What Makes a Company “Innovative”?

Posted by Chuck Kocher
On February 17, 2014

We entrepreneurial types tend to celebrate innovative companies. We admire them. We want to be like them. But what makes a company innovative?

That’s a bit of a trick question, because, frankly, I don’t think there is any such thing as an innovative company. Companies aren’t innovative—people are.

What that really means is that if you want to know what makes a company an innovative, forward-looking, groundbreaking force, you need to take a look at the people who make up the company. And more specifically, you need to take a closer look at a company’s leadership.

How does one become an innovative leader? Can anyone do it, or is that something that belongs only to those “right-brain” creative types who dream in Technicolor? Are innovators born—or made?

Forbes.com recently suggested that, “Anyone can change his or her behavior to improve creative impact in a company.” And they went on to list five disciplines that creative and innovative leaders practice—gleaned from The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators by Jeff Dyer, Hal Gregersen, and Clayton M. Christensen.

And what are those disciplines? The authors refer to them as skills, and list them as:

  1. Questioning
  2. Observing
  3. Networking
  4. Experimenting
  5. Associational Thinking (drawing connections among unrelated fields)

When you look at that list, most of the skills listed don’t immediately strike you as “creative” or “innovative.” And yet, it’s the practice of these disciplines that leads to innovative—even disruptive—thinking and action. Here’s a quick glance at how some pretty forward-thinking CEOs apply a few of these disciplines in their companies.

  • When Jeff Bezos of Amazon interviews job candidates, he says “Tell me about something that you have invented.” [It] could be on a small scale—a new product feature or a process that improves the customer experience, or even a new way to load the dishwasher. But he wants to know that they will try new things.
  • Marc Benioff of Salesforce.com says, “I can’t sit in headquarters and pretend I’m in touch. Odds are, what we’re using today will be obsolete in a few years.”
  • Robert Kotick, CEO of Activision Blizzard says, “The most important thing we do to encourage innovation is give people the freedom to fail. And if we disappoint [our customers’ expectations], we are a very good learning organization, really digging deep into understanding why it didn’t work.”
  • Pradeep Sindhu, cofounder and chief technology officer of Juniper Networks says, “Most R&D innovation at Juniper happens because someone looks two to five years out and notices a potential disruption. Our culture promotes vigorous debate based on a survival-of-the-fittest philosophy–regardless of the source.

Are you working on these disciplines in your company? Are you questioning your strategy and methods—or are you just going with the flow? Are you observing what’s going on around you—or are you too busy “doing stuff?” Are you networking and seeing what’s happening outside your walls—or are you isolated? Are you experimenting and trying new things—or are you locked into a predictable pattern. And are you looking at trends in unrelated fields—or are you only aware of what’s happening in “your” industry?

Maybe you don’t consider yourself a “creative type.” Don’t let that stop you from using the disciplined “left side” of your brain to come up with ideas that can disrupt your whole industry!