When FastCompany published 6 Ways to Create a Culture of Innovation, within the first few days the article received over 2000 tweets from FastCo’s page alone.

Why such keen interest in this topic?

Many leaders and organizations have finally recognized that real innovation isn’t about creating finely tuned processes, using new fangled methodologies, or creating 2×2 matrices.  Rosebeth Moss Kanter essentially argued this a few months ago in her Harvard Business Review blog.

More and more of my clients are telling me that “we have plenty of ideas, we just can’t get traction with any of them.”  They’re stuck.  The reason:  their company cultures stifle innovation.

I recently spoke about this very challenge at the Human Capital Institute.  The 300 HR managers in the audience raised their hands in agreement when they were asked if “the soft stuff” was their company’s biggest barrier to innovation.  The problem is that it’s really, really difficult to mix up just the right recipe of a culture that truly supports and fosters innovation.

Here’s a succinct synopsis of the six strategies for creating a culture of innovation:

1. Be intentional with your innovation intent – Frame the way you want to change the world and make it about the customer.
2. Create a structure for unstructured time –Provide employees with  “unstructured” time to explore and tinker.
3. Step in, then step back – Provide tools that give guidance and structure, but let employees decide how best to use and apply them.
4. Measure what’s meaningful – Because “you get what you measure,” select metrics that reinforce your innovation goals.
5. Give “worthless” rewards – Don’t just recognize people through formal awards, but rather promote recognition everyday through informal interactions.
6. Get symbolic – Understand that mission statements, awards, stories of successes and failures, posters in the hallways, catch phrases, and acronyms all shape culture.  Create your own symbols that reinforce innovation values.

The soft stuff truly is the hard stuff.  Which is why I also recently posted a new tool I created for culture design called The Culture of Innovation Canvas.

Anyone can fill out a checklist, complete a PowerPoint template, and design an ideal type model.  While strategies and tools are still important, navigating the dynamics of organizational culture is increasingly being recognized as the most critical success factor for business success.  And those who learn to curate culture to support innovation will become the stewards of the future.

Want more detail?  Check out the original version of 6 Ways to Create a Culture of Innovation.

Today I spoke to over 100 executives as part of the American Society of Association Executives Leadership Forum.  The venue:  Quebec, Canada.  The topic:  Breakthrough Innovation.

When I asked the audience how many of them have experienced disruptive change in their markets and organizations, every hand in the house went up.

In addition to sharing thoughts from my recently published article 6 Ways to Create a Culture of Innovation, I also shared the Intuit Catalyst Toolkit, a resource that the software company encourages everyone at all levels and in all functions to use to innovate.  I provided the story of the nonprofit HousingWorks, which revolutionized the nonprofit thrift store model by creating stylish destination stores with the unique look of a designer boutique.

Even though associations aren’t “for profit”, they can (and should) innovate like anyone else (however they decide to define innovation).

Emerging technologies and market shifts have disrupted many organizations, and associations are no exception.  The flip side of any threat is opportunity. Associations have the opportunity to innovate, and it starts with these questions:

• What is the game changer that gives us our raison d’etre? (I had to throw in the French since we are in Quebec after all)
• What are the metrics of success that will shift behavior and reinforce innovation?
• What pilot projects can help get our feet wet through experimentation?
• How can we push the thinking and boundaries of our staff by exploring new member needs, markets, trends and business models?
• How can we create a true culture of innovation?

Change is everywhere and impacting everyone.  Disruptive innovation isn’t just for companies like Apple and Netflix.   Whether you’re a membership association, professional society, visitors’ bureau, or tourism board, the burning platform is the same:  to disrupt or be disrupted, that is the question.

This week is the Front End of Innovation conference in Boston, which is arguably the most renown event for corporate innovation professionals.

Here’s my presentation on Strategies and Tools for Creating a Culture of Innovation.

