Revolutionary Ideas in Action: What We Can Learn

Truly revolutionary people come sparingly, perhaps once or twice in a lifetime.  Because of this we tend to look at them as almost larger than life;  yet they exist, as do we, within an historical and social context with all the limitations that come with being human.  But that’s partly what makes them so interesting.  They possess the same raw materials and information as others, but for some secret reason they’re able to act on the information at their disposal and transcend their peers in a unique way.   Let’s grant, for sake of argument, that they possess a certain genius;  still, are there practical takeaways which could benefit the rest of us concerning how they successfully sold their ideas in a competitive marketplace? 

We’ll compare two such idea revolutionaries to answer that question, but with one important criteria:  namely, we’ll inquire whether similar characteristics can be gleaned from revolutionaries, not only from very different vocations, but also from completely different periods in history.  Doing so opens the possibility that such traits transcend particular times and vocations, implying that there’s a uniformity of underlying factors in transformative innovation.  We’ll find that there are indeed some shared characteristics that are both interesting and beneficial for anyone in the business world - particularly for executives responsible for setting strategic direction.  Those underlying factors will prove significant because they relate to the way human beings in general best create ideas and, just as importantly, how they best support and successfully sell those ideas within a competitive field.  Before proceeding though, I need to make a brief comment about my objective, namely, that our overview will be restricted to answering the question of why they were successful vis-a-vis their peers;  and thus I won’t attempt to evaluate the legitimacy of their viewpoints.  In other words, my interest is in what made them successful in the competitive marketplace of ideas, not in what the final judgement of history will be on their ideas.  

With that caveat, our first revolutionary is the 19th century scientist Charles Darwin, who single-handedly changed the nature of science for generations to come with his theory of evolution.  Second is Steve Jobs, who revolutionized how a great many of us interact with technology and whose influence will be felt for many years to come.  The two could hardly be anymore removed from each other, not only historically, but vocationally.  Yet we’ll discover that, despite their vastly different times and roles in life, they displayed some instructive commonalities that should prove helpful to anyone interested in successful innovation.

Charles Darwin

That historical, philosophical, and even scientific debates on evolution and its implications continue to exercise the minds of serious thinkers a century after Darwin’s death gives us continuing evidence of the extraordinary vitality of Darwin’s science and of the profundity of the Darwinian revolution.

I. Bernard Cohen

A great many elements converged to produce what’s been called the Darwinian scientific revolution.  What interests us here is that Darwin was by no means the first thinker to propose the idea of evolution.  I. Bernard Cohen points out that historians have shown there were many predecessors to Darwin on the subject.  Yet before Darwin’s publication of On the Origin of Species in 1859, none of these prior proposals about evolution altered the nature of science in any significant way.  So the natural question is why?  What was is it about Darwin’s particular presentation of the idea that was so different than his predecessors?  The problems Darwin was trying to answer weren’t any secret to other scientists;  and, in fact, others had even proposed elements that were very close to what Darwin would lay out in the Origin.  

In fact, Cohen notes that Alfred Russell Wallace independently developed some of the same ideas as Darwin, which fortuitously ended up being published along with a short synopsis of Darwin’s in 1858 (a year before the Origin).  However, there was muted reaction to their ideas, and they quickly learned that the mere publication of the idea of evolution was’t enough to launch the scientific revolution they sought.  That had to wait for Darwin’s own publication of the Origin the following year.  But this brings us to the question that concerns us here, namely, in what lies the difference between this first and second round of publications?  Why did the first publication fall on deaf ears while the second, Darwin’s Origin, usher a fundamental shift in science felt to this day?  There are actually several reasons, and ones that will be instructive for our purposes.

The first reason is Darwin’s presentation of the idea in the Origin.  It was both readable and it showed by careful reasoning and observation evidence for the doctrine of evolution.  He also brought together a wide swath of evidence from other, related fields of knowledge:  for example, the vast experience of breeders who practiced a sort of artificial selection, as well as a great variety of evidence of the geographical distribution of plants and animals, from geographical history, and other related fields to natural history.  Additionally, Darwin transformed the proposal of Charles Lyell (concerning the well-known problem of the sequence of different species found in the fossil records of successive geological eras) from the view of a contest among species into that of individuals.  Noting the variations, in other words, within members of a species, Darwin proposed that the chances of an individual’s survival depend on particular variations the individual possesses (what he called “natural selection”).  This transition from Lyell’s interpretation was one of the keys to a revolutionary way of thinking about the world of nature.

Darwin’s insight though was also precipitated by his reading from other, seemingly non-related fields.  The work, for example, of Thomas Malthus - an English economist and moral philosopher - proved to be the catalyst that led Darwin (and Wallace, independently) to see the clue to the origin of species in natural selection through “a struggle for existence.”  In other words, it enabled Darwin to apply what he knew about the struggle at the species level to the individual level.  But there are also other factors that contributed to Darwin’s receptivity to Malthus in the first place, such as the principles of individualism and competition in Adam Smith’s economic thinking.  To add to all this there even seemed to be in the air a feeling that a divinely ordained process was continually weeding out misfits in a similar manner to the concept of “selection.”

Along these lines, Howard Gruber adds that Darwin delighted in studying Paley’s Natural Theology and Euclid’s Elements.  Ironically, it my have been Darwin’s immersion in the Cambridge combination of theology and natural history that deepened his awareness of the adaptive structures he was later to explain in natural terms.  Even the poetic vein in his approach to nature was nourished throughout his education.  “Poetry can be important,” Gruber notes, “in the development of a scientist:  its content results from the poet’s efforts to search out hidden meanings in the world around him;  its form demands a similar effort of those who would enjoy it...One does not have to look far in Darwin to find prose passages in which he is being more self-consciously poetic, striving to invoke in his readers something of his own feeling for nature.”

