How to explain innovation to your boss

I wouldn’t like to be you having to explain to my boss what is innovation, and why he’s not doing it right. But it happens that as consultants this is pretty much what we do every day. Here’s how…

For about five years now I’ve introduced most of my MBA classes on this very narrow choice: “Are you wired to solve puzzles or mysteries?” This is one of these gimmicks that you end up using when you perform in front of an audience and try to explain innovation. You catch them off guard as soon as possible and try to engage them in rewiring their brain in a certain way.

I’m not proud; it’s a gimmick that you’ll find lying around in many powerpoints or articles about strategy. It was supposedly introduced by Gregory TREVERTON, chairman of the US National Intelligence Council, and famously used in 2007 by Malcom GLADWELL discussing the Eron’s fall from grace.

But this is a very useful gimmick.

It’s a “clever expedient” of a kind that forces you to position yourself on an innovation scale going from zero to one. So, in case you need to have THE discussion with your boss about “Is our company really innovating?” it should serve you well.

Puzzles are about invention

Puzzles are what we love to do.

The reason is simple: they automatically trigger the natural wiring of our brain. We are all super-educated in solving this kind of problems:

chess - innovation copilots

The mother of all puzzles is actually the chess game.

Envision the start of a game: all black and white pieces are on the board waiting for the first move. It will always be a white move first, and only from a specific subset of white pieces that are not blocked by others on the first turn.

From there the game will rapidly branch out in an incredibly complex tree of possibilities. But you can scour this tree and minimax your options at each step. Patterns and configurations appear and entire libraries of ingenious optimal moves have been recorded over time. You can memorize them, and this is a considerable amount of the initial training of a Grand Master in chess.

… Or of a computer.

Which now requires mere seconds to get the libraries on its hard drive and since 1997, just brute-force its way to optimal moves and victory.

Being zero-sum games (you lose a piece irrevocably, and this is a net gain for me) and with known rules, chess is the perfect way innovation should work for marketers, engineers, and your finance team. If only the market could be modelized, if reproducible patterns could be found, and essentially “if only everything were on the table”… then market research would make sense.

But the market is a bitch.

The market doesn’t comply with our need and the way we’ve been educated at seeking the best answer. There is no optimal solution to a market problem. There is no defined market, segments, tribes or categories. And most importantly, by the time you think you have made sense of what you call a market, it will have moved away in a less predictable configuration.

In term of market research, I call that the Douglas ADAMS Conundrum:

There is a theory which states that if ever anyone discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable. There is another theory which states that this has already happened.

The fact that we would rather see the market behave doesn’t seem to affect it very much.

And if in doubt ask the smart guys at Nikon if the photography market is a puzzle that behaves nicely. Last time I checked the iPhone was the most used camera on the planet, and Nikon is not going to pivot in Android phones — or God forbid, their own mobile technology.

You have to realize that a large part of the tools we use in business do not apply in innovation: market shares, customers segments, year-to-year growth, … They all assume a consensual board game with all pieces in place. How do you compute Tesla? Car manufacturer? Energy provider? Smart city operator? All of the above?

In the end, if you can write a business plan about what you are doing and project an ROI or an EBIDTA three to five years from now, you’re solving puzzles. You don’t innovate.

It doesn’t mean that what you’re doing is worthless.

Sending men to the moon and back was solving an unbelievably complex puzzle. But both trajectories of Earth and the Moon were known down to the centimeter, a very second for the next century and more and most of the rocket engines and ballistics part were cracked during WWII. Appollo missions “just” required an incredible amount of resources and time.

But in the end it wasn’t innovation, it was invention. This is what puzzles are all about.

Mysteries are about innovation

Mysteries are a different ball game.

If chess was the perfect illustration of puzzles, then the game of go would have to be chosen for mysteries:

mysteries - innovation copilots

Contrary to chess, you start the game of go with an empty board.

Then, a stone at a time, players will occupy the space, each stone potentially changing the game configuration by allowing the capture of some of the opponent’s stones. That, with the fact that unlike chess, each stone has the same value and behaves in the same way, create a tree of possibilities vastly deeper and more complex than chess.

If chess was cracked by computers twenty years by a combination of brute-force, library of moves and clever minimax navigation algorithm, go required real AI to allow computers in.

kasparov vs deep blue

In that regard, it speaks volume that it was IBM, a company of the eighties that ended up cracking chess, while it was Google that cracked go.

And while go is a good illustration of mysteries, it is not perfect. To adequately fit the bill of a mystery the board should change size randomly, or stones should be added and removed by a third invisible player with his own set of objectives (such as having six perfect square of white stones on the board). Because as such, go and chess are games where there is a perfect symmetry of information.

Mysteries don’t give you the luxury of perfect information, and in case you reach for it, it would be useless because the market configuration will have changed (go back to the ‘Douglas ADAMS Conundrum’).

