York Lo is Head of Institutional and Retirement Product Development at John Hancock and a member of the EMBA Class of 2018.
Each year, many students come to MIT Sloan to learn about innovation. After all, the School’s mission is “to develop principled, innovative leaders.” Over 700 companies partner with the Institute on technology development, and companies started by the school’s alumni entrepreneurs generate revenues greater than the GDP of the world’s 10th largest economy. So, what is the secret behind the continuous stream of innovation and can middle-aged executives like me who work at older firms benefit from this? Or is it something that only 20-something entrepreneurs at nimble startups, such as Pillpack (recently acquired by Amazon for 753 million and launched out of MIT’s Hacking Medicine Competition in 2012) can achieve?
While some people are naturally more innovative than others based on the Innovator’s DNA test developed by MIT Senior Lecturer Hal Gregersen, age is not really a factor. In a study conducted by MIT Prof. Pierre Azoulay and Daniel Kim, they debunked the myth of the 20-year-old entrepreneur and found that the average age of successful entrepreneurs when they started their firms is 43. In fact, thinking back, some of the most innovative ideas I heard in the EMBA program came from a classmate who is over 60. So, it is the breadth and depth of experience and the innovative mindset that counts and not the age.
Adhering to MIT’s slogan of “mens et manus” (mind and hand), I was involved in several Action Learning projects related to innovation during my 20 months at MIT. These projects involved my own company as well as other corporations and startups in fields ranging from nanotechnology and medical imaging to climate change solutions. Through these courses, I was introduced to many innovation techniques such as hackathons by Prof. Fiona Murray and her team at the MIT Innovation Initiative. Thanks to the amazing network at MIT, we also had the good fortune of meeting on campus every other week with industry experts behind some of the world’s most innovative companies like inventor Bob Langer and venture capitalist John Doerr.
Below are five key insights I gained from these experiences that could help executives of any age drive successful innovation at any stage:
Build A Diverse Innovation Ecosystem –
To innovate you need to think outside of the box. This means engaging in dialogues with different stakeholders and building an innovation ecosystem where ideas can flow in from many different directions. At the macro level, we have seen the success of ecosystems in regions such as Boston, Silicon Valley, London and Israel thanks to strong collaborations among universities, governments, corporations, startups and VC/accelerators. Organizations can benefit tremendously from collaborating with other stakeholders (especially in vibrant ecosystems like Boston) and forming teams that are diverse (MIT is certainly an example of that in terms of faculty, staff and students). This is true not only at a macro and organizational level but at an individual level, as I’ve found myself coming up with more ideas simply from being surrounded by a cohort of executives from different sectors ranging from health science to IT to nonprofits.
Idea Generation: Going from factory mode to studio mode –
From our courses on dynamic work design with Prof. Nelson Repenning and organizational processes with Prof. Roberto Fernandez, we have learned about the tendencies of individuals to engage in known, repeatable work in a fast, automatic fashion (aka factory mode). Too often we spent most if not all of our time on tackling the tasks/projects at hand rather than collaborations and discussions with others to come up with better solutions or new ideas (aka studio mode). To innovate, we need to shift from factory mode to studio mode. This could be as simple as spending more time in the cafeteria with other colleagues to week-long intensive hackathons involving external parties.
Idea Screening through Real-Win-Worth It Framework –
As history has shown us, organizations have generated many great ideas, but sometimes fail to capitalize on them. Xerox PARC is a good example. Through the product design course taught by Prof. Steve Eppinger (whose students included the founders of Airbnb), we were exposed to the RWW Framework, which is a great approach to assess the viability of any product ideas/opportunities. It involves asking three critical questions about the idea: “Is it real?” (feasibility and addressable market sizing), “Can we win?” (competitive analysis) and “Is it worth it?” (P&L analysis). To proceed, the answers to 2-3 of these 3 questions need to be yes. The concept is simple, yet so many project teams and companies have failed to ask these questions. As a result, they ended up pursuing unrealistic opportunities that were simply intriguing engineering challenges, trying to find a problem rather than the other way around and costing millions if not billions.
Ask the right questions and develop a robust feedback loop –
Once you’ve done your analysis and begin to pursue your new idea, there is no guarantee of success. You need to keep asking questions to fine-tune your prototype and develop a robust feedback loop to get it right. Thanks to tools such as online surveys like Qualtrics, you can receive lots of feedback on your ideas in a very short time if you ask the right questions and have a strong ecosystem.
Get Big Fast Through Systems Thinking and Avoid Capabilities Trap –
To grow your new product/service, you need to think about the reinforcing loops (factors that could be considered as tailwinds) that would support its growth and the balancing loops (factors that could be considered as headwinds) that might slow it down. A careful alignment and consideration of these forces (systems thinking) could help you scale quickly and sustain growth. But as with any new initiatives, things don’t necessarily deliver immediately, and things could get worse before they get better. Hence many prefer to do quick fixes (e.g. cost cutting) that deliver quick results rather than make new investments and innovate to genuinely pursue something that is better for the long-run. Firms and teams need to avoid this “capabilities trap” (termed by Profs. John Sterman and Nelson Repenning) to drive successful innovation.
How do you approach innovation at your company?