Another significant factor concerning the revolutionary nature of Darwin’s proposal manifested itself in the attacks on his model for doing science.  His opponents charged that he’d departed from traditional norms of scientific thought, in that Darwinian evolution is nonpredictive (but nevertheless causal).  That is, while Darwin proposed a cause to the process of evolution, he was unable to predict what the future course of evolution will be - a striking departure from the traditional view in which predictive power is a necessary criteria in theory assessment.  He essentially showed that a science can give a satisfactory explanation of the past, even while prediction of the future is impossible.  And regarding other detractors, as one would expect in the midst of an idea revolution, Darwin had his share.  The reading of the Wallace-Darwin papers in 1858 mentioned above made George Bentham so “perturbed” that he withdrew his own paper that was scheduled to be read later that morning in which he was to present evidence of the fixity of species.

Finally we have the issue of timing.  Darwin had worked out the consequences of his theory slowly, but by 1844 he privately wrote an essay which contained the essence of the thoughts presented in the Origin.  We have evidence that he became an evolutionist in 1837 and conceived of the theory of natural selection the following year, yet didn’t publish his ideas in any form for some two decades.  So interestingly, the intellectual revolution was actually achieved in 1836-37, with the second stage of commitment to the revolution, the private revolution, taking form in 1844.  But the public stage of revolution on paper had to wait for another decade and a half until Darwin received Wallace’s paper - which was one of the primary causes for Darwin’s rapid completion of a readable version of the Origin - with its independent conception of natural selection, in 1858.  

Implications

For our purposes, we can make some initial conclusions about Darwin’s revolution.  

First, the problems Darwin was trying to solve were nothing new, and others were already coming to similar conclusions.  What seems to have made his proposal stick was directly related to his effort in providing a readable account that systematically laid out the evidence.  A simple reading of a paper the prior year wasn’t enough.  Whatever might be said about nineteenth century scientists, they were very much human and a clear, readable, and elegant account of evolution was required to push Darwin’s theory through the clutter.  Darwin essentially created an easy-to-understand account that was especially appropriate for consumption, something we might think in terms of a  marketing effort of sorts.  Yet theoretical simplicity and beauty isn’t a foreign element even in scientific progress.

Second, Darwin was a wide reader who had a firm grasp of not just the professional literature of his vocation, but just as importantly, of many other subject matters seemingly unconnected with his own field.  Bringing in a swath of evidence from breeders, among others, was key to selling the theory.  In addition, had he not read Malthus’ work, which was unconnected to his field, history’s judgement of Darwin might have been different.  His reading of these many other sources sparked an important imaginative process in Darwin’s thinking that enabled him to see his own field in a new and creative light.  In other words, his broad interests empowered a transformation in which he was able to take ideas already in the marketplace to the next logical step through a creative process that was fertilized by inter-disciplinary reading.  

Third, although we might think it too obvious to mention, Darwin acted and took advantage of the time as he made the Origin available for public consumption (being motivated by competitive pressures).  Here we highlight two important points:  first, it shows that competitive pressures are everywhere, in every field, and that they should be viewed as a galvanizing force which can harness one’s energy toward a productive end;  second is that Darwin decided to take the risk - which was substantial given the scientific and religious implications of his theory and the furor that was sure to follow - and make his ideas public.  As Seth Godin might put it, he made the decision “to ship.”  Fourth, and most importantly, it was the combination of all these factors that set the Origin apart from the work of his contemporaries.  It seems evident that without these factors Darwin likely would not have brought the revolution to science that he did (meaning it would have been left to someone else).

Fifth, as a result Darwin was able to redefine the bounds of science itself, not the least of which by introducing a theory with explanatory power of the past, but minus the predictive power that was thought by traditional methods as a necessary feature of theories.  As our beginning quote illustrates, Darwin’s revolution not only allowed innovation to flourish, but no matter what the final consensus of his revolution will be, his thought is sure to go down in the annals of history.

Steve Jobs

Steve Jobs thus became the greatest business executive of our era, the one most certain to be remembered a century from now.  History will place him in the pantheon right next to Edison and Ford.  More than anyone else of his time, he made products that were completely innovative, combining the power of poetry and processors.

Walter Isaacson

Steve Jobs once remarked that, “Technology alone is not enough.  It’s technology married with liberal arts, married with the humanities, that yields us the result that makes our heart sing.”  These weren’t just words to Jobs.  He embodied this ideal as Apple introduced a product line - the iPod - that would, quite literally, make our hearts sing.  But as Walter Isaacson points out in his impressive biography of Jobs, the iPod was just a part of a new strategy that would transform the personal computer into a “digital hub” that coordinated a variety of devices.  Jobs’ vision was that people would link and sync their pictures, video, text, and every aspect of what he called their “digital lifestyle.”  Thus the Mac, far from being marginalized, would become the hub for new innovative devices which included the iPod, iPhone, and iPad.

A central part of the strategy involved what Jobs called “the digital music revolution,” which began in January of 2001 with Apple’s initial release of iTunes for the Mac.  iTunes allowed an intuitive, completely self-contained, format where users could import an unlimited number of audio tracks and put them into an MP3 format, and download songs to MP3 players with plug-and-play simplicity.  The advertising slogan would later simply put it, Rip. Mix. Burn.

The iPod was released soon after in October of the same year, just as the country was grappling with a terrorist attack which took the lives of thousands of Americans.  It seemed to outsiders that Apple stood on a precipice in which their very future might be determined as Jobs made the memorable announcement.  While it was Apple’s first attempt to enter the digital music market, the iPod was by no means the first digital listening device.  Hard disk MP3 and flash-based players had been in the market for several years, and their market penetration was in full swing.

But Apple presented their new device as distinguishable in several ways.  First, the iPod could compete with both devices in the fact that it used a 1.8-inch hard drive and could hold about a thousand songs - which made it smaller than most other hard disk MP3 players and small enough to give flash-based players a run for their money.  From Apple’s perspective, the iPod was the perfect marriage of storage capacity and size.  Second, it could play multiple audio file formats.  Third, the other players were missing a sleek design, something which Apple was able to deliver in spades.  Combining a simple interface with an equally simple hardware design, Apple was able to build an impressive device with both power and ease of use.  Isaacson highlights debates in which Jobs had to convince team members to offload more complex procedures to iTunes where they could more appropriately be handled, which turned out to be one of Apple’s brilliant moves.  And while the press thought Apple had priced the iPod too high at $399, it turned out that they had read the market perfectly and greatly exceeded anyone’s sales expectations.