In this presentation I introduce the concept of the Culture of Innovation Canvas, a simple tool (download PDF or download PowerPoint) for defining the following dimensions of an organization’s innovation culture:

And here are some of the resources and tools that I reference on creating a culture of innovation:

Intuit’s Innovation Catalyst Toolkit

Building Blocks of Innovation (MIT)

KEY Creativity Climate (Harvard)

LEAPS Innovation Leadership Competencies

All companies, whether they are successful with innovation or not, have one thing in common: they have their own “personalities.”  These personalities are their unique organizational cultures – the shared experiences, values, norms, assumptions and beliefs that shape individual and group behavior, and that (for better or for worse) ultimately impact their business success.

The most innovative companies pull the right levers to create a culture that leads to exploration, experimentation, rapid prototyping, and the innovations that surprise the market, create competitive differentiation, and drive growth.  That’s where real “leapfrogging” comes from.

Sustained competitive advantage comes from innovating how we innovate.  That’s the essence of real innovation.

In the past, new products and technologies consumed the vast majority of the innovation air-time. That’s no longer the case.

The most innovative companies today realize that competitive differentiation comes as much from how they innovate as it does from what they’re innovating.  Here are five trends shaping the world of innovation itself that anyone can apply to their business:

#1: Co-Create with Customers

Thanks to Facebook and YouTube, almost 10 years ago Time Magazine named “You” as their Person of the Year.  Our collective 15 minutes of fame didn’t end there.

The convergence of ubiquitous Internet access, mobile devices, and social networking has created an environment in which customers are front and center.  Companies now realize that innovation is a team sport in which their customers need to play a direct, if not lead role.

Vans, the classic yet youthful shoe brand, provides a fully customizable shoe-building experience on their website.  Customers literally start out with a blank canvas and design dream shoes that they can “share” with friends and family.

More and more, customer co-creation will be seen as one of the best sources of creating what customers really want – because customers create it for themselves.

#2:  Create an Experience

You know that design has found its place when Fortune 500 companies like Samsung, Ford, P&G and others instill Chief Creative Officers and Chief Design Officers to lead their innovation efforts.  Whereas design used to be equivalent with industrial design, its scope has expanded to include experience design.  Experience design involves the practice of designing products, services, events and environments with an emphasis on the quality of the customer experience, not simply on form or functionality.

Unilever, for example, recently spun-off an experimental retail store it created called Rituals.  The store isn’t organized by rows of products, but rather the personal “wellness” experience.  Product names, colors, packaging and promotion are all geared toward the consumer’s desired emotional state and include areas focused on “relaxing,” “energizing” and “purifying.”

Experience innovation provides a broader lens with which to view customers’ needs and desires, which can help pinpoint the “touch points” that will deliver true surprise and delight.

#3:  Servicize

Services now account for about 80% of US output (GDP) and over 70% of output from other industrialized nations.

Companies like Facebook, Square, OpenTable, and others have proven that great service business models can be build upon web and mobile technologies.  But as I described in my latest article for FastCompany, “servicizing” is as much about reinventing a product-based business model as it is about creating new services.

Rolls Royce, for example, sells more than cars; they also sell airplane engines. When they modified their sales model and introduced service fees based on “uptime” (the actual time the engines are flying in the air), their airline customers were elated. Airlines prefer to pay as their own cash comes in from their passengers and cargo instead of buying an engine up-front. Rolls Royce sells “hot air out of the back of the engine,” not the actual engines.

Servicizing isn’t about creating customer support or training for existing products.  It’s an entirely new way of thinking about customers and the value they desire.

#4:  Profit with Purpose

With climate change, the looming healthcare crisis, rampant childhood obesity, and other social ills, we’ve finally seen the light (or at least the glimmer of a candle):  business should be able to make money while at the same time providing a broader benefit to people, the community and the environment.

It’s not just the Ben & Jerry’s or the Patagonia’s of the world who are blending social responsibility with business.  WalMart, once known for its business ruthlessness, has become an unexpected model by gathering more than 1,000 leading suppliers to review goals and expectations for creating a more environmentally and socially responsible global supply chain.  Schools like Oxford, Cornell University and Dartmount College are creating a host of programs to help students create businesses that support the triple bottom line (people, planet and profit).

Profit and purpose are no longer mutually exclusive.  They’re becoming intertwined as a source of competitive advantage.

