Be your own disruptor: Out-innovate your competitors and win

"85 percent of CEOs have innovation on a short list of strategic priorities. But then they put it off," said Tom Kelley, the featured speaker at Arizona State University's 2007 Design Excellence Dinner. "In principle, everybody's for innovation, but in practice innovation gets put in the important-but-not-urgent pile." Kelley, author of "The Art of Innovation" and "The Ten Faces of Innovation," warns that putting it off until tomorrow can cause a firm to lose its competitive advantage.

"85 percent of CEOs have innovation on a short list of strategic priorities. But then they put it off," said Tom Kelley, the featured speaker at Arizona State University's 2007 Design Excellence Dinner. "In principle, everybody's for innovation, but in practice innovation gets put in the important-but-not-urgent pile."

The problem with that put-if-off attitude, Kelley said, is that it becomes a habit. "The next thing you know, some other organization that hasn't been putting innovation off until tomorrow comes along and starts to cut into your world just a little bit. First it won't even hurt, but then they take a little more and a little more and then it really does start to hurt."

"In the long run, innovation has urgency," Kelley said. General manager of IDEO, the design and development firm that's ranked by global business leaders as one of the world's most innovative companies, Kelley is author of "The Art of Innovation" and "The Ten Faces of Innovation."

The red queen effect

Scott Bedbury, author of "A New Brand World," said, "What's new in this new brand world is the need for greater innovation. In the future, standing still will be lethal to any brand." But Kelley thinks that Bedbury's future, when inaction leads to failure, is already in the past. The new reality is not about whether you innovate, but how fast.

"Standing still? I haven't seen a client in the last five years that had that as an option," Kelley said. Instead, he suggested, we're in a new environment that can be characterized by what Kelley calls the red queen effect. The red queen metaphor comes from Lewis Carroll's book "Through the Looking Glass." Alice and the Red Queen are trying to get across the chess board; they're running, but they're not getting anywhere.

When Alice, frustrated, questions the Red Queen, the Red Queen replies, "Alice, if you want to get somewhere else, you have to run twice as fast as that." The lesson, Kelley said, is that today it's not enough to be an innovator. Today, your pace of innovation must exceed the competition, he said. One example of the red queen effect, Kelley said, is the "epic battle" between the former consumer electronics leader Sony and the younger, more aggressive firm Samsung.

A decade ago, Kelley said, no one in North America ever walked into a consumer electronics store and asked "Hey, got any Samsung TVs?" "Samsung picked up the pace of innovation, slowly raised the quality of their design, and in doing so raised the strength of their brand," Kelley said. In 2005, he reported, the value of Samsung's global brand passed the value of Sony's. Sony is still an innovator, but that hasn't been enough, Kelley said — and that's the red queen effect.

"The lesson," Kelley said, "is that it's not enough to do an innovation every once in a while, because no matter what kind of job you are doing, there's always a Samsung out there. There's a global competitor who wants a little piece of your business — somebody who's really hungry and is prepared to have a very fast pace of innovation." The key, Kelley said, is to be your own disrupter. "Don't let somebody else take away a piece of your business — out-innovate your competitors."

Faces of innovation

In his most recent book, "The Ten Faces of Innovation," Kelley talks about the ten innovator personas inherent in everyone. "We have all ten innovators in us," he said, "it's about using the right one at the right time."

Kelley's ten faces include the learning roles — the anthropologist, who looks at human behavior and tries to learn about what people actually do in their real lives; the experimenter, who tries things, accepting failure as part of the bargain; and the cross-pollinator, who's humble enough to realize that his organization/culture/country doesn't have all the answers, and so looks outside for ideas.

The organizing roles include the hurdler, who anticipates what the hurdles are going to be and plans for them; the collaborator, who takes a multi-disciplinary approach; and the director, who attracts the most talented, creative people and helps them to do their best work.

The building roles include the experience architect, who designs great experiences; the set designer, who understands that how work space is set up can be strategic — that the space can change the attitudes and performance of the people who work there; the caregiver, who creates relationships through empathy; and the storyteller, who understands that people store information in their brains not as data but as stories.

The two most important personas, Kelley said, are the anthropologist and the experience architect. At IDEO, Kelley said, anthropology as a practice is the single biggest source of innovation. "The anthropologists are really good at going out in the field and seeing a problem that we hadn't really noticed. They do that by asking questions."