Finally, special mention should be made of the literature he read throughout his life because, as mentioned above, he explicitly and on many occasions remarked about its impact on his work.  “I like living at the intersection of the humanities and technology,” he said on one occasion.  On another he remarked:  “Edwin Land of Polaroid talked about the intersection of the humanities and science.  I like that intersection.  There’s something magical about that place.  There are a lot of people innovating, and that’s not the main distinction of my career.  The reason Apple resonates with people is that there’s a deep current of humanity in our innovation...In fact some of the best people working on the original Mac were poets and musicians on the side...Great artists like Leonardo da Vinci and Michelangelo were also great at science.  Michelangelo knew a lot about how to quarry stone, not just how to be a sculpture.”  Thus along these lines, Isaacson notes that Jobs wasn’t only interested in reading on technology, but also read widely within the liberal arts, including Plato, Melville, and Shakespeare;  “I loved King Lear,” Jobs once said.  This was all on top of his reading of spiritual literature.  In fact, Bianca Bosker of the Huffington Post points points out that less than a handful of the books mentioned in Isaacson’s biography concern technology.  So here again we see broad, inter-disciplinary reading that fed the vision of a man who Isaacson calls “the ultimate icon of inventiveness, imagination, and sustained innovation.”

Implications

We can conclude briefly with the following.  First, the problem Jobs was seeking to address was nothing new, with competitors having already developed solutions that were readily available.  In fact, as Isaacson notes, at one point Jobs was frustrated with himself for missing it and hoped he wasn’t too late.  But here again, competitive pressures impelled Jobs into action and he was able to capitalize on the market’s failure to present an elegant solution.  With a deep understanding of the market, Jobs was able to address the problems head-on, but in a way that encompassed much more than the obvious with his keen ability to “sniff the winds, and sense what lay ahead.”

Second, Jobs succeeded in transforming people’s digital lifestyles by looking at what was currently in the market and taking it to the next logical step, through an imaginative process which enabled him to gauge cultural and technological trends.  Thus he thought in much broader terms than competitors by developing a strategy of the digital hub, followed by a fully integrated solution (iTunes) that allowed complete management of a person’s entire music library.  Instead of merely focusing on the personal computer which which was showing signs of decline, Jobs simultaneously breathed new life into the Mac and captured our imaginations by creating an intersection between the things we love in life, the things we live for, and technology.  Uniquely, technology came to the service of our passions, intelligence, and art - virtually all aspects of our humanity.  His thinking and broad vision proved so compelling that Apple would rise to be the world’s most valuable company in August of 2011.

Third, Jobs presented an extremely compelling solution by making complex things easy, inspiring elegance in both hardware and software.  Ease of use and aesthetics were his mantra, enabling the iPod (as well as the iPhone and iPad) to captivate users all over the world.  Todd Zenger notes that Jobs “believed that consumers would appreciate aesthetics and aspired to create a device with the elegance of a Porsche....His insight was that the internal capability most critical to value creation in this competitive terrain was design.”  But, and I believe this is worth repeating, as Jobs tried to make abundantly clear on many occasions, the influence of the liberal arts was key to his quest and success.  He once said that “Microsoft never had the humanities and liberal arts in its DNA.  Even when they saw the Mac, they couldn’t copy it well.  They totally didn’t get it.”  His interest and reading in non-business related material provided the soil in which technological innovation would flourish.

Fourth, and again it might seem strange to point out, he acted and took advantage of the time.  But as any entrepreneur knows, acting on beliefs isn’t easy;  in fact, more than not, it’s that last part of a person’s plan that never comes to pass.  Risk can be frightening, but unfortunately it’s an integral component of action.  And Jobs’ grand strategy was most definitely a risk, as failure would probably have meant Apple’s irrelevancy.  Fifth, it was the combination of all these factors that was the impetus of Apple’s phenomenal success.  As a result, Jobs was able to literally redefine not just personal computing, but also important aspects of the music industry and how our lives interact with technology.  Evidence of this is everywhere, from people sitting in coffee houses with earbuds, all the way to the other spectrum of manufacturing plants where production managers can be seen with iPads in hand containing the company’s real-time key performance indicators. Revolutionary indeed.

Summary Findings

Darwin and Jobs, despite their very different vocations and aims, had some important commonalities.  First, in an important sense neither one was first to market with a solution to their respective problem.  Second, they both had an expertise in the market of ideas that were current and available, meaning they understood the problems each of their constituencies faced and why those problems hadn’t been solved.  Third, both were able to recast complex problems into a relatively simple, even elegant, solution.  Fourth, they were able to see through the data and extend those available ideas in a direction that was truly revolutionary.  In other words, they successfully cast a slightly different light on problems that may have seemed to many as worked-over and solved to some extent, setting the scene for a new paradigm through which we see the world.  Fifth, and closely related to the fourth, they were both well read and knowledgeable about ideas outside of their professional domains that proved critical in their idea formation.  As a result, they were able to see interrelationships among disparate fields of knowledge that others had failed to see - which provided a key to their ability of seeing through the data.

This aspect is worth stressing particularly in our culture as education becomes more and more specialized.  In his bestseller, The Closing of the American Mind, Allan Bloom laments that education in the U. S. has become specialized to the point that the humanities and liberal education are in complete decay.  While more people now have college degrees, the impression that our general populace is better educated depends on what one means by the word education - or rather a blurring of the distinction between liberal and technical education.  

