Chasing Lightning—Serial Innovation.
For most leaders, innovation is as mysterious and lucky as understanding where lightning will strike; which explains why repeated (serial) innovation is so rare.
We were in the desert when an unexpected storm hit. My Army unit had spent all night traveling, conducting reconnaissance, and setting up the site for a large Air Defense battalion. Needless to say, we were all dealing with some level of heat exhaustion and welcomed the distinct smell of rain as the shower drew closer. We contemplated whether we should lower the Patriot missile launchers for fear that lightning would strike the large antennas. Maybe we were so used to short-lived pop-up showers or maybe we were just lazy, but a few of us decided to continue our break and appreciate the cloud cover and a few sprinkles while it lasted. Then, out of nowhere, everything around us was blasted with a bright white light. For a brief moment, I couldn’t see anything as a surge of electrical current went blazing through my body and brought me to my knees. Once the tingling sensation finally left my body, I looked around to see that my brothers were all standing, looking down at me, and shaking their heads with a mix of concern and humor.
“What was that!?” I asked, as I struggled to regain my bearings and slowly stand to my feet again.
I’ll never forget their gracious response: “Way to go Dickson. You were the only moron holding on to the barrel of your weapon!” Then, we all erupted in laughter and got back to work.
It had been a perfect storm when a series of factors aligned. The lightning hit one of the Patriot missile launchers, surged through the ground, found a lightning rod in the metal barrel of my M16 rifle, and eventually surged through my hand and the rest of my body. This forced me to my knees and was how I became the brunt of a week full of jokes.
However, it also surprisingly opened up several opportunities. During one of the onslaughts of poking fun at me, my Sergeant chimed in saying that he hoped it hadn’t affected my brain, because he thought I was a candidate for a “soldier of the month” board (a prestigious opportunity for the best soldiers from each company to compete based on their military knowledge and know-how).
This fortuitous lightning strike led to an opportunity that opened my eyes to a new way forward in my military career. I was able to innovate around the system that rewarded physical fitness or time-in-service (categories where I was outmatched) and led to my victory as soldier of the month. As I went on to win more competitive boards, I was given precedence over other soldiers for training opportunities (for example, the highly sought-like Air Assault school) and was given my own recon team where I used my studies from the boards to help our team innovate again and again. Finally, on my two-year anniversary, I passed the E-5 ranking board to earn my sergeant stripes—a feat that ordinarily took 5-7 years! Did I work hard for each of those boards and creative innovations with my recon team? Of course. But, I’ll never forget that this series of innovations began with a lucky lightning strike that I didn’t allow to go to waste.
One-Hit Wonder Innovators
For the majority of leaders, innovation is as mysterious and lucky as understanding where lightning will strike, which may explain why repeated (serial) innovation is so rare. Despite the fact that two out of three organization leaders say innovation is among their top three priorities(1) and that innovative companies hold a premium in the US market (even during the pandemic-driven crash and steepest bear market in stock market history),(2) very few leaders demonstrate the capacity for serial innovation. The music industry infamously refers to these lightning strikes as one-hit wonders—lucky individuals or bands who enjoyed one hit, but were unable to create another.
Mysterious one-hit wonders only solidify the idea that innovation strategy is nothing more than the pure luck of a lightning strike; and endlessly repeated stories perpetuate this line of thinking. For instance, Constantin Fahlberg forgot to wash his hands before lunch (quite the hazard for most chemists) which led to him noticing a particularly sweet flavor during his meal: artificial sweetener! Engineer George de Mestral enjoyed a eureka moment while analyzing the burrs on his dog’s paws underneath a microscope which led to the innovation of velcro. Arthur Fry’s usage of 3Ms lightly sticky adhesive on placeholders in his hymnal, led to the commercial success of the Post-it note.
Yet, if we continue to believe that the road to innovation is simply one of luck or mystery, our chances of serial innovation are reduced even further. For example, out of 162 organizations who made it to Boston Consulting Group’s (BCG) “top50 most innovative companies list” over the past 14 years, nearly 30% appeared just once—and 57% appeared three times or fewer. This leaves an abysmal turnout of only 8 companies who have made the list every year: Alphabet, Amazon, Apple, HP, IBM, Microsoft, Samsung, and Toyota.(3)
More unfortunately, even fewer stay committed to innovation amidst non routine circumstances. We are hearing this repeated in many of our in-depth interviews as organizations cautiously reopen. For instance, a technology leader at a large hotel chain typified this sentiment when she told us, “We put all strategic initiatives on hold, and I doubt we will be revisiting any innovative initiative in the near future.”