Understand that this is key in innovation: you can write a thesis on how Uber beats taxi companies, or on how Nespresso created would-be luxury out of one of the cheapest raw material on the planet, but it will not give you a template for success if you’d meet the same market configuration.

Mysteries are not complicated they are complex, and quite often chaotic.

If you have doubts about what is the configuration of your company’s market (because you’ll keep using that word in board meetings no matter what), this is how Edward LORENTZ defined the threshold to chaotic space:

When the present determines the future, but the approximate present does not approximately determine the future.

See? I bet that most of the time you know that the state of the market you’re working in, is not a template to explain the future of the market. Congratulations, you’re solving mysteries — not puzzles.

In that regard, people formally trained in science, engineering, or business suck. Not because they are bad people or plain dumb, just because they have the wrong set of tools.

And sadly marketers are in the same basket, which is a shame because ‘marketing’ trainings have essentially devolved in ‘product marketing’ or worse, ‘promotional marketing’, while not touching ‘strategic marketing’ anymore. But this is a story for another article…

Not so surprisingly, the ones that are usually best trained at inductive reasoning, fuzzy logic, and generally weaponizing intuition to infer solutions in the innovation space are designers. Sadly enough, money and business are their very own brand of kryptonite. And most of them will just shut down in screen-saver mode when euros, dollars, or yuans pop in the discussion.

This is a tremendous irony when design thinking got hyped so much in the recent years by multinationals, while bewildered designers were sitting on the bench in silent outcry and marketing guys were throwing post-its (and money) at fairly unintuitive problems.

In conclusion, that’s the big burden for all organizations: they cannot escape the innovation space and in there they have to solve mysteries, but very few or the teams have the tools to do so. And in many cases, these tools are not deemed serious enough to be considered further than just an ephemerous fad.

The big reveal

It would be neat to keep this way of thinking: innovation is about solving puzzles with engineers and product marketers, while real innovation is left to mystery-solvers such as designers if they decided to speak business someday.

It is not so.

We’re not on a binary scale going from 0 to 1. Remember? That was a clever expedient all along. So yes, it works and does properly reframe your understanding of reality, but it’s not the end of it.

Puzzles and mysteries are the borders of a wide envelope of possibilities and games.

dilbert risk mistakes

You’ll never play a perfect game of invention or a perfect game of innovation while leading a project or a company. This is not how reality is. There will be a more or less balanced cocktail of puzzles and mysteries to solve.

The goal for me is to try to help you understand and properly share with your team or your board, what is what.

There is a part of Nikon as a company that has to keep getting better at optics, photography and user interfaces in a soon to be mobile-only world. Fine. Use engineering and R&D tools. Segment the shit of the market, use customer personas, roadmap features, and pipeline inventions.

But there is the other part, the part that has to push the company in a post-camera world. And this is not about being smarter at solving puzzles and thinking of drones as the next-gen flying around cameras taking pictures of your family canyoning. This is about betting on autonomous cars (or AI) and seeing how to squeeze in a future that is not really happening yet.

Failure at innovation is precisely there:

Not seeing with crystal clear acuity the two cultural spaces flowing in and out together, how they are connected, which tools and paradigms to use and when.

In the end, we ask intrapreneur teams in corporate incubators to deliver disrupting business models wrapped in business plans. This is not going to happen. Writing a business plan for innovation is just broadcasting that you’re uneducated on the matter at hand (or irresponsible).

This is also why most competitors, analysts or commentators misread Apple moves when they remove CD drive from their laptop, adopting exotic connector standards, or unplug our headphones. Most analysts trained at solving puzzles don’t understand where this is going. Their logic is not at fault, it’s just not the right logic at the time.

In hindsight, removing the CD drive was really a key move paving the way for solving the future of our digital life.

Dell or Asus could have removed their drives and design better solid-state drives instead, or thinner laptops for that matter. This would have been engineers solving a puzzle, not innovators tackling mysteries, and hence obviously not budging the market a single inch. Still engineering the CD drive out, making ultra-thin aluminum unibodies was also a key engineering achievement for Apple.

Again, in hindsight, this should be crystal clear. There is no opposition between solving puzzles or mysteries in the market, they are different things to do to deliver innovation and actually transform the market.

We’ll see what lies in the future when it resolves. Was Apple right or wrong to remove the headphone jack (or whatever other technicality you want to discuss)? I just don’t know. But if I’d like to get to the bottom of it, I’d be sure to use the right set tools and so should you in your own business.

Or at least, you should be able to explain innovation to your boss from now on.

Author: Philippe

Philippe has been training 200-300 startups a year since 2007, consulted for dozens of multinationals on rupture innovation or corporate incubation, and was directly involved in more than 150 startups building their market fit and scaling up their business. He also teaches business model innovation in key MBA programs whether they are in Paris or Shanghai. And since 2017, Philippe is now living in Amsterdam, one of the best European business hub around.