A highly trained computer specialist need not have had any more learning about morals, politics or religion than the most ignorant of persons.  All to the contrary, his narrow education, with the prejudices and pride accompanying it, and its literature which comes to be and passes away in a day and uncritically accepts the premises of current wisdom, can cut him off from the liberal learning that simpler folk used to absorb from a variety of traditional sources.  It is not evident to me that someone whose regular reading consists of Time, Playboy, and Scientific American has any profounder wisdom about the world than the rural schoolboy of yore with his McGuffey’s reader.

G. K. Chesterton once remarked that the great myths of the liberal arts are works of imagination which teach poetical truths that there’s something there;  something behind the clouds or within the trees, and that the pursuit of beauty is the way to find it;  that the imagination, in other words, is a sort of incantation that can call it up.  Gruber correctly comments that the balance that’s best for clinching an argument is not the same as that for opening a mind.  Broad reading opens the mind, which combined with knowledge and proficient use of the brutal facts, sells the idea.

As evidence of the decline in our creative abilities, Richard Barrett cites a now well-known study that compared the creativity of children to adults.  It showed that the vast majority of children are creative geniuses by giving a group of 1,600 children a test of creative thinking over a period of 15 years.  From ages three to five, an astounding 98 percent of the children scored in the genius category.  But here’s the interesting part.  Already by ages eight to ten, only 32 percent scored in that category, and by 13 to 15 years of age, it was down to a paltry 10 percent.  Moreover, two hundred thousand adults over the age of 25 have taken the same tests, and only 2 percent scored in the genius category.  “What happened to their natural creativity?  The answer is that it was socialized out of them.  Our proficiency in expressing our creativity falls off as we accept other’s opinions and evaluations of what is good and bad, right and wrong.  Our education systems have much to answer in this arena” [Richard Barrett, Liberating the Corporate Soul].  

Many have argued that the decline of the humanities and liberal arts in our educational institutions has been a significant factor in the decline in imagination and creativity.  Isaacson says that Steve Jobs was able to take imaginative leaps that were instinctive and even magical at times, and that his insights came out of the blue and required intuition more than sheer mental processing power.  Darwin was also able to make such leaps;  but in both cases, their interests in other fields - the humanities, economics, poetry, and even music - provided the fertile soil in which revolutionary ideas could be born and grow to maturity.

Finally, using competitive pressures as a motivator, they acted, and in the face of considerable risk to their futures.  In this sense they were (Darwin included) both entrepreneurial and courageous.  And courage shouldn’t be trivialized in either case, as cowardice becomes the much easier road to take when so much is on the line.  Both reaped their fair share of detractors and enemies as a result.  Yet for the reasons above, both were successful in revolutionizing how we think about the world and its many-sidedness.

Applying What We’ve Learned

Our examination has revealed some significant things about how successful revolutions are brought about;  namely, that certain traits seem to transcend particular times and vocations, pointing to an instructive uniformity (at least in some cases) of underlying factors in transformative innovation.  We can point specifically to the following:  First, it’s not always necessary to be the first to market (there can even be certain perils to being first).  Competition is a simple fact of life, but there often remain unaddressed problems that can be solved in innovative ways, and commonly even more proficiently within an existing competitive field which can serve as fodder.  In fact Darwin and Jobs were both jolted into action by competition, implying that competitive forces served as a catalyst of fruitful work.  Look carefully to see where the gaps are and address those head-on.  But even more, think broadly about the underlying problem, how it can be creatively addressed, and who your constituencies really are - or could be.

Second, make simplicity a priority, as it’s a form of elegance in itself.  While this may seem desirable in the business world, it doesn’t seem so for science, but philosophers of science are quick to point out that even here one of the criteria for evaluating competing hypotheses is theoretical simplicity.  Presentation, even in a discipline like science, matters.  Why?  The reasons are many, but one has to do with how humans best process and connect with new information and ideas.  Clarity, simplicity, and elegance are especially suited to meet an audience - and they’re powerful because they do so at an emotional level, not just intellectual.  Importantly, studies are showing that people’s emotions are closely tied to their reasoning processes.  In fact, Gerald Zaltman argues that our emotions typically exert first choice on our thinking and behavior.  

Third, read, and read widely.  Make yourself familiar with the literature in your industry, but importantly, do so in areas like poetry, philosophy, and even music.  Discipline yourself to devote thirty minutes a day just reading with no other distractions.  Absorbing a wide-array of literature has the effect of opening the mind to creative thinking in a way nothing else can.  Try something along the lines of Shakespeare's Henry V or Plato’s Republic.  One may be an expert in a specific field because all time and attention has been focused there, but he pays a high price of living in a very small space.  Reading a broad range of literature, listening to Mozart and Bach, has the effect of enlarging that space to encompass more of the world’s wonders.  And its effect will be more clarity of thought and a greater appreciation for innovation.

Fourth, have the courage to take a risk and act on your ideas, taking advantage of the time.  Follow through with your ideas to the end, and as Seth Godin says, set a date, and when that date comes, ship - no excuses.  Of all the characteristics presented here, this one may be the toughest.  But it’s obviously one of the most crucial aspects to developing and marketing innovative ideas.  At the heart of this is developing self-discipline (something both Darwin and Jobs had).  Studies have shown that people high in discipline outperform even those with higher IQs.  In fact, self-discipline out-predicts IQ for academic success by a factor of about two.  And unlike IQ (which many argue to be unchangeable), self-discipline can be learned as it simply involves deliberate practice.  Mortimer J. Adler once said that true freedom isn’t possible without a mind made free by discipline, and he was right.

Finally, Gruber makes a point worth mentioning.  Each of us, he says, makes a different set of decisions about how we make use of our personal resources, thereby setting the scene for the fortunate thoughts that occur and choosing among them as they do.  Thus, Darwin could notice behavioral variations in pigeons and use them in a theory of the evolution of mind “because he was at once the pigeon fancier, the evolutionist, and the materialist.”  We can similarly add that Jobs could notice behavioral patterns and unexpressed wishes of consumers and use them in a grand strategy that would change the way we interact with technology because he was at once a humanist, technologist, and music lover.  Gruber’s point would be simply that the fact they were all these things at once meant that a unique intersection of many things could occur in their minds.  And that, the existence of such an ensemble shouldn’t be regarded as an accident, but rather the deliberately cultivated fruit of each’s effort.  They both organized their lives in order to construct a new point of view.  “In his explorations of the world, the individual finds out what needs doing.  In his attempts to do some of it, he finds out what he can do and what he cannot.  He also comes to see what he need not do.  From the intersection of these possibilities there emerges a new imperative, his sense of what he must do.”

