notes, “the collaborative creativity that marked the digital age included collaboration between humans and machines.”

An Emerging New Management Model

 Filling the innovation resource gap requires a rethinking of a century-old management model that has been the foundation for how things get done in large organizations. Fixed plans and tight controls are of little value in a world that is rapidly changing. Instead, business leaders need to heed the four key lessons of the innovators to guide them in transforming their management structures into highly effective learning systems where collaborative teams blend complementary styles to exercise distributed power in serving the needs of their customers. To do so, business leaders will need to operate from the right context, embrace the emerging new management model of the innovators, and organize themselves as collaborative networks rather than top-down hierarchies.

Rod Collins (@collinsrod) is the Innovation Sherpa at Salt Flats and the author of Wiki Management: A Revolutionary New Model for a Rapidly Changing and Collaborative World (AMACOM Books).