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Introduction

This book is a practical guide to a big idea about innovation. Its an idea with roots in modern neuroscience, classical military strategy, and Asian philosophy, and its played a part in countless cases of creative innovation in business and other fields. Over the past decade, I've explained the idea in a series of books and articles, and I've taught the idea to thousands of graduate students and executives in courses at Columbia Business School and in sessions at companies around the world. This book offers a method to apply the idea, in a form that any innovator can learn and use, without any advanced training in business or economics or any other technical field. All you need is a passion for ideas and a desire to put them into action for personal and professional fulfillment. You can use this method as an individual, in a team, or throughout your organization. The idea is creative strategy. It solves the problem of innovation, not just for designing new products but for coming up with creative ideas for strategy at any level: the overall company, a division, a team, or just yourself. It applies to businesses, government agencies, nonprofits, and your own career and personal development. In all kinds of strategy, you always need a creative idea to some degree because the world around you is always changing, so the future is never exactly the same as the past. Your strategy must change to keep up with the times. But how should it change, exactly?

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There are two kinds of traditional methods that claim to yield creative ideas for strategy: methods of creativity and methods of strategy. You will see that neither set of traditional methods actually solves the problem. Methods of strategy show you how to analyze your strategic situation, but thats where they stop. They dont give you the next step, how to get a creative idea for what to do. Methods of creativity show you how to come up with lots of creative ideas, but they dont connect those ideas to your strategy. So you end up doing lots of strategic analysis first, and then go into a room to brainstorm creative ideas. There is no connection between the two methods. This common sequenceformal analysis, then creative brainstorming actually comes from an old theory of how the brain works. Youve probably heard this: the left side of the brain is analytical, and the right side is creative. So first you do your analysis (left side) and then let your creativity (right side) take over. Unfortunately, this is not how the brain really works. In the past ten years, neuroscience has overturned that old model of the brain. We now know that analysis and creativity are not two different functions on two different sides of the brain. In the new modelcalled learning-and-memoryanalysis and creativity work together in all modes of thought. You cannot have an idea without both. The new science of learning-and-memory reveals at last how creative ideas form in the mind. When you do something yourself or learn what someone else did, those details go into your memory. When you face a new situation, your brain breaks down the problem into pieces and then searches through your brain for memories that fit each piece. It then makes a new combination from those pieces of memory. The combination is new, but the elements are not. These three stepsbreak it down, search, combineare very different from the two conventional steps of analyze and brainstorm. Creative strategy puts the three steps of learning-and-memory for new situations into a practical method that fits how the human brain actually works. Part I of this book offers a step-by-step guide to the practice of creative strategy. It begins with a picture of how the brain puts creative ideas together, and then shows how that translates into a formal method for innovation. As you proceed through Part I, you will see that each creative strategy step differs in key ways from traditional methods of strategy, creativity, and innovation. At various points I pause to explain the differences to keep the distinctions clear. Part II goes into these traditional methods in greater depth to help you alter or depart from them to make room for creative strategy. For example,

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perhaps you currently use Porters Five Forces or Blue Ocean Strategy, Six Thinking Hats, the Balanced Scorecard, Design Thinking, Design for Six Sigma, brainstorming sessions of various kinds, or the like. Your aim is to make them work with creative strategy, not against it, and Part II shows you how. Part III offers miscellaneous materials that provide more background for you to refer to according to your interest or need. It includes a brief summary of the creative strategy method and a review of key sources that led me to the main ideas of this book. As it turns out, I used creative strategy to create creative strategy, and this section shows where the ideas came from that made up the new combination. As you go through this guide, try to look at creative strategy with a beginners mind, as they say in Zenitself a key source for creative strategy. Try to clear your mind of other methods and allow it space to consider this new idea. At the end, when youve gone through it all, you can decide whether to toss the book away or try to apply its methods, at least in part. Of course I hope, if youve read this far, youre willing to give it a chance.

