By Sam Herring, Executive VP of Intrepid Learning Systems, and 2011 Chair of the ASTD Board of Directors
Two of my favorite examples of innovative companies are Starbucks and Apple because they invented entirely new types of products and customer experiences that simply did not exist before. And they have something else in common: they lost their creative edge for a time but they learned how to get it back.
Many people consider Apple the world’s greatest product innovator. Two of Apple's innovations – a commercially successful mouse and a graphical user interface for the personal computer – are among the most important breakthroughs in broadening access to technology. Interestingly, Apple didn't invent the mouse or create the first graphical user interface. As Malcolm Gladwell points out in a May 2011 New Yorker article, Apple’s contribution was to make them commercially successful, something that Xerox, the company which invented them, was never able to do.
Apple's CEO, Steve Jobs, left the company in 1987 and stayed away for 10 years during which the company lost its innovative edge. When Jobs returned, he had this blunt assessment: “The company took a nap” for a decade. It forgot its first rule: to continuously build great products.
Steve Jobs’ challenge was to resurrect Apple’s famous culture of product innovation. He describes that culture as an intangible “gravitational force” which brings disparate ideas and technologies together to create great products.
After his return, Jobs was obviously phenomenally successful at re-igniting Apple’s product innovation culture. We are all familiar with the products and services that Apple created over the last several years; iPod, iTunes, iPhone, AppExchange, iTouch, iPad, MacAir, and the Apple store, to name just a few.
Jobs didn’t set out to make Apple the wealthiest, or most valuable technology company in the world. He has repeatedly said "our goal has always been to make the best products." Nevertheless, as a result of its successful product innovation, today Apple is the most valuable technology company. Over the last decade, Apple’s market value has increased more than 100-fold to more than $300 billion—only ExxonMobile is worth more today.
Now consider Starbucks. Through innovation it reinvented a common experience –having a cup of coffee – and turned it into a phenomenally successful business on a global scale. Howard Shultz, the company's founder, was determined to bring world class coffee and the romance of Italian espresso bars to the United States. He believed that such an experience could enrich people's lives and even create community. And he believed it was possible to scale that experience not just in the United States but around the world. And scale he did. In 1987, when Schultz took over Starbucks, the company had 11 stores and 100 employees. Today the company has more than $10 billion in annual revenue and serves nearly 60 million visitors a week in 16 thousand stores across 54 countries. More than 200,000 people now work for Starbucks.
But when Schultz stepped away from his operational role as CEO in 2000, and took on the role of Chairman, Starbucks experienced a challenge very similar to Apple's. Without the day-to-day leadership of an inspirational CEO, Starbucks began to lose its focus on the “romance of the coffee experience.” Instead, the company focused on growth at the expense of customer experience, introducing a sometimes bewildering variety of new products that didn’t always resonate with Schultz’s vision of the customer experience. In 2008, Starbucks profits slipped more than 50 percent from the previous year. The market signaled its concern, valuing Starbucks at less than $9 per share, down from its high of nearly $40 per share in 2006.
It was only after Schultz resumed the role of CEO that the company returned to its roots. Shultz did this not by returning to old ways of operating, but by innovative changes to the company that reinforced the coffee experience. He shut down 7,100 stores for a day of company-wide barista training. Customers saw a note on the door which said "We are taking time to perfect our espresso. Great espresso requires practice. That's why we're dedicating ourselves to honing our craft."
In addition, the company launched neighborhood concept stores and introduced the new Clover brewing system - all intended to enhance the coffee experience.
These and other changes have delivered impressive financial results—last fall, Starbucks posted its best financial performance in nearly 40 years. While revenue was constrained by the recession between 2008 and 2010, during that time profits tripled and share value quadrupled.
It's important to note that in the cases of both Apple and Starbucks, innovation was not the work of the CEO alone. Although a leader sets the tone for a culture of innovation, and the best CEOs directly lead innovation, it is individual employees who make it happen. And as we all know, learning plays a major role in creating that capability.
Shouldn't we be catalysts of innovation in our companies and our communities? Aren't we living in a unique innovation moment in which knowledge work now dominates most of the world's economies? Aren't we seeing a steady flow of new social media tools that foster innovation? And isn't learning a fundamental driver of innovation? Studies of identical twins separated at birth tell us that one third of our ability to think creatively is genetic, but two thirds comes from learning -- understanding a skill, practicing, experimenting, and creating. Research by i4cp in 2011 of companies with 1000 or more employees confirmed that innovation is more important than it was two years ago and will be much more important five years from now.
Leading innovation involves a distinct set of skills that are fundamentally connected to learning, and CEOs from the most innovative companies spend 50 percent MORE time on these activities than CEOs with no innovation track record.
What are these skills?
- Associating—building a broad range of knowledge from which to draw new connections.
- Questioning—asking Why? Why not? And What if?
- Observing—watching behavior closely, having a keen eye.
- Experimenting—trying new things, taking things apart, inviting new experiences, taking risks
- Networking—meeting new people, being exposed to new ideas.
These skills can be learned not just by top leaders but by anyone in a position to lead innovation from anywhere on the org chart. This means that as learning professionals, we have a powerful role to play in creating experiences and fostering environments where innovation thrives.