10. How to (Dis)organize for Innovation – From Incremental to Exponential

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How to (Dis)organize for Innovation

CHAPTER SUMMARY: DeWALT created a runaway success with an elegant but simple innovation in batteries, increasing annual revenue by hundreds of millions of dollars. We discuss the importance to innovation of reducing friction, ensuring that top management spends time talking with employees and customers close to the ground and creating ways that teams and people with new ideas can be heard, nurtured, and valued even if their ideas don’t pan out. We include a decreasing innovation friction checklist to assist in identifying what may be obstructing innovation in an organization.

Innovation is not served by perfect organization or confinement to a program but by a little unpredictability, such as arises in talking with customers or in serendipitous meetings with other units. This is precisely why Apple’s Steve Jobs designed both the Pixar Studios building and the new Apple campus in Cupertino to foster frequent random encounters between employees by (among other approaches) making them walk past each other as they crossed the campus and ate together in a cafeteria. Enforcing this does not guarantee innovation, but it is a necessary condition: randomness and external focus are disorganizing forces requisite for shaking old ways of thinking enough to foster novel thoughts and concepts. In this chapter, we will cover the principles of “dis-organization” and provide some examples of how it has worked in the real world.

DeWALT Helps Construction Unplug

In the United States, one of the most trusted brands of construction tools is that of DeWALT, a subsidiary of Stanley Black & Decker, an industrial conglomerate with $14 billion in 2018 sales. DeWALT has earned the trust of contractors and other tradespeople who use its saws, drills, and other tools by acting on close observation of their customers’ use of them, spending a lot of time on job sites, asking about problems that construction teams experience.

On a number of these visits, DeWALT’s research teams noticed that contractors favored using cordless, battery-driven drills and saws but remained tethered to generators or the mains in using higher-power tools such as miter saws. The research team saw in this problem a revenue opportunity to market a more powerful battery that could supply both 20 volts, for smaller tools, and 60 volts, for heavier-duty ones. A project team presented the idea to DeWALT senior management, which has a history of experimentation and bottom-up innovation.

Fresh on the heels of a successful innovation using Bluetooth in batteries to track tool locations, DeWALT’s senior managers embraced the idea and greenlit product development, and, in 2016, DeWALT introduced its Flexvolt line of adjustable-voltage batteries. The new product line won rave reviews from contractors, and Popular Science magazine counted it one of the greatest ten home innovations of the year.1 By 2018, the Flexvolt line was earning annual revenues of $300 million; and, on the back of that, DeWALT launched other lines of tools requiring greater power or battery life, such as electric lawnmowers.

DeWALT’s success was not its first; nor was it an accident. The company’s long history of innovative product development arises from both the bottom and the top. It results from Stanley Black & Decker’s enforcement of many of the key principles that we believe are essential for (dis)organizing for innovation. Its commitment to innovation is holistic, and the firm’s venture arm invests in innovative startups and runs two accelerator programs, in Atlanta and Silicon Valley, in partnership with the leading venture incubator Techstars.

DeWALT provides its innovators with many means of potential support for their ideas, no matter where they live in the company hierarchy. Perhaps most importantly, senior management spends considerable time and energy interacting with innovators and learning what is happening on the ground. “The innovation strategy is globally distributed and diverse, yet holistic and seamlessly integrated into our businesses,” Mark Maybury, Stanley Black & Decker’s chief technology officer, told the magazine Strategy+Business in 2018.2 From this mass of innovation efforts comes an ethos of (dis)organization: many, many ways to achieve innovation with lots of small bets but no “bet-the-farm” plays.

Creating Innovation by Reducing Friction and Removing Barriers

Available to any organization are several ways in which to nurture and protect innovation.

Encouraging ideas to come from workers at all levels is one that we’ve covered extensively already. In order to attract ideas in the service of a greater goal, organizations have used digital suggestion boxes, regular team meetings focusing on improving processes, and companywide competitions. The idea for descaling aircraft toilets came through a British Airways companywide idea competition to attain a 50 percent reduction in carbon emissions by 2050. The airline was also the first to contract for plant-based jet fuel.

Another way to encourage innovation is to create small, diverse, interdisciplinary teams. Amazon exemplifies the ability of small teams to foster huge achievements; most of the new business lines at Amazon have emerged from small project teams of no more than a dozen. (Amazon limits team size on the “pizza model”—the notion that a team of more people than can share a couple of pizzas is too large.) Setting very bold goals that you can measure and judge (without worrying if the goals are not met the first time) is the core of the Google OKR (Objectives Key Results) model, where employees are encouraged to shoot for the stars—and are considered successful if they achieve even 70 percent of their goals.

Critical to enabling teams and employees to innovate is allowing them the autonomy to do so. Innovation cannot be scheduled, planned, or mandated; it does not work on a clock or a quarterly calendar; it is not assisted by employee-performance reviews. Because everyone loves to play the innovation game, “feedback” and mentorship from well-intended “experts” higher up in the company easily create time sinks.

Another aid to your internal innovators is to minimize external noise and organizational inertia: to shield them from bureaucracy, meetings, and obligations that are not contributing to their goal; to not mandate performance reviews; and to let them avoid death by review committee.

Checklist: Decreasing Innovation Friction

There is no consistently best answer to the questions below; their function is to stimulate thought on the innovation environment.

  Can a team conceive and launch an innovation project quickly (in a few months or less)?

  Are your innovation project teams multi-disciplinary?

  Are people working on innovation projects excused from all the duties of their regular jobs?

  How frequently are innovation projects expected to make formal reports?

  How many meetings with project outsiders in each quarter must innovation projects attend in order to provide updates?

  Do innovation project teams have to go through the same procedures to procure equipment or services as the rest of the company does?

  Are innovation projects allowed to freely collaborate with external parties?

  Are innovation projects’ members allowed to form a startup to continue their work if the company decides not to pursue the idea?

This may sound like advocacy for an “innovation unit” inside a company, but it has key differences precisely because it occurs from the bottom up rather than from the top down. Sometimes that may even appear to be irresponsible and against the rules. So be it. The teams need to feel urgency and agency, and to have authority and creativity.

Most important of all is to make clear that you expect these entrepreneurs and innovators to fly away and launch their own companies based on ideas incubated in house. This is normal and natural. Taking a restrictive approach to intellectual property will only cause bitterness and will encourage employees to hoard their ideas. Given their wings, some may choose to grow their ideas within the walls of the legacy company; others may feel the need to build something new from the ground up. Either is good, because it builds the brand and reputation, and ideally a new business line or model, while cementing the culture of innovation.