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Creative Strategy from the Inside

Part I of this book immerses you in the method of creative strategy. It shows step-by-step how to use creative strategy for innovation problems of various kinds. By the end you become an insideryou know how it works, what makes it tick, and all the moving parts. Each step in creative strategy has its own complexity and calls for different skills to master. Here I present a much simplified version, which will fit no situation exactly. But it does fit all kinds of situations to some degree. Whenever you face a complex problem that you dont see a way to solve, you need an innovation. But you might not realize thats what you need. You were hired because you know the answers, and its hard to admit that you dont, that instead you need something new. Normal planning methods often hide the need for innovation. You lay out your goals and initiatives and timetables for marketing, operations, product development, or your overall strategy. You know how to plan, so thats what you do. But for every goal you set, every initiative you design, there might be a better one just beyond your graspan innovation you dont yet see. Creative strategy helps you see it.

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From Mind to Method

This chapter shows how the human mind creates solutions to new problems and then translates that mental method into a series of formal steps that an individual or group can use for innovation of any kind. The mental method is strategic intuition, and my previous book Strategic Intuition explains it in detail. Creative strategy is the set of formal steps you can use to apply strategic intuition.

Strategic intuition

To start, we must go back to three key milestones in the recent history of the science of the mind. The first came in 1981, when Roger Sperry won the Nobel Prize in Physiology or Medicine for his work on the two sides of the brain. Sperry concluded from his experiments that one side of the brain is rational and analytical but lacks imagination and that the other side of the brain is creative and intuitive but irrational. This conclusion fit the much older idea that human thought is sometimes rational and sometimes irrational. Sperry located these two kinds of thinking in two different parts of the brain.

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Traditional views of innovation all conform in some way to this dual model of the human brain. They all involve some hard/soft sequence, such as deductive plus inductive reasoning, analysis plus creativity, art plus science, critical thinking plus gut instinct, logic plus feeling, and so on. Some versions add iteration: first analysis, then creativity, then analysis again, then creativity, and so on. Unfortunately, our second key milestone overturned this dual model of the mind. In the early 1990s, Seiji Ogawa figured out how to use magnetic resonance imaging (MRI) scans to show how ideas emerge in the human brain. Ogawa has been on the short list for the Nobel Prize for some years now. His work let scientists see which parts of the brain different mental tasks actually use. From Ogawas first MRIs, it was immediately clear that there are not two kinds of thinking that operate on two different sides of the brain. Although Ogawas work overturned Sperrys dual model, it took science another decade to arrive at a new model to replace it. Our third key milestone came in 2000, when Eric Kandel won the same Nobel Prize as Sperry for his work on this new model. Kandel called it learning-andmemory, where the whole brain takes in and stores information through sensation and analysis and retrieves it through conscious and unconscious search and combination. In this model, analysis and intuition are not two different kinds of thought, in two different locations, but rather two key inputs into a single mode of thought that operates throughout the brain. Some thought has more analysis, some has more intuition, but all thought requires both. Learning-and-memory gives a very different picture of how innovation works. Lets start with analysis. We commonly say analysis is a rational or logical process, but it can never be purely so except in mathematics. We can break down the number 20 into factors of 10 and 2 or 5 and 4. Mathematics is a closed system, so we know we are right. Its logical. But now lets analyze something that is not pure math: the performance of your company or organization over the past decade. What do I include in my analysis, and what do I leave out? For example, the weather: Should we gather data on temperature and plot that against a measure of unit performance? If I say yes and you say no, which one of us is right? And what is our measure of unit performance? What if you and I have different ones? Which one is right? There is no logical answer for any of these questions. In all cases, we do our best to make an educated guess. You use your judgment, and I use mine. If we disagree, we argue using logical arguments, but that does

