[MUSIC] Okay, today our discussion is about a concept that I'm sure you've heard frequently since you've arrived. Innovation. We're surrounded by this word, innovation. We have innovation leadership. Companies have chief innovation officers. So sort of central concept in our modern culture. But it's a bit of a problematic term because we don't really know what it means. What does, actually, what does innovation refer to? So what we're going to try to do today is rig up an exercise in which we're going to attempt to crowdsource a definition of innovation. And the idea is that as we go through this, we'll be able to, arrive at a definition then, so, by the end of the class, hopefully we'll be in a somewhat more enlightened position. What is this elusive term, innovation? Yes, sir. >> [MUSIC] [MUSIC] So here we have a matrix, right? We've attempted to crowdsource what innovation is. We've taken the collective intelligence of the room and we've tried to map onto this a discussion of what innovation is according to these various authors, our own ideas, things that we've read, and so on. And I've put them in a kind of a matrix here, so we have three columns, and column one, which is a very busy column, column two, and then, column three. And the question I'd have for you is, of these three columns, where is there the greatest clarity? Upon which, or where in these three is there the greatest concordance of views? Column A, Column B, or Column C? >> C. >> C. Do we all agree? That C seems to represent. And what, actually, we've done is, this sort of, we've actually created a kind of linear thing, right? So this is where innovation comes from, Column A. B is the sort of channel, the process, right, that we need to put it through. And C is the result. Right? So it's a nice, simple, attempt to create a, a linear matrix of, of innovation. So what's interesting is that we all agree on the outcome. Why we need to innovate. Growth. Value. Competitive advantage. Survival. Right? Companies that can't solve their problems, companies that can't grow, companies that can't retain their competitive advantage are companies that will die. Right? So that seems to suggest, it's pretty clear, why we need to innovate. because if we don't innovate, in the context of a firm, death awaits. And so, presumably, given that choice, death or innovation, don't have to think about it too long. I'll choose to innovate. Seems preferable to death. Right? But as we move back then, on our matrix from Column C to Column A, we have a bit of a problem. Because if the choice is innovate or die, so you say, "Okay, well I'm going to choose innovation", and then you say, "Okay, great, so what do I do now"? I've made the choice, I've make it, I've made, I've made the commitment, I'm going to innovate, where do I start? What do I do? And then all of a sudden, now our authors give us all this contradictory advice. It's new. No, it's not new, it's old. It's improvement! No, it's not improvement, it's revolutionary. No, it's evolutionary. Has to be incremental. No, it's got to be disruptive. It's about what you know. No, it's forget what you know, it's about the things that you don't know. It's random. No, it's deliberate, and so on. We seem to see these concepts that emerge that are directly contradictory, which doesn't really help us very much. How are we supposed to do something which eludes a definition to the point where you can put mutually incompatible concepts together and still somehow argue that these represent innovation? Well, I have at least one piece of good news for you in this class. Which is that, quite aside from whether we're going to be able to crack the question of what innovation is, the good news is that now, with this matrix, you are in a position to write your own book about innovation. All you need to do is take a picture of this board. And you'll need a subscription to the case repository at Harvard, so you can have access to all the different... Antonio's literally going to take a picture, he's like, "This sounds like a great idea". >> [LAUGH] >> So I will, I'll, I'll lay it out for purposes of Antonio and any other budding author. So the first thing is you need a snazzy title, so come up with some sort of random noun, right? And you can be like, like sign post, the innovation sign post why not, we'll use something like that. And you simply take, one concept from Column, C and one concept from Column B and you take a couple from Column A, and that, plus the case study, gives you your nice book on innovation. You may need four or five case studies. You say, innovation is about the right environment, creating disruptive ideas, in a task-driven environment which is sensitive to the market in order to retain competitive advantage and that's three of 'em. Or you say, no, no, it's about, randomness and creativity and simplicity, with an acceptance for risk in order to create, development. And that's Google. Or you say, no, no, no, no, no. It's about, a constant sense of improvement with, giving the freedom to the people that you work with, the idea of rule breaking driven by customer need in order to drive great profits and that's Apple. Or whatever, it doesn't really matter you can probably fix the concepts as you want to think. What it tells us is a lot of what we read about innovation is in fact merely the reverse engineering of success stories in the marketplace, which is another way of saying," Do what these guys did and let's call that innovation". Does that get us ahead of the game? Does that help us? Can a company that makes bottled water learn from the example of Apple about how to be innovative? Can a car company learn from the experience of an apparel company? Can Inditex tell something to DuPont about how they should be innovative in their approach to the marketplace? That limitation of a reverse engineered success tells us, I think, that the concept of innovation itself is really, remains very elusive. We know it's not invention. Right? If it were invention, we'd simply say, "It's invention". We know it can't just be improvement. because if it were, we would call it improvement. So what is it? And yet, even though we're still, doesn't seem to us, any closer to being able to define what innovation is, we've got a bit of a problem. Because we're told, if we don't innovate, firms that cannot innovate are firms that are destined to die. Innovate or die. So we better start innovating. And it's actually interesting it's too bad that you didn't sample the literature more. There's a book called The Little Black Book of Innovation, How to Learn How to Innovate in Four Weeks. Week one, identify opportunity. Wouldn't that be great? Christian, you're going to spend one week and identify opportunity. Monday morning, you're going to sit down, pen and paper in hand, put down on the top, "opportunities identified". And, by Friday, you're sheet will be filled with all those opportunities identified and you're ready to move to week two. Enact opportunities, right? I mean, can you imagine? Four weeks? It's like a weight loss program. Suddenly, you're moved to innovation. There's a 12 Steps to Innovation, as if it's some kind of a recovery program. Step one, start innovating. Step two, write letters to all the people you've known in the past to apologized that you weren't an innovator before. Step three, who knows, right? And so on, and so on, and so on. These ideas that somehow, that are being peddled to you that I'm going to give you, I'm going to unlock the secret. Well, we should know something. If there are three and a half million books written about innovation, it tells us that it is a very elusive concept indeed. We're not really that far, further ahead, after all of these years. Drucker's '85 text telling us there are already too many books. Here we are, 25 years, further along, and we still don't seem any closer to the concept except that we seem to know that it remains a very urgent issue for us to embrace. So what do we do? How do we resolve, this paradox? How do we resolve this conundrum? We must innovate or else we will die. Sad thing is we don't know how to innovate. We're probably skeptical of four week programs, 12 step programs. So where do we go? What do we do? So one of the things we're going to do is to try and ponder this question from another angle. What does innovation seeking actually to achieve? If we ask that question, what does innovation seek to achieve? And we look at the question from that approach and go back, maybe we'll be able then to say something more interesting about what this idea is trying to do in the context of a managerial culture. Why it is that many firms want to embrace, this very basic concept. [BLANK_AUDIO]