#5:  Build Your Innovation Network

Innovation was once the role of a handful of people “at the top” or in R&D. Open Innovation and Open Business Models will continue to drive new opportunities using external networks.  More and more, the job of innovation has expanded to include employees, customers, partners and anyone else who has value to contribute.

Kimberly-Clark’s Huggies Mom Inspired program solicits new business ideas directly from “mompreneurs.”  The company also promotes one-day “expert acceleration sessions” that bring hand-picked outside “thought leaders” face to face with business teams to bust mental models and create game-changing strategies.

To harness innovation networks, it’s vital for companies to rethink the traditional command and control structure.  The goal is to tapped into internal and external resources to quickly ideate, iterate, prototype and launch new ideas.

Here’s one final thought…   Just like today’s world, innovation is complex.  While new products, services and technologies are always important, the field of innovation is about much more.  Sustained value creation relies on innovating how we innovate.  That’s the essence of real innovation.

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What trends do you see?  What other strategies are important? What are your favorite examples of “innovating innovation”?

Stop Drinking the Bath Water

The last couple of weeks have been far from restful for me.  Two weeks ago The Wall Street Journal published an article on “bestseller campaigns” and highlighted the fact that I used the marketing strategy to vault my book Leapfrogging onto the bestseller lists.  I woke up to see my face prominently displayed on the Journal‘s webpage. Later that day, Forbes released a similar piece, again featuring my book, and then the Christian Science Monitor also jumped on the bandwagon.

Quite literally overnight, I had become the poster child for a secretive and all-too-common practice in the book publishing industry.

As I first described in Debunking the Bestseller, I didn’t speak out about my own experience with these bestseller campaigns just to perform a public mea culpa. I did it because I recognized that I had been handed an opportunity to practice what I preach in my book Leapfrogging – to find the strength for deep introspection, dive into the unknown, and embrace uncertainty as a necessary catalyst for jumping to the next level.  Needless to say, the last two weeks have been brimming with both introspection and uncertainty.

We Can’t See Our Blind Spots Until We Overcome Them

When I first decided to run Leapfrogging through a bestseller campaign, my goal wasn’t focused on finding status, fame, or transitioning to a new career. I thought hitting the bestseller list – even just for a week – would create real market demand for the book.  It didn’t.

But if I hadn’t run my book through a bestseller campaign, I wouldn’t have gained the personal knowledge of the secret system used to manufacturer Wall Street Journal and New York Times bestsellers.  I wouldn’t have discovered that most publishing insiders are keenly aware of this prevalent marketing strategy and that they view “gaming the system” as standard practice.

Now with my firsthand experience, I feel a personal responsibility to help plant the seeds for a much-needed discussion on a topic that’s indicative of a larger issue in the publishing world – and which hopefully contributes to a broader exploration of how the industry can reinvent its business model.

“SpikeSellers” – Publishing’s Dirty Little (Symptomatic) Secret

Given what I’ve learned from working with ResultSource, the marketing company who’s literally written the book on bestseller campaigns, I estimate that a minimum of 20-30 percent of all business books on the bestseller list in a given week are “SpikeSellers” – books that achieve enough of a short-term sales boost through orchestrated pre-orders to hit the bestseller list, only to fade away into obscurity.  And my estimate is conservative.  A few years ago, Todd Sattersten of the BizBookLab conducted an analysis of the Wall Street Journal’s bestseller list and found that “60% of the titles that appeared on the list one week were gone the next.”

Since Nielsen BookScan compiles its data based on weekly sales numbers, SpikeSellers stack the deck in favor of those authors and marketers who are able to cram significant sales into a single week, usually the first week after the book’s publication date.  While not “illegal” in the sense of the law, they usurp the assumptions held by the general public – that the books on bestseller lists are quality reads that represent what’s trending in society.

Why is this issue so gut-wrenching for so many?  Easy answer:  one more trusted institution in our society has been debunked.

Follow the Money

We’ve seen it in professional sports, politics, and business.  Bestseller campaigns further diminish our faith in the institutions we rely on to steward our values of equality and meritocracy.  Once again, we find that the system is skewed to benefit those with resources, status, and power – not exactly motivating for the small publisher or self-published author.