"Sometimes the answers are pretty easy," Kelley added, "but you have to start with the right question."

When working with clients, IDEO asks them to set aside their point of view about "the way things are" and look at their environment with fresh eyes. "When we send out the anthropologists," Kelley said, "100 percent of the time they come back having found a problem hidden in plain sight." The problem, Kelley said, is that we become so immersed in our environment that we stop noticing problems. By taking on the anthropologist role, we can see what's wrong.

IDEO always goes through the anthropology process with its clients, Kelley said. With Oral-B, the anthropologists went out into the field and observed kids brushing their teeth. They found that kids needed toothbrushes that were fatter, not smaller — as conventional wisdom suggested — because kids grip the toothbrush with their fists. "Because of that little bit of anthropology," Kelley said, "Oral-B had the best-selling kids' toothbrush in the world for 18 months."

It's a simple process, but many companies still don't engage employees in anthropology mode, Kelley said. That's like leaving money on the table. The anthropologist role complements the experience architect, who looks at the customer experience from start to finish and asks "what would it take to make my customer's experience better at any step of the journey?"

Those opportunities for improving the customer experience are, Kelley said, often informed by what the anthropologist has learned in the field. Drawing from the book "The Experience Economy," Kelley talked about the experience pyramid: individual companies start out as a commodity, move up to a product, then to a service, and finally end as an experience.

At each higher step, Kelley said, the customer happily pays more, for a result that is less time-consuming and less risky. By finding opportunities to be experience architects, Kelley said, companies discover ways that they can move up the experience pyramid. The experience architect, Kelley said, also asks "what is important to my customer?"

For example, Westin was the first hotel to realize that business travelers didn't care about the hotel's spa or restaurant — all the business traveler really did at the hotel was sleep, so what she cared about was the bed. So Westin designed the Heavenly Bed — and enjoyed a competitive advantage in the business travel market for five years as a result. "People will reward companies for finding the experience that matters to them," Kelley said.

"If you can get people to play the anthropologist and try to get a deeper understanding of human behavior and the way your customers actually use your offerings; if you can take on the role of experience architect and always think about the customer journey and look for each step of the way where you can raise your business one rung higher on the experience economy pyramid; if you can take those two ideas to heart, it will go a long way toward helping you build, nurture, and reinforce your own unique culture of innovation."

Innovation and the Masters in Real Estate Development program

The 2007 Design Excellence dinner was hosted by the ASU College of Design and the Council for Design Excellence. Wellington Reiter, dean of the College of Design, said that he invited Tom Kelley as keynote speaker because Kelley connects design and business.

"I'm concerned that not enough designers make that connection; they forget that their ideas have to survive in the marketplace," Reiter said. ASU launched a Masters in Real Estate Development (MRED) program in the fall of 2006 to teach designers and others to connect what they do on the drawing board to the market.

The MRED is an accelerated, trans-disciplinary degree program that combines instruction from the College of Design, the W. P. Carey School of Business, the College of Law, and the Del E. Webb School of Construction. "The purpose of the MRED program is to make real estate development not just about designing and building, but about designing and building with an eye toward the marketplace and toward sustainability," Reiter said.

The program teaches students to be the kind of innovators that Kelley encourages. "It's about learning on the job and formulating effective teams," Reiter said. "Our focus is not to make the students experts in all aspects of real estate development, but rather to cultivate experts in collaborative, team-based activity — people who know what they don't know and know how to bring missing talent on board."

The MRED program embraces the kind of constant, fast-paced innovation that Kelley described. "The MRED program is innovative on the part of educators, in how students are taught; it's innovative in its demand that students test assumptions about how development is practiced; and it's innovative in its approach to how students think about sustainability," said Reiter.

Bottom line:

• Innovation belongs in the "urgent" pile — putting it off until tomorrow will cause a firm to lose its competitive advantage.
• Innovating is not enough — businesses must pick up the pace of innovation in order to stay on top.
• We all possess the ten innovative personas — the key is to find and engage the right one at the right time.
• The two most critical innovation personas are the anthropologist and the experience architect. Anthropologists go out into the field and ask questions about how people really behave; the experience architect asks what's really important to the customer.
• The new Masters in Real Estate Development program incorporates the kind of innovative thinking that Kelley encourages, aiming to get designers and others to connect what they do on the drawing board to the market.