Amy Edmondson

Leadership Insights

Innovation Isn’t Magical, It’s a Steady Learning Process

By Amy Edmondson | Oct 1, 2013 | Comments (0)

Artsy. Wacky. Creative types. Out-of-the-box thinkers.

These are some of the adjectives we use to describe (and obscure) the mysteries of creativity and innovation. For many in medicine, where proven science and time-tested processes help streamline potentially overwhelming situations, innovation is a terra incognita that – just as on the edges of medieval maps – harbors dragons.

Many managers mistakenly view innovation as something uncontrolled, chaotic, or “undisciplined.” But, innovation is essentially a systematic collective learning process. And, at its best, a fast process. Fast learning is disciplined learning. It might look chaotic to the untrained eye, but the collaborative learning that happens in truly innovative companies is, in fact, systematic and disciplined.

Winning with Discipline

In his new book, Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry, Wharton professor David Robertson describes the panicky tailspin toy company LEGO found itself in during the late 1990s, when declining profits spurred a frantic, uncontrolled push for innovation.

He writes, “LEGO strapped on over-amped engines of innovation and aimed for the stars, boldly declaring that in five years it would be the world’s biggest brand among families with children. Disaster soon followed. Although [the company] broke the sound barrier with LEGO Star Wars and Harry Potter, the company lost control of its dizzying array of innovation efforts and quickly found itself hurtling toward a crash.”

Most of the company’s innovation efforts were unprofitable or had failed outright. LEGO had innovated itself to the precipice of bankruptcy in the early 2000s.

Robertson describes a series of bold experiments — LEGO 1.0 through 5.0. It began with a return to the first principles of simplicity. LEGO reduced the number of its products, remembered who the customer really was, and focused on what made the company famous in the first place—namely, the brick.

“It might look chaotic to the untrained eye, but the collaborative learning that happens in truly innovative companies is, in fact, systematic and disciplined.”

It worked.

According to Robertson, for the last five years LEGO has been growing sales at 24 percent per year and profits at 40 percent per year. Enthusiasm for LEGO and its legendary brick has never been higher.

In the innovation journey, as LEGO CEO Jorgen Vig Knudstorp and his management team learned, each step is an experiment, and each experiment must be different from the one before. Its design must incorporate the knowledge gained in the prior cycle. In this way, innovation cycles out, bumpily—forget the image of a smooth roll out of a new idea—improving as it goes.

Here’s another example of disciplined innovation: When Netflix introduced its Watch Instantly offering, it did so in successive waves of 250,000 customers at a time, taking six-months to cycle out its previous innovation of instant downloading technology.

During that time the company constantly checked in with customers via e-mails inquiring about the quality of specific movies watched. It also set up and actively monitored a Netflix Blog to explain operations, step by step, and to respond to frequent customer posts about problems, requests, and suggestions. The new service was free for current users for several years, until the problems were worked out. Once it really worked smoothly, Netflix asked customers to pay.

And did they ever pay. At the end of Q2 in 2013, Netflix reported approximately 30 million paying subscribers to its internet-only streaming service in the United States alone – surpassing the subscriber base of cable channel HBO.

As the Netflix example illustrates, one essential discipline in innovation is learning at the right scale. Trials of new processes or systems should never “bet the farm,” by taking on excessive financial or safety risks.

The same is true for health care organizations. Testing new carepaths, electronic health systems, or patient communication strategies, for example, should happen at a scale just large enough to capture a representative experience from which to learn what needs to change the next time around.

This is the kind of practice that companies use to learn fast. Above all, innovation requires companies to fully utilize employee and customer experiences to learn.

Next week we’ll examine a blueprint for bringing this kind of iterative innovation process to your organization. Stay tuned!

Read more for other insights on innovation:

1. The Paradoxical Demands of Innovation
2. Envision, Enroll, and Engage Your Future
3. When Do You Change an Airplane’s Engine?

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