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not mean our educated guesses came to us through logic. And our arguments are not purely logical at all, of course, regardless of what we might claim. So how did our educated guesses arrive? Why did I say we should collect weather data, and why did you say we should not? If not by logic, then by what? Learning-and-memory gives us a clue. You and I have different information in our memories, which we acquired by learning different things. Although we face the same questionthe performance of your company or organization over the past decadewe draw on different memories to analyze it. And we do so in two distinct ways: expert intuition and strategic intuition. These are the two main mechanisms the brain uses to apply memories to current and future situations. Lets start with expert intuition. Herbert Simon won the Nobel Prize in Economics in 1978 partially for his research on how experts think, and in the 1990s Gary Klein took to the field to study experts in action, such as firefighters, emergency room nurses, and soldiers in battle. In the past decade, expert intuition has become a significant field of study in its own right. Malcolm Gladwells popular book Blink gives a recent summary of that research. We now know that expert intuition is the rapid recall and application of thoughts and actions from direct experience in similar situations. The more experience, the better and faster your expert intuition. So a nurse can walk across the emergency room floor, glance at a child, and rush over to save the childs life. How did she do it? She noticed something she had seen beforein the childs eyes, how the child was sitting, and so forth. Expert intuition happens so fast that experts can seldom explain how they did it, but Klein developed an interview method that pins down to a surprising degree exactly what they recall from their prior experience. We develop and use expert intuition every day, in all kinds of skills and tasks. Most professional training increases expert intuition. But expert intuition can be the enemy of innovation. We see a new situation and quickly see whats familiar within it and act accordingly. But if the situation is different enough, weve just made a big mistake. Expert intuition cannot solve a strategic or creative problem, which by definition is a new situation. What if our nurses emergency room is dirty, crowded, and losing moneyand shes never experienced that before? She cant just walk across the floor and recall the answer from her past experience. Expert intuition wont work. She needs strategic intuition instead. This is a particular form of learning-and-memory that has strong roots both in the science of how ideas

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form in the mind and in empirical cases of successful strategy. The brain selects a set of elements from memory, combines them in a new way, and projects that new combination into the future as a course of action to follow. Strategic intuition typically occurs as one or a series of flashes of insight when the mind is relaxed. The past elements come from both direct experience and the experience of others that you learned through reading, hearing, or seeing. Once we understand how learning-and-memory creates new ideas, we can go back to some classics of strategy and see elements of strategic intuition within them, in particular Sun Zis Art of War and On War by Carl von Clausewitz. Modern brain research shows that Sun Zis Dao philosophy promotes a state of mind conducive to flashes of insight. Modern Asian martial arts feature the same mental discipline: the do in judo, aikido, and taekwando, and the like means Dao. And Clausewitz gives four keys to strategic intuition that produce innovation in any field of endeavor: examples from history, presence of mind, coup doeil, and resolution. These four steps of Clausewitz offer a useful bridge from the science of strategic intuition to the method of creative strategy. They help us see how you can make conscious use of your unconscious learning-and-memory, at least in part. Lets look at each step in turn to see how. In the first step, examples from history, you learn, retain, and recall in memory the elements of what others did to succeed in a previous situation. This happens naturally, because were human. Its how you learned most things in life, from walking and talking to sports and calculus. But it can happen actively as well through study. And here we meet Clausewitzs main example: Napoleon. By studying what Napoleon himself described as the eighty-three campaigns of the great captains whose high deeds history has transmitted to us, he had an arsenal of elements to combine in each new situation he faced. The second step, presence of mind, has a direct parallel in the Dao philosophy of Sun Zi and Asian martial arts. You must free your mind of all expectations. You expect the unexpected, as Clausewitz puts it. This is actually very difficult to do. The two biggest obstacles to presence of mind are excessive focus and negative emotions. Excessive focus means you cant let go of your current understanding of the problem, your goals, your timeline, options youve already listed, and so on. You must free your mind of all of that in order for your brain to make new connections. And all kinds of negative emotionsanger, frustration, worry, fearflood the brain with the hormone cortisol, which blocks recall. You literally cannot think creatively.

