Thirty years ago I “retired” from corporate life and founded what’s now known as the Eureka! Ranch in the basement of our home. The Ranch has achieved great things — inventing for the likes of Walt Disney, Nike and American Express; publishing seven bestselling books; producing two network TV shows; and creating a new field of academic study known as Innovation Engineering taught on and off college campuses.
I believe that key to the success of Eureka! Ranch is the culture of innovation that started from the beginning when I was the company’s only employee. Here are the four things I believe have been critical to the creation of an innovation culture:
1. A never-ending improvement mindset.
From the start, I established a mindset that improvement in how we work needed to be continuous. As employees joined the company, I’d regularly ask them after meetings or project events, “What did you learn?” The question encouraged them to stop and think. It created a conversation about what was working and what was not. And, most importantly, it helped build a culture of never-ending learning and improvement.
2. Blame the system, not the people.
Dr. W. Edwards Deming, the statistician who transformed how manufacturing builds quality, famously taught that, “94 percent of the problem is the system, 6 percent is the employee.” This fundamental truth is critical to the creation of an innovation culture. Focusing on systems as the cause of problems means we don’t develop a mentality of focusing on whose to “blame” for mistakes. It also means that employees have less fear of failure.
3. Mission-, not metric-driven strategy.
A mission mindset means focusing energy on our mission of helping companies to Find, Filter and Fast-Track Big Ideas. Metrics — sales, profitability, market share — were the outcome of the strategy. This is the exact opposite of many companies, where achieving metrics are the definition of strategy. The mission-focused approach has evolved at Eureka! Ranch over the years. Today it’s called the “Blue Card.” It defines strategic initiatives with a motivating narrative that explains what we need to accomplish and, especially, why it’s important. It defines the mission with a simple statement, “We need ideas for…”. Finally, it defines with clarity the strategic and tactical boundaries associated with the mission. The result is greater engagement as employees have a deeper understanding of what’s really important and why.
4. Fail Fast/Fail Cheap cycles of learning.
When failure is perceived to result in punishment, employees think small and take no risks. When employees feel safe to prototype, test and conduct experiments, they innovate. Innovation can’t happen without experimentation. You wouldn’t expect a baseball player to never strikeout or a research scientist to be successful with every experiment. Yet, when it comes to most of the business world, we expect perfection on every task and project that employees take on. Or, more importantly, employees and executives have a need never to fail within them. Rather than try and possibly fail, they take no chances. They only pursue ideas that they have high certainty will be successful.
At the Eureka! Ranch we give space to all employees to run experiments. The only requirement is that we think during the process. To help us think, we use an updated version of the Plan, Do, Study, Act (PDSA) cycle of learning taught by Dr. Deming. Plan sets the aim or purpose of the experiment. Do is our theory as to what might accomplish the aim — it’s the experiment we’re going to run. Study is where we think about what we learned. It’s about us thinking hard about why the experiment worked or didn’t. This is a critical difference from the more common PDCA…. Where teams check that action happened versus study. Lastly, we act. For innovations, this usually means going through another PDSA cycle. The result is a structured approach for discovering and problem solving, versus the more task focused PDCA.
By putting these processes in place, innovation speed increases by up to six times, while innovation risk decreases up to 80 percent as a result of broader and deeper executive and employee engagement in innovation.