This is unfortunate as the corporations who prioritize innovation during non routine scenarios and downturns experience disproportionate rewards and outperform those who simply wait out the storm (see exhibit above). Let’s not forget, it was the Great Depression that gave rise to the helicopter, nylon, radar, the jet engine, canned beer, and sunscreen. It was the Great Recession’s innovators who outperformed the market and delivered 4% higher market share per year from 2007-2012. Without innovation we would not have companies like Uber, Square, or Slack. To put it simply, it pays to be innovative during routine times, and even more during the non routine.
The point is that serial innovation is hard, but it’s not impossible. Netflix continues to evolve from a company that rented DVDs through the mail, to a company that streams entertainment for a monthly subscription, to one that creates content that, many times, outperforms Hollywood movies. John Deere continues to improve its tractors while building an ecosystem of online services. Small and medium-sized organizations are known for their innovations as well (although, contrary to popular belief, small and medium-sized organizations do not deliver more innovation than large organizations). Small businesses achieve returns and speed to market comparable to large companies as long as they invest in innovation at a comparable percentage of sales as their giant business counterparts.(4)
Credit Aric Nicholson
Getting Past Lucky
A small handful of companies may be able to get lucky and catch lightning once, but organizations that wish to sustain market leadership* will need to get past lucky. They will need to figure out how to take advantage of or create lightning strikes repeatedly even as non routine storms become more frequent.
When our study of Non Routine Leaders™ turned its attention to innovation, the existing research made clear that focus on and investment in a consistent, systematic approach to innovation are necessary to become a serial innovator. First, market leaders strategically created their innovation platforms to include a systematic approach to the portfolio of innovations, process, and people involved. Second, innovators that outperform their industry invest 1.4 times more in their innovation programs for a far greater payoff of four times as much (both as a percentage of sales).(5)
*Market leadership in innovation is defined as generating more output in terms of percentage of sales from products launched within the past three years than the industry peer median.
Finally, leading organizations pay attention to getting the prototype right and going to market with far fewer mistakes. In fact, successful innovators report average times to market are up to five months longer than the times for others.(6) Yet, focus, investment, and attention to detail during the go-to-market process, while necessary, are still not sufficient for success. The critical ingredient that was most often overlooked among organizations, was the ability to effectively LEAD the innovation process.
“The critical ingredient that was most often overlooked among organizations, was the ability to effectively LEAD the innovation process.”
Organizations have a tacit understanding of a leader’s undeniable impact on many key innovation elements from the creation of the innovation platform to the management of the platform.(7) In fact, the innovation studies we have reviewed reveal that strong leadership is at the epicenter of the innovation platform framework;(8)(9)(10) serves as a fundamental role in innovation;(11)(12) or is, at the very least, implicitly necessary. Unfortunately, Professor Alan G. Robinson of the University of Massachusetts points out that leaders are unprepared:(13)
Clear leadership requirements are absent in the majority of academic and commercial case studies. For instance, according to most innovation platform frameworks, there is a consistent demand for the “right leaders,” “creativity,” “business builders,” “strategic thinking,” “best talent,” and usually a combination thereof. However, very few offer help as to how to identify the “right leaders,” let alone define the attributes such leaders should demonstrate. BCG, which has spent years carving out a niche for itself in the innovation platform consulting business, suggests that leaders “establish a common language on innovation….frame the challenge, and get CEO buy-in.” They go on to say that leaders must also be able to answer a myriad of complex questions (feel free to skip ahead to the next paragraph):
Which issues to attack first?
What is working well?
What are their companies’ most pressing weaknesses?
What should they scrutinize first—strategy, governance, process, talent, incentives, culture, or something else?
Is our innovation strategy grounded in deep customer insight and foresight that help us decide what to do—and not do—and enable us to nimbly adjust to shifting opportunities?
Do we ensure that people and budgets are aligned with our shared innovation priorities?
Do our metrics and incentives reward both predictable, incremental progress and successful step-change innovation?
Do we have a clear view of our competitive advantage?
Do we manage our portfolio strategically?
…..and that’s only a few of the questions.(14)
This is just an example of how complex, and far-reaching, the demands on a leader can be as it relates to innovation. It also explains the ambiguity and disorganization surrounding many innovation efforts and why a fundamental leadership role for serial innovation is often ill-defined. Even if a leader is persistent enough to develop a prototype, how will (s)he manage its progression to a final product or service, while staying resilient in the face of multiple non routine changes (for example; rapid shifts in competition, customer expectations, and socio-political contexts)? It’s clear that competitors have a far more difficult time following innovation than they do lowering prices, sadly there is a large failure rate among innovation platforms. (15) According to our research, the unclear role of leaders is to blame. The good news is that these failures are preventable once we understand the critical ingredients of innovation leadership.