So, while our revolutionaries may have possessed a certain genius, they also point us to practical directives on how we can stimulate and embolden creativity that ends in action which transforms, through a careful consideration of how we use our own resources.  We too can organize our lives in order to construct a new point of view if only we’re willing to put forth the effort required to make imagination a living reality.  As Thomas Edison once mused, “Genius is one percent inspiration and ninety-nine percent perspiration.”

The Nature of Innovation

A full one-third of corporate revenue is generated through new product launches each year, a fact which speaks volumes about the importance of innovation.  Because of this, and because of the concept’s popularization, innovation has gained an almost ubiquitous presence.  We see its influence everywhere it seems, from the popular and professional literature all the way to company vision statements.  But what is innovation, and how is it best achieved?  We all know it’s critical for a company’s success in this highly competitive world, but the concept seems a bit hazy around the edges.

To clarify its nature, some basic questions seem to be in order.  Is innovation rooted in the unique creativity of special individuals that have the ability to generate ideas (seemingly out of nowhere) that transform, or is it simply the inevitable result of the next stage of a particular discipline’s evolution?  Are there people who, despite the way customers do things and in spite of the way they behave, are able to almost magically transcend present reality to create something special and transformative?  Or, is innovation best seen as the necessary outgrowth, and rooted in, present reality?  In fact, neither of these options do justice to the way things actually are.  Concerning the former, transformative innovation doesn’t come from a mind that’s not deeply rooted in present realities.  Ideas that come from speculative fancies are like an answer in search of a question;  they’re bound to address issues that aren’t concerns of real people.  They’re simply ideas divorced from reality.  What I have in mind here is the guy toiling away in his garage to invent something without first trying to understand what his potential customers might actually want, which is often very different than what we think in solitude.  Such an attitude is fostered by the plausible sounding argument that customers don’t know what they need, and that real innovators fly above the fray and are uniquely able to tell them what they need. 

Reality however is quite different.  While a person might think he can fly without an engine, he’ll soon be corrected by the reality of gravity.  Founder of Southwest Airlines, Herb Kelleher, once said that “Customers are like a force of nature: You can't fool them, and you ignore them at your own peril.”  That this is a widespread phenomenon probably has something to do with the astonishing failure rate of start-ups in the first five and ten years of business (over 50 and 70 percent respectively).  As for our second option, true innovation doesn’t come by way of a natural evolution of the way things are.  Japanese companies in the 1980s became masters of incremental improvements on operations and processes, enabling them to produce products faster and with higher quality.  While it gave them an advantage for a time, they eventually suffered due to the fact that operational effectiveness isn’t the same thing as innovation.  Minor improvements, which do result in operational efficiencies, simply don’t equate to the innovation which has become so key in today’s competitive environment.

I believe the best way to view innovation consists in recognizing its dual nature, in its dynamic relationship with both of our options above.  What this means is that transformative innovation is deeply rooted in the way things are, while at the same time it has qualities transcending that reality in some significant way.  We can thus say that innovation is emergent from present reality and arises out of it, but it does so by making unique interconnections between disparate elements of that reality, resulting in something new;  something that, through those interconnections, gains new characteristics that were not part of the individual parts alone. 

We might gain something by drawing an analogy with the human brain and its relation to the mind.  The brain is a highly complex system of neuronal networks that operate in concert, and out of which something truly unique emerges that we call consciousness.  What’s important is that this intricately interconnected system is a necessary physical substrate that sustains self-consciousness.  And while consciousness is deeply rooted in, and therefore dependent on, those vast physical interconnections something arises - consciousness - which isn’t easily reduced to those systems.  After all, among the animal kingdom humans have the unique ability for abstract thought and self awareness.  Key to this is the concept of emergence, of something new/higher coming out of systems that operate at lower levels.  We can point to the same sort of thing in a discipline like biology.  While biology emerges from and is rooted in the fundamental laws of physics and chemistry, we can’t simply reduce biology to chemistry or physics;  and that’s for precisely the same reason, namely, that the biological level has characteristics beyond those other levels in which it is rooted.  Something unique happens the higher up you go.  What’s important for our purposes is both that the higher levels wouldn’t be possible without the lower ones, and that the higher levels gain characteristics which can’t be simply reduced to the lower levels.

Truly transformative innovation is best seen as following the same pattern;  as emerging from lower levels - defined here as present needs, products, processes, behaviors, and the like - and being rooted in them, but out of which comes something truly unique and endowed with characteristics that weren’t part of their individual elements.  It’s precisely the result of the unique interconnections of those individual systems that allows something special to emerge (which is along similar lines to Michael Porter’s view on strategy).  On this model we can see that innovation isn’t possible without being rooted in the lower levels;  and then because of the unique interconnections it draws between disparate elements, it gains something which goes above and beyond those lower levels.

This view seems to make most sense of the fact that the more connections with reality that are made, the more fundamental the innovation and the harder it is to displace.  An example of this is Steve Jobs’ “digital music revolution” in which the music lover (which is most of us) was given a single place to manage all of his music, along with a slick device that can go wherever he does.  Or the iPhone, which brought together a whole host of things we love, from our music library, photos, email, browser, phone, all the way to thousands of other apps that connect our lives to technology - all again in a single device.  Such innovations, being deeply rooted in activities we already engage in, aren’t easily dislodged - and, because they address deep needs, an automatic emotional connection is created in the consumer.  Jobs’ innovations were thus deeply rooted in present realities, and therefore emerged from them, but they were able to surprise us through the interconnections of many different things - which created something truly unique.  Either a lack of engagement with reality or mere incremental tweaks to current offerings would have preempted the Apple revolution that catapulted it to being the world’s most valued company in 2011.  Here we see the both/and nature of transformative revolution.

