And indeed, horses were everywhere—even pulling trolley cars—while steam-engine trains were taking passengers the longer distances they needed to go. So there was no compelling apparent need at that time to develop an automobile, just a curiosity and hunger to do so and a vision of potential consumer demand based on the value those inventors and business people thought was latent in an emerging market.
Ford, in particular, was curious enough to perceive needs that went deeper than the surface. When he invented an automobile, he didn’t say, “Well, now I have the perfect mousetrap, let the world beat a path to my door.” Instead, he considered the customers or users and determined their perception of value. Price was a big concern. By making his Model T affordable (and by paying his own employees a wage that turned them into automobile consumers), Ford stimulated demand. It’s telling that he later faltered because he didn’t see to other things consumers valued, such as color, style, or variations in model.
Google has this kind of user orientation today. As we’ve discussed, it is very fast, collaborative, and vigorous (Mindset #1). And it is laser-focused on the value-perspective of the customer or user (Mindset #2) over any incremental concerns about profitability. But it is an insatiably curious and outwardly directed company, too. (Mindset #3.)
Companies that are hungry and outrospective do not discover their path by following a limited or narrow understanding of the customer or even the market they are in. They are as curious about that customer as they are about the projects they are focused on, and they are hungry both for insight and for discoveries that will genuinely affect the world, not merely push the needle in the direction it has already been pointing.
Market research does not play a strong role in this process because that approach to understanding the customer is inherently biased toward confirming what the organization already knows or wants to do. In fact, many of Google’s innovations come from combining ideas or innovations in new ways. This sort of genre-mixing is common among artists and pure scientists; it is exceedingly rare in business. Most organizations suppress the curiosity and outward focus that lead to insights arising from seeing patterns or connecting disparate forces or ideas. They would rather focus on the narrow band of problems the company grapples with every day.
This is where the importance of diversity also comes into play. The notion of diversity as a form of political correctness has done a grave disservice to the development of new strategic capabilities in most organizations. How can a company be innovative, discover new things, or possibly understand how the customer perceives value, if everyone in the company thinks the same, and not enough people are representative of the variety of customers? Without a mix of voices, experiences, perspectives, and outlooks, it’s impossible for a company to be sufficiently outrospective in today’s global economy.
Companies need to ask themselves constantly, “What business are we in?” and “How might we continue to best serve our customers or potential customers?” Hungry and outrospective companies disrupt themselves constantly. They don’t stop asking questions—even when there’s no evidence that questions need to be asked. They don’t sit on their own success, navel-gazing on recent achievements and quarterly earnings. They act upon their possibility mindset. They focus on the market and the customer. And they encourage and expect their people to play a major part in the direction of the company, regardless of role or tenure.
BUILDING AND CHANGING MINDSET
Companies that are culture-based and nimble, focused, and feisty are clear about their mindsets and do everything they can to inculcate them in the organization. The leaders drive those mindsets home constantly. It is the singular area in which they correct the thinking of others and do not allow for latitude. They know that if they get mindset locked in, then people will act appropriately within those constraints to deliver better innovations and higher levels of performance.
Those companies also make sure that they bring the right people on board in the first place. Mindsets can be taught and are definitely reinforced by culture, leadership, rewards, etc., but it’s far easier to win those battles if you have mindset alignment from the get-go.
Mindset is the underlying operating system that drives the actions, behaviors, and business practices of the organization. Like rewriting code, it can be difficult to change because whatever mindset is already in place—whether it is explicit or implicit—can be an insidious deterrent to a fundamentally new way of thinking. Nevertheless, mindsets can be shifted even radically. That’s what Satya Nadella, CEO of Microsoft, is trying to do.
Microsoft is now more than forty years old. It’s the second- or third-largest technology company in the world, flipping places with Google depending on the quarter. It made $22 billion in profits in 2014. But a lot has changed since regulators found the company so dominating and threatening that they wanted to break it up. It’s been a long time since a Microsoft product drew much interest, much less killed or made a category. The brightest young engineers do not flock to Redmond the way they once did. Microsoft is seen as a comfortable, corporate environment more than a creative hub of innovation and entrepreneurship. This is in spite of the fact that Microsoft has the biggest research and development engine in the industry, Microsoft Research, with a budget of $11.4 billion in 2014.
Nadella is trying to “end the factional strife inside Microsoft, making the 118,000-strong work force nimbler. He has rallied them around mantras, like making personal computing more personal through wearables and other devices. To better translate Microsoft’s innovation into products people want to buy, he has directed the company’s research group, the biggest in the technology industry, to work more closely with product engineers.”19
Eliminating internal fiefdoms. Flattening out middle management. Making it easier to communicate and collaborate across the organization. Bringing engineers and creative innovators together. Pushing product excellence. Making smaller bets with potentially bigger payoffs. And allowing failure to be part of the process. It’s all starting to have an effect. As an outside member of the technical advisory board says, “There’s an eagerness in the business units to pick up ideas that are going to make a significant difference.”20
Companies that wish to thrive today and over the long term must reinforce or adopt mindsets that work with rather than resist the dynamic forces at play in our fundamentally changed world. In the next section of this book I’ll show you how they do that.
ORGANIZATIONS THAT WIN: HOW THEY’RE NIMBLE, FOCUSED, AND FEISTY
NOKIA, the Finnish telecommunications company, was originally founded in 1865 in Tampere, Finland, as a ground-wood pulp mill. Over the years, the company periodically added a number of other business areas to its portfolio, including forestry, cable, rubber, tires, footwear, plastics, chemicals, power generation, and eventually electronic devices. However, it was Nokia’s entrance into the mobile-phone market that changed everything and made Nokia the brand we know today.
In 1992, new CEO Jorma Ollila was so convinced that Nokia’s future was in telecommunications, he made the strategic decision to divest the company of all of its non-telecommunications enterprises. So, during the course of the 1990s, Nokia sold off its legacy cable, consumer electronics, and rubber divisions and put its focus squarely on mobile telecommunications. By 1998, Nokia had surpassed its rivals in this fast-growing industry