A Sensemaking Approach to Serial Innovation
A vast majority of the Non Routine Leaders™ in our studies were charged with innovative initiatives. As we’ve reported previously, the hidden advantage behind their superior leadership and consistent growth outcomes is sensemaking, or the ability to make sense of non routine situations. However, there is another equal, if not more surprising benefit—it is also the lightning rod for serial innovation. It’s no wonder that sensemaking has become the number one indicator of leadership effectiveness(16)(17a) and, as it turns out, a far more sustainable approach to leading serial innovation in a non routine landscape.
Whether the Non Routine Leader™ was the chief executive of an organization, the innovation director, a department leader, or a front line manager, they each demonstrated superior sensemaking skills. No matter how non routine the situation, they could make sense of the problem or opportunity for their team, interpret it quickly, innovate, and adapt (both as individuals and as the leader of a team). In some circles this is known as absorptive capacity. In other words, Non Routine Leaders™ weren’t just making sense of the non routine storm, they were capturing lightning over and over again. To understand how these leaders were doing this, we must take a closer look at this lightning rod of innovation and its three critical moves. —“Seeing, Thinking, and Doing”—a three-pronged mental model for both superior leadership… and serial innovation. (18) (19) (20) (21) (22)
In short, sensemaking is the ability to make sense of the non routine. It transforms unfamiliarities and, complexities into a “situation that is comprehended explicitly in words and that serves as a springboard into action.”(23) This dynamic pinball game within our mind—Seeing, Thinking, and Doing—is how we make sense of the unfamiliar, complex, non routine challenges that surround us each day. The sensemaking moves interact with and support one another, because what we see affects how we think, what we think affects what we do, and what we do in turn affects what we see in the future. When these three sensemaking moves are employed as innovation routines across a team, leaders are more able to identify, interpret, and deliver innovation consistently with better results. Ultimately, sensemaking in non routine situations is the most important determinant of your final innovation performance, because it is the “precursor to more effective action.”(24)
Non Routine Leadership & “Absorptive Capacity”
Cohen and Levinthal said that "in order to be innovative, an organization should develop its "absorptive capacity,”(25b) or the ability to recognize, acquire, interpret, and exploit new knowledge. Gerry George, and his colleagues at Singapore Management University conducted a meta-analysis of absorptive capacity and they confirmed that absorptive capacity is a “strong predictor of innovation and knowledge transfer, and its effects on financial performance are fully mediated by innovation and knowledge transfer.”(25c) Ironically, the sensemaking model of Seeing, Thinking, and Doing, offers a cognitive overlay and, indeed, an uncanny similarity to absorptive capacity. For instance, firms with high levels of absorptive capacity are said to demonstrate the following abilities:
Recognize and identify the value of new external knowledge (Seeing)
Acquire
Interpret and assimilate (Thinking)
Exploit new external knowledge and deliver commercially (Doing)
Both from a Non Routine Leadership™ lens and an "absorptive capacity” lens, the road to serial innovation is clearly the result of improving our leaders, teams, and systems’ capabilities in three areas of sensemaking:
How can we improve our ability to recognize insights (Seeing)?
How can we improve our ability to commercialize insights (Thinking)?
How can we improve our ability to test prototypes and go to market (Doing)?
Our 100 leadership interviews revealed that very few leaders deliberately focused on more than one of these sensemaking skills (Seeing, Thinking, Doing), while even fewer leaders focused on all three. In regard to innovation, leaders and their respective organizations fell into one of three categories—“Ad-hoc” (30%), “Overdose” (65%), and “Integrated” (5%). The integrated leaders focused on all three areas of sensemaking and experienced successful serial innovations, usually in multiple areas of the business.
“Ad hoc”
Ad hoc leaders were found in medium and large organizations. They experienced several start and stop initiatives in lieu of an ongoing innovation strategy or platform with inconsistent results at best and painfully negative returns at worst. In one instance, a vice president of a buying team was convinced he could “See” an opportunity based on anecdotal evidence. Because he trusted his long track record of innovation from a previous position, he invested several million into a new product. Over budget and behind schedule, he skipped testing and went to market. The release was a flop that resulted in pointing fingers and questionable firings. Even years later, the organization was still paying the penalty with a risk-averse culture that was afraid to innovate or make decisions.