Why is this significant?  First, because our thinking is mixed with truth and error.  Having innovation rooted in the lower levels provides a bulwark against speculative flights of fancy;  or in other words, keeps us grounded in the real world with real people and real problems and desires.  As we all know, the world is constantly changing, and reality is the best check against veering off in the wrong direction.  And these very real problems provide the fodder for our creative processes, which as we zoom out and look at them from a broad perspective, allow us to make new connections that change the way people do things.

Second, it’s significant because viewing innovation as such suggests that to be truly transformative, we must dig down beneath the surface phenomena to the root causes of things - often hidden and difficult to surmise - in order to really address human needs and desires;  with the ultimate goal being the discovery of patterns, which are an essential element in innovation and the thing that makes it compelling and emotionally significant to a wide audience.  This shouldn’t be surprising, as it’s been the model for science for hundreds of years and thus might even be seen as reflecting something fundamental about how people best understand reality as a whole.  Such a view tells us that causes with their corresponding patterns must be discovered with sensitivity and attention to underlying mechanisms and behavior.  IDEO has risen to be one of the world’s most sought after design firms precisely because they’ve embedded these concepts into their core practices, which begins with their “deep dive” process that seeks to understand problems from multiple perspectives, and with a thoroughness one might expect only of the practicing scientist.  Yet it’s been proven successful time and again, perhaps because that’s the way reality demands to be interrogated and the way our creative processes flourish.

Is Loyalty Dead?

In his book The Loyalty Effect, Fred Reichheld notes that on average, U.S. corporations lose half their customers in five years and half their employees in four. On top of this, he shows that disloyalty at current rates has been shown to stunt corporate performance by 25 to 50 percent. That's incredible! For any company looking for long-term growth and stability, such defection rates are simply unsustainable.

Creating loyalty, then, from customers and employees is obviously critical. Unfortunately, you simply can't have loyalty from one without the other. Losing employees becomes a vicious cycle which can cause customer disloyalty, while losing customers can cause high turnover in employees. Consider Reichheld's simple illustration concerning the tangible benefits of maintaining loyalty:

Imagine two companies, one with a customer retention rate of 95 percent, the other with a rate of 90 percent. The leak in the first firm's customer bucket is 5 percent per year, and the second firm's leak is twice as large, 10 percent per year. If both companies acquire new customers at the rate of 10 percent per year, the first will have a 5 percent net growth in customer inventory per year, while the other will have none. Over fourteen years, the first firm will double in size, but the second will have no real growth at all. Other things being equal, a 5-percentage-point advantage in customer retention translates into a growth advantage equal to a doubling of customer inventory every fourteen years. An advantage of ten percentage points accelerates the doubling to seven years.

Besides these considerations, what else about maintaining loyalty makes it so lucrative? Two things come to mind immediately. First, most businesses rely on customer referrals for continued success. In fact, it's hard to imagine a business grow when there's widespread consumer discontent with its service and offerings. Fortunately or unfortunately, the opinion of consumers can circulate in this day and age within a few seconds to literally millions of other prospects. But the real value of maintaining customer loyalty is that you always have a ready and willing pool of customer advocates for your products and services: and there isn't anything more powerful than having your customers do your selling for you!

Second, there's a natural relationship between employee loyalty and customer loyalty that's often not fully appreciated. Stability within a company is tied to employee retention. Loyal employees provide a maturity and expertise that's incredibly difficult to maintain with high turnover. We've all tried to get help from employees that clearly don't have the history required to solve our problem. Everyone knows how frustrating this can be, and how it creates an overall negative perception of the company.

But the flip side to this is that companies that tend to have high customer retention also tend to have high employee retention. At least one reason for this phenomenon is that employees seem to feel their job has more meaning when the company can generate such enthusiastic customers, which in turn bolsters employee morale. It's a circle often overlooked. And importantly, this cycle leads to higher productivity. As reported by Conley, the Gallup Organization found that a highly engaged employee and customer leads to 3.4 times more financial productivity. Impressive.

The moral? Loyalty is only dead for companies that foolishly think that success is maintained without such a focus. Creating an environment that inspires loyalty isn't easy, but critically important, and in the end the surest way to guarantee financial success and long-term growth.

Customer Service, The Ritz Carlton Way

If businesses treated people the way the Ritz does, the world would be a better place.  Being in the hotel business, you’d expect the service to be good, but the Ritz literally puts other hotels to shame.  They’ve set the bar on service excellence that every business should do their best to imitate.  While it would take a book like Joseph Michelli’s The New Gold Standard to do it justice, a few things about the Ritz deserve attention, which will help illuminate a recent experience we had at the Marina Del Ray location.

Summed up nicely on a card which all employees carry is the Ritz Credo, which states their pledge to provide the finest personal experience which enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of guests.  Michelli notes it’s all a result of their belief that guests should be treated like family.  The intimacy of interpersonal caring and the art of anticipation are critical aspects of the Ritz culture; they’re the secret sauce of the Ritz Mystique.  In fact, to guarantee their ideals are carried out by employees, the company empowers every single one to spend up to $2,000 on each guest each day.  And that’s all without seeking permission from a supervisor.  Talk about trusting your employees!

Though I think we should aim for service excellence for its own sake, there’s an interesting side effect that Michelli reports.  Ritz research shows that a guest who’s actively engaged with the Ritz and its staff spends a whopping 23 percent more money than the one who’s only moderately engaged.  When employees produce a 4-percentage-point increase overall in customer engagement scores, the Ritz achieves an extra $40 million in revenue!  That’s incredible, and I suspect it’s true to some extent for most businesses.