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The third step, coup doeilor glance in Frenchis the term Clausewitz uses for a flash of insight. Modern brain science shows how presence of mind fosters flashes of insight. When your mind is clear, selected examples from your memory combine in a new way to show you what course of action to take. The result is a strategy, but not a complete onejust key elements that show you the way. It may be one big coup doeilthe famous Eureka! in the bathor a series of smaller ones that you hardly feel as discrete cognitive events. But the mental mechanism is the same for epiphanies large and small. Last comes resolution, that is, resolve, determination, will. The flash of insight sparks a conviction that this is the right path despite the obstacles and resistance you will face, especially from others around you who did not have the idea. Of course, it is hard to distinguish good resolution for a good coup doeil from stubborn persistence for a bad idea. But examples from history offer help. If these examples that made up the coup doeil are solid and in sum cover the new situation, then its likely a good idea. We can now look at how innovation really works. Lets go back to the question of your companys performance over the past decade. You look at the situation and come up with a set of measures and data that you compile from memory of similar situations. If these parallels come quickly, from only your own direct experience, thats expert intuition. If it takes more time, and you draw from situations you know about but are not from your direct experience, thats strategic intuition. In practice you typically draw from both and dont sort out which is which. But the strength of your resolutionhow hard you argue your case and how firmly you believe the idea will work depends on how strong those parallels seem to you, regardless of whether you are conscious of them and able to explain them to others. It is unlikely that anyone on earth has had enough of the right direct experience to understand every aspect of your companys performance over the past decade solely through expert intuition. Situations where expert intuition alone wont suffice are strategic, so you need strategic intuition to find a solution. If the situation is within your direct experience, thats a tactical situation, and expert intuition can work. Innovation as strategic intuition is thus the search for the right combination of parallels within and beyond your own experience to apply to a new situation. In the same way that learning-and-memory applies to understanding your situation, it helps you decide what action to take in the face of the situation. Quite literally, an idea comes together in your mind. Here we can apply the same distinction between expert and strategic intuition: Do

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the elements of your idea come just from your own experience (expert) or also from the experience of others (strategic)? What course of action your company should pursue in the future is clearly a strategic question, where no one person has enough direct experience to give a good answer solely from that source. Expert intuition wont work. You need strategic intuition instead.

Creative Strategy

In ordinary practice, innovators are seldom conscious of the precise examples from history that make up their flashes of insight. But in team situations, it helps greatly to make your examples explicit. Once he was in charge, Napoleon never had to explain his coup doeil. In modern organizations, we do. The solution is to convert the four elements of Clausewitz into a more formal method of innovation for teams. The result is creative strategy, where you apply strategic intuition in a systematic way to find a creative solution to a strategic problem. The rest of this chapter summarizes the creative strategy method and shows how it follows the four elements of Clausewitz. The next few chapters go through the steps of the method in greater detail. The method of creative strategy follows three phases that draw from three diverse sources beyond those Ive cited so far: rapid appraisal in international economic development, a what-works scan from social policy research, and creative combination from General Electrics corporate university in the late 1990s. Together, these three sources give us a team method that matches what a single brain does in the flash of insight that comes from strategic intuition. All three phasesrapid appraisal, the what-works scan, and creative combinationuse an insight matrix to organize examples from history that the rapid appraisal and what-works scan discover. Figure 1.1 shows the basic matrix before you start. At the top of the matrix, your team writes down your current understanding of the situation or problem, always as a provisional draft, because the problem might change as you proceed to solve it. This kind of shift is normal in innovation: sometimes that flash of insight you have at night or in the shower is a realization that the problem is actually different from what you first thought. Once you have a preliminary problem statement, analysis comes next: you break down the problem into smaller pieces. You list these in rows,

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Figure 1.1

Insight matrix.

also in draft, because they too might change as you proceed. We call these problem pieces elements, as in chemistry, where different chemical compounds are made up of elements in various combinations. After all, the term analysis itself comes from chemistry, where you break down a compound into its elements. These first two parts of creative strategystating the problem and its elementsneed not take much time, but you must do them well and with the right people. This is where rapid appraisal comes in. Its a set of iterative interview and research techniques that gain insight into a complex problem. The interviewees must include the leaders who will ultimately decide what innovation to pursue in addition to the leaders who will take the lead in pursuing it. These are sometimes the same person, sometimes two people, sometimes more. In complex situations and organizations, you often must conduct one quick round of interviews just to find out who these people are. If you then change the problem or its elements as you proceed, you must go back to that key group to get their understanding and approval and perhaps add to the group because of the shift of focus.