During the process of writing and marketing my book, I began to see how truly systemic the practice runs in the industry.  And after 20 years working in business, leadership development and innovation, I’ve learned to do one thing when I want to gain insight into a market or industry – follow the money.

Here’s the bestseller campaign business model. Just follow the money to see who benefits:

• Literary Agents – Easier and more lucrative to broker a book deal when a bestseller campaign is part of the author’s stated marketing strategy
• Publishers – Reduce their financial risk when contracting with an author who commits to a bestseller campaign due to assured sales numbers; gain significant revenue from the initial sales spike while creating a greater likelihood of future sales due to bestseller promotional status
• Book Retailers – Obtain individual and bulk sales, which are especially lucrative for large retailers like BarnesandNoble.com
• Nielsen – Sells book sales data to publishers and others; only counts hard copy books as part of their bestseller list formula, which promotes hard copy print book sales that benefit traditional publishers
• Marketing Firms – Charge authors fees for each bestseller campaign
• Authors – Gain status and potentially increase speaking and consulting fees

When it comes to bestseller campaigns, the publishing industry is a closed loop system that reinforces itself.  Each party keeps the secret because they benefit in their own way.

Don’t Drink The Bath Water

Whether we’re talking about business, politics, or anything else, I’ve seen a common dynamic unfold when individuals, groups, and organizations are invested in the status quo:  they keep silent, stop asking tough questions, and avoid introspection. We’ve seen the casualties of these mindsets and behaviors in business many times – just think Encyclopedia Britannica, Kodak, and Blockbuster.

In my view, bestseller campaigns represent a symptomatic ripple within a broader sea change facing the publishing industry.  The industry is in the midst of a massive disruption and just about everyone has taken a white knuckled grasp on their shrinking piece of the economic pie.

Over the past two weeks, some have called for a re-examination of the “black box” way bestsellers are tabulated by Nielsen and The New York Times (for a great article by my own publisher on this topic check out What Do Bestseller Lists Really Measure?).  These types of challenges to the status quo are a great start.

If the publishing industry truly wants to successfully navigate the disruptive changes it faces, its breakthroughs won’t come from drinking its own bath water. It won’t come from gaming an antiquated system but rather reinventing the system so that everyone can create and obtain a new level of value – especially consumers.  Real “leapfrogging” comes from a desire to change the world, honesty and transparency, and collaborative dialog.

New Questions Lead to New Answers

Albert Einstein said, “No problem can be solved by the same level of consciousness that created it.”  I believe the publishing industry needs to tackle an entirely new set of questions that address the various forces – technological, social, environmental, financial, etc. – that pose very real threats and opportunities:

• How are various forms of digital content, text, and social media converging to redefine the “book” itself – and what are the opportunities for packaging and selling the most meaningful content, whether in bite-sized pieces or traditional book formats?

• How can we take a longer-term, more holistic view of “bestseller” so the system doesn’t reward weekly sales spikes but rather the longer-term impact of a “book”?

• How do we most effectively capture and share what’s truly trending in society through more dynamic, real-time “bestseller lists”?

• How can we move away from closed, proprietary evaluation systems and instead adopt approaches based on the principles of “open” and “social” (e.g., the “Klout” for bestsellers)?

These are meaty questions and require both small and large players to step up to the plate – from Nielsen, to Barnes & Noble, to Wiley, to Harper Collins, to the myriad of indie publishers, authors, technology start-ups, and beyond.  If the incumbents don’t disrupt themselves, the history of innovation shows that someone else will (and its name may start with the letter “A” and end with “zon”).

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So what do you think? What’s needed to fundamentally change the system and who’s going to do it?  What needs to be done to restore faith in the system?

Debunking the Bestseller

A Lesson in the Status Quo, Risk-Taking, and the Gray Areas of Life and Business

The other day, I received an unexpected phone call from Jeff Trachtenberg, a reporter at The Wall Street Journal. He said he wanted to talk about my bestselling book, Leapfrogging. At first, I was thrilled. Any first-time author would jump at the chance to speak with such a high-profile publication. But it turned out Trachtenberg didn’t want to discuss what was in my book. He was interested in how it had made it onto his paper’s bestseller list. As he accurately noted, Leapfrogging had, well, leapt onto the Journal’s list at #3 the first week it debuted, and then promptly disappeared the following Friday.

