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PU B L ISHED B Y :

YALE SCHOOL OF MANAGEMENT

YALE INSIGHTS �

V IDEO

HOW DO YOU BUILD A CULTURE OF INNOVATION?

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Behavioral Approach to Management

How does a successful company maintain a climate in

which new ideas and risk-taking are encouraged? Tim

Brown, CEO and president of the design consultancy

IDEO, describes how he thinks about innovation and

why empathy is an important part of the equation.

In markets characterized by rapid change and a ceaseless quest for the faster, better way to operate,

one of the most prized corporate attributes is innovation. But many of the natural byproducts of

corporate success—hierarchy, routinization, the elimination of risk—can stifle innovation.

A 2009 study in the Journal of Marketing examined 759 companies across 17 countries,

looking for the factors that predicted whether a particular firm would innovate. While the

degree of innovation was influenced by external factors such as the local culture,

government, and supply of labor and capital, the study found, the most important driver

was internal corporate culture.

An article in Sloan MIT Management Review identifies a series of "building blocks" for an

innovative culture, including hard-to-measure characteristics such as values, behavior,

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and climate. "An innovative climate," the authors write, "cultivates engagement and

enthusiasm, challenges people to take risks within a safe environment, fosters learning,

and encourages independent thinking."

One of the companies cited in Management Review is the global design consultancy IDEO,

which has helped firms innovate for more than two decades. In a conversation with Yale

Insights, IDEO CEO and president Tim Brown adds another prerequisite for innovation:

empathy.

"A sense of inquiry, of curiosity, is essential for innovation, and the quickest way for

removing curiosity in my opinion is to have organizations that are too inward-facing," he

says. "A sense of empathy for the world and for the people whose problems they might be

trying to solve—that's essential."

TRANSCRIPT

Q: What do organizations need in order to innovate?

Tim Brown: Any organization that wants to innovate, wants to be prepared to innovate, I

think, has to have a few things in place. One is-and perhaps the most important thing is-

methods for having an open mind. A sense of inquiry, of curiosity is essential for

innovation. And the quickest way for removing curiosity in my opinion is to have

organizations that are too inward-facing, that don't spend enough time out in the world,

particularly with their customers or the people they would like to have as customers or the

parts of the world that they would like to have customers in. But a sense of curiosity, an

openness, a sense of empathy for the world, for people whose problems they might be

trying to solve-that's essential.

A second thing that's important is an ability to create spaces where trust can happen,

where risks can get taken. We tend in our operationally minded view of the world to try

and mitigate and design out as much risk as we can, but if you want to innovate, you have

to take risks. And to take risks you have to some level of trust within the organization,

because if people get penalized for failure, particularly the kind of failure that's most

useful which is where you learn a lot, then they're not going to do it, in which case you're

not going to get any innovation.

Q: What expertise does IDEO have internally? Are there advantages to not have expertise?

Brown: We do have a very broad range of sectors and industries and design problems and

innovation problems that we try and take on, and the way we like to think about it is we

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come with a deep expertise in how to innovate, and we partner with our clients, who come

with an expertise about their industry. And we come with what we might call a beginner's

mind. We come with an open mind to what the possibilities might be, and that can be

quite useful. Now it's not always useful, and sometimes it's useful to have expertise as

well, and there are certainly some industries, like healthcare for instance-financial

services is another one-that we've done a lot of work in and where we've built up some

reasonable expertise over the years. And we certainly try and move the knowledge around

our organization as best we can, but we do rely somewhat on the value of having an open

mind when we approach a new question. I think that's perhaps the reason that we

succeed in working across a lot of different industries.

We're also insatiable in terms of looking for new problems to tackle. And we have, like

many creative organizations, sort of severe attention deficit disorder, so we like to work on

different things. We like to tackle new challenges. So that drives us a little bit as well.

Q: How do you think about the roles of intuition and analysis in the creative process?

Brown: The creative process is not what many people think it is, which is all intuitive. The

intuition is a result of large amounts of input, right? And that input, if it's gonna be useful,

there's some level of pattern recognition going on, which means it's some level of

analysis. It isn't necessarily sort of analysis in a numerical sense, but we go look at a lot of

people, we do a lot of ethnographic research, for instance, a lot of anthropology. That's

not numeric analysis, but it's a lot of information. And it's that information that then

comes together to actually inform the intuition of a creative team.

And what I believe that as human beings we're still relatively uniquely able to do-in other

words the machines have not caught up yet-is that we're able to synthesize large amounts

of information and make what we think of as intuitive creative leaps. What we're actually

doing is we're just synthesizing lots of data and we're coming to a point of view about that.

And that's where the creative leap happens, and ultimately that's the payoff of the

creative process. But if you don't feed it with lots of data, if you don't feed it with lots of

information, then it's rare in my view that you get the interesting creative leap.

Q: As CEO, how do you keep your own organization innovating?

Brown: I have quite a lot of empathy for our clients, because I found running our own

organizations, it's actually really hard to keep innovating all the time around everything.

Now we do have an extremely emergent culture at IDEO, where people are coming up with

new ideas all the time. We're definitely more of a 1,000 flowers blooming kind of

organization than we are a driven from the top, we're gonna innovate here, and then we're

gonna innovate there. My job is is to try and help and encourage us to do some pattern

recognition across all of that stuff and try and imagine where the places where we might

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focus more of our resources.

But I suppose the thing that I most try and do is to encourage people to remember to ask

all the same creative questions about our own process as we do about our clients-easily

said, not always easy to do. And you have to give some time for that. You have to

remember that like any organization, if you get into an operational mindset where we

we're just doing the job, then it's easy to forget about innovation. So, you know, constantly

we're putting resources aside for teams to go and work on things just because we're

interested in learning about them, not necessarily because a client's paying for them. So

doing your own R&D, even in an innovation organization, is really important.

TIM BROWNCEO and President, IDEO

The Yale School of Management’s Look atGlobal Business

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