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Insights: how transformative innovation occurs

Transformative innovation is business evolution at hyper speed.  Great new business ideas do not arise in a vacuum; they are derived from known constructs applied in new and different ways.  Rapid progress comes from first diversifying the gene pool of possible ideas and then constantly searching for new combinations.  It is from these processes that we get both the notion of a “Black Swan” – the search for the unexpected in unlikely places, and the notion of “fail fast” – try lots of new combinations but be willing to rapidly abandon those that do not quickly take hold.


Many, if not most, of the spectacularly successful entrepreneurial companies have been the result of adding to this hyper-evolutionary process one or more critical “insights.”


What makes this process challenging for existing businesses is it is extraordinarily difficult to apply it to a known and desired outcome.  First, you have to broaden the pool of possible ideas – this often feels more like misdirection and lack of focus than a proper path forward.  Then you have to seek many rapid failures – again a seeming misdirection from pursuing known objectives.  Lastly, you have to wait until some “critical insight” strikes you, the timing of which is unpredictable at best.  Nonetheless, time and time again, that seemingly random process leads to a new approach whose insightful brilliance is downright obvious after the fact, but was anything but accepted wisdom when first proposed.  In part, this is true because the new path forward is rarely a linear continuation of the past; it is a recombination of past pathways into a previously unseen path forward.  It is not, however, a random process. 


The founders of these "transformative companies" tend to use their expertise to intuitively sort through the available solution set, rapidly separating the useful from the irrelevant.  In that regard, they are often perceived as being creative or intuitive, rather than deductive or scientific, yet the ability to be intuitive rests on their very expertise in the underlying subject matter.  Rather than wasting time with the vast quantity of useless information, they rapidly reduce that information to the portions that are relevant to the task at hand.  But their intuition is not of the “gut feel” or instantaneous recognition variety, it is a more gradual and thoughtful process of using the familiar to chart a path into the unfamiliar.


In his book “Strategic Intuition,” Professor William Duggan examines two very different bases for this type of “strategic intuition” thought process as applied to achieve victory, success and happiness – the military teachings of Napoleon and the religious teachings of Buddha:


On the Napoleonic front Duggan looks at two leading theorists on military strategy – Antoine-Henri Jomini and Carl von Clausewitz.  If you subscribe to Jomini, success depends on applying greater force than the competition to whatever objective you are seeking.  Under that view, you choose an objective and then carefully plot a strategy to achieve it.  Even in todays military, that perspective dominates, as it does in the strategic business planning of most large corporations.  


However, studies of actual military decisions in the field suggest that successful campaigns are much closer to a “strategic intuition” process described by Von Clausewitz:  He defines success as the ability to apply greater force to the places where you can win.  Figuring out exactly where you can win tends to be a more intuitive process that occurs over time as you think through your objectives, and it may require that you define success more flexibly in order to be able to leverage those decisive points as they occur.  Von Clausewitz phrased it as follows:  “When all is said and done, it really is the commander's coup d'œil, his ability to see things simply, to identify the whole business of war completely with himself, that is the essence of good generalship.  Only if the mind works in this comprehensive fashion can it achieve the freedom it needs to dominate events and not be dominated by them.” Of course the “glimpse of truth” that you recognize in that critical moment is never something that you can prove at the moment, it is only with the passage of time that it becomes apparent that you indeed had the critical insight that defined success.


So too it is when looking at many of the most transformational companies – success seems obvious after the fact, but was never that obvious to others at the critical moment.  Each flash of insight comes with its own timing – it must happen now.  Tomorrow is too late.


Duggan also studies Buddhism’s “Four Noble Truths” and its “Eightfold Path” and recognizes that they describe a very similar tension:  Loosely translated the “Truths” say: 1) you won’t get what you want from life, 2) wanting it is the problem, and 3) happiness therefore comes from not wanting.   Simplistically, it says: “go with the flow” instead of “pursue what you want.”  Anger, jealousy, regret, fear, contempt, grief, disappointment, and anxiety—all negative emotions—arise from wanting something you cannot have at the times when you want it.  On its own this is unlikely to form the impetus for a successful business.


The “Eightfold Path,” however, does (again loosely translated) describe a methodology for happiness and success that entrepreneurs and companies would do well to follow:


  • Learn as much as you can about the way things naturally are, so expertise  as applied to resources – knowledge of math, physics, chemistry, etc. is relevant and cannot be ignored.

  • Commit yourself to not wanting, but to seizing moments of opportunity and using your expertise to tell you when those “moments” exist.

  • Just do it, excuses not accepted, just trying doesn’t count because trying is what you do when you have wants; “seizing the moment” allows you to collect wins that will further enable to pick your spots and act decisively.

  • Be truthful to yourself and others about what you are doing and have compassion in how you go about achieving it.

  • Have values and live according to them.

  • Earn your success by not hurting others – “seize the opportunity,” not – “crush the competition.”

  • Recognize the value of the moment, act when the time is right, not when you want to, live in the moment not in the past or in the future.

  • Apply the appropriate level of concentration.  In Buddhism this implies meditation, but in business it means both concentrating and keeping an open mind at the same time – a “restful focus.”


These types of “strategic intuition,” of recombining old things in new ways through a flash of insight played a key role throughout the PC revolution. VisiCalc came from three previous elements: the mouse, a fighter plane dashboard, and the calculator. E-mail combined an existing internal message routine with the existing Internet protocol. Google’s algorithm and monetization were a recombination of AltaVista’s “links” and Overture’s “click through.”  Tesla’s electric car combined known electric motor technology, available lithium ion batteries and the concept of parallel processing to develop a breakthrough automotive drive train.  The further insight of making it sexy, fast and highly user interactive (rather than slow, green and cheap) was a further insight that led to an automobile that transformed its industry.  Similarly, Uber has applied a series of available routing, mapping, billing and other “sharing economy” technologies to an industry previously devoid of them – the taxi industry.  By so doing it has both disrupted the existing taxi business and dramatically enlarged its addressable market, far more consumers now utilize the more user friendly process than were using just taxi’s in the past. 


Of course, in business, this process of recombining known elements in novel and creative ways is one of “take from everywhere;” the very antithesis of “not invented here.” It is a criticism often made of China’s entrepreneurial process, the success of which cannot be denied even if the legality is at times questioned.


To pursue this type of success you must: (i) create an environment in which a rich diversity of ideas is strongly encouraged; (ii) create processes that allow most of them to be rapidly eliminated by actually implementing them and failing; (iii) hire senior executives who have the appropriate level of expertise to rapidly sort through the diversity of ideas, but also the freedom to insightfully come up with unobvious and often disruptive pathways forward (especially when they seem to be going in any direction but forward); (iv) create a work environment that allows for the restful focus necessary to lead to the great insights, (v) have the patience to “live in the moment” and to “wait for the moment” and then have the courage (and the institutional support) to move forward aggressively at a point where the wisdom of that decisiveness and resolution is anything but obvious. 

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