Suddenly, I wasn’t so thrilled anymore. I was just about to sit down to dinner with my family and now I was being put on the spot to discuss my role in perhaps one of the most controversial practices in the book publishing industry. I was tempted to make an excuse and plead the 5th. But I wound up talking to Trachtenberg several times over the next few days.

And I’m glad I did.

When No One’s Talking, You’re Living In the Status Quo

Trachtenberg asked me about my experience with a company called ResultSource, the firm I had hired to help me hit the bestseller list from day one. Trachtenberg said he had contacted all of the major New York publishers, but no one would speak to him about the firm or the role of so-called “bestseller campaigns” in helping authors reach the coveted status. No comment. Dead silence.

I can’t say I was eager to be the first person to go on the record about the topic. But then I realized something – Trachtenberg’s surprising phone call was an opportunity to live up to what I urge my readers to do in my book Leapfrogging.

I’ve seen the phenomenon of corporate silence repeatedly in my career. There’s a big, smelly, ten thousand pound elephant in the conference room. Everybody knows it’s there, but no one’s willing to take the risk and point it out. As Trachtenberg was discovering, bestseller campaigns are the unacknowledged pachyderm of the book business.

There’s good reason why most industry insiders would prefer that the wider book-buying public didn’t learn about these campaigns. Put bluntly, they allow people with enough money, contacts, and know-how to buy their way onto bestseller lists. And they benefit all the key players of the book world. Publishers profit on them. Authors gain credibility from bestseller status, which can launch consulting or speaking careers and give a big boost to keynote presentation fees. And the marketing firms that run the campaigns don’t do so bad either.

My book is all about the importance of taking risks to transform these kinds of unspoken and entrenched practices. Not only that, it’s about using what seem like unfortunate surprises – like an unwelcome phone call from a reporter– to find new insights and opportunities. It hit me that if I didn’t find the guts to talk about this issue, then everything I had written was just empty rhetoric. I knew I had no choice.

So, to Trachtenberg’s pleasant surprise, I told him my story.

The Making of a Bestseller

In exploring marketing strategies for my book, I had indeed stumbled upon the company that Trachtenberg had asked me about, ResultSource. I learned that this niche marketing firm had apparently cracked the code on how the sales of books are calculated by companies like Nielsen that produce bestseller data – the very data that major trade publications, newspapers, and journals rely on to populate their bestseller lists, just like The Wall Street Journal. I learned that bestselling authors like Tony Hseih, CEO of Zappos and author of Delivering Happiness, and numerous other bestselling authors had employed its proven methodology.

I too contracted with ResultSource. The strategy the firm laid out for me was relatively straightforward. I would contact my Fortune 500 clients and others and ask them to preorder copies of my book. If I could obtain bulk orders before Leapfrogging was released, ResultSource would purchase the books on my behalf using their tried-and-true formula. Three thousand books sold would get me on The Wall Street Journal bestseller list. Eleven thousand would secure a spot on the biggest prize of them all, The New York Times list.

Prior to publishing my first book, I had run a thriving consulting and leadership development business, working with some of the biggest and most innovative companies in the world. I also speak at many conferences, so my network of contacts is pretty robust. It took effort, but in the end I was able to secure enough client orders, along with my own purchases to resell at conferences, to make it onto The Wall Street Journal’s bestseller list.

Trachtenberg, the reporter for the Journal, asked me if I had “gamed the system” by hiring ResultSource. The answer would most likely be “yes” for anyone outside the publishing industry who views books as simply things to buy, borrow, and read. But for me, having just lived through the entire book publishing and marketing process for the first time, the answer to Trachtenberg’s question is much more complex.

The Awful Truths about Book Publishing

When I first approached my publisher, Berrett-Koehler, they insisted I read an article they give to every prospective author called The 10 Awful Truths about Book Publishing. The number of books being published has exploded to 3 million titles a year, including self-published works. Despite this tsunami of growth, industry sales have been declining every year since 2007. To make matters worse, the average book has less than a 1% chance of being stocked in a bookstore. These are painful realities for the aspiring author who wants to get his or her message out to a mass audience with the intent of changing the world.

