style="font-size:15px;"> Many innovators realize that they are deficient in these critical skills and, consequently, try to team up with others who possess them. For example, eBay founder Omidyar quickly recognized the need for execution skills, so he invited Jeff Skoll, a Stanford MBA, and Meg Whitman, a Harvard MBA, to join him. “Jeff Skoll and I had very complementary skills,” Omidyar told us. “I’d say I did more of the creative work developing the product and solving problems around the product, while Jeff was involved in the more analytical and practical side of things. He was the one who would listen to an idea of mine and then say, ‘Ok, let’s figure out how to get this done.’” Skoll and Whitman professionalized the eBay Web site, added fixed-price auctions, drove international expansion, developed new categories such as autos, and integrated important capabilities such as PayPal.
The Discovery and Delivery Skills Matrix: How Innovators Stack Up
To test the assertion that innovative executives have a different set of skills than typical executives, we used our innovator’s DNA assessment to measure the percentile rank of a sample of high-profile innovative entrepreneurs (founder CEOs of companies on BusinessWeek’s list of the top one hundred most innovative companies) on both the five discovery skills (associating, questioning, observing, networking, experimenting) and the four delivery or execution skills: analyzing, planning, detail-oriented implementing, and self-disciplined executing. We averaged their percentile rank scores across the five discovery skills to get an overall percentile rank, and then did the same thing across the four delivery skills to get an overall percentile rank. We refer to the overall percentile rank across the five discovery skills as the “discovery quotient” or DQ. While intellectual quotient (or IQ) tests are designed to measure general intelligence and emotional quotient (or EQ) assessments measure emotional intelligence (ability to identify, assess, and control the emotions of ourselves and others), discovery quotient (DQ) is designed to measure our ability to discover ideas for new ventures, products, and processes.
FIGURE 1-3
Discovery-delivery skills matrix
Figure 1-3 shows that the high-profile innovative entrepreneurs scored in the eighty-eighth percentile on discovery skills, but only scored in the fifty-sixth percentile on delivery skills. In short, they were just average at execution. We then conducted the same analysis for a sample of nonfounder CEOs (executives who had never started a new business). We found that most senior executives in large organizations were the mirror image of innovative entrepreneurs: they scored around the eightieth percentile on delivery skills, while scoring only above average on discovery skills (sixty-second percentile). In short, they are selected primarily for their execution skills. This focus on execution is even more pronounced in business unit managers and functional managers, who are worse at discovery than typical CEOs. This data shows that innovative organizations are led by individuals with a very high DQ. It also shows that even within an average organization, discovery skills tend to distinguish those who make it to the highest levels of the organization. So if you want to move up, you’d better learn how to innovate.
Why do most senior executives excel in the delivery skills, but are only above average in discovery skills? It is vital to understand that the skills critical to an organization’s success vary systematically throughout the business life cycle. (See figure 1-4). For example, in the start-up phase of an innovative venture, the founders are obviously more discovery-driven and entrepreneurial. Discovery skills are crucial early in the business life cycle because the company’s key task is to generate new business ideas worth pursuing. Thus, discovery (exploration) skills are highly valued at this stage and delivery (execution) skills are secondary. However, once innovative entrepreneurs come up with a promising new business idea and then shape that idea into a bona fide business opportunity, the company begins to grow and then must pay attention to building the processes necessary to scale the idea.
FIGURE 1-4
The business and executive skill life cycles
During the growth stage, the innovative entrepreneur may well leave the company, either because she has no interest in scaling the idea (which involves boring and routine work, at least to her) or because she does not have the skills to manage effectively in a large organization. Innovative entrepreneurs are often described as poor managers because they lack the ability to follow through on their new business ideas and are often irrationally overconfident in them. Moreover, they are more likely to make decisions based on hunches and personal biases rather than data-driven analysis.11 Not surprisingly, the conventional prescription for these problems is to replace the entrepreneurs with professional managers—individuals with proven skills at delivering results. At this point in the business life cycle, professional managers who are better equipped to scale the business often replace the entrepreneur founders. When such replacement occurs, however, key discovery skills walk away from the top management team.
With the founder entrepreneur out of the picture, the ensuing growth and maturation stage of the business life cycle begins. In these stages, managers generally make it to the top of the management pyramid through great execution. This may involve generating incremental (sustaining) innovations for existing customers, but the focus is on execution, not building new businesses. Surprisingly few companies in this stage pay systematic attention to the selection or promotion of people with strong discovery skills. As this happens, the lack of discovery skills at the top becomes even more glaring, but it is still not necessarily obvious. (Contrast these common practices with those of Amazon founder Bezos, who systematically asks any new hire, including senior executives, to “tell me about something that you have invented.” Bezos wants to hire people with an inventive attitude—in other words, people like himself.)
Eventually, for most organizations, the initial innovations that created the business in the first place complete their life cycle. Growth stalls as the business hits the downward inflection point in the well-known S curve. These mature and declining organizations are typically dominated by executives with excellent delivery skills. Meanwhile, investors demand new growth businesses, but senior executive teams can’t seem to find them because the management ranks are dominated by folks with strong delivery skills. With discovery skills largely absent from the top management team, it becomes increasingly difficult to find new business opportunities to fuel new company growth. The company once again starts to see the imperative for discovery skills.
In sharp contrast, when entrepreneur founders stay through the growth stage, the company significantly outperforms its peers in growth and profitability.12 An entrepreneurial founder is far more likely to surround herself with executives who are good at discovery, or who at least understand discovery. Could Apple have built new businesses in music (iTunes and iPod) and phones (iPhone) on top of an older computer business without the return of Jobs? We doubt it.
The key point here is that large companies typically fail at disruptive innovation because the top management team is dominated by individuals who have been selected for delivery skills, not discovery skills. As a result, most executives at large organizations don’t know how to think different. It isn’t something that they learn within their company, and it certainly isn’t something they are taught in business school. Business schools teach people how to be deliverers, not discoverers.
For a moment, consider your company’s track record of rewarding and promoting discovery skills. Does your company actively screen for people who have strong discovery skills? Does your company regularly reward discovery skills through annual performance assessments? If the answers are no, then it is likely that a severe discovery skill deficit exists at the top