In another scenario, the president of a medium-sized organization set up a pet project that he had been “Thinking” about for years without considering whether the insight was generalizable to a larger group of customers. He invested millions on large machinery and retooling it to meet specific needs of auto manufacturers. Since the customers demand was not high enough for them to recoup their costs, they ended up selling the equipment and taking a loss.
Most of the time ad hoc leaders rolled the dice with little strategic thinking to find out what might happen if they were to just “Do” something. This happens more often than many realize and is often a costly experience. These examples come from real stories where a lethal combination of a leader’s hubris and ad-hoc half-measures eliminated any chance of meaningful innovation.
“Overdose”
The majority of our interviews fell into the overdose category. What we mean by overdose is that the innovation systems and/or processes emphasized one aspect of sensemaking—Seeing, Thinking, or Doing—while largely ignoring the other two. This group of leaders had innovation strategies, platforms, or processes in place that avoided most of the egregious mishaps of ad hoc leaders, but did not achieve serial innovation. While this group performed better than the ad hoc leaders, because they accomplished incremental wins. They did not succeed in creating the serial innovation needed to maintain market leadership. Still, this is more than could be said for our ad hoc leaders and their organizations. We further segmented the “overdose” group into three categories based on the innovation and leadership processes they used.
Seeing Overdose: The organizations with strong research capabilities were extremely savvy at recognizing new insights (Seeing), but struggled with how to frame and interpret (“Think”) the commercialization of these insights and, as a result, they also struggled to take action (“Do”).
Thinking Overdose: The organizations with strong analysis methods who leveraged systems and processes such as Root Cause Analysis, Systems Thinking, and other well-engineered systems and thinkers, struggled in identifying new ideas (“See”) and sent very few new ideas to market (“Do”).
Doing Overdose: Finally, the leaders who leveraged Design Thinking, Lean, and Agile methodologies that focused on iterative testing and implementation (Doing), paid little attention to how their organization or team could identify new opportunities (See) and creatively commercialize these insights into new offerings (Think). While we continue to research these segments, the “Doing Overdose” is, so far, the largest subset of the overdose categories, possibly because it is the most tangible of the three. Yet, “in a society that values action, effective leaders must rely on and reward the sensemaking that helps direct and correct that action.”(25)
“Integrated”
The smallest group of leaders was the most successful because they integrated three sensemaking capabilities in their processes and leadership methods. Their innovation teams and organizations made sense of innovation from end-to-end. No matter how non routine their situation, these leaders understood what it took to capture ideas from multiple sources, including vendor relationships, external scouting, internal idea labs, crowd sourcing, thought leader monitoring, and academic partnerships (See). They had several approaches to thinking and sharing insights across business and IT silos and interpreting them into commercially viable prototypes (Think). Lastly, was their ability to go to market with better products and services, strong agile teams, project management, and proven go to market processes (Do). Their abilities to align their leadership strengths in sensemaking with their systems and processes made this group virtually unstoppable and far more consistent with their innovation results—with at least one market leading innovation every three years.
Benjamin Franklin, serial innovator \ Credit Aric Nicholson
Chasing Lightning, A Conclusion
Benjamin Franklin was known for chasing lightning on horseback. In fact, of all of Benjamin Franklin’s innovations, probably the most famous was his invention of the lightning rod which turned lightning catching into a commercial success. But he didn’t stop there. Franklin was a serial innovator in multiple industries, and he did this during the non routine times of America’s struggle for independence. His secret? Sensemaking, of course. He was widely known for his adroit observations (Seeing); his thinking in the form of proverbs, models, and principles (Thinking); as well as his famous experiments (Doing), which gave way to several innovations, still in use today.
Seeing: The Gazette is just one prominent example. It gave Franklin a forum for sharing his observations regarding a variety of local reforms and initiatives through printed essays.
Thinking: Franklin was well known for structured interpretations and framing ideas that influenced everything from education (for example, the “educational triumvirate”) to psychological principles (“Benjamin Franklin Effect”), to science (“one fluid theory of electricity”), economics (“theory of value”), and others.
Doing: It’s clear that Franklin understood the downfall of overdosing in Doing when he famously said, “Experience is an expensive school.” However, Franklin experimented quite a bit, which led to inventing and reinventing products, services, intellectual properties, government policies, new organizations, and business models across a host of industries.
Special Thanks to Mike Moses for his editing contribution!
Research Endnotes:
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