Despite these frightening facts and figures, I was thrilled when I received Berrett-Koehler’s book contract. They receive over 1500 book proposals a year and only accept and about 30-40. If I could beat these odds, I told myself, surely I could parlay my good luck into getting my book stocked on at least one bookseller’s shelf.

What I hadn’t fully internalized was that I would be almost entirely responsible for the marketing and promotion of my book. Publisher’s produce and distribute books, but that’s about all they do these days. It was my job to create the real market demand. *

Is it “Gaming the System” to “Work the System”?

Before Leapfrogging came out last August, I sought the advice of some industry insiders and seasoned authors to learn the secrets of book marketing. I tapped into my network and was introduced to someone who had just left her role as an executive at Harvard Business School Publishing. She was the first to mention “bestseller campaigns” to me. According to her, “everyone” was doing it, especially for non-fiction business books like mine.

I also spoke to two of my professional heroes, gurus in the field of management and both regular staples on the Thinkers 50 – the who’s who list of the world’s leading business thought leaders. Both of them told me that if they hadn’t used bestseller campaigns for their own books, they wouldn’t have hit the bestseller lists. “Guruship,” they told me, came from playing the game in a way that reinforced their personal brands as thought leaders. Ponying up the dough for the bestseller campaign was a small investment that would pay off later in speaking fees and consulting contracts.

What was happening here? Had I just uncovered the underworld of the publishing industry, a secret society that knows how to manufacture knowledge, fame, and careers? Was it really true that the practice had become standard operating procedure? If this was how everyone was doing it, was it gaming the system or simply working within the system that existed?

At first, feelings of excitement and disenfranchisement collided within me. On the one hand, I was elated that a bestseller was realistically within my reach – that this elusive status symbol was something I could actually control. But my excitement was tempered with the recognition that the trust I had placed in the very lists endorsed by reputable publications like The Wall Street Journal, The New York Times, Publisher’s Weekly, and others, might not represent the institution I had assumed it was.

Playing the Game Using Unwritten Rules

I played the bestseller game using unwritten rules. And as I reflect upon what I experienced and learned, it’s clear to me that anyone with enough money can potentially buy his or her way onto a bestseller list. Although most authors attempt to pre-sell books to their existing networks, theoretically, as long as one has enough money to purchase 3000 of their own books while using the tactics of a bestseller campaign to do so, they are basically guaranteed bestseller status. When I have told this same story to friends, family, and my close colleagues, most end up with their jaws on the floor.

Out of the millions of books published each year, very few become bestsellers. Most first-time authors are unaware that these campaigns exist and, if they are, most are unable to apply the strategy because the costs and pre-selling requirements are beyond their reach. In the bestseller campaigning process, a book’s quality – good or bad – has surprisingly little to do with it.

It’s no wonder few people in the industry want to talk about bestseller campaigns. Bestseller lists are revered, longstanding, and – of course – incredibly influential. The fact that it has become standard practice to work the system that determines which titles wind up on these lists is not exactly good PR for an industry that’s already in turmoil.

Take Risks and Find Surprises to Break-Through

In revealing my personal story, I risk several things. If I ever want to write another book, I risk being blacklisted by an industry that benefits each time an author contracts for a bestseller campaign. I risk having my current book, Leapfrogging, dismissed as a sham, even though it’s received fairly wide press and positive reviews. And I risk damaging a few personal relationships with those who may see my words here as an attack on their livelihoods.

Of course this very article may lead to additional visibility for my book and my work. But that isn’t the end goal.

As I describe in Leapfrogging, personal and business breakthroughs don’t necessarily result from big visions, carefully crafted strategies and meticulous plans. It’s the unexpected, itself, that contains the seeds of insight, learning, and growth that leads to breakthroughs.

When I decided to write my book, I didn’t know that I would gain an insider’s view of an industry that was fighting the very type of disruptive innovation and change that I have dedicated my life to understanding and helping others to navigate. And I surely couldn’t have predicted Trachtenberg’s phone call. In opening up to these little surprises, and sharing them with others in the spirit of challenging the status quo, I can only expect that more will come my way.
Click here for Debunking the Bestseller Part 2

* It’s important to note that my editor at Berrett-Koehler actually questioned my choice to participate in a bestseller campaign. As a rule, this publisher feels that the campaigns wind up detracting from authors’ long-term focus on promoting their books. In the end, though, the decision whether to participate in the bestseller campaign was left up to me.