A Vacation to Remember

None of the hype about the Ritz Carlton is mere theory, as we recently found out during our stay at the Ritz in Marina Del Rey (consistent with our memorable Ritz experience in Maui last year).  Wowing us began after we checked in and realized our bathroom door wouldn’t lock (something you like to do when toddlers are present).  It only took a few minutes for maintenance to show up, but he realized he didn’t have the correct part.  It only took another minute or so, but when he returned he surprised us by bringing the new movie Wreck-It Ralph for our boys, anticipating the fact that we’d need kiddo distraction during our stay.  Great way to foresee a need we couldn’t even verbalize at the time.

But it only got better.  The next morning as we walked off the lobby elevator, Gloria greeted us with a warm smile and proceeded to make animal balloons for our twin boys (which they loved!).  Treating us like we were family, she made sure she memorized our names and even took the time to write down the spelling of our boys’ names.  When we returned to our room, there were two gift baskets for our tots complete with an engraved Ritz name badge (names were spelled correctly by the way, which isn’t easy), beach balls, and a fully wrapped gift for each.  I mean you would have thought it was Christmas at home, presentation and all.  Every little detail was perfect.

Pretty cool.  They made us feel like we were at home with family, yet with all the sophistication of the Ritz.  And that resonated deeply with us because as we have toddlers (plural), we were apprehensive that the staff might be put out with their energy.  Far from it, we were never made to feel as though the hotel catered only to adults.  In fact, they had something for the kids, whether a movie, a sucker, or a car every day of our stay.  And they always genuinely greeted us with warmth.

One other thing that wowed me was a day at the pool.  We’d apparently left a drink behind.  The following day, Chris (the pool attendant) said he noticed we’d left it there and insisted on replacing it with a drink of our choice.  May be small, but it left a big impression.  Even when we checked out and I brought the car to pick up luggage, our Bellman made sure I could find the rental car facility, warmly shook my hand, and offered me a bottle of water for the road.

All this got me thinking about the impact the staff made on us that week.  There are a lot of nice hotels, but none of them are the Ritz.  Their warmth and thoughtfulness made our trip.  It’s true that Ritz ambience is beautiful, but the service they provided our family that week completely overshadowed the amazing surroundings.  Makes me scratch my head when companies have the same opportunities the Ritz does with customers, yet fail to understand that making an emotional connection is king.  There’s simply no substitute.  Not only did we love our stay, but because of their generosity we made it a point to purchase gifts at their shop instead of the Promenade shopping area in Santa Monica, which is much larger.  So it’s true, warmth and generosity do pay off after all.  Oh, and there’s also the fact that a guest (me) has taken the time to write about it, which is free to them, and delivered that word of mouth advertising every company craves.  Guess I can only hope other businesses will follow the Ritz’ lead, but I won’t hold my breath.

Negotiate Great Relationships - Concluding Thoughts

Experts love to paraphrase the Italian diplomat Daniele Vare that negotiation is the art of letting them have your way.  While that might sound a bit crafty, there’s a lot of truth to it.  But in most deals there are multiple people involved from each side that all have their own interests they’re looking to have met.  So it’s often difficult to see just how you can let them have your way.  Where to begin with so many interests involved?  We’ve seen this dynamic in almost every negotiation we’ve been involved in, and it can be both frustrating and challenging.

Harvard Professor James Sebenius makes a useful observation here, and one that can save you a lot of grief; that what’s rational for the whole may not be for the parts.  To assess the full set of interests at stake, you have to understand the interests of all the key players in the internal decision process.  In the thick of things it’s easy to focus on the one who speaks the most.  But in virtually every case, there’s an entire subset of often conflicting interests in the background threatening to derail an agreement.

We’ve learned through trial and error that the detractors need direct attention.  Underneath the hostility lies a set of interests that have to be met for agreement to move forward.  And one thing we’ve had to learn is that their real interests are often masked, so digging further down is essential.  Offering empathy for their concerns and asking tons of questions seems to work the best:  Why is it you want that, What exactly are you trying to accomplish, What’s the end goal?  We’ve found this helpful because people have the tendency to get caught up in solving their problem in a particular way, which makes it our job to show how it could be solved in perhaps a better way.  Tunnel vision is human nature, it exists in every discipline, but in negotiations it has to be addressed. 

Professor Sebenius adds along these lines that since agreement represents the simultaneous solution of all sides’ problems, solving their problem is part of solving your problem.  His advice?  And I wish I’d read this years ago, avoid the self-defeating mistake of letting them solve their problem while we solve ours.  Huge mistake.  Almost guaranteed that if you disengage their resistance hardens.  What he says couldn’t be any more accurate.  Stay close to each participant, develop good relationships as much as possible, and incorporate their feedback in the process.

In the end, it’s all about creating long-term relationships, so approach negotiation, and renegotiation, with the attitude of genuinely trying to satisfy each party’s interests.  If you succeed, the financial and psychological benefits are enormous.  Because after it’s all said and done, all any of us have are our relationships, and those can’t be reduced to financial statements or spreadsheets. 

Negotiate Great Relationships - Part 2

In our second blog on negotiating tips, I'll summarize the advice of expert William Ury that I wish I’d read years ago.

Ury lays out five tips that can save you a lot of grief if used wisely. 

1.  Go to the Balcony, not to be confused with The Godfather’s “Go to the Mattresses.”  While it sounds as obscure, it’s helpful.  He’s pointing out the danger of our tendency to react when attacked.  Simply put, don’t try to control the other person’s behavior, control your own.  “Go to the balcony” means that you buy some time to refocus on the end goal, an apt image for getting perspective on the situation and picturing yourself standing on a balcony looking down on the negotiation.  Useful advice, because to engage in joint problem-solving you need to maintain your mental balance and stay focused on achieving what you want. 

2.  Step to Their Side.  When engaged in talks it’s easy for things to go awry.  Emotions get involved and viewpoints can seem almost unmanageable.  You need to create a favorable climate and defuse anger, fear, hostility, and suspicion.  If they attack, they expect you to do the same - so do the opposite.  Listen to them, acknowledge their points, and agree with them whenever you can.  Acknowledge their authority and competence.  But arguing with them won’t help, in fact it will make them more abrasive.  Step to their side.  Look for occasions when you can say yes to them without making concessions.  Here’s where subtlety and human warmth is called for, something that can’t be calculated on any spreadsheet.

