Monday, November 14th, 2011

Q&A: Best-Selling Author Eric Ries on Innovation in Business (Part 1)

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In anticipation of our launch of the Box Innovation Network aka /bin, we’re kicking off a series of discussions with entrepreneur and best selling author Eric Ries. Ries will be sharing his perspective on innovation in the enterprise and how people, processes and technologies are revolutionizing the way we work.

Q: To kick things off, since “innovation” is being used in all sorts of debates from politics, education to technology, can you briefly describe for us what innovation means to you?  

I prefer to define innovation around the context in which it happens – when you’re trying to create something new, and you face high uncertainty about what the outcome is going to be.  If it’s not just a follow-on copy of a product you’ve done before or an exact clone of somebody else’s business, but something that is actually new, that’s innovation.

Q: How does a slowed pace of innovation impact business?

It’s lethal. If you’re a company that’s had some success in the past, then as we speak right now, there are entrepreneurs and innovators that are trying to replicate that success and take it away from you. In the old days, if you got to a certain level of scale and success, and you took your company public and had a really groundbreaking innovation, you could rely on having exclusive market leadership for decades.

Think of the old General Motors and the nearly half century it spent as the number one automaker in the world. Those days are long over. These days, if you look at companies like Groupon and Zynga, they’re facing not a couple, but hundreds of existential threats from copycats and competitors even before they’ve gone public, and they’re going to face that pressure through their whole life. So anyone who wants to be successful over the long term – and the long term now is defined as a matter of years, not decades – is going to have to have a process for continuous innovation, or they’re toast.

Q: What are the top three to five key elements you think every business needs in order to stay innovative?

Recognize that when you’re innovating: You’re fundamentally conducting an experiment, and I mean experiment in the scientific sense. In traditional business when you make a plan, you analyze your way to an answer. You say, “We’re going to do the things in this plan, and we’re confident good things are going to happen.”

But in entrepreneurship, when you make a plan, all you’re doing is running a test to see if the assumptions in that plan are, in fact, true, because most of the time they’re not true. There’s way too much uncertainty and you end up having to change plans – what we call pivot – over and over again. So everything is an experiment, and the pivot is the most important tool in the entrepreneur’s toolkit, because the pivot is what you do when it’s time to change strategies without changing your vision.

Let’s say you had this idea to change the world and on your way there you realize there’s an obstacle – there’s something about your plan that doesn’t actually work, your experiment comes back false. Well, like any good scientist, when you have a hypothesis that turns out false, you don’t just give up, you don’t just go home and say that’s it. You try to figure out what’s the new strategy that will get me to my destination through some other route.

You can’t substitute vision for data: Vision is still really important – vision tells you where you want to go. You don’t ask your car’s GPS where you want to go, you tell it where you want to go and it helps you get there. Vision is where we want to go; strategy is our GPS for figuring out how to get there. That structure of experimentation, rapid iteration, and pivoting, I think that’s at the foundation of modern innovation.

Read part 2 here