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Next you move to the second phase of creative strategy: the whatworks scan. You ask the most important question you can ever ask to solve any problem of any kind: Has anyone else in the world ever made progress on any piece of this puzzle? Across the top of the matrix, as columns, you list sources to search for answers to this question. Again your list is in draft form, because you might add or delete sources as you proceed. Once you have a few sources on the list, the team starts a treasure hunt: the whatworks scan. You search the sources for examples from history that might apply to each element on the list of problem pieces. An example from history is anything that existed before you find it: something that happened a century ago and something that happened this morning are both examples from history. We will call examples from history precedents. In the what-works scan, every source has several potential precedents that might or might not fit your problem. You never use the whole source as your precedent. For example, if branding is a problem element, Starbucks might be a source for you. You might say you want to brand like Starbucks, but youre not going to imitate everything Starbucks does to build its brand. You study what Starbucks has done and you choose from within that study something you find useful for your problem element, for example, how Starbucks owns rather than franchises its stores to keep greater control of the store experience. Thats a precedent you might want to use yourself. Finding relevant precedents is not easy, because outside of physical science we lack statistical proof that one set of actions works best to yield a particular effect. Because of this, the what-works scan has its own specialized methods and techniques to arrive at a set of precedents that fit the problem at hand. This scan is a key difference between creative strategy and most other innovation methods, which spend most of their time and effort on research about the problem. In contrast, creative strategy comes after the key leaders in charge of the problem have already done their homework in that regard by whatever method they think best. Once they understand the problem to some degree and decide to try to solve it, creative strategy spends most of its time and effort on searching for solutions through a what-works scan. The what-works scan should take as much time as you have to devote to it. In urgent situations, that might be one day. For longer-term problems, it can take a week, a month, or a year. In principle, a what-works scan can go on forever, as there are always more corners of human experience to investigate. In the old days of gold mining, if you had infinite time and

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money, you would dig a hole everywhere on earth as deep as possible. The less time and money you have, the fewer and more shallow the holesso too with a what-works scan. Yet you dont dig just anywhereyou look for sources where someone else found gold for problems related to yours. One byproduct of the what-works scan is learning, which lets you build up an inventory of precedents to apply in the future to other problems. And the scan can be fun, a voyage of discovery where youre never sure what youll find. But it can make some people anxious, especially if they search for days or weeks and do not find what they need. This brings us back to presence of mind, where you need the mental discipline to face the unknown with a calm, open mind. Otherwise you revert to expert intuition and fill the matrix with what you already know. When you run out of time, or when you judge that you have found enough promising precedents, you move to the next phase: creative combination. You select and combine precedents to make a solution. There is no precise formula for creative combination because it matches the flash of insight in a single brain, when precedents come together in your mind. You connect the dots, but not all the dots. The what-works scan yields a set of worthy precedents, but if you combine them all you will just have a giant mess. You see how one, and another, and yet another together make an innovation that fits your situation and solves your problem. Last, but not least, the creative combination produces resolution: the will to pursue the idea you see. Its a fact of human nature that people have greatest resolution for their own ideas; thats why so many consulting reports gather dust on office shelvesthe consultants had the idea, not the client. Creative strategy solves this problem by including key leaders at two decisive points: the rapid appraisal and creative combination. You bring them the precedents you found that fit the elements of the problem they understood and agreed to in rapid appraisal, and you lead them to select and combine a subset of them in creative combination. They literally see the answer, and that makes all the difference. That, in brief, is how you can translate the brains mechanism for creating new ideasstrategic intuitioninto a formal method for innovation: creative strategy.