Last week I had the good fortune of having my book Leapfrogging published as a “Manifesto” by 800-CEO-READ.  Here’s a quick synopsis, or you can download the full version here.

Most leaders are taught to avoid uncertainty.  Big visions, carefully crafted strategies, and detailed plans are signs of great leadership.

Surprise is the enemy.

Or, is it?

Could we be overlooking – even resisting – one of the most essential catalysts of personal and business breakthroughs? Could we be ignoring the most fundamental tool that anyone can use to create disruptive innovation and change?

Here’s the problem.  Creating game changers – whether products, services, or new business models – requires leaders, teams, and organizations to live with uncertainty, embrace ambiguity, and respond to both good and bad surprises along the way.

Some companies and leaders have experienced the inherent value of uncertainty and surprise, and actually use it to out-innovate the competition:

Intuit’s flagship product was Quicken, the leading software program for managing home finances.  But early on, CEO Scott Cook and his leadership team kept hearing that small businesses were using the product.  Quicken was designed for balancing checkbooks, not for the type of debit accounting needed to run a business.  Cook dismissed his own market data for over a year.  But when a survey came back indicating about 50 percent of Quicken’s customers were small businesses, Cook decided to look into the cause.  What he realized surprised him – twice!  He first discovered that the vast majority of small business owners didn’t know how to do debit accounting, and didn’t want to learn it, which was precisely why they were using the wrong product – because Quicken was simple and easy to use.  This initial surprise led to an even bigger one:  the market for small-business-accounting software was ripe for the taking.  Cook and his team went to work and created QuickBooks.  Three months after launching the small-business-accounting program, Intuit captured almost 70 percent of the market.  The product remains one of the company’s biggest and most profitable businesses today.

Of course, not all surprises are good ones. When bad things happen unexpectedly, it’s natural to resist them. Sometimes, however, it’s possible to transform the negative into a positive. During OpenTable’s early days, the online restaurant reservation service received a big blow to its business model. Danny Meyer, famed New York restaurateur, told OpenTable’s CEO, “Look, I don’t need more business. We’re full every night.” Meyer represented the most prestigious customer in one of the most important food cities in the world, and he didn’t need the service. This surprise led to a big shift for OpenTable: In addition to restaurant reservations, the company developed a “guest management” platform to also capture and provide detailed data on the restaurants’ diners themselves. By flipping the negative into a positive, OpenTable capitalized on two complementary needs and became the leader in the market.

When unexpected events or experiences occur, rather than fight them, there can be value in looking into the heart of the surprise to uncover what it may be telling us.  A surprise is a surprise because it forces us to revisit assumptions.  The stronger our reaction – either positive or negative – the stronger our assumptions are likely challenged or reinforced by the surprise.

Charting new territory involves using uncertainty as a tool to discover direction. The real missing ingredient for breakthroughs that leapfrog mindsets and markets lies in how we uncover, interpret and respond to the single most predictable aspect of real innovation – the inevitable surprises that will come our way.

The New Year brings about resolutions to redefine the status quo.  It’s usually an individual endeavor focused on fitness, relationships, or finances.

But great things can happen when we apply the catalytic energy of the New Year to our teams and organizations. 2013 represents the ideal time to leapfrog our mental models and innovate our way to business breakthroughs.

Here are four strategies any leader can use to jump-start the New Year with their teams and organizations:

Strategy #1:  Define Your “Leapfrogging” Opportunity – promote big thinking that involves challenging assumptions and “changing the game” in whatever you’re doing.  It’s all about leapfrogging existing solutions and the competition.  Apple didn’t create the iPod because customers asked for it; they wanted it themselves.  Target didn’t become “Tar-zjay” by emulating Wal-Mart; they decided to be known for incredible design and become the leader in “cheap chic.”  Ask yourself:  In what ways are we holding onto the status quo?  What are the breakthroughs that we want to create and lead?