Harvard Professor James Sebenius makes an important point here.  Developing and maintaining a strong social contract (I’ll simply call this relationships) can be as, or even more important, than a good economic contract.  This is one point we’ve found to be especially true in our business.  Negotiating the spirit of a deal shouldn’t be less important than the letter contained in spreadsheets.  Successful ventures generally work through problems on the basis of good relationships; when people run to check contracts it usually spells trouble.  As powerful evidence of this, Sebenius quotes Felix Rohatyn, former managing partner of Lazard Freres, that “most deals are fifty percent emotion and fifty percent economics.”  Relationships can be instrumental in making or breaking a deal.

3.  Reframe.  Simply rejecting the other side’s position makes them dig in further.  Instead, when they take a hard-line position, change the game, reframe; meaning, direct their attention to the challenge of meeting the interests of each side.  Reframe what they say to direct them back to the problem by asking problem-solving questions such as, Why is it that you want that? or What if we were to...?  In other words, let the problem be the teacher.  Keep in mind that successful negotiators ask countless questions.

4.  Build them a golden bridge.  People want to look good, they want to appear as though they’ve won.  So help them by crafting an agreement that makes it look like they won.  Fact is, everybody needs to win for the agreement to be long-term anyway.  As we noted earlier, negotiation is a social process in which various parties have to participate in order for an agreement to be crafted.  The process is as important as the result, and as people participate - even those initially hostile - they make the process their own. 

We’ve noticed this in our negotiations, especially when there’s initial resistance to agreement.  Once those people are engaged and infuse their ideas into the process, they change their tone to one of ownership and vested interest in the final outcome.  In short, you have the opportunity to take people from obstructions to advocates for a negotiated agreement.

Ury says that you should think of yourself as a mediator whose job it is to make it easy for them to say yes.  Involve them in the process, incorporate their ideas.  Try to identify and satisfy their unmet interests, particularly their basic human needs.    Don’t push, build them a golden bridge.  Especially helpful, show the other side how your proposal stems from or relates to one of their ideas.  This is something we try to use whenever possible, as it gives the clear signal that we’re interested in the relationship as much as the signing of a document.  People want to feel they’re being heard (on all levels) and that what they say matters.  Demonstrate tangibly that it does.

5.  Use power to educate.  After everything you do, resistance is still possible.  If so, and if they think they can win without your cooperation you need to educate them to the contrary.  You need to make it hard for them to say no to an agreement.  Instead of threats, educate them about the costs of not agreeing.  Ask reality-testing questions, demonstrate your BATNA and reduce the lure of theirs.  Use only if necessary, and minimize their resistance by exercising restraint and reassuring them that your goal is mutual success, not victory.  Don’t escalate, use power to educate.

Concluding thoughts to come next week, stay tuned...

Negotiate Great Relationships

Relationships are one of those basic facts of life, and for most, an appreciated fact.  They’re formed for various reasons, but at the heart it’s because we depend on one another for certain results, which could be anything from unity, security, love, or even financial gain.  But because relationships are one of those basics in life, so is negotiation; and while it’s easy to think of negotiating as something only Fortune 500 companies do, it’s actually as much a fact of life as relationships themselves.  It comes into play every time people who depend on one another for results have different perceptions of a situation or have differing interests.  And since we all depend on one another, and since we don’t often see everything the same way, we’re all constantly involved in negotiation - be it in our marriages, friendships, work relationships, or board room level deliberations.

The reason I’m highlighting negotiation in this three part blog is because relationships make the business world go round, and negotiation (and renegotiation) plays a crucial role in making those relationships strong and sustainable.  Negotiating can, and will, either set a relationship up for long-term success or doom it to failure, and it needs to be viewed as a foundation of business itself.  So I thought I’d pass along some helpful tips from the experts, as well as some we’ve learned along the way.

The Real Point of Negotiation

Put simply, negotiation is a means of furthering interests by joint problem-solving.  Sounds easy, but this is an easy one to side-step.  Often, true interests aren’t stated at all, as we’ve discovered in our business on many occasions.  Agreement in those situations wasn’t reached for some time because it took considerable digging to find out what the real interests were for all the key players. 

So it’s wise to listen attentively to what they’re actually trying to accomplish, as it’s often not what’s stated in their objectives.  In one our negotiations, the stated objectives focused on replacing their current offering feature for feature, but it turns out that the underlying motivation for seeking a replacement was to sign an agreement with someone they could call a partner.  Someone that would actually listen to and implement their feedback in future product development.

Makes complete sense, we all want to be heard - and it’s why William Ury points out that the single most important skill in negotiation is the ability to put yourself in the other side’s shoes.  If your aim is to change their thinking, you have to begin by understanding what their thinking is with some degree of empathy.  Effective negotiators listen far more than they talk. 

Harvard Professor James Sebenius adds that to influence their decision most effectively you need to understand their problem as they see it.  What counts is their perception of their real interests, not what you think their interests should be, but theirs as they see them, their perceptions of their alternatives to an agreement (their BATNA, or Best Alternative To a Negotiated Agreement), their notions of fairness, their constituency pressures, etc.  When I think how many times we’ve failed at this and how we could have been spared heartache by following his advice... well, I’m sure you can understand.  It’s all too easy, in fact it’s human nature, to get caught up in seeing things through the narrow prism of our own objectives. 

At least part of the reason we’re prone to this is because we tend to think their interests are the opposite of ours.  Psychologists who’ve studied this call it the “mythical fixed pie,” which implies that the pie is fixed and that it’s a win-lose game in which any gains to one side are offset by losses on the other.  In fact, Professor Sebenius adds that in one study of over 5000 subjects in 32 negotiation studies, participants failed to realize compatible issues a whopping 50% of the time.  His advice?  Don’t deduce their intentions from your fears.

More great tips to come next week....