Strategy #2:  Leverage Data, then Go with Your Gut – When it comes to making resolutions, you instinctively know what you need to do.  Breakthrough innovation isn’t much different; there are no maps for uncharted territory.  Comprehensive data rarely exist.  The goal is to use whatever information you can find, and then apply your instincts to fill in the gaps.  A University of Amsterdam research study recently found that people made the best decisions when they actually ignored detailed data and? made quick decisions after “sleeping on it.”  Ask yourself:  Are we holding back because we’re missing data that can’t realistically be obtained in a workable timeframe?  What do we know deep down to be true that data can’t tell us?

Strategy #3:  Test the Waters with Your Pinky Toe – Research from the University of Virginia shows that entrepreneurs get their ideas out into market as quickly as possible (even if they’re not perfect), test them, and change their fundamental assumptions as needed.  And they’ll go through this same iterative process many times to get it right.  The goal is to sponsor and conduct low-risk experiments to test and validate a variety of new opportunities.  Using this approach provides room for learning and adapting while minimizing the risk of failure..  Ask yourself:  What is the smallest step that would have the greatest impact?  What big assumptions can be tested with the least effort or investment?

Strategy #4:  Savor Surprise – The unexpected is a natural part of innovation.  And in today’s 2013 environment, uncertainty has never been greater.  When unanticipated things occur, rather than fight them, listen to what they’re telling you..  The stronger our reaction – either positive or negative – the stronger our assumptions are likely being challenged or reinforced. Scott Cook, Founder of Intuit, credits this unusual mantra of ‘savoring surprise’ as one of the pillars of his company’s long-term success. Ask yourself:  What surprises have we experienced that influenced where we are today?  What can we do to remain open to the power of surprise when it occurs rather than resist it?

In many ways, “the soft stuff is the hard stuff” when it comes to challenging existing assumptions, processes, and ways of working.  And these strategies must be applied over time, through a journey that involves experimentation, setbacks and successes.  2013 is the year to recognize that anyone who’s willing to push through to the other side of the status quo can become an innovation leader.

This post will also be published in LDRLB (Leader Lab) and Innovation Excellence

What Types of Questions Push Thinking and Inspire Innovation?

Pushing thinking to find breakthroughs and innovate is as much about asking the right questions as finding the right answers. CIO Insight recently published a great summary of 10 questions that can be used for leapfrogging mindsets to foster innovation:
1. Accentuate the Positive
“What experiences make you smile?”

2. Intersecting Universes
“Have you ever looked at two seemingly unrelated experiences and realized they were connected?”

3. Unexpected Gain
“What surprises both challenged your assumptions and gave you more insight into the business?”

4. Big Data Question
“Have you ever looked at the data you managed and asked why it matters?”

5. Untapped Asset
“Name a skill you possess that you never actually use at work that could help us perform better?”

6. Global Reach
“When you’ve visited a foreign country, what did you notice first? What did you learn from it?”

7. Beyond Limitations
“When have you ever pushed yourself beyond your comfort zone? How did you benefit?”

8. Future CEO
“What work-related experience brought out your entrepreneurial side?”

9. Game Changer
“What’s the simplest thing you could do right now to transform this organization?”

10. Performing Under Pressure
“Has there ever been a time when uncertainty made you feel invigorated instead of intimidated?”

To view the original dynamic presentation on the CIO Insight website, click here. Now, go ask yourself, your team, and your company a tough question!

Why do we avoid uncertainty and surprise?

Most leaders avoid uncertainty. Most organizations hate surprises. It makes sense. Predictability and control are the unquestioned holy grails of management.

But could we be overlooking an essential and critical ingredient of breakthrough leadership and innovation? For example, every management book on Amazon with the word “surprise” in its title is about how to minimize the phenomenon from occurring. Why do we resist recognizing that unpredictable events, and especially surprises (whether positive or negative), are natural parts of life. What’s stopping us from using uncertainty and surprise as strategic tools for innovation?

This TEDx video reveals the hidden assumptions of business and society that get in the way of personal and business breakthroughs. It shows that anyone can harness the “Power of Surprise” to break through in whatever they’re doing.

Check it